UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-30421
AT&T COMMUNICATIONS
Plaintiff - Appellant
v.
BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE
COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M
FIELD; JACK A BLOSSMAN; COMMISSIONER OF LOUISIANA PUBLIC SERVICE
COMMISSION, in their official capacities
Defendants - Appellees
_________________________________________________________________
AT&T COMMUNICATIONS OF THE SOUTH CENTRAL STATES, INC, also known
as AT&T
Plaintiff - Appellant
v.
BELLSOUTH TELECOMMUNICATIONS INC; LOUISIANA PUBLIC SERVICE
COMMISSION; DON OWEN, The Commissioners of the Louisiana Public
Service Commissioners in their Official Capacity; IRMA MUSE
DIXON, The Commissioners of the Louisiana Public Service
Commissioners in their Official Capacity; DALE SITTIG, The
Commissioners of the Louisiana Public Service Commissioners in
their Official Capacity; JAMES M. FIELD, The Commissioners of the
Louisiana Public Service Commissioners in their Official
Capacity; JACK A. BLOSSMAN JR, The Commissioners of the Louisiana
Public Service Commissioners in their Official Capacity
Defendants - Appellees
_________________________________________________________________
AMERICAN COMMUNICATION SERVICES OF LOUISIANA, INC; AMERICAN
COMMUNICATION SERVICES OF BATON ROUGE, INC; AMERICAN
1
COMMUNICATION SERVICES OF SHREVEPORT, INC
Plaintiffs - Appellants
v.
BELLSOUTH TELECOMMUNICATIONS INC; THE LOUISIANA PUBLIC SERVICE
COMMISSION; DON OWEN; IRMA MUSE DIXON; DALE SITTIG; JAMES M.
FIELD; JACK A. BLOSSMAN also known as Jay Blossom; COMMISSIONERS
OF THE LOUISIANA PUBLIC SERVICE COMMISSION, in their official
capacities
Defendants - Appellees
Appeals from the United States District Court
For the Middle District of Louisiana
January 16, 2001
Before POLITZ, SMITH, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
The issues in this case are (1) whether a telecommunications
carrier is barred by the Eleventh Amendment from bringing suit in
federal district court against a state public service commission
under Section 252 (e)(6) of the Telecommunications Act of 1996, 47
U.S.C. § 151, et seq. (1996 Act or Act), for judicial review of
whether the commission’s arbitration determination with respect to
an interconnection agreement meets the requirements of § 151 of the
Act and applicable FCC regulations; and (2) whether the carrier may
bring an action under the Ex parte Young doctrine in federal court
against the individual members of a state public service commission
in their official capacities for prospective relief from their
2
arbitration determination contrary to the requirements of § 251 of
the Act and its implementing regulations.1 The district court held
that the plaintiff telecommunications carriers were barred by
Eleventh Amendment immunity from bringing such actions and
dismissed their suits. We reverse and remand the case for further
proceedings in accordance with the 1996 Act and the Ex parte Young
doctrine.
In the 1996 Act Congress pre-empted the states in the
regulation of local telecommunications competition with regard to
all matters addressed by the Act. The Act offers state public
service commissions the option, however, of approving or rejecting,
pursuant to §§ 251 and 252 of the Act, any interconnection
agreement between carriers adopted by negotiation or arbitration.
If the state public service commission declines such offer in any
proceeding under the Act, the FCC is required to assume the
1
AT&T also contends that the Eleventh Amendment is not applicable
because the present case involves mere judicial review of the
record and is not a suit in law or equity against the Louisiana
Public Service Commission (“LPSC”) for purposes of the Eleventh
Amendment. We do not accept this argument. In the present case
AT&T Communications named the LPSC as a defendant, process was
served on it, and it was required to suffer the indignity of being
compelled to appear before a federal court.
A “suit in law or equity” exists against a sovereign state for
purposes of the Eleventh Amendment when a plaintiff has served
compulsory process upon that state as defendant in a matter. See
Missouri v. Fiske, 290 U.S. 18, 28 (1833); Cohens v. Virginia, 19
U.S. 264, 407-408 (1821). See also Puerto Rico Aqueduct and Sewer
Authority v. Metcalf & Eddy, Inc., 506 U.S. 139, 146 (1993) (“The
very object and purpose of the 11th Amendment were to prevent the
indignity of subjecting a State to the coercive process of judicial
tribunals at the instance of private parties.”) (citing In re
Ayers, 123 U.S. 443, 505 (1887)) (emphasis added).
3
responsibility of acting upon that matter. In a case in which the
state public service commission accepts the responsibility offered
and makes a determination under the Act, any party aggrieved by
such determination may bring an action in an appropriate federal
district court to determine whether the agreement meets the
requirements of §§ 251 and 252. The 1996 Act provides that no
state court shall have jurisdiction to review the action of a state
commission in approving or rejecting an agreement under the Act.
When the Louisiana Public Service Commission (LPSC) accepted
Congress’s offer to function as an arbitrator under the Act in
determining and approving the interconnection agreement in the
present case, the regulation of local telecommunications
competition and related interconnection agreements was no longer a
permissible or lawful activity within the states’ own powers. When
Congress bestows a gift or gratuity upon a state of a benefit which
cannot be obtained by the state’s own power, Congress may attach to
the gratuity the condition of a voluntary waiver by the state of
its Eleventh Amendment immunity. Consequently, the LPSC
voluntarily waived its state immunity when it accepted the
Congressional offer of a gratuity that was clearly conditioned upon
the LPSC’s amenability to federal suits by private parties under
the Act and arbitrated the interconnection dispute in the present
case.2
2
In this opinion, for convenience and hopefully some clarity,
we refer to all of the parties and non-parties which have adopted
4
The LPSC commissioners allegedly determined and approved an
interconnection agreement that violates the requirements of the
1996 Act, and the aggrieved carriers bound by the determination
seek prospective injunctive relief against the commissioners in
their official capacities to terminate further operation of the
agreement against them; therefore, the doctrine of Ex parte Young
permits the suit to proceed against the commissioners.
I. The Telecommunications Act of 1996
A. Background; Preemption of State Regulatory Jurisdiction
In AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366, 371-373
(1999), the Supreme Court succinctly described the context and
content of the 1996 Act:
Until the 1990s, local phone service was thought to
be a natural monopoly. States typically granted an
exclusive franchise in each local service area to a local
exchange carrier (LEC), which owned, among other things,
the local loops (wires connecting telephones to
switches), the switches (equipment directing calls to
their destinations), and the transport trunks (wires
carrying calls between switches) that constitute a local
exchange network. Technological advances, however, have
the position on appeal of plaintiff-appellant AT&T Communications
collectively as “AT&T.” This includes plaintiff-appellant American
Communications of Louisiana; defendant-appellant BellSouth; the
United States and the Federal Communications Commission (“FCC”),
intervenors; and Amicus Curiae Sprint Communications Company. In
certain instances we refer to AT&T Communications and American
Communications of Louisiana jointly as “AT&T Communications.”
AT&T Communications and American Communication Services of
Louisiana also appeal from the district court’s determination that
the LPSC is an indispensable party to this litigation. Our
reversal of the district court’s judgment moots the indispensable
party issue.
5
made competition among multiple providers of local
service seem possible, and Congress recently ended the
longstanding regime of state-sanctioned monopolies.
[The 1996 Act] fundamentally restructures local
telephone markets. States may no longer enforce laws
that impede competition, and incumbent LECs are subject
to a host of duties intended to facilitate market entry.
Foremost among these duties is the LEC’s obligation under
47 U.S.C. § 251(c) (1994 ed., Supp. II) to share its
network with competitors. Under this provision, a
requesting carrier can obtain access to an incumbent’s
network in three ways: It can purchase local telephone
services at wholesale rates for resale to end users; it
can lease elements of the incumbent’s network “on an
unbundled basis”; and it can interconnect its own
facilities with the incumbent’s network. When an entrant
seeks access through any of these routes, the incumbent
can negotiate an agreement without regard to the duties
it would otherwise have under § 251(b) or (c). See §
252(a)(1). But if private negotiation fails, either
party can petition the state commission that regulates
local phone service to arbitrate open issues, which
arbitration is subject to § 251 and the FCC regulations
promulgated thereunder.
(footnotes omitted).
The FCC issued its First Report and Order implementing local
competition provisions under the 1996 Act six months after its
passage. In Re Implementation of the Local Competiton Provisions
in the Telecommunications Act of 1996, 11 FCC Rcd 15499 (1996)
(First Report & Order). Numerous challenges to the FCC’s
rulemaking by incumbent LECs and state utility commissions were
consolidated in the Eighth Circuit. The Court of Appeals vacated
the FCC’s pricing rules and several other aspects of the First
Report and Order, as reaching beyond the Commission’s jurisdiction.
