Michigan Bell Telephone Co. v. MCIMetro Access Transmission Services, Inc.

MOORE, Circuit Judge,

concurring.

I write separately to explain in more detail why I agree that federal courts have jurisdiction to review the determinations of state public service commissions for compliance with both federal law and state law.

The Federal Telecommunications Act of 1996 (“Act”) provides, “[i]n any case in which a State commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of this title and this section.” 47 U.S.C. § 252 (e)(6). The Sixth Circuit has clearly recognized that a federal court exercising jurisdiction under § 252 may review a state commission’s determination for compliance with federal law. However, this court has not decided whether § 252 authorizes federal courts to review a state commission’s determination for compliance with state law. 1

The Supreme Court, although expressly declining to interpret the scope of § 252(e)(6) jurisdiction, has recognized that federal courts have jurisdiction to review state commission decisions interpreting or enforcing interconnection agreements for compliance with federal law under 28 U.S.C. § 1331 . 2 Verizon Md. Inc. v. Pub. Serv. Com’n of Md., 535 U.S. 635 , 122 S.Ct. 1753, 1758 , 152 L.Ed.2d 871 (2002). Because § 252(e)(6) neither “establishes] a distinctive review mechanism for the commission actions that it covers” nor “displays any intent to withdraw federal jurisdiction under § 1331,” the Supreme Court saw no need to rely on § 252 for jurisdiction over a federal question. Id. at 1759. As the Court explained, “even if § 252(e)(6) does not confer jurisdiction, it at least does not divest the district courts of their authority under 28 U.S.C. § 1331 to review the Commission’s order for compliance with federal law.” Id. at 1758 . Thus, the Court concluded that federal courts can review for compliance with federal law both state commission decisions accepting an interconnection agreement and decisions interpreting or enforcing an already accepted interconnection agreement. Verizon Maryland did not address whether such decisions are also reviewable for compliance with state law.

The Supreme Court’s decision to rely on § 1331 rather than § 252(e)(6) as a basis for jurisdiction suggests that federal courts may be able to exercise supplemental jurisdiction over any state law issues related to a particular federal question about a state commission’s treatment of an *362 interconnection agreement. The supplemental jurisdiction statute, 28 U.S.C. § 1367 , provides, “in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” State and federal claims arising from a state commission’s interpretation of an agreement clearly arise from a “common nucleus of operative facts” and are such that a plaintiff would expect to try them in one judicial proceeding. United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 , 86 S.Ct. 1130 , 16 L.Ed.2d 218 (1966). Thus, supplemental jurisdiction would properly establish a basis for federal review of state law claims related to a determination of whether a state commission decision is in compliance with federal law.

However, as state commissions have emphasized, they have Eleventh Amendment immunity against state law claims brought in federal court. Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 106 , 104 S.Ct. 900 , 79 L.Ed.2d 67 (1984). In McNeilus Truck and Manufacturing, Inc. v. Ohio, 226 F.3d 429 (6th Cir.2000), we recognized that this is true even where a federal court would otherwise have supplemental jurisdiction over a state law claim. Id. at 438 . Therefore, under the Sixth Circuit’s precedent, a federal court cannot exercise supplemental jurisdiction to assess the correctness of a state commission’s interpretation of an interconnection agreement on any state law ground, even where the court has federal question jurisdiction over a related claim.

Because Sixth Circuit precedent precludes federal courts from exercising supplemental jurisdiction to consider any state law claims pertaining to a state commission’s determination, we must revisit the issue that the Supreme Court explicitly left unresolved in Verizon Maryland —the scope of § 252. Specifically, we must decide whether the text of “§ 252 implicitly encompasses the authority to interpret and enforce an interconnection agreement that the commission has approved” and whether “an interpretation or enforcement decision is therefore a ‘determination under [§ 252]’ subject to federal review.” Verizon Md., 122 S.Ct. at 1758 . Assuming that interpretation decisions are § 252 determinations, we must also decide the effect of § 252(e)(6)’s statement about the purpose of federal review in § 252(e)(6). The Act permits actions in federal court “to determine whether the agreement or statement meets the requirements of section 251 of this title and this section.” 47 U.S.C. § 252 (e)(6). I believe that (1) a state commission’s interpretation decision is a “determination under [§ 252],” and (2) federal review for compliance with state law is contemplated by the purpose of determining whether a state commission’s order meets the requirements of §§ 251-252 because § 252(e)(6) provides that such review may begin with consideration of the interconnection agreement in question.

