Amicus Curiae Brief — Verizon Maryland Inc. v. Public Service Commission of Maryland

re .

5 '

OCT 25 2001

Nos. 00-1531 and 00-1711

IN THE

Supreme Court of the United States

VERIZON MARYLAND INC.,

Petitioner,

Vv.

PUBLIC SERVICE COMMISSION OF MARYLAND, ET AL.,

Respondents.

UNITED STATES OF AMERICA,

Petitioner,

On Writs of Certiorari

To The United States Court of Appeals

For The Fourth Circuit

BRIEF AMICUS CURIAE OF

THE VIRGINIA STATE CORPORATION COMMISSION

WILLIAM H. CHAMBLISS

(Counsel of Record)

JOSEPH W. LEE II

Virginia State Corporation Commission

1300 East Main Street, 10th Floor

Richmond, Virginia 23219

(804) 371-9671

'BEST AVAILABLE COPY

TABLE OF CONTENTS

QUESTION PRESENTED IN NOS. 00-1531 &

IPE 9G 6 ccesessasacesenncevsessensennsnenssssscenscsensesnsssasnssonsnnsencedhosssseenees 2

STATEMENT OF AMICUS INTERES T.............::cccceeseeeeeeees 2

i TE 5

FITS cnnnesscencesessesnamnenssnemmesssesseneenemnesanneeeneee 8

I. Federal Courts Do Not Have General

Federal Question Jurisdiction To

Determine Whether State Commission

Determinations Violate The 1996 Act

EAE eee 8

A. There Is No Private Cause Of Action

gS Ee ee 9

Il. The Rooker-Feldman Doctrine Was

Properly Applied By The Fourth

SET Cee ee Sn 15

TESTS SI one ane a ee oO 18

TABLE OF AUTHORITIES

CASES

Aetna Inc. Co. v. Chicago RI & PR Co., 229 F.2d 584

(90 Cis. 89D E)....10:scsxsscenserssessiennssectaiinai 8

American Well Works Co. v. Layne & Bowber Co.,

re FT nn 8

Blatchford v. Noatak, 501 U.S. 775 (1991) .....cccccccceeseeeeeeees 7

Burgio and Campofelice, Inc. v. NYS Dept. of Labor,

067 F368 BESO. GEG Git. BFF) cccccsecessstvennintsscsnnieummaaniie 12

California v. Sierra Club, 451 U.S. 287 (1981)..........000000 11

Cont v. Ashe, 423 UB. G6 (0D FED cccsesssssccnntonsinessaninimmniuans 9, 11

District of Columbia Court of Appeals v. Feldman,

SGD UB. SEB CRIBB ccccccccscsscscssvecessessnnsemeuanal 13

FERC v. Mississippi, 456 U.S. 742 (1982) ........cccceccceeeseeees 15

GTE South Inc. v. Morrison, 6 F. Supp. 2d 517 (E.D.

Va. 1998), aff'd 199 F.3d 733 (4th Cir. 1999)... 3

In the matter of Petition of AT&T Communications of

Virginia, Inc., For preemption of jurisdiction of

the Virginia State Corporation Commission

pursuant to § 252(e)(5) of the Telecommunications

Act of 1996, CC Docket No. 00-251, DA 01-198,

2001 WL 62694 (F.C.C. January 26, 2001)... 4

Louisiana Landmarks Soc. Inc. v. City of New

Orleans, 85 F.3d 1119 (5 Cir 1996)........scessesssesesnessneeeses 9

Northwest Airlines, Inc. v. Transport Workers Union,

4351 U.S. 77 (8GB1)..ccccccccssesscnssenentestsenstiensaanaaanaa 9

Petition of Starpower Communications, LLC, For

declaratory judgment and _ enforcement of

interconnection agreement with Bell Atlantic-

Virginia, Inc., Case No. PUC990156, 2000 S.C.C.

Ns te cnccsncscenctesensanensenensnsssnssccsvesccsceseccsssecssessaes

Petition of Starpower Communications, LLC, For

declaratory judgment interpreting interconnection

agreement with GTE South, Inc., Case

No. PUC990023; and Petition of Cox Virginia

Telecom, Inc. v. GTE South Incorporated, For

enforcement of interconnection agreement for

reciprocal compensation for the termination of

local calls to Internet Service Providers, Case

No. PUC990046, 2000 S.C.C. Ann. Rep. 263..............