Iowa Utilities Board v. FCC, 120 F.3d 753, 800, 804, 805-806 (8th
Cir. 1997). It held that the general rulemaking authority
6
conferred upon the FCC by the Communications Act of 1934 extended
only to interstate matters, and that the FCC therefore lacked the
specific congressional authorization it needed for implementing
provisions of the 1996 Act addressing intrastate communications.
Id. at 795.
The Supreme Court in Iowa Utilities reversed on the main
point, holding that the FCC has general jurisdiction to implement
the 1996 Act’s local-competition provisions. The Court concluded
that since Congress expressly directed that the 1996 Act be
inserted into the Communications Act of 1934, and since the 1934
Act already provides that the FCC “may prescribe such rules and
regulations as may be necessary in the public interest to carry out
the provisions of this Act,” 47 U.S.C. § 201(b), the FCC’s
rulemaking authority extends to implementation of §§ 251 and 252.
“We think that the grant in § 201(b) means what it says: The FCC
has rulemaking authority to carry out the ‘provisions of this Act,’
which include §§ 251 and 252, added by the Telecommunications Act
of 1996.” Id. at 378. Furthermore, the Court held that section
152(b) of the Communications Act of 1934, which provides that
“nothing in this chapter shall be construed to apply or to give the
[FCC] jurisdiction with respect to . . . intrastate communications
service . . .” does not change this conclusion because the 1996 Act
clearly applies to intrastate matters. Id. at 379-380.
Significantly for purposes of deciding the Eleventh Amendment
issues in the present case, the Court in Iowa Utilities, in answer
7
to arguments of the dissenters relying on the presumption against
preemption of state regulatory power, responded that the 1996 Act
clearly manifested Congress’s intent to supplant traditional state
police power regulation of local telecommunications competition:
But the question in this case is not whether the Federal
Government has taken the regulation of local
telecommunications competition away from the States.
With regard to matters addressed by the 1996 Act, it
unquestionably has. The question is whether the state
commissions’ participation in the administration of the
new federal regime is to be guided by federal-agency
regulations. If there is any “presumption” applicable
to this question, it should arise from the fact that a
federal program administered by 50 independent state
agencies is surpassing strange. The appeals by both
Justice THOMAS and Justice BREYER to what might loosely
be called “States’ rights” are most peculiar, since there
is no doubt, even under their view, that if the federal
courts believe a state commission is not regulating in
accordance with federal policy they may bring it to heel.
This is, at bottom, a debate not about whether the States
will be allowed to do their own thing, but about whether
it will be the FCC or the federal courts that draw the
lines to which they must hew. To be sure, the FCC’s
lines can be even more restrictive than those drawn by
the courts–but it is hard to spark a passionate “States’
rights” debate over that detail.
Id. at 378 n.6 (emphasis added). “After the 1996 Act, § 152(b) [§
2(b) of the 1934 Act, which excluded intrastate communications from
the FCC’s jurisdiction] may have less practical effect. But that
is because Congress, by extending the Communications Act into local
competition, has removed a significant area from the States’
exclusive control.” Id. at 381 n.8 (emphasis added). See also
Texas Office of Pub. Util. Counsel v. FCC, 183 F.3d 393, 423-24 (5th
Cir. 1999), cert granted, 120 S.Ct. 2214 (2000)(recognizing Iowa
Utilities’ holding that state regulation of intrastate
8
telecommunications competition is preempted under §§ 251 and 252
but refusing to extend that holding to § 254 of the Act).
B. Procedures Under the 1996 Act; Optional Role Of
State Commissions; FCC Preemption; Federal Judicial Review
Upon receiving a request for interconnection, services, or
network elements pursuant to Section 251 of the Act, an incumbent
LEC may negotiate and enter into a binding agreement with the
requesting carrier which must be submitted to the state commission.
§ 252(a)(1). During negotiations, any party may ask the state
commission to mediate differences. § 252(a)(2). Any party to the
negotiation may petition a state commission to arbitrate any open
issues during the period from the 135th to the 160th day after the
initial request for negotiation. § 252(b)(1). The state
commission resolving open issues by arbitration must ensure that
its resolution and imposition of conditions meets the requirements
of § 251 and FCC regulations. § 252(c). The state commission may
only reject an agreement adopted by negotiation if it discriminates
against a non-party carrier; is not consistent with the public
interest, convenience, and necessity; or does not meet the
requirements of §§ 251 and 252(d) and FCC regulations. §
252(e)(2). Subject to § 253, the state commission may also
establish or enforce other requirements of state law in its review
of an agreement. § 252(e)(3). No state court shall have
jurisdiction to review the action of the state commission in
approving or rejecting an agreement under this section. Id. If
9
the state commission fails to act or to carry out its
responsibility under § 252(e), the FCC shall issue an order
preempting the state commission’s jurisdiction of that proceeding
or matter, assume the responsibility offered to the commission with
respect to that matter, and perform the functions that had been
offered to the state commission. § 252(e)(5). “In 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.” § 252(e)(6).
II. Facts and Procedural History
In 1997 AT&T Communications attempted to negotiate an
interconnection agreement under §§ 251 and 252 of the 1996 Act with
BellSouth, the local exchange carrier in Louisiana. When the
parties failed to reach an agreement on several elements of the
interconnection agreement, AT&T Communications petitioned the LPSC
to arbitrate the issues pursuant to § 252(b). LPSC accepted the
responsibility as arbitrator under § 252(e)(4) and resolved the
issues substantially in BellSouth’s favor. AT&T Communications
brought this action against BellSouth, the LPSC, and the individual
commissioners of the LPSC in the Middle District of Louisiana
pursuant to § 252(e)(6), contending that the LPSC arbitration
determination does not meet the requirements of §§ 251 and 252 and
10
the FCC regulations. The defendants answered on the merits. The
district court, however, requested that the parties brief whether
the suits against the LPSC and its officers were barred by the
Eleventh Amendment. After briefing, the district court dismissed
the actions as to all defendants, holding that suit against the
LPSC was barred by the Eleventh Amendment, and that suit against
the individual commissioners could not be maintained under Ex parte
Young. AT&T Communications of the South Central States, Inc. v.
BellSouth Telecommunications, Inc., 43 F. Supp. 2d 593 (M.D.La.
1999). AT&T filed timely notices of appeal.
III. Discussion
AT&T presents two principal arguments for reversal of the
district court’s interpretation and application of the Eleventh
Amendment and Ex parte Young: (1) the LPSC waived its Eleventh
Amendment immunity by voluntarily accepting and performing its
assigned role in the federal regulation of local competition under
the 1996 Act; and (2) AT&T’s suit, in any event, may proceed
against the individual commissioners under the doctrine of Ex parte
Young.
Whether a state is entitled to Eleventh Amendment immunity is
a question of law that this court reviews de novo. Hudson v. City
of New Orleans, 174 F.3d 677, 682 (5th Cir. 1999); United States ex
rel. Foulds v. Texas Tech Univ., 171 F.3d 279, 288 (5th Cir. 1999),
cert. denied, 120 S.Ct. 2194 (2000).
11
A. State Sovereign Immunity Generally
The Eleventh Amendment to the Constitution of the United
States provides: “The judicial power of the United States shall
not be construed to extend to any suit in law or equity commenced
or prosecuted against one of the United States by Citizens of
another State, or by Citizens or Subjects of any Foreign State.”
Further, as long construed by the Supreme Court, federal judicial
power does not extend to suits brought against a state or its
agencies by its own citizens. See, e.g., Puerto Rico Aqueduct &
Sewer Auth. V. Metcalf & Eddy, 506 U.S. 139 (1993); Edelman v.
Jordan, 415 U.S. 651 (1974); Hans v. Louisiana, 134 U.S. 1 (1890).
The Eleventh Amendment also bars federal jurisdiction over suits
against state officials acting in their official capacities when
the state is the real party in interest. See, e.g., Pennhurst
State School & Hospital v. Halderman, 465 U.S. 89 (1984).
Eleventh Amendment immunity from suit is not absolute.
College Savings Bank v. Florida Prepaid Postsecondary Education
Expense Board, 527 U.S. 666, 670 (1999). Congress may authorize a
private party to bring a federal court suit against unconsenting
states in the exercise of its power to enforce the Fourteenth
Amendment. Kimel v. Florida Bd. of Regents, 528 U.S. 62, 80
(2000); College Savings, 527 U.S. at 670 (citing Fitzpatrick v.
Bitzer, 427 U.S. 445 (1976)). A state may waive its sovereign
immunity by consenting to suit. College Savings, 527 U.S. at 670
(citing Clark v. Barnard, 108 U.S. 436, 447-448 (1883)).
12
Additionally, the Supreme Court has for nearly a century allowed
suits against state officials for prospective injunctive relief to
end a continuing violation of federal law under the doctrine of Ex
parte Young, 209 U.S. 123 (1908).