The Sixth Circuit has already recognized that § 252 “gives the state commission authority to interpret and enforce agreements when post-approval disputes arise.” Mich. Bell Tel. Co. v. Strand, 305 F.3d 580 , 583 (6th Cir.2002) (citing 47 U.S.C. § 252 (c), (e)(1) and (2) as the basis for this authority). The Federal Communications Commission (“FCC”), the agency charged with implementing the Act, BellSouth Telecommunications, Inc. v. MCImetro Access Transmission Services, Inc., 317 F.3d 1270, 1276 (11th Cir.2003) (en banc), has likewise recognized that a state commission’s § 252 responsibilities include the interpretation and enforcement of inter *363 connection agreements. In re Starpower Communications, LLC, 15 F.C.C.R. 11277, 11280, ¶ 7 (2000) (finding that “the Virginia Commission ‘failed to act to carry out its responsibility’ under section 252” by declining to interpret and enforce Starpower’s interconnection agreements). The FCC’s interpretation of the statute supports the conclusion that state commissions may interpret agreements within the purview of § 252.

Moreover, “[n]o court has held or suggested that a state commission does not have the authority to interpret and enforce interconnection agreements after they have been approved.” BellSouth Telecomms., Inc. v. MCImetro Access Transmission Seros., Inc., 317 F.3d at 1276 . In fact, several other circuits have held that, by giving state commissions the power to accept or reject interconnection agreements, § 252 necessarily implies their authority to interpret and enforce such agreements. S.W. Bell Tel. Co. v. Brooks Fiber Communications of Okla., Inc., 235 F.3d 493, 497 (10th Cir.2000); S.W. Bell Tel. Co. v. Connect Communications Corp., 225 F.3d 942 , 946 (8th Cir.2000); MCI Telecomms. v. Ill. Bell Tel. Co., 222 F.3d 323 , 337-38 (7th Cir.2000), cert. denied, 531 U.S. 1132 , 121 S.Ct. 896 , 148 L.Ed.2d 802 (2001); S.W. Bell Tel. Co. v. Pub. Util. Com’n of Tex., 208 F.3d 475, 479-80 (5th Cir.2000). Thus, it seems clear that interpretation is a determination under § 252, and that a federal court has jurisdiction over a state commission decision interpreting an interconnection agreement pursuant to § 252(e)(6).

Federal courts therefore have § 252(e)(6) jurisdiction to review a state commission’s interpretation of an agreement, although it is not clear whether that jurisdiction permits review of the interpretation for compliance with state law. After all, the Act specifically permits aggrieved parties to bring a federal action for a specific purpose — “to determine whether the agreement or statement meets the requirements of section 251 of this title and this section.” 47 U.S.C. § 252 (e)(6). The circuits have split on whether § 252(e)(6) should be interpreted broadly or narrowly, but those circuits recognizing only jurisdiction to review a state commission determination for compliance with federal law rely heavily on this “purpose clause.” Unfortunately, none of the circuits on either side of the split offer a persuasive, reasoned explanation for their conclusions about the scope of federal jurisdiction under the Act.

The First and Seventh Circuits have held that federal courts have § 252 jurisdiction only to review a state commission’s determination for compliance with federal law, not state law. The First Circuit relied on the purpose language of § 252(e)(6) to support this conclusion, reasoning that there would have been little need to include this language “[i]f Congress had intended federal courts’ review to encompass any kind of alleged legal flaw in a state commission’s determination.” P.R. Tel. Co. v. Telecomms. Regulatory Bd. of P.R., 189 F.3d 1, 14 (1st Cir.1999) (noting that this interpretation is also consistent with the Act’s general scheme of cooperative federalism). The Seventh Circuit similarly concluded that Congress included this language “to clarify that federal courts may review a state commission’s actions with respect to an agreement only for compliance with the requirements of § 251 and § 252 of the Telecommunications Act, and not for compliance with state law.” MCI Telecomms. Corp. v. Ill. Commerce Comm’n, 168 F.3d 315 , 320 (7th Cir.1999) (also interpreting the Act to envision suits reviewing “actions” by state commissions rather than “[r]eview of interconnection agreements” themselves).