Prentis v. Atlantic Coast Line Co., 211 U.S. 210

Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) 12, 13, 14, 1

Scripps-Howard Radio, Inc. v. Federal

Communications Commission, 316 U.S. 4 (1942).......

Smith v. Kansas City Title & Trust Co., 255 U.S. 180

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.

SR a ccncnesncnscnssenecccsnsenccsevescsscsscnsvecsccenevcssescccssveeeee

Western Airlines, Inc. v. Port Authority of New York

and New Jersey, 817 F.2d 222 (2™ Cir. 1987),

cert. denied, 485 U.S. 1006 (1988)..........ccccccccceeeseeeees

STATUTES

Code of Virginia § 56-38, et SO. ............ccscseseseeeeeeseeeeeeneeees 3

BD AIK © CRG cccsccsessensnszscanssscsasssszsnssensemessmmnesnsssonmsanenss 13

BD GBA. © CSG ccccsesscsnssereseszasmscsscsssvsasemssssesssnnenss 7, 8, 12, 13

Sd 13

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Ge GBA. B FOG cccsccsnsscsssasssressssnssumnssessnssssssensesssessanssensssse 6

Go GSEs. © FR pe ccnczszsnscsczsnssnssnssnccsnssnesemnsnsenssessensnsemmnstee 6

Gr GK. © Fe crccccnsccsssscsemesnemeeeeeemsmn 6

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Re 6

47 U.S.C. §§ 251(c)(4) and (6); 251(d)(3); 251(f),

252, 253(b) and (f), 254 and 261(C)............ccccceeeeeeeeeeeees 12

Re 12

Sa UB. § FGA ccccscnsssccessrssccssasssssssnssesnssscnsncestemnes 6

Ge DBA. © FIRED ccscceszssscssssssssecssavenssnvvevesnessnvensnscsmsasssse 10

Ga AGB. GD FOGG ccrcccsscsccssscsscssssecsssnsnsencrsnssnesensesnssssnaneen 6

Ga GBA... § BPO ccecesscssscssenscssessnssscssnssscssessessssennsssuvessessnsssvsst 10

Can 68 VaeeeED © 62.2- 8D nccesesssssssssssssnsecsscssssnessessecssstsceese 15

Pub. L. No. 104-104, 110 Stat. 56............ccccccesscesseeeeereneeseenes 5

iv

REGULATIONS

Virginia Administrative Code § 20 VAC 5-400-180............ 4

Virginia Administrative Code § 20 VAC 5-400-

BD © D GIG secscsszsassvevasssszszsensevsnssnsnessesnenensnssnssnssessoseanesss 4

Common Carrier Competition Report, CC Report

No. 96-9, FCC, Common Carrier Bureau, 1996

WL 164625 (F.C.C. April 10, 1996)............ccccccceeeeeeeees 5

H.R. Rep. No. 204, 104" Cong., 2™ Sess. 4748,

reprinted in U.S.C.C.A.N. (March 1996) ..............c000000 10

S. Rep. No. 23, 104" Cong., 1" Sess. 1995

ee 11

Telecommunications Act of 1996, Pub. L. No. 104-

104, purpose statement, 1 10 Stat. 56 (1996)................... 10

CONSTITUTIONAL PROVISIONS

United States Constitution, Eleventh Amendment................ 3

We, GRR.,, AID, Tip SOB Ey 68 GIG cecscsccsssscnsecssensnsemseccscessssese 3

IN THE

Supreme Court of the United States

VERIZON MARYLAND INC.,

Petitioner,

v.

PUBLIC SERVICE COMMISSION OF MARYLAND, ET AL.,

Respondents.

UNITED STATES OF AMERICA,

Petitioner,

On Writs of Certiorari

To The United States Court of Appeals

For The Fourth Circuit

BRIEF AMICUS CURIAE

The interest of the Commission in this proceeding is

that of a State agency that, pursuant to State constitutional

authority and legislation, has the authority to regulate the

ielecommunications industry in the Commonwealth of

Virginia. The Commission’s views are not adequately

represented by petitioners, respondents or other parties. It is

believed that the views contained herein will provide a more

complete view of the Constitutional and statutory issues

involved.