In Seminole Tribe v. Florida, 517 U.S. 44, 72 (1996), the
Supreme Court held that Congress cannot abrogate Eleventh Amendment
immunity through the exercise of its Article I powers. “Even when
the Constitution vests in Congress complete lawmaking authority
over a particular area, the Eleventh Amendment prevents
congressional authorization of suits by private parties against
unconsenting States.” Id. at 72; see College Savings, 527 U.S. at
672. Consequently, AT&T correctly does not contend that Congress
abrogated the states’ Eleventh Amendment immunity by enactment of
the 1996 Act under its Article I power to regulate interstate
commerce. Instead, this case turns on waiver and Ex parte Young.
B. Waiver
The Supreme Court has “long recognized that a State’s
sovereign immunity is ‘a personal privilege which it may waive at
[its] pleasure.’” College Savings, 527 U.S. at 675 (quoting Clark,
108 U.S. at 447). “The decision to waive that immunity, however,
‘is altogether voluntary on the part of the sovereignty.’” Id.
(quoting Beers v. Arkansas, 61 U.S. 527, 529 (1858)). Generally,
the Court will find a waiver either if the state voluntarily
invokes its jurisdiction, Gunter v. Atlantic Coast Line R.R. Co.,
200 U.S. 273, 284 (1906), or if the state makes a “clear
13
declaration” that it intends to submit itself to the court’s
jurisdiction. College Savings, 527 U.S. at 675-76 (quoting Great
Northern Life Ins. Co. v. Read, 322 U.S. 47, 54 (1944)).
In College Savings, the Court held that the Eleventh Amendment
immunity of the state education expense board (“the Board”), an arm
of the State of Florida, had not been voluntarily waived by the
Board’s alleged false advertising in interstate commerce. 527 U.S.
at 680-81. The petitioner, a New Jersey bank, had brought suit
against the Board alleging unfair competition under the Lanham Act
based on the Board’s alleged false advertising of its tuition
savings plans in its brochures and annual reports. The pertinent
federal statutes, the Trademark Remedy Clarification Act and the
Lanham Act, expressly subjected the states to suits brought under
them for false and misleading advertising.
The New Jersey bank relied upon Parden v. Terminal Railway of
Alabama Docks Department, 377 U.S. 184 (1964), in which the Supreme
Court had recognized a not altogether volitional “constructive-
waiver” theory, when it permitted employees of a railroad owned and
operated by Alabama to bring an action under the FELA against the
State as their employer. Although the FELA did not refer to the
states, the Parden Court held that, under the facts of that case,
the Act authorized the FELA action against Alabama as a “common
carrier by railroad . . . engaging in commerce between . . . the
several States,” 45 U.S.C. § 51 (1940 ed.). See College Savings,
527 U.S. at 666-67. Even though Alabama law expressly disavowed
14
any such waiver, the Parden majority held that “[b]y enacting the
[FELA] . . . Congress conditioned the right to operate a railroad
in interstate commerce upon amenability to suit in federal court as
provided by the Act; by thereafter operating a railroad in
interstate commerce, Alabama must be taken to have accepted that
condition and thus to have consented to suit.” Parden, 377 U.S. at
192.
The Supreme Court in College Savings, however, expressly
overruled Parden and its “constructive-waiver experiment [as] ill
conceived.” 527 U.S. at 680. The Court stated that “there is
little reason to assume actual consent based upon the State’s mere
presence in a field subject to congressional regulation[;] . . .
the most that can be said . . . is that the State has been put on
notice that Congress intends to subject it to suits brought by
individuals[,] . . . [and][t]hat is very far from concluding that
the State made an ‘altogether voluntary’ decision to waive its
immunity.” Id. at 680-681 (quoting Beers, 61 U.S. at 529). More
is required as a reasonable basis for inferring that the state, by
engaging in a federally-regulated activity, voluntarily consented
to being sued by individuals in federal court based on the federal
law. See id.
Consequently, the College Savings Court concluded that a state
voluntarily waives its Eleventh Amendment immunity by engaging in
activity subject to congressional regulation only if (1) the state
has been put on notice clearly and unambiguously by the federal
15
statute that the state’s particular conduct or transaction will
subject it to federal court suits brought by individuals; (2) the
state may refrain from engaging in the particular actions without
excluding itself from activities otherwise lawfully within its
powers; and (3) the state elects to engage in the conduct or
transaction after such legal notice has been given. See 527 U.S.
at 675-87. These waiver requirements are most clearly illustrated
by the Court’s discussion of the fundamental differences between
College Savings and two prior cases involving constitutionally
permissible conditions attached to gratuities offered to the states
by Congress.
In Petty v. Tennessee-Missouri Bridge Commission, 359 U.S. 275
(1959), the Court had held “that a bistate commission which had
been created pursuant to an interstate compact (and which we
assumed partook of state sovereign immunity) had consented to suit
by reason of a suability provision attached to the congressional
approval of the compact.” College Savings, 527 U.S. at 686. And
in such cases as South Dakota v. Dole, 483 U.S. 203 (1987), the
Court had held “that Congress may, in the exercise of its spending
power, condition its grant of funds to the States upon their taking
certain actions that Congress could not require them to take, and
that acceptance of the funds entails an agreement to the action.”
College Savings, 527 U.S. at 686.
The fundamental difference between the College Savings case
and the Petty and Dole cases, as the Court cogently pointed out,
16
lies in the distinction between the types of Congressional acts
involved. In the statutes involved in the latter cases, Congress
had obtained the states’ voluntary consent to conditions attached
to gratuities–a voluntary waiver of sovereign immunity for an
interstate compact in Petty, and an increase in the drinking age
for federal highway funds in Dole. Neither gratuity was attainable
by the state through lawful activities within the state’s own
powers. In contrast, College Savings involved federal statutes
that forced a state’s not “altogether voluntary” waiver by threat
of exclusion from otherwise lawful activity within its power. The
Court explained:
These cases seem to us fundamentally different from the
present one. Under the Compact Clause, U.S. Const., Art.
I, § 10, cl. 3, States cannot form an interstate compact
without first obtaining the express consent of Congress;
the granting of such consent is a gratuity. So also,
Congress has no obligation to use its Spending Clause
power to disburse funds to the States; such funds are
gifts. In the present case, however, what Congress
threatens if the State refuses to agree to its condition
is not the denial of a gift or gratuity, but a sanction:
exclusion of the State from otherwise permissible
activity. Justice BREYER’s dissent acknowledges the
intuitive difference between the two, but asserts that it
disappears when the gift that is threatened to be
withheld is substantial enough. Perhaps so, which is
why, in cases involving conditions attached to federal
funding, we have acknowledged that “the financial
inducement offered by Congress might be so coercive as to
pass the point at which ‘pressure turns into
compulsion.’” Dole, supra, at 211, 107 S.Ct. 2793,
quoting from Steward Machine Co. v. Davis, 301 U.S. 548,
590, 57 S.Ct. 883, 81 L.Ed. 1279 (1937). In any event,
we think where the constitutionally guaranteed protection
of the States’ sovereign immunity is involved, the point
of coercion is automatically passed–and the voluntariness
of waiver destroyed–when what is attached to the refusal
to waive is the exclusion of the State from otherwise
17
lawful activity.
527 U.S. at 686-87.
For these reasons, we agree with the Tenth and Seventh
Circuits’ conclusion that, after College Savings, Congress may
still obtain a non-verbal voluntary waiver of a state’s Eleventh
Amendment immunity, if the waiver can be inferred from the state’s
conduct in accepting a gratuity after being given clear and
unambiguous statutory notice that it was conditioned on waiver of
immunity. See MCI Telecommunications Corp. v. Illinois Bell Tel.
Co., 222 F.3d 323, 339 (7th Cir. 2000) (In College Savings, 527 U.S.
at 687, “the Court simply held that states cannot ‘constructively’
waive their immunity by being forced by Congress to choose between
preserving their sovereign immunity and engaging in an ‘otherwise
lawful activity.’”); MCI Telecommunications Corp. v. Pub. Serv.
Comm’n of Utah, 216 F.3d 929, 937 (10th Cir. 2000) (“A constructive
waiver is voluntary only where Congress threatens a state with the
denial of a ‘gift or gratuity’ if the state refuses to consent to
suit in federal court. Where Congress threatens a state with a
‘sanction’ if it refuses to consent to suit, then the waiver is no
longer freely given.”) (citation omitted). A state’s voluntary
waiver of immunity, inferred from the state’s acceptance of a
Congressional gratuity that it was free to decline without loss of
any sovereign prerogative, was distinguished by the Supreme Court
in College Savings from “the type of ‘forced waiver’ exacted by
Congress under Parden, whereby the state is threatened with the
18
sanction of waiving its immunity if it engages in a regulated
enterprise, [as] really an abrogation of the state’s immunity
prohibited by Seminole Tribe.” Illinois Bell, 222 F.3d at 340
(citing College Savings, 527 U.S. at 690 as “noting that forced
waiver and abrogation are ‘the same side of the same coin’”);
(citing also Chavez v. Arte Publico Press, 204 F.3d 601, 604 n.5
(5th Cir. 2000) (“College Savings expressly overruled Parden and its
implied waiver theory. That theory is no longer available to
support an Article I abrogation of Eleventh Amendment Immunity.”)).