*364 By contrast, the Fifth and Ninth Circuits have recognized federal jurisdiction to review state commission decisions for compliance with state law. 3 S.W. Bell Tel. Co. v. Pub. Util. Com’n of Tex., 208 F.3d 475, 481-82 (5th Cir.2000); U.S. West Communications v. MFS Intelenet, Inc., 193 F.3d 1112 , 1117 (9th Cir.1999), cert. denied, 530 U.S. 1284 , 120 S.Ct. 2741 , 147 L.Ed.2d 1005 (2000). In reaching this conclusion, the Fifth Circuit discussed the purpose language of § 252 and the First and Seventh Circuits’ arguments for reading this language narrowly, but ultimately did not explain its decision to adopt “the broader view, considering de novo whether the agreements comply with sections 251 and 252, and reviewing ‘all other issues’ under an arbitrary-and-capricious standard.” S.W. Bell Tel. Co., 208 F.3d at 482 . Similarly, the Ninth Circuit emphasized the purpose language of the statute when discussing the standard of review under § 252(e)(6), but offered no explanation for its decision to “consider[ ] de novo whether the agreements are in compliance with the Act and the implementing regulations ... and considering all other issues under an arbitrary and capricious standard.” U.S. West Communications, 193 F.3d at 1117.

Because the circuits that have addressed the scope of § 252 jurisdiction have failed to offer persuasive explanations for their conclusions, we are left to interpret the statute for ourselves. We have recognized that under § 252(e)(6), “this court’s review of [a state commission’s] order is limited to determining whether the order is inconsistent with sections 251 and 252 of the Act.” 4 Mich. Bell Tel. Co. v. Strand, 305 F.3d at 586. However, this recognition ignores an important component of federal review under § 252(e)(6). Section 252(e)(6) explicitly contemplates not only federal review of the state commission’s order interpreting an interconnection agreement, but also federal review of the agreement itself. The statute provides, “[i]n any case in which a State commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of this title *365 and this section.” 47 U.S.C. § 252 (e)(6). The purpose clause refers not to evaluating the commission’s determination for compliance with § 251 and § 252, but rather to evaluating the agreement or statement for compliance with § 251 and § 252. The phrase “agreement or statement” refers to the interconnection agreements discussed throughout § 252 and the “[statements of generally available terms” discussed in § 252(f). See MCI Telecomms. Corp. v. BellSouth Telecomms., Inc., 112 F.Supp.2d 1286 , 1290 n. 6 (N.D.Fla.2000), aff'd, 298 F.3d 1269 (11th Cir.2002). Thus, although § 252(e)(6) refers to an aggrieved party’s action to challenge the state commission’s interpretation of an interconnection agreement, it also authorizes federal judicial review of the agreement itself.

The language of § 252(e)(6) suggests that Congress believed meaningful federal judicial review of a state commission’s interpretation of an agreement may require consideration of the agreement itself. 5 Because Congress decided that federal courts can consider the agreement itself, allowing federal judicial review of a state commission’s state law determinations is consistent with the Act’s vision of cooperative federalism. Cooperative federalism permits “state commissions [to] exercise their expertise about the needs of the local market and local consumers” even as they “are guided by the provisions of the Act and by the concomitant FCC regulations and checked by federal court review for consistency with these federal provisions.” P.R. Tel. Co., 189 F.3d at 14 (citations omitted). Allowing federal courts to exercise the jurisdiction specifically afforded to them by the Act cannot possibly upset the contemplated scheme of cooperative federalism. In fact, because the Act specifically authorizes federal judicial review of interconnection agreements, and thus implicitly allows review of the state commission’s interpretation of those agreements under state law, federal review for compliance with state law actually furthers cooperative federalism.

Even as the telecommunications regime leaves room for states to rely on and experiment with state law, “the Act’s judicial review provisions provide a proceduralist check — even with a deferential review of substantive decisions — that will help to ensure that the state agencies undertake a reasoned consideration of the issues presented to them.” Philip J. Weiser, Chevron, Cooperative Federalism, and Telecommunications Reform, 52 Vand. L.Rev. 1, 37 (1999). Federal consideration of interconnection agreements will not prevent states from considering matters of state law; it will only ensure that they do so reasonably. Because we only want to ensure that state commissions reasonably apply state law, federal courts must give deference to a state commission’s resolution of state law issues. 6 See MCI Tele- *366 comms. Corp. v. BellSouth Telecomms., Inc., 112 F.Supp.2d at 1290 (“Although some level of review of state commission action may be necessary to render meaningful the district court’s review for compliance with the Act’s legal requirements, the omission of any provision for review for any other purpose suggests that, within the bounds of the Act’s legal requirements, review should be deferential.”). This accords with the approaches taken by other circuits that recognize federal jurisdiction to review state commission orders for compliance with state law. S.W. Bell Tel. Co. v. Pub. Util. Com’n of Tex., 208 F.3d at 482 ; U.S. West Communications, 193 F.3d at 1117.