Respectfully submitted,

WILLIAM H. CHAMBLISS

General Counsel

JOSEPH W. LEE III

Attorney

VIRGINIA STATE

CORPORATION COMMISSION

Post Office Box 1197

Richmond, Virginia 23218

(804) 371-9671

Counsel of Record

Counsel for Amicus Curiae the

Virginia State Corporation

Commission

QUESTION PRESENTED IN NOS. 00-1531 & 00-1711

Whether a federal district court has subject-matter

jurisdiction under 28 U.S.C. § 1331 to determine whether a

state public utility commission’s order interpreting or

enforcing an interconnection agreement violates the

Telecommunications Act of 1996?

STATEMENT OF AMICUS INTEREST'

The Virginia State Corporation Commission is a

State administrative body created by the Constitution of

' Rule 37.6 Statement: William H. Chambliss, General Counsel to the

Virginia State Corporation Commission, is the author of this brief. No

person or entity other than the Virginia State Corporation Commission

has made a monetary contribution to the preparation or submission of

this brief.

Virginia and charged with, among other things, the

regulation of telecommunications entities within the

Commonwealth of Virginia. Va. Const., 4 *. [IX Sec. 1, et

seq. The Va. Commission continues to be involved in the

regulation of telecommunications entities and the creation of

competitive markets for the benefit of Virginia consumers.

The Constitution of Virginia and Virginia state law confer

upon the Commission the authority under state law to order

interconnection between carriers operating within the

Commonwealth and specifically § 56-38, et seg. of the Code

of Virginia authorizes the Commission, upon request of the

parties, "to effect, by mediation, the adjustment of claims,

and the settlement of controversies, between public service

companies, and their employees and patrons." After the

passage of the 1996 Act, the Va. Commission became

involved in the arbitration and interpretation of

interconnection agreements between competitive local

exchange companies ("CLECs"), seeking to enter the local

telephone market in Virginia and incumbent local exchange

companies ("ILECs").

In GTE South Inc. v. Morrison, 6 F. Supp. 2d 517

(E.D. Va. 1998), aff'd 199 F.3d 733 (4th Cir. 1999), the

Court held that the Commission in arbitrating

interconnection agreements pursuant to § 252 of the 1996

Act, waived any claims of sovereign immunity under the

Eleventh Amendment. Subsequently, the Va. Commission

has declined to waive sovereign immunity under the

Eleventh Amendment of the United States because it has not

been empowered by either the Constitution of Virginia or the

Code of Virginia to do so.” Consequently, the Va.

? Petition of Starpower Communications, LLC, For declaratory judgment

and enforcement of interconnection agreement with Bell Atlantic-

Virginia, Inc., Case No. PUC990156, 2090 S.C.C. Ann. Rep. 272;

Petition of Starpower Communications, LLC, For declaratory judgment

interpreting interconnection agreement with GTE South, Inc., Case

No. PUC990023; and Petition of Cox Virginia Telecom, Inc. v. GTE

, 3

Commission is no longer able to enforce § 252 of the Act for

arbitration since doing so imperils Virginia's sovereign

immunity. Nor does the Va. Commission approve

negotiated interconnection agreements under the 1996 Act,

but instead relies on state law authority.’ The Virginia State

Corporation Commission offers to conduct arbitration of

interconnection agreements pursuant only to existing state

law authority.’ At this time all telecommunications entities

offered this option by the Va. Commission have declined

said offer, and the Federal Communications Commission is

presently arbitrating a Virginia case.”

As the success of the opening of competitive markets

in the telecommunications industry is dependent upon a

well-functioning framework of interdependent regulatory

entities and the appropriate recognition to the decisions and

South Incorporated, For enforcement of interconnection agreement for

reciprocal compensation for the termination of local calls to Internet

Service Providers, Case No. PUC990046, 2000 S.C.C. Ann. Rep. 263.

* Therefore, the Virginia State Corporation Commission awaits this

Court's decision on the issue of a state commission's waiver of sovereign

immunity by participation in actions pursuant to § 252 of the 1996 Act.