We also join the Seventh and Tenth Circuits in concluding that
the 1996 Act does not potentiate the exaction of a “forced waiver”
of Eleventh Amendment immunity from the states. See Illinois Bell,
222 F.3d at 342-44; Pub. Serv. Comm’n, 216 F.3d at 938-39, 939 n.6.
The Act only establishes a basis for a voluntary gratuity induced
waiver that states may accept or reject, and it does not require
the states as a condition of accepting the gratuity to abandon any
lawful activity currently within their powers. Illinois Bell, 222
F.3d at 343-344; Pub. Serv. Comm’n, 216 F.3d at 938.
After passage of the 1996 Act, regulation of competition among
providers of local phone service is no longer within the province
of states’ inherent authority. Congress, by enacting the 1996 Act
pursuant to its commerce power, validly preempted the states’ power
to regulate local telecommunications competition. Iowa Utilities,
525 U.S. 366, 378 n.6 (1999) (“With regard to the matters addressed
by the 1996 Act, [the Federal Government] unquestionably has [taken
19
the regulation of local telecommunications competition away from
the States].”); see also FERC v. Mississippi, 456 U.S. 742, 764
(1982) (“[T]he commerce power permits Congress to pre-empt the
States entirely in the regulation of private utilities.”).
Accordingly, Congress established a federal system headed by the
FCC to regulate local telecommunications competition. The Act
permissibly offers state regulatory agencies a limited mission,
which they may accept or decline: to apply federal law and
regulations as arbitrators and ancillary regulators within the
federal system and on behalf of Congress. 42 U.S.C. § 252. Cf.
Hodel v. Virginia Surface Mining & Reclamation Assn., 452 U.S. 264,
290 (1981) (“Thus, Congress could constitutionally have enacted a
statute prohibiting any state regulation of surface coal mining.
We fail to see why the Surface Mining Act should become
constitutionally suspect simply because Congress chose to allow the
States a regulatory role.”).
Section 252(e)(6) of the Act plainly states that “any party
aggrieved by” a state commission’s determination, which necessarily
will include private individuals, may bring an action in an
appropriate federal district court, and § 252(e)(4) provides that
no state court shall have jurisdiction to review the action of a
state commission in approving or rejecting an agreement under this
section. We agree with the Seventh Circuit that “Congress has
expressed unmistakably that, under [the Act], states could
participate in the federal regulatory function delegated to them by
20
the federal government on the condition that their participation be
reviewed in federal court” and that the “Act satisfies the
requirement that Congress clearly state that participation by the
state in the regulatory scheme entails a waiver of immunity from
suit in federal court.” Illinois Bell, 222 F.3d at 341; see also
Pub. Serv. Comm’n, 216 F.3d at 938.
When the LPSC accepted Congress’s offer under the 1996 Act to
delegate federal authority to the state commission to act as an
arbitrator in the present case, the regulation of interconnection
agreements covered by the 1996 Act was no longer a permissible or
lawful activity within the power of the states. As in Petty and
Dole, Congress was under no obligation to offer states something
they could not obtain on their own, viz., participation in the 1996
Act’s federal regulation of local telecommunications competition.
Also, as in those cases, the state was free to accept or reject
such participation as a gratuity without abstaining from any lawful
activity within its power. College Savings made clear that when
Congress bestows a gift or gratuity, it may attach the condition of
a waiver of Eleventh Amendment immunity to a state’s acceptance.
527 U.S. at 686-87. Consequently, the LPSC voluntarily waived its
state immunity when it accepted the Congressional offer of a
gratuity and arbitrated the interconnection dispute in this case.
C. Application of Ex parte Young
We agree with the Sixth, Seventh, and Tenth Circuits that a
21
suit such as this one, brought by AT&T Communications for
injunctive relief against the individual members of the LPSC
because a determination made by the commissioners is allegedly
contrary to the 1996 Act, is a “straight forward” Ex parte Young
case. Illinois Bell, 222 F.3d at 345; Pub. Serv. Comm’n, 216 F.3d
at 939; Michigan Bell Tel. Co. v. Climax Tel. Co., 202 F.3d 862,
867 (6th Cir. 2000), cert. denied, 121 S.Ct. 54 (2000). Therefore,
even if Plaintiffs’ suit against the LPSC were barred by the
Eleventh Amendment, the suit for prospective injunctive relief
could proceed against the individual commissioners in their
official capacities.
Under the Ex parte Young doctrine, a private party may sue
individual state officers in federal court to obtain prospective
relief from an ongoing violation of federal law. See Ex parte
Young, 209 U.S. 123 (1908); Idaho v. Coeur d’Alene Tribe, 521 U.S.
261, 294 (1997) (O’Connor, J., concurring); id. at 298-99 (Souter,
J. dissenting); Ysleta Del Sur Pueblo v. Laney, 199 F.3d 281, 289
(5th Cir. 2000), cert. denied, 120 S.Ct. 2007 (2000); Earles v.
State Bd. of Certified Public Accountants of Louisiana, 139 F.3d
1033, 1039 (5th Cir. 1998). The purpose of the doctrine is to
enable federal courts to “vindicate federal rights and hold state
officials responsible to ‘the supreme authority of the United
States.’” Pennhurst, 465 U.S. at 105 (quoting Ex parte Young, 209
U.S. at 160). In the present case, AT&T Communications filed suit
against the individual LPSC commissioners in their official, rather
22
than personal, capacities. AT&T Communications alleges that the
arbitral determination of the interconnection agreement by the
commissioners violates the 1996 Act, a federal law. As the
interconnection agreement determination binds present and future
relations between AT&T Communications and BellSouth, the alleged
violation of federal law is on-going. Finally, an order preventing
the commissioners from enforcing provisions of the agreement which
fail to meet the requirements of the 1996 Act will be purely
prospective.
The LPSC commissioners counter that the present case fits
within the exception to Ex parte Young recognized by the Supreme
Court in Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996).
The Court in Seminole Tribe held that suits against individual
state officers in their official capacities for on-going violations
of federal law are not available when Congress has enacted a
comprehensive remedial scheme intended to be the sole remedy for
violations of federal law. Id. at 74. Because the remedial scheme
prescribed by Congress under the 1996 Act is significantly
different from the congressional plan considered by the Court in
Seminole Tribe, and does not manifest an intent to exclude Ex parte
Young suits, we disagree with the commissioners’ contention that
Seminole Tribe precludes application of the Ex parte Young
exception in this case.
In Seminole Tribe, the Supreme Court noted that the Indian
Gaming Regulatory Act (“IGRA”) provided that the sole judicial
23
remedy available under the act upon failed negotiations between the
State and the plaintiffs was a court order requiring mediation
between the parties. Id. If such mediation failed, the result
under IGRA’s elaborate remedial scheme was preemption of any
proposed agreement between the parties by regulations issued by the
Secretary of the Interior. Id. at 74-75. The Court thus noted
that the powers of the federal district court under IGRA were
limited “significantly,” id. at 76; in comparison, the Court
recognized that “an action brought against a state official under
Ex parte Young would expose that official to the full remedial
powers of a federal court, including, presumably, contempt
sanctions.” Id. at 75. The Court stated that “the fact that
Congress [under IGRA] chose to impose upon the State a liability
that is significantly more limited than would be the liability
imposed upon the state officer under Ex parte Young strongly
indicates that Congress had no wish to create the latter under
[IGRA].” Seminole Tribe, 517 U.S. at 75-76.
The 1996 Act, however, does not severely limit relief
available to an aggrieved party as does the IGRA. Section
252(e)(6) of the 1996 Act simply provides that, if the state
commission makes a determination under that section, any aggrieved
party may bring suit in federal court to determine whether the
determination meets the Act’s requirements. The 1996 Act does not
limit jurisdiction of federal courts to entertain suits in law or
equity for prospective relief from on-going violations of federal
24
law by state officials acting in their official capacities. It
thus cannot be said that Congress intended in the 1996 Act to limit
significantly the federal judicial remedies available to an
aggrieved party authorized to bring suit in an appropriate federal
court.3 See Illinois Bell, 222 F.3d at 346 (“The power of the
court under subsection 252(e)(6) stands in stark contrast with the
court’s powers to impose what the Supreme Court called a ‘modest
set of sanctions’ under the statute at issue in Seminole
Tribe.”)(citing Seminole Tribe, 517 U.S. at 75).