In sum, the Act gives federal courts jurisdiction to evaluate the determinations of state commissions for compliance with state law. The jurisdictional grant of § 252(e)(6) explicitly allows federal courts to review not only a state commission’s determination, but also the agreement interpreted by that determination. By allowing federal courts to consider the agreement, the Act necessarily permits federal review of a state commission’s interpretation of the agreement under state law. Although the Act contemplates federal jurisdiction to review state law determinations, we should review such determinations only to determine whether the state commission’s interpretation of state law is arbitrary and capricious. See S.W. Bell Tel. Co., 208 F.3d at 482 ; U.S. West Communications, 193 F.3d at 1117.

. Federal courts have generally recognized that the interpretation of an interconnection agreement is governed by state contract law, not federal law. See, e.g., Ill. Bell Tel. Co. v. Worldcom Techs., Inc., 179 F.3d 566 , 574 (7th Cir.1999), cert. denied, 535 U.S. 1107 , 122 S.Ct. 2318 , 152 L.Ed.2d 1071 (2002).

. "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331 .

. The Eleventh Circuit has also said that state commission interpretations of agreements are subject to federal review under § 252. BellSouth Telecomms., Inc. v. MCImetro Access Transmission Servs., Inc., 317 F.3d 1270, 1279 (11th Cir.2003) (en banc). However, the Eleventh Circuit did not decide whether § 252 permits federal review of state law claims, instead concluding that federal courts can exercise pendent jurisdiction to consider state law issues related to a state commission order. Id. at 1278.

The Fifth Circuit claims that the Fourth Circuit "would permit district courts to consider de novo whether the agreements are in compliance with the Act and the implementing regulations, but ... review all other issues decided by a state commission under a more deferential standard.” S.W. Bell Tel. Co. v. Pub. Util. Com’n of Tex., 208 F.3d at 482 . The Fourth Circuit, however, has not interpreted § 252(e)(6) to permit federal judicial review of state commission orders for compliance with state law. Rather, the Fourth Circuit held that it reviews de novo a state commission’s interpretations of the Act and reviews the commission’s factfinding under the substantial evidence standard. GTE S., Inc. v. Morrison, 199 F.3d 733 , 745 (4th Cir.1999).

. This statement reflects no judgment about whether federal courts can review state law questions, such as the interpretation of an interconnection agreement, under § 252(e)(6). In Michigan Bell, this court . explained that it did not interpret the agreement’s terms because the plaintiff had withdrawn its arguments that the state commission order erroneously interpreted the agreement as a matter of state law. 305 F.3d at 585 n. 10. This court did not indicate whether it would have been proper to interpret the agreement had the plaintiff not withdrawn its state law claims.

. The Fifth, Ninth, and Eleventh Circuits have assumed as much, without explaining their assumption. S.W. Bell Tel. Co. v. Pub. Util. Com’n of Tex., 208 F.3d 475, 481-82 (5th Cir.2000); U.S. West Communications v. MFS Intelenet, Inc., 193 F.3d 1112 , 1117 (9th Cir.1999); BellSouth Telecomms., Inc., v. MCImetro Access Transmission Servs., Inc., 317 F.3d at 1277 (“[T]he language of § 252 persuades us that in granting to the public service commissions the power to approve or reject interconnection agreements, Congress intended to include the power to interpret and enforce in Hns first instance and to subject their determination to challenges in the federal courts.”).

. Naturally, we also give deference to a commission’s factual determinations: "[W]e join our sister circuits in applying the 'arbitrary and capricious’ standard.” Mich. Bell Tel. Co. v. Strand, 305 F.3d at 586-87 (noting that under this standard a "decision [must] be upheld if it is the result of a deliberate principled reasoning process, and if it is supported by substantial evidence”).