It is reasonably believed that other state regulatory bodies are similarly

positioned, i.¢,, without express authority to waive the immunity of their

particular state.

* Virginia SCC Rules codified at 20 VAC 5-400-180 as "Rules governing

the offering of competitive local exchange telephone service" provide for

the authority to address interconnection issues under the authority of the

Virginia Code. Rules 20 VAC 5-400-180 F 5 and 6 specifically provide

for arbitration of contested issues.

> In the matter of Petition of AT&T Communications of Virginia, Inc.,

For preemption of jurisdiction of the Virginia State Corporation

Commission pursuant to § 252(e5) of the Telecommunications Act of

1996, CC Docket No. 00-251, DA 01-198, 2001 WL 62694 (F.C.C.

January 26, 2001).

authority of the State commissions, the Commission urges

this Court to sustain the orders below. The Court of Appeals

decision that no waiver of sovereign immunity occurred by

State commission participation in the regulation of

interconnection agreements is in accord with law and

Congressional intent. The Virginia State Corporation

Commission supports the position that State commissions

must retain the authority to render final orders or decisions

which possess full effect and finality under state law. The

Court should conclude that neither the 1996 Act nor § 1331

provide a basis for a finding of waiver of sovereign

immunity by a state commission fulfilling obligations

imposed by the 1996 Act.

SUMMARY OF ARGUMENT

In 1996, Congress enacted the Telecommunications

Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified at

47 U.S.C. § 251 et seg.) to open the local

telecommunications markets to competition.© The 1996 Act’

® At the time the 1996 Act was passed, 19 states had in place rules

opening the local exchange market to competition. In seven states,

competing firms already had begun to offer switched local service.

These states were California, Illinois, Maryland, Massachusetts,

Michigan, New York, and Washington. Competition rules were in place

in Arizona, Colorado, Connecticut, Florida, Georgia, lowa, Louisiana,

North Carolina, Ohio, Oregon, Tennessee, and Virginia. See, Common

Carrier Competition Report, CC Report No. 96-9, FCC, Common

Carrier Bureau 1996 WL 164625 (F.C.C. April 10, 1996) at page 3.

Particularly, the Virginia General Assembly amended § 56-265.4:4 of the

Code of Virginia to provide for competition in local exchange

telecommunications in 1995. The Va. Commission enacted rules

governing the provision of such services; codified at 20 VAC 5-400-180

as “Rules governing the offering of competitive local exchange telephone

service”.

” See, 47 U.S.C. §§ 251-261. The 1996 Act is codified throughout Title

47 of the United States Code. References to the 1996 Act are to the

relevant sections of the Code.

5

— ee eee ee

imposes a general duty on all telecommunications carriers to

interconnect with other telecommunications carriers. 47

U.S.C. § 251(a). With regard to ILECs, the duty to

interconnect is even more specifically defined by

§ 251(c)(2). (Cite to this assertion)

In conjunction with these interconnection obligations,

the 1996 Act requires all local exchange carriers to establish

reciprocal compensation arrangements for the transport and

termination of telecommunications. 47 U.S.C. § 251(b)(5).

For peposes of compliance with this subsection, the 1996

Act provides that such terms and conditions must provide for

the recovery by each carrier of costs associated with the

transport and termination on each carrier's network facilities

of calls that originate on the network facilities of the other

carriers. Further, such terms and conditions must determine

costs on the basis of a reasonable approximation of the

additional costs of terminating such calls. 47 U.S.C.

§ 252(d)(2)(A). However, ILECs may negotiate and enter in

a binding agreement with a requesting carrier without regard

to the standards set forth in subsections (b) and (c) of § 251.

As a State that has been in the forefront of the

development and opening of competitive markets in the

telecommunications industry,® the Commonwealth of

Virginia has an important stake in the protection of the

framework and relationship between the telecommunications

industry, the State commissions, and Federal courts created

under the 1996 Act. Virginia likewise has an equally

important stake in maintaining sovereignty over the

processes of its state judicial and regulatory bodies. The

federal district courts have only that jurisdiction that

Congress grants through statute. The federal district courts

do not possess subject-matter jurisdiction over suits that

* As of June, 2001, 200 competitive local exchange companies (CLECs)

have certificated in the Commonwealth of Virginia.