Appellees also argue that the Supreme Court’s decision in
Idaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997), precludes
applicability of Ex parte Young to the present case. However, this
circuit has rejected the idea that Coeur d’Alene affects the
traditional application of Ex parte Young:
We concur with the consensus among other courts that
although the principal opinion in Coeur d’Alene suggests
a case-by-case (rather than rule-based) approach to the
application of Ex parte Young, see Coeur d’Alene, 521
U.S. 261, 276-282 , 117 S.Ct. at 2038-2040 (opinion of
Kennedy, J.), this part of the opinion did not muster a
majority, and a majority of the Court would continue to
apply the rule of Ex parte Young as it has been
3
The LPSC and its commissioners contend that because review under
section 252 (e)(6) is limited in subject matter to a determination
of “whether the agreement or statement [as determined by the state
commission] meets the requirements of section 251,” the remedial
scheme created by the 1996 Act is more limited than traditional Ex
parte Young suits, and therefore such suits with respect to the Act
are precluded under Seminole Tribe. However, this limitation
defines the courts’ subject matter jurisdiction in all suits
brought to enforce the provisions of the 1996 Act rather than the
relief available in such a suit. Therefore, the Act does not
prohibit the application of the Ex parte Young doctrine.
25
traditionally understood, see id. at 296, 117 S.Ct. at
2047 (O’Connor, J., concurring in part and concurring in
the judgment(joined by Scalia and Thomas, JJ.)); id. at
297, 117 S.Ct. at 2048 (Souter, J., dissenting (joined by
Stevens, Ginsburg, and Breyer, JJ.)).
Earles v. State Bd. of Certified Public Accountants of Louisiana,
139 F.3d 1033, 1039 (5th Cir. 1998).
Accordingly, the application of Ex parte Young to suits
against state commissioners under section 252(e)(6) of the 1996 Act
remains unaffected by either Seminole Tribe or Coeur d’Alene. See
Illinois Bell, 222 F.3d 323, 347 (7th Cir. 2000); Pub. Serv. Comm’n,
216 F.3d 929, 940 (10th Cir. 2000); and Michigan Bell Tel. Co. v.
Climax Tel. Co., 202 F.3d 862, 867 (6th Cir. 1999).
IV. Conclusion
Because the LPSC voluntarily waived the state’s Eleventh
Amendment immunity in the present case, we REVERSE the decision of
the district court dismissing AT&T Communication’s suit against
LPSC. Because the Ex parte Young doctrine applies, we also REVERSE
the decision of the district court dismissing AT&T Communication’s
suit against the individual commissioners. The case is REMANDED
for further proceedings consistent with this opinion.
ENDRECORD
26
JERRY E. SMITH, Circuit Judge, dissenting:
I respectfully dissent and would affirm the dismissal. The
district court correctly opined that defendants are immune under
the Eleventh Amendment.
When a state commission elects to arbitrate an interconnection
agreement or approve a Statement of Generally Available Terms
(“SGAT”), the Telecommunications Act of 1996 (the “1996 Act” or the
“Act”) vests jurisdiction in the federal courts for any aggrieved
party to challenge state actions inconsistent with the requirements
of the Act.4 That jurisdiction is exclusive.5 Pursuant to the
Eleventh Amendment, however, federal courts may not entertain suits
by citizens against states arising out of congressional legisla-
tion, such as the 1996 Act, enacted under the Commerce Clause.6
Under the Eleventh Amendment, states enjoy broad sovereign
4
“In 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).
5
“If the State commission does not act to approve or reject the
agreement within 90 days after submission by the parties of an
agreement adopted by negotiation under subsection (a) of this
section, or within 30 days after submission by the parties of an
agreement adopted by arbitration under subsection (b) of this
section, the agreement shall be deemed approved. No State court
shall have jurisdiction to review the action of a State commission
in approving or rejecting an agreement under this section.” Id. §
252(e)(4).
6
See Seminole Tribe v. Florida, 517 U.S. 44, 54 (1996).
27 27
immunity from suit in federal court:
The Judicial power of the United States shall not be con-
strued to extend to any suit in law or equity, commenced
or prosecuted against one of the United States by Citi-
zens of another State, or by Citizens or Subjects of any
Foreign State.
U.S. CONST. amend. XI. Though the amendment’s text most reasonably
applies only to suits in diversity, the Supreme Court has consis-
tently looked to the principle underlying the amendment to bar
suits on federal causes of action as well.7 Thus, individuals may
not sue states in federal court on causes of action arising out of
Article I legislation such as the 1996 Act.8
This immunity extends not only to states but to their agen-
cies, as well.9 The Eleventh Amendment thus immunizes the Louisi-
ana Commission from suit in federal court. Under certain, limited
circumstances, however, state officialsSSlike the commissionersSSmay
be subjected to suit, notwithstanding the Eleventh Amendment, under
Ex parte Young, 209 U.S. 123, 158-59 (1908).
7
See id. at 69-70 (rejecting blind reliance on the text of the
Eleventh Amendment because it dealt only with particular problem of
diversity jurisdiction created by an incorrect decision in Chisolm
v. Georgia, 2 U.S. (2 Dall.) 419 (1793)); Hans v. Louisiana, 134
U.S. 1 (1890) (same).
8
See, e.g., Hans, 134 U.S. at 18-19; Seminole Tribe, 517 U.S.
at 72-73. Of course, federal legislation enacted pursuant to
Section 5 of the Fourteenth Amendment may constitutionally abrogate
state sovereign immunity. See Fitzpatrick v. Bitzer, 427 U.S. 445
(1976).
9
See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, 506 U.S.
139, 146 (1993).
28 28
Whether the 1996 Act violates the Eleventh Amendment is res
nova in this Circuit.10 On appeal, the telephone carriers present
three unconvincing theories to avoid sovereign immunity.
First, the carriers assert the application of the doctrine an-
nounced in Young to allow suit against the commissioners. Second,
they assert that the commission effectively waived its state sov-
ereign immunity by electing to arbitrate the interconnection agree-
ment and approve BellSouth’s SGAT under powers granted by the 1996
Act. Third, AT&T claims that the Act contemplates only appellate-
style judicial review and thus does not fall within the Eleventh
Amendment’s prohibition of “suit[s] in law or equity.”11
The Supreme Court recently addressed the Young and waiver is-
sues in, respectively, Seminole Tribe and College Savings Bank v.
Florida Prepaid Postsecondary Educational Expense Board, 527 U.S.
666 (1999), recognizing a broad Eleventh Amendment immunity suffi-
ciently capacious to bar suit here under the 1996 Act. In seeking
reversal, the telephone carriers urge, and the majority adopts, an
unduly narrow interpretation of those rulings. They would look to
the facts, circumstances, and rationales of each holding as somehow
exhaustive of the proper scope of the Eleventh Amendment jurisdic-
10
The majority relies substantially on AT&T Corp. v. Iowa
Utilities Board, 525 U.S. 366 (1999), but the Eleventh Amendment
issue was neither presented nor addressed in that case.
11
The majority summarily rejects this argument, and I agree.
29 29
tional bar, rather than merely illustrative of the immunity states
enjoy from suit in federal court.
I.
In Seminole Tribe, the Court breathed new life into Eleventh
Amendment immunity. That holding not only expanded the scope of
the amendment to cover all federal causes of action arising out
Congress’s Article I powers12SSthereby barring suit under the 1996
Act against a State commissionSSbut also narrowed the fictional ex-
ception to state sovereign immunity first established in
YoungSSthereby barring suit under the Act against state commission-
ers as well.13 The majority therefore errs in accepting the tele-
phone carriers’ argument that AT&T’s suit should be permitted to
12
See Seminole Tribe, 517 U.S. at 72-73 (“The Eleventh Amendment
restricts the judicial power under Article III, and Article I
cannot be used to circumvent the constitutional limitations placed
upon federal jurisdiction.”). Seminole Tribe specifically involved
the Indian Commerce Clause and explicitly overruled Pennsylvania v.
Union Gas Co., 491 U.S. 1 (1989), which had addressed the Inter-
state Commerce Clause, see Seminole Tribe, 517 U.S. at
66SSprovisions both found within Congress’s legislative powers
enumerated in Article I, Section 8. But a state’s sovereign
immunity is not restricted to that section, for Hans itself dealt
with the Contracts Clause, a constitutional restriction on the
states located within Article I, Section 10. See Hans.
13
See Seminole Tribe, 517 U.S. at 74 (stating that “where
Congress has prescribed a detailed remedial scheme for the
enforcement against a State of a statutorily created right, a court
should hesitate before casting aside those limitations and
permitting an action against a state officer based upon Ex parte
Young.”).
30 30
proceed against the member commissioners under Young.
In Young, the Court fashioned a judicial remedy to provide
prospective relief against state officials to redress ongoing vio-
lations of federal law, as a special exception to the Eleventh
Amendment bar to suit. Under Seminole Tribe, however, judicial re-
lief pursuant to Young is not available to redress violations of
the 1996 Act, because the Act provides a limited statutory remedial
scheme that supplants the relief otherwise alternatively available
under Young.
A.
It is not enough that the Eleventh Amendment permits judicial
application of Young to the 1996 Act. Under Seminole Tribe, courts
additionally must determine whether, in enacting that bill, Con-
gress acted to supplant that judicial remedy by substituting a
statute-based remedial scheme. See Seminole Tribe, 517 U.S.
at 74-76.
