MCI Telecommunications Corp. v. Illinois Commerce Commission

168 F.3d 315
CourtCourt of Appeals for the Seventh Circuit
DecidedFebruary 10, 1999
DocketNos. 98-2127, 98-2256
StatusPublished
Cited by7 cases

This text of 168 F.3d 315 (MCI Telecommunications Corp. v. Illinois Commerce Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
MCI Telecommunications Corp. v. Illinois Commerce Commission, 168 F.3d 315 (7th Cir. 1999).

Opinion

RIPPLE, Circuit Judge.

The plaintiff telephone companies brought this action against the Illinois Commerce Commission and various individual Commissioners. The companies alleged violations of the Telecommunications Act of 1996 in connection with the defendants’ arbitration and approval of the companies’ interconnection agreements.1 The defendants now seek review of the district court’s denial of their motions to dismiss each case on Eleventh Amendment grounds. For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I

BACKGROUND

A. The Statutory Scheme

Congress enacted the Telecommunications Act of 1996 (“the Act”) “[t]o 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.” Pub.L. No. 104-104,110 Stat. 56, 56 (1996). The Act seeks to introduce competition into local telephone service markets by ending the historic monopoly held by incumbent local exchange carriers (“LECs”). Congress recognized that, even after the removal of regulatory restrictions on competition, significant economic barriers would remain to block entry into local telephone markets. Prospective market entrants would face the cost of duplicating an incumbent provider’s local network infrastructure. To remove this economic barrier, the Act essentially requires incumbent LECs to share their networks with competitors. Section 251 of the Act requires incumbent LECs to allow new entrants to interconnect with existing local networks, to lease elements of existing local networks at reasonable rates, and to purchase the incumbents’ services at wholesale rates and resell those services to retail customers. See 47 U.S.C. § 251.

Section 252 sets out the process by which incumbent LECs and prospective carriers establish interconnection agreements. First, incumbent LECs and prospective carriers must negotiate in good faith to reach voluntary interconnection agreements. At any time during the negotiations, a party may ask a state commission to participate as a mediator in the negotiations. See 47 U.S.C. § 252(a)(2). If negotiations prove unsuccessful, subsection 252(b) provides for compulsory arbitration of any open issues. During the period from the 135th to the 160th day after an incumbent LEC receives a request for negotiation, any party to the negotiation may petition a state commission to arbitrate any open issues. Sections 251 and 252 establish certain standards that the state commission must follow in resolving open issues by arbitration and in imposing conditions on the parties. The state commission is also bound by FCC regulations issued pursuant to § 251.

Subsection 252(e) requires any interconnection agreement reached by negotiation or arbitration to be submitted to the state commission for approval and specifies the grounds on which a state commission can reject an agreement. Subsection 252(e)(5) further provides that, if a state commission fails to carry out any of its responsibilities under this section, then the FCC will preempt the state commission’s jurisdiction, assume responsibility for the proceeding, and act for the state commission in carrying out its functions.

An implementing regulation to § 252 provides that a state commission “fails to act” for purposes of subsection 252(e)(5) — thus prompting the FCC to step in and assume the state commission’s responsibilities — if it fails to respond within a reasonable time to a [318]*318request for mediation or a request for arbitration, or if it fails to complete an arbitration within the established time limits. See 47 C.F.R. § 51.801. A state commission will not be deemed to have failed to act, however, if it merely fails to approve or reject an agreement within the established time limits. See id. In such a case, the agreement will be deemed approved. See 47 U.S.C. § 252(e)(4).

Therefore, subsections 252(e)(4) and (e)(5), taken together and read in conjunction with the FCC regulation, create a scheme that provides regulatory oversight of interconnection agreements, either by a state commission or by the FCC in its place. Only one scenario, not present in this case, appears to be an exception to this scheme: when the parties reach a voluntarily negotiated agreement without any request for mediation or arbitration and the state commission fails to act to approve or reject the agreement. When these two circumstances occur, the resulting agreement will be deemed approved by the state commission, see § 252(e)(4); the FCC will not step in to assume the approval function. In all other cases, either a state commission or the FCC will exercise regulatory oversight over the interconnection agreement process.

Finally, subsection 252(e)(6), titled “Review of state commission actions,” provides that whenever a state commission fails to act, the exclusive remedies for that failure to act will be proceedings by the FCC and any judicial review of the FCC’s actions. It further provides that “[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 and this section.”

B. The Litigation in the District Court

MCI filed suit against the Illinois Commerce Commission and various individual Commissioners in their official capacities. It alleged that they had violated certain sections of the Act when conducting arbitration proceedings and approving the terms of MCI’s interconnection agreement with Amer-itech. In the MCI case, Ameritech filed a cross-claim against the Commissioners asserting a similar claim. Ameritech also filed its own action against the Commissioners challenging their approval of two negotiated agreements between Ameritech and other telecommunications carriers. MCI and Am-eritech sought declaratory and other equitable relief.

The defendants moved to dismiss the plaintiffs’ claims on Eleventh Amendment sovereign immunity grounds. The defendants argued that the Act could not abrogate the states’ immunity. They also submitted that Illinois had not explicitly authorized waiver of its immunity through any statute or constitutional provision. The defendants further contended that their participation in the arbitration and review process under the Act did not constitute waiver of sovereign immunity because no provision of the Act required the state to submit to suit as a condition for exercising the authority granted it.

The plaintiffs argued that Congress had conditioned state commissions’ participation in the arbitration and approval process on their submission to federal court jurisdiction. Thus, they argued, the defendants waived any Eleventh Amendment immunity when they elected to implement the federal regulatory scheme set forth in the Act with full knowledge that their determinations would be reviewable exclusively in federal court.

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Bluebook (online)
168 F.3d 315, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mci-telecommunications-corp-v-illinois-commerce-commission-ca7-1999.