6

challenge, as contrary to federal laws, orders of state public

utility commissions interpreting or enforcing interconnection

agreements. Congress has not abrogated the State

commission’s sovereign immunity pursuant to 28 U.S.C.

§ 1331.

ARGUMENT

I. Federal Courts Do Not Have General

Federal Question Jurisdiction To

Determine Whether State Commission

Determinations Violate the 1996 Act

Under § 1331.

The Fourth Circuit held that 28 U.S.C. § 1331 does

not provide federal jurisdiction because Congress intended

federal jurisdiction to be limited to the grant in 47 U.S.C. §

252(e)(6).” Furthermore, the Court of Appeals held that "the

simple fact that interconnection agreements are "creations of

federal law" does not make their interpretation a sufficiently

substantial federal question to confer jurisdiction under 28

U.S.C. § 1331.""° Petitioners contend that the federal district

courts have jurisdiction under 28 U.S.C. § 1331.'' The Va

Commission maintains that the case before this Court does

not meet the requirements for jurisdiction under 28 U.S.C.

§ 1331.

* Bell Atlantic Maryland, Inc. v. MCI WorldCom Inc., et al., 240 F.3d

279, 309 (4th Cir. 2001).

Id. at 308.

'' Section 1331 provides in pertinent part, that "(tJhe district courts shall

have original jurisdiction of all civil actions arising under

the. . laws. . .of the United States.

'? The party seeking the federal forum must establish the basis for the

court's jurisdiction. Petitioners have failed to allege that the federal law

creates any cause of action. Jurisdiction may not be sustained on a

theory that the plaintiff does not advance. Healy v. Seagull Specialty

Co., 237 U.S. 479, 480 (1915).

—

The federal district courts have that jurisdiction

which Congress grants through statute. Because federal

question jurisdiction ultimately depends on an act of

Congress, the scope of the district courts’ jurisdiction

depends on the Congressional intent manifested in the statute

at issue.

Furthermore, § 1331 jurisdiction may be preempted

by a doctrine which requires jurisdiction to reside elsewhere.

Congress has not abrogated the State commission's sovereign

immunity pursuant to § 1331. The Supreme Court has

expressly held that § 1331 does not suffice to abrogate

immunity for all federal questions. Blatchford v. Noatak,

501 U.S. 775, 786 (1991). In light of this statement, no

reasonable argument could be made that § 1331 constitutes

an abrogation of state immunity.

A. There is no private cause of action under the 1996

Act

Even though Congress has conferred general federal

question jurisdiction on the federal district courts under 28

U.S.C. § 1331 in terms similar to the constitutional

provision, the term "arising under" in the statute is narrower

than the similarly defined constitutional power. Verlinden

B.V. v. Central Bank of Nigeria, 461 U.S. 480, 495 (1983).

Because federal question jurisdiction ultimately depends on

an act of Congress, the scope of the district courts’

jurisdiction depends on the Congressional intent manifested

in the statute at issue. As this Court has held, "the source of

plaintiffs rights must be found...in the substantive

provisions of the. . .Act which they seek to enforce. . .Touche

Ross & Co. v. Reddington, 442 U.S. 560, 577 (1979).

Section 1331 should be construed strictly and all

doubts should be resolved in favor of State court jurisdiction.

Aetna Inc. Co. v. Chicago RI & PR Co., 229 F.2d 584, 586

9

(10" Cir. 1956). There are two tests under which an action

may present a federal question. The first asks whether

federal law creates the cause of action. If so, federal

question jurisdiction exits. American Well Works Co. v.

Layne & Bowber Co., 241 U.S. 257, 260 (1916). If state law

creates the cause of action, the second test asks whether that

cause of action poses a substantial federal questions. Smith

v. Kansas City Title & Trust Co., 255 U.S. 180, 201 (1921)."°

Courts begin with the presumption that if a statute

does not expressly create a private cause of action, one does

not exist. See, Louisiana Landmarks Soc. Inc. v. City of

New Orleans, 85 F.3d 1119, 1123 (5" Cir 1996). By now,

Congress is well aware of this presumption and how to craft

statutes that unequivocally do provide private remedies. See,

Touche Ross & Co. v. Redington, 442 U.S. 560, 572 (1979)

("Touche"). Appellants argument relies upon the erroneous

assumption that the existence of a federal statute

automatically gives rise to § 1331 jurisdiction.“

Under the settled framework for evaluating whether a

private cause of action may be inferred from a statute, the

factors considered include whether the plaintiff is part of the

class for whose special benefit the statute was passed; and

whether the indicia of legislative intent reveals a

congressional purpose to provide a private cause of action or

deny one; whether it is consistent with the underlying

legislative scheme to imply such a remedy; and whether the

'3 Since no state law claims are raised, this second test does not apply.