1.
As a judicially-crafted exception to the Eleventh Amendment,
the Young doctrine is not a fiction in which courts ought to engage
lightly.14 It was created in Young to give relief against state of
14
See Seminole Tribe, 517 U.S. at 74-76 (noting that Young is a
(continued...)
31 31
ficials to vindicate constitutional rights.15 Young since has been
extended to vindicate federal statutory rights.16
Nevertheless, it is Congress that creates federal statutory
rights, so it is also Congress that dictates the remedies available
to enforce statutory violations.17 Thus, “where Congress has pre-
scribed a detailed remedial scheme for the enforcement against a
State of a statutorily created right, a court should hesitate be-
fore casting aside those limitations and permitting an action
against a state officer based upon Ex parte Young.” Seminole
14
(...continued)
“narrow exception to the Eleventh Amendment”).
15
See Young, 209 U.S. at 159-60 (“The act to be enforced is
alleged to be unconstitutional; and if it be so, the use of the
name of the state to enforce an unconstitutional act to the injury
of complainants is a proceeding without the authority of, and one
which does not affect, the state in its sovereign or governmental
capacity. It is simply an illegal act upon the part of a state
official in attempting, by the use of the name of the state, to
enforce a legislative enactment which is void because
unconstitutional. If the act which the state attorney general
seeks to enforce be a violation of the Federal Constitution, the
officer, in proceeding under such enactment, comes into conflict
with the superior authority of that Constitution, and he is in that
case stripped of his official or representative character and is
subjected in his person to the consequences of his individual
conduct.”).
16
See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,
105-06 (1984) (recognizing that the Young remedy is available to
address violations of federal but not state law).
17
See David P. Currie, Ex Parte Young After Seminole Tribe, 72
N.Y.U. L. REV. 547, 549 (1997) (“Congress is perfectly free to
abolish the remedy recognized by Ex parte Young.”); id. at 551
(“Seminole Tribe will have its most significant effect on actions
involving statutory, not constitutional rights.”)
32 32
Tribe, 517 U.S. at 74.18
The question, then, is whether the judicial review provisions
of the 1996 Act establish a “detailed remedial scheme for the en-
forcement . . . of a statutorily created right,” id., sufficient
under Seminole Tribe to supplant the judicially-made Young remedy
that otherwise would be alternatively available to AT&T. See
Seminole Tribe, 517 U.S. at 74. In other words, we must determine
whether AT&T may pursue relief exclusively through the Act or
whether, alternatively, Young is also available.
In concluding that an Indian gaming act supplanted Young, the
Seminole Tribe Court explained:
Here, Congress intended [the rights conferred by the
act] to be enforced against the State in an action
brought under [25 U.S.C. § 2710(d)(7)]; the intricate
procedures set forth in that provision show that Congress
intended therein not only to define, but also to limit
significantly, the duty imposed by § 2710(d)(3). For
example, where the court finds that the State has failed
to negotiate in good faith, the only remedy prescribed is
an order directing the State and the Indian tribe to con-
clude a compact within 60 days. And if the parties dis-
regard the court’s order and fail to conclude a compact
within the 60-day period, the only sanction is that each
party then must submit a proposed compact to a mediator
who selects the one which best embodies the terms of the
Act. Finally, if the State fails to accept the compact
selected by the mediator, the only sanction against it is
that the mediator shall notify the Secretary of the In-
terior who then must prescribe regulations governing
class III gaming on the tribal lands at issue. By con-
trast with this quite modest set of sanctions, an action
brought against a state official under Ex parte Young
18
See also Currie, 72 N.Y.U. L. REV. at 551 (“Seminole Tribe may
well preclude the use of Ex parte Young in additional cases
involving statutory rights.”).
33 33
would expose that official to the full remedial powers of
a federal court, including, presumably, contempt sanc-
tions. If § 2710(d)(3) could be enforced in a suit under
Ex parte Young, § 2710(d)(7) would have been superfluous;
it is difficult to see why an Indian tribe would suffer
through the intricate scheme of § 2710(d)(7) when more
complete and more immediate relief would be available
under Ex parte Young.
Id. at 74-75 (footnote omitted).
In other words, to supplant Young, a statute must provide a
detailed and limited remedial legislative scheme, narrower in scope
than what would be available under Young. Otherwise, to invoke
Young would be to render the judicial review provisions of a stat-
ute superfluous.
Under the 1996 Act, an aggrieved party may seek judicial
review only under certain conditions: “In any case in which a
State commission makes a determination under this section, any par-
ty aggrieved by such determination may bring an action in an appro-
priate Federal district court to determine whether the agreement or
statement meets the requirements of section 251 . . . .” 47 U.S.C.
§ 252(e)(6) (emphasis added). The Act thus limits the timing of
access to federal courts, the scope of commission conduct subject
to judicial review, and the defendants vulnerable to suit.
First, with respect to access to suit and the scope of review-
able commission conduct, aggrieved parties have a right to judicial
relief under the Act, but only after the State commission has made
34 34
a determination.19 This is not unlike the requirement of a final
agency action to trigger Administrative Procedure Act judicial re-
view, see 5 U.S.C. §§ 702, 704, and it is available only to review
the validity of a commission agreement or statement under the Act
and not its process. The 1996 Act thus imposes a number of stat-
utory duties on State commissions that are either not effectively
or only partially effectively reviewable under this judicial review
provision, including the duty to arbitrate open issues brought to
the commission, see 47 U.S.C. § 252(a)(2); the duty to provide an
opportunity to respond to the party against whom another party has
petitioned for arbitration, see id. § 252(b)(3); the duty to arbi-
trate only those issues raised by a petition, see id. § 252(b)-
(4)(A); the duty to conclude the resolution of unresolved issues
within nine months of the initial request, see id. § 252(b)(4)(C);
and, with respect to SGAT’s, the duty to complete review within
sixty days of submission, see id. § 252(f)(3).
To delay judicial review until the state commission actually
makes a determination (rather than before), and then to limit that
review only to ensuring that any agreement or statement (as opposed
19
See GTE Southwest, Inc. v. Graves, 989 F. Supp. 1148, 1150
(W.D. Okla. 1997); GTE N. Inc. v. Glazer, 989 F. Supp. 922 (N.D.
Ohio 1997); GTE Northwest, Inc. v. Nelson, 969 F. Supp. 654 (D.
Wash. 1997); GTE Fla., Inc. v. Johnson, 964 F. Supp. 333 (N.D. Fla.
1997); GTE S. Inc. v. Breathitt, 963 F. Supp. 610 (E.D. Ky. 1997);
GTE S. Inc. v. Morrison, 957 F. Supp. 800 (E.D. Va. 1997); Contel,
Inc. v. Jacobs, 1997 WL 809628 (D. Minn. 1997).
35 35
to the arbitration process itself) complies with the Act, is to
“limit significantly . . . the dut[ies] imposed by”20 the Act and
thus to supplant relief under Young. A plaintiff might prefer to
seek the immediate injunctive relief offered by Young to redress
ongoing violations of the Act,21 but the Act requires the aggrieved
party to wait for a determination by the state commission before
filing suit, even if it means that some violations, such as com-
pliance with the statutory deadlines, might never be redressed.
The Act therefore provides a remedial scheme that supplants relief
otherwise offered by Young.
Second, the Act refers only to cases involving “a State com-
mission.” Id. § 252(e)(6). No reference is made to state commis-
sioners. As Seminole Tribe teaches, courts should not lightly
construe Congressional intent to “expose [a state] official to the
full remedial powers of a federal court, including, presumably,
contempt sanctions,” where the statute seems to suggest otherwise
by providing alternative remedies. Seminole Tribe, 517 U.S. at
20
Seminole Tribe, 517 U.S. at 74.
21
That an on-going violation is the result of a past wrong does
not transform the remedy from a prospective to a retrospective one.
Relief under Young is still available in these cases. See CSX
Transp., Inc. v. Bd. of Pub. Works, 138 F.3d 537, 541 (4th Cir.
1998) (stating that “a future injunction is not made retrospective
merely because it recognizes that an ongoing violation of law is
the result of a past wrong.”).
36 36
75.22 Given that only parties “aggrieved by such determination may
bring an action” and that such actions are limited “to determin-
[ing] whether the agreement or statement” complies with the Act,
§ 252(e)(6), the most reasonable construction is to limit the scope
of judicial review to the only parties able to trigger itSSstate
commissions.23
Notwithstanding the availability of injunctive relief, the ju-
dicial review provisions are sufficiently limited to supplant re-
lief under Young. That the limited statutory remedy under the Act
22
See id. at 75 n.17 (distinguishing between statutes expressly
permitting suit against specific state officials and those allowing
suit only against “the State”).