4 Petitioners contend in this appeal that if Congress had intended to

restrict the jurisdiction of the federal district courts, it would have

expressly precluded jurisdiction in the 1996 Act. This argument is

obviated by the fact that federal district courts are courts of limited

jurisdiction and only possess that jurisdiction granted expressly by

Congress.

10

cause of action is one traditionally relegated to state law, in

an area basically the concern of the States, so that it would

be inappropriate to infer a cause of action based solely on -

federal law. Cort v. Ash, 422 U.S. 66, 78 (1975) ("Cort").

Unless Congressional intent to create a private cause

of action can be inferred from the language of the statutory

structure, or some other source, the essential predicate for

implication of a private remedy simply does not exist.

Northwest Airlines, Inc. v. Transport Workers Union, 451

U.S. 77, 94 (1981). Whether Congress has created an

enforceable right is determined by its intent. Smith v. Kirk,

821 F.2d 980, 982 (4" Cir. 1987). Neither the language of

the 1996 Act nor its legislative history indicates that

Congress intended to create a private cause of action.

The legislative history of the 1996 Act establishes

that telecommunications entities were not intended to be

special beneficiaries of the statute enacted. The Acct itself

expresses Congress’ intent "to promote competition and

reduce regulation in order to secure lower prices and higher

quality services for American telecommunications

consumers and encourage the rapid deployment of new

telecommunications technologies." Telecommunications Act

of 1996, Pub. L. No. 104-104, purpose statement, 110 Stat.

56, 56 (1996). (cmphasis added) In its report concerning

the legislation, Congress specifically stated that:

. .. In order to secure lower prices and higher

quality services for American

result will be lower prices to consumers and

businesses, . . . a competitive edge for

enormous benefits to American businesses

and consumers from lifting the shackles of

monopoly regulation . . . -

11

H.R. Rep. No. 204, 104" Cong., 2” Sess. 4748, reprinted in

U.S.C.C.A.N. (March 1996) (emphasis added). Thus, it is

clear that the 1996 Act was enacted to benefit consumers

generally and was not intended to special’y »2nefit ILECs

such as BA-MD.

Furthermore, an examination of the legislative history

and statutory scheme presents no indication that Congress

intended to create a general private cause of action. No

language in the Act supports such an argument. There are

limited express grants of federal jurisdiction in the 1996

Act" but, as pertinent here, one such grant is limited'® to

suits brought by parties to interconnection agreements. 47

U.S.C. § 252(e)(6). Under § 252(e)(6), a district court's

review of a State Commission's approval or rejection of an

interconnection agreement is limited to whether the

agreement meets the requirements of §§ 251 and 252. Such

review is narrowly construed and does not cover other

aspects of a State Commission's decision, such as

consistency with State law, or matters covered in § 253. See,

Southwestern Bell Telephone, 225 F.3d 942. Therefore,

§ 252(e)(6) is a limited jurisdictional provision.

Aside from the narrow remedy contained in

§ 252(e)(6), the 1996 Act also explicitly provides for federal

'S Section 252(e)(6) provides, in pertinent part, in any case in which a

State Commission makes a determination under this section, any party

injured by such decision may bring an action in an appropriate Federal

district court to determine whether the agreement or statement meets the

requirements of Section 251.

"© The district courts have construed § 252(e)(6) narrowly. See, e.g.

Citizen's Utility Ratepayers Board v. McKee, 946 F. Supp. 89 (D. Kan.

1996) (Plaintiff is not an aggrieved party under § 252(e)(6); only the

interconnecting service provider or affected local exchange carriers has

standing.)