23
The state defendants additionally argue that the Act’s judi-
cial review provision does not provide for injunctive relief,
thereby further enlarging the gap between relief under the Act and
that provided by Young. The Act simply authorizes federal courts
to review only to ensure that any “agreement or statement meets the
requirements of” the 1996 Act. Id. Although the only case in this
circuit to have construed the Act’s judicial review provision,
Southwestern Bell Telephone Co. v. Public Utility Commission, 208
F.3d 475 (5th Cir. 2000), did not involve the Eleventh Amendment,
we did indicate an inclination to adopt a “broader view” of the
provision. See id. at 481-82 (construing the Act to permit review
of state commissions for compliance with state law, under the
arbitrary-and-capricious standard, in addition to de novo review of
compliance with Act). A natural reading of the text is that it
defines merely the scope of state conduct subject to judicial
review, rather than the available remedies, and that our authority
to enforce compliance reasonably includes the availability of
injunctive reliefSSalbeit only against the state commission and not
its commissioners. See Franklin v. Gwinnett County Pub. Schs., 503
U.S. 60, 66 (1992) (stating that “although we examine the text and
history of a statute to determine whether Congress intended to
create a right of action, we presume the availability of all ap-
propriate remedies unless Congress has expressly indicated
otherwise”) (citation omitted).
37 37
against state commissions is actually not available because it is
unconstitutional under the Eleventh Amendment does not alter the
determination that the Act supplants Young relief against state
commissioners. The Supreme Court directly confronted this issue in
Seminole Tribe, concluding that the Court could consider the alter-
native remedy provided by Congress sufficient to supplant relief
under Young, notwithstanding the fact that that remedy was uncon-
stitutional. This result struck some commentators as absurd,24 but
the Court unhesitatingly concluded that it is for Congress, and not
the courts, to rewrite defective statutes.25
24
See Currie, 72 N.Y.U. L. REV. at 550 (“That said, the
application of [this] principle in Seminole Tribe makes no sense.
The majority held Ex parte Young precluded by a provision it had
just declared unconstitutionalSSthe section authorizing suit
against the state itself. One of the essential characteristics of
unconstitutional provisions is that they have no effect. Moreover,
the inability to make the state suable removes the only plausible
basis for believing that Congress would have wanted to forbid suit
against the Governor under Ex parte Young . . . . [T]he last thing
that Congress would have wanted was to leave the offended party
with no remedy at all.”).
25
See Seminole Tribe, 517 U.S. at 75-76 (“Here, of course, we
have found that Congress does not have authority under the
Constitution to make the State suable in federal court under §
2710(d)(7). Nevertheless, the fact that Congress chose to impose
upon the State a liability that is significantly more limited than
would be the liability imposed upon the state officer under Ex
parte Young strongly indicates that Congress had no wish to create
the latter under § 2710(d)(3). Nor are we free to rewrite the
statutory scheme in order to approximate what we think Congress
might have wanted had it known that § 2710(d)(7) was beyond its
authority. If that effort is to be made, it should be made by Con-
gress, and not by the federal courts. We hold that Ex parte Young
is inapplicable to petitioner’s suit against the Governor of
Florida, and therefore that suit is barred by the Eleventh
(continued...)
38 38
2.
The telephone carriers and the majority would apply a narrower
reading of Seminole Tribe, however, limiting its scope to the par-
ticular federal statute that decision construed. The carriers ar-
gue that the 1996 Act does not limit relief nearly as dramatically
as does the statute in Seminole Tribe and that Seminole Tribe held
only that that enactment was sufficient to supplant Young. After
all, the same kind of injunctive relief to redress ongoing viola-
tions is available under the 1996 Act as is available under Young;
that was not so in Seminole Tribe. All an aggrieved party need do
under the 1996 Act is to satisfy the administrative exhaustion-like
conditions of the Act’s judicial review provision, as was done
here.
But that is precisely the problem under Seminole Tribe. Sec-
tion 252(e)(6) limits the scope of Commission conduct subject to
scrutiny by federal courts and thus supplants Young. Under Semi-
nole Tribe, 517 U.S. at 74, Young relief is unavailable when, by
enacting the statute, “Congress intended therein not only to de-
fine, but also to limit significantly, the duty imposed” by the
statute through a limited remedial scheme.
This is the carriers’ strongest argument against applying Sem-
inole Tribe, which is silent on the question, because Seminole
25
(...continued)
Amendment and must be dismissed for a lack of jurisdiction.”).
39 39
Tribe does not expressly state that a federal statute limiting de-
fendants and commission duties subject to judicial review, but not
remedies such as injunctive relief, is sufficient to supplant
Young. Nonetheless, the carriers’ attempt to distinguish between
limits on available remedies (as in Seminole Tribe) and limits on
defendants and duties (as in the instant case) finds no support in
Seminole Tribe, which, after all, describes Young relief as a “nar-
row exception to the Eleventh Amendment.” Id. at 74. Therefore,
in the face of ambiguity in Seminole Tribe as to whether it pre-
cludes Young relief only where a statute prohibits certain judicial
remedies, or also where a statute limits only defendants and du-
ties, the majority errs in resolving that ambiguity against state
sovereign immunity.
B.
Because the Act confers exclusive jurisdiction in the federal
courts,26 and, as I have shown, an action in federal court is barred
under the Eleventh Amendment, no review to enforce the commission’s
or a commissioner’s compliance with the Act is available in state
26
“If the State commission does not act to approve or reject the
agreement within 90 days after submission by the parties of an
agreement adopted by negotiation under subsection (a) of this
section, or within 30 days after submission by the parties of an
agreement adopted by arbitration under subsection (b) of this
section, the agreement shall be deemed approved. No State court
shall have jurisdiction to review the action of a State commission
in approving or rejecting an agreement under this section.” 47
U.S.C. § 252(e)(4).
40 40
or federal court. This circumstanceSSthat there is neither a state
nor a federal forum to vindicate federal rights created by the
ActSSis not alone sufficient to trigger relief under Young. Such
a rule was suggested in Idaho v. Coeur d’Alene Tribe, 521 U.S. 261
(1997), as a mere factor to support application of Young, but even
that minimal suggestion was endorsed by only two Justices27 and
expressly repudiated by three.28 The governing rule remains the
same: Relief under Young is available where prospective relief is
necessary to redress on-going violations of federal law,29 but only
if Congress has not supplanted that relief with an alternative,
limited remedial scheme. See Seminole Tribe, 517 U.S. at 74-75.
II.
It is not enough to say that the Eleventh Amendment applies
and that the narrow exception of Young has been supplanted by
Congress, for a state might be found to have waived such immunity.
There is no actual waiver in this case, and, even if constructive
27
See Coeur d’Alene Tribe, 521 U.S. at 270-74 (Kennedy, J.,
joined by Rehnquist, C.J.).
28
See id. at 291-92 (O’Connor, J., joined by Scalia and Thomas,
JJ., concurring).
29
See id. at 294 (O’Connor, J., joined by Scalia and Thomas,
JJ., concurring) (opining that “a Young suit is available where a
plaintiff alleges an ongoing violation of federal law, and where
the relief sought is prospective rather than retrospective”); id.
at 298-99 (Souter, J., joined by Stevens, Ginsburg, and Breyer,
JJ., dissenting) (same).
41 41
waiver is still available as a matter of law, the state defendants
did not waive its immunity voluntarily. They therefore have re-
tained their immunity under the Eleventh Amendment.
A.
As the majority seems to acknowledge, there was no express
waiver; Louisiana did not enact a law or otherwise express its con-
sent to suit in federal court under the 1996 Act. Instead, the
majority reasons that Louisiana effected “a voluntary gratuity
induced waiver” by participating in the regulatory scheme.
In College Savings Bank v. Florida Prepaid Postsecondary
Education Expense Board, 527 U.S. 666 (1999), the Court overruled
Parden v. Terminal Railway of Alabama Docks Department, 377 U.S.
184 (1964), and rejected the theory that a state might construc-
tively waive sovereign immunity.30 In its place, the Court adopted
“[t]he classic description of an effective waiver of a constitu-
tional right”SSthat is, “the intentional relinquishment or abandon-
ment of a known right or privilege.” College Sav. Bank, 527 U.S.
at 682. The test is a “stringent one.” Id. at 675. In any event,
the majority correctly acknowledges that a theory of constructive
waiver is no longer viable.
30
See College Sav. Bank, 527 U.S. at 680 (“We think that the
constructive-waiver experiment of Parden was ill conceived, and see
no merit in attempting to salvage any remnant of it. . . .
Whatever may remain of our decision in Parden is expressly
overruled.”).
42 42
B.
For a waiver to be effective, it must be completely voluntary
and not coerced or based on an unconstitutional condition. The ma-
jority errs in concluding that the supposed waiver here meets that
requirement.