12

court jurisdiction in two other sections. Section 274 creates

federal jurisdiction in the electronic publishing area and

Section 207 creates the same jurisdiction over interstate

communications disputes. That Congress expressly provided

for a specific right of access to the federal courts in

§ 252(e)(6) and the other sections noted above is evidence

that when Congress wished to provide a private remedy, it

knew how to do so and did so expressly. Touche, 442 U.S.

at 572.

The conclusion that Congress did not intend to create

a private cause of action is further supported by the fact that

Congress considered but failed to include a private right of

action in the 1996 Act for violations of an interconnection

agreement. Section 257 of the Senate Bill expressly

provided for a general private right of action. S. Rep. No.

23, 104" Cong., 1" Sess., 1995 at 104-05 (March 30, 1995).

However, this provision was not enacted in the final

legislation. Congress’ express grant of federal rights of

action in the three sections of the 1996 Act while deleting a

general provision from the Senate Bill, demonstrates that

Congress did not intend to create an implied cause of action.

Consideration of the first two Cort factors is

dispositive. The language of the statute and its legislative

history do not suggest that the Act was intended to create

federal rights for the benefit of a class of persons but rather

was intended to benefit the public at large through a

regulatory scheme to be administered in large part by the

States. See, California v. Sierra Club, 451 U.S. 287, 298

(1981). Nor is there any evidence that Congress anticipated

that there would be a private remedy.

This being the case, it is unnecessary to inquire

further to determine whether the purpose of the statute would

be advanced by the judicial implication of a private action or

whether such a remedy is within the federal domain of

13

interest. These factors are only of relevance if the first two

factors give indication of Congressional intent to create the

remedy. /d., citing, Touche, 442 U.S. at 574-576.

The conclusion that the 1996 Act does not create a

private cause of action negates any claim of federal subject

matter jurisdiction.” In the absence of a federal statutory

cause of action, declaratory relief by a federal court is

available only when a federal statute totally precludes State

regulation of the matter being litigated. In other words, the

federal statute must have entirely occupied the field,

preventing any state regulation of matters within the scope of

the federal statute. Western Airlines, Inc. v. Port Authority

of New York and New Jersey, 817 F.2d 222, 225-26 (2™ Cir.

1987), cert. denied, 485 U.S. 1006 (1988). See, also Burgio

and Campofelice, Inc. v. NYS Dept. of Labor, 107 F.3d 1000,

1007 (2d Cir. 1997). A preemption cause of action for

declaratory relief is not an alternative means for enforcing

the substantive provisions of the federal statute. Western Air

Lines v. Port Authority of New York & New Jersey, 817 F.2d

at 225-26.

No reasonable argument could be made contending

that the 1996 Act entirely preempts state regulation of local

exchange service or local exchange carriers. Among a

variety of other things, § 252 requires a state commission to

determine wholesale rates in the context of an arbitration.

See, e.g., §§ 251(c)(4) and (6); 251(d)(3); 251(f), 252, 253(b)

and (f), 254 and 261(c).

This Court should find that the 1996 Act does not

create a private cause of action, nor does it “occupy the

field,” thereby preventing any state regulation of matters

'’ This Court held that the Federal Communications Act of 1934 "does

not create new private rights". See Scripps-Howard Radio, Inc. v.

Federal Communications Commission, 316 U.S. 4, 14 (1942).

14

a Gem ngage EE

falling within the scope of the federal statute. Given these

conclusions, the Court should hold that the district court did

not have jurisdiction pursuant to 28 U.S.C. § 1331 and

therefore uphold the decision of the Court of Appeals.

II. The Rooker-Feldman Doctrine Was

Properly Applied By the Fourth

Circuit.

The Rooker-Feldman doctrine stems from two

Supreme Court cases decided sixty years apart. In Rooker v.

Fidelity Trust Co., 263 U.S. 413 (1923), the Supreme Court

held that lower federal courts lack jurisdiction to entertain

appeals from state court judgments because that power is

reserved to the Supreme Court. In 1983, the Supreme Court

decided District of Columbia Court of Appeals v. Feldman,

460 U.S. 462 (1983), clarifying Rooker and giving the

Rooker-Feldman doctrine its name. In Feldman, the

Supreme Court held that lower federal courts have no

jurisdiction to hear "challenges to state court decisions in

particular cases arising out of judicial proceedings", /d. at

486, or decide questions “inextricably intertwined" with

State court judgments. Jd. at 483 n. 16.

The Rooker-Feldman doctrine is founded on two

main inferences derived from provisions of Title 28 of the

United States Code. The first inference is that 28 U.S.C.

§ 1257, which gives the Supreme Court appellate review of

certain State court decisions, is the only federal statute that

explicitly provides for federal review of state court decisions.

Congress granted original jurisdiction to federal district

courts under a variety of statutes, including 28 U.S.C.

§§ 1331 and 1332. Under this statutory scheme, federal

district courts are courts of original, not appellate

jurisdiction. Thus, by inference, 28 U.S.C. § 1257 granted

jurisdiction exclusively to the Supreme Court to review final

judgments or decrees from the highest court in a state. The

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second inference is that Congress intended to foreclose all

other forms of federal court review of state decisions.

Because Congress only gave the Supreme Court the explicit

authority to review the decisions of a state court, Congress

meant to deny all other federal courts that power.

Thus, the Rooker-Feldman doctrine is an extension of

the principle that federal courts are courts of limited

jurisdiction. Also underlying the Rooker-Feldman doctrine

is the idea of federalism. The doctrine is designed to

preserve the two distinct legal systems so that each may

proceed independently of the other with the Supreme Court

as the final arbiter of any federal questions raised in either

system. The policy reasons that underlie the doctrine apply

just as readily to state agency decisions rendered in quasi-

judicial proceedings as they do to State court decisions.

The Feldman Court found that the federal district

court was “without authority to review final determinations

of the [D.C. Court] in judicial proceedings. Review of such

determinations can be obtained only in this Court. See, 28

U.S.C. § 1257." Feldman, 460 U.S. at 476. In reaching this

conclusion, the Supreme Court analyzed the crucial question

whether the proceedings before the D.C. Court "were judicial

in nature” so as to bring these proceedings under the ambit of

Rooker.

The leading case relied upon by the Feldman Court

was Prentis v. Atlantic Coast Line Co., 211 U.S. 210 (1908),

where the Supreme Court acknowledge that your amici, the

Virginia State Corporation Commission, is at least for some

purposes, a court. 211 U.S. at 224. Prentis also held that:

A judicial inquiry investigates, declares and

enforces liabilities as they stand on present or

past facts and under laws supposed already to

exist .... Legislation on the other hand looks

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ateeel

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to the future and changes existing conditions

by making a new rule to be applied thereafter

to all or some part of those subject to its

power.

211 U.S. at 226. The Feldman Court agreed with the Prentis

finding that the question regarding whether a proceeding is

judicial in nature "depends not upon the character of the

body but upon the character of the proceedings.” 460 U.S. at

477. The Feldman Court found that the proceedings at issue

were judicial in nature because the tribunal "was called upon

to investigate, declare and enforce liabilities as they stood

on present or past facts and under laws supposed already to

exist." Feldman, 460 U.S. at 479. Consequently, the

Feldman Court ruled that the district court lacked subject

matter jurisdiction over applicants’ claims for individual

relief.

The Va. Commission has the powers of a court of

record to administer oaths, compel the attendance of

witnesses and production of documents, punish for contempt,

and enforce compliance with its orders through fines and

other penalties as prescribed or authorized by law.'® This

Court has recognized that state agencies perform judicial acts

in FERC v. Mississippi, 456 U.S. 742, 760-61 (1982). The

Rooker-Feldman doctrine preserves the autonomy of both

sovereigns and prevents undue incursions of federal courts

upon lower courts. The Fourth Circuit recognized the

judicial nature of state commissions’ proceedings and

properly found that federalism requires the federal district

courts to refrain from taking jurisdiction in cases involving

state commissions.

'§ Code of Virginia § 12.1-13.

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CONCLUSION

The judgment of the Court of Appeals for the Fourth.

Circuit should be affirmed.

Respectfully submitted,

WILLIAM H. CHAMBLISS

General Counsel

JOSEPH W. LEE Ii

Attorney

VIRGINIA STATE

CORPORATION COMMISSION

P.O. Box 1197

Richmond, Virginia 23218

(804) 371-9671

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