“[W]here the constitutionally guaranteed protection of the
States’ sovereign immunity is involved, the point of coercion is
automatically passedSSand the voluntariness of waiver de-
stroyedSSwhen what is attached to the refusal to waive is the
exclusion of the State from otherwise lawful activity.” College
Sav. Bank, 527 U.S. at 687 (emphasis added). The protection of
College Savings Bank is not limited only to states that were
previously engaging in federally-regulated activity (as distin-
guished from states that were merely participating in a federal
program), as mistakenly urged by the carriers, but instead extends
to any otherwise lawful activity. For example, the Court rejected,
out of hand, any exception whatsoever for states acting as market
participants. Id. at 685-86.31
31
In College Savings Bank, however, the Court distinguished
waivers induced under the Compact and Spending Clauses on the
ground that Congressional approval of interstate compacts and
disbursement of federal funds to the states are matters of
Congressional gratuity and do not improperly interfere with a
state’s ability to conduct otherwise lawful activity. Id. at 686
(citing Petty v. Tenn.-Mo. Bridge Comm’n, 359 U.S. 275 (1959)
(Compact Clause), and South Dakota v. Dole, 483 U.S. 203 (1987)
(continued...)
43 43
The 1996 Act does not force states to waive their sovereign
immunity, but it unconstitutionally subjects to suit in federal
court any state commission that elects to arbitrate interconnection
agreements between competitors operating in local telephone service
markets within their jurisdiction or to approve SGAT’s of Bell
Operating Companies providing service to their jurisdiction. The
telephone carriers emphasize that the Act gives clear notice that
state commissions choosing to regulate will subject themselves to
suit in federal court.32 After College Savings Bank, however, clear
notice, though still necessary, is no longer sufficient to induce
waiver of Eleventh Amendment immunity.
Under College Savings Bank, even a clearly-induced waiver is
ineffective if arbitration of interconnection agreements or approv-
al of SGAT’s by a state commission constitutes “otherwise lawful
activity.” Id. at 687. The question, therefore, is whether arbi-
tration of interconnection agreements or approval of SGAT’s by a
state commission constitutes “otherwise lawful activity” for which
Congress cannot condition a waiver of sovereign immunity, or wheth-
31
(...continued)
(Spending Clause)).
32
See Dole, 483 U.S. at 207 (holding that “if Congress desires
to condition the States’ receipt of federal funds, it must do so
unambiguously, enabling the States to exercise their choice
knowingly, cognizant of the consequences of their participation”)
(citations omitted); Atascadero, 473 U.S. at 247 (holding that the
Rehabilitation Act “falls far short of manifesting a clear intent
to condition participation in the programs funded under the Act on
a State’s consent to waive its constitutional immunity”).
44 44
er, instead, the grant of such power to the states is a gift or
gratuity, which Congress may so condition. Id. at 686-87.
Before the 1996 Act, state commissions regulated local tele-
phone service markets within their jurisdiction. The Act takes
that local regulatory power from the states,33 as the telephone
carriers themselves appear to concede. Granted, the Act does not
keep such authority exclusively in the hands of Congress or the
FCC, but allows it back to the state commissions. That delegation
back to the states is permitted under the statute, however, only if
the states subject themselves to suit in federal court.
Congress was not merely conditioning a gift or a gratuity, as
the carriers insist and the majority concludes. Rather, the Act
imposes conditions on states wishing to continue to regulate local
telephone markets as they once did. This Congress cannot do.
In essence, the Act requires state commissions to sacrifice
either policy preference or sovereign immunity. A state commission
may wish to intervene and make its policy preferences known, but
doing so subjects it to federal jurisdiction. To avoid federal
jurisdiction, a state commission must abdicate its regulatory goals
and hope that the private parties and the FCC will come to a solu-
tion it would endorse. This hardly rises to a voluntary waiver of
33
See AT&T Corp., 525 U.S. at 379 n.6 (“But the question in
these cases is not whether the Federal Government has taken the
regulation of local telecommunications competition away from the
States. With regard to the matters addressed by the 1996 Act, it
unquestionably has.”).
45 45
a state’s constitutional right to sovereign immunity in federal
court.
The telephone carriers would re-characterize state commission
powers under the Act as “federal regulatory authority,” and thus
the kind of activity in which a state may not lawfully engage
without congressional authorization. They and the panel majority
would analogize the Act to congressional exercises of its powers
under the Compact and Spending Clauses, under which Congress is
constitutionally authorized under College Savings Bank to require
waiver.
The regulatory powers enjoyed by state commissions under the
1996 Act are indeed “federal” in the sense that Congress, and not
a particular state, has articulated the governing standards. But
the underlying subject matter nevertheless remains within the in-
disputable (if non-exclusive) domain of the states. Like other
matters of commerce, local telephony is a matter both within the
jurisdiction of state regulators and subject to federal preemption.
As the majority observes, “[T]he question in this case is not
whether the Federal Government has taken the regulation of local
telecommunications competition away from the states. With regard
to the matters addressed by the 1996 Act, it unquestionably has.”
Iowa Utils. Bd., 525 U.S. at 379 n.6.
To be sure, Congress could have preempted state regulation of
46 46
all telephony.34 And Congress may give the states the option of
providing their own regulations or facing preemption by federal
law.35 But the greater does not always include the lesser, and it
certainly does not when state sovereigntySSas opposed to mere
policy preferenceSSis at issue.
In pursuit of legitimate ends such as telephony regulation,
Congress may not offend state sovereignty. This was so in the com-
mandeering cases36 and is no less so here with respect to the
Eleventh Amendment. Congress may ask states to choose either to
regulate or to stand back and let federal law take over. But just
as it cannot commandeer states to conduct federal regulation on be-
half of the United States, it cannot condition, on submission to
suits in federal court, state participation in those regulatory af-
34
See FERC v. Mississippi, 456 U.S. 742, 764 (1982) (noting that
“the commerce power permits Congress to pre-empt the States
entirely in the regulation of private utilities”); Hodel v. Va.
Surface Mining & Reclamation Ass’n, 452 U.S. 264, 290 (1981) (“A
wealth of precedent attests to congressional authority to displace
or pre-empt state laws regulating private activity affecting
interstate commerce”).
35
See FERC, 456 U.S. at 765 (stating that, because “Congress
could have pre-empted the field,” statutes “should not be invalid
simply because, out of deference to state authority, Congress
adopted a less intrusive scheme and allowed the States to continue
regulating in the area on the condition that they consider the
suggested federal standards”); New York v. United States, 505 U.S.
144, 167 (1992) (observing that “[w]e have recognized Congress’
power to offer States the choice of regulating [commercial]
activity according to federal standards or having state law pre-
empted by federal regulation”).
36
See Printz v. United States, 521 U.S. 898 (1997); New York v.
United States.
47 47
fairs in which states once freely engaged.
Thus, the telephone carriers’ argument that state commissions
enjoy the option whether to regulate may solve Tenth Amendment
problems raised in Printz or New York but does not address the
concern of coerced waiver of state sovereignty under the Eleventh
Amendment. Giving states the choice whether to be preempted by
federal law represents a permissible form of “cooperative federal-
ism,” Hodel, 452 U.S. at 289, but the conscription of state offi-
cials to execute federal regulatory programs or the subjection of
state officers to suit in federal court diminishes the “accounta-
bility of state [and] federal officials” and thereby violates con-
stitutional principles of federalism, Printz, 521 U.S. at 929-30.
III.
The Eleventh Amendment bars AT&T from suing the state defen-
dants but not from suing BellSouth. AT&T thus argues that the dis-
trict court abused its discretion when it dismissed the entire
case, even as to BellSouth.37
Authority to dismiss an entire case because of the unavail-
ability of one particular party is governed by FED. R. CIV. P. 19,
which “requires that if, as a matter of equity the court finds that
the lawsuit cannot proceed without the absent party, then that par-
37
The majority's erroneous disposition of the other issues on
appeal rendered unnecessary a discussion by the majority of this
indispensable-party issue.
48 48
ty be considered indispensable and the case dismissed.” Shelton,
843 F.2d at 216 (emphasis added) We review the district court’s
exercise of its equitable powers for abuse of discretion. See In
re Nikoloutsos, 199 F.3d at 236.
To determine whether a party is indispensable, courts look to
rule 19(b), which states:
[T]he court shall determine whether in equity and good
conscience the action should proceed among the parties
before it, or should be dismissed, the absent person be-
ing thus regarded as indispensable. The factors to be
considered by the court include: first, to what extent a
judgment rendered in the person’s absence might be preju-
dicial to the person or those already parties; second,
the extent to which, by protective provisions in the
judgment, by the shaping of relief, or other measures,
the prejudice can be lessened or avoided; third, whether
a judgment rendered in the person’s absence will be ade-
quate; fourth, whether the plaintiff will have an ade-
quate remedy if the action is dismissed for nonjoinder.
The determination of whether a party is “indispensable” is thus a
pragmatic one.38 “The distilled essence” of the four factors “is
the attempt to balance the rights of all concerned.” Schutten, 421
F.2d at 873. In other words,
[t]he plaintiff has the right to “control” his own liti-
gation and to choose his own forum. This “right” is, how-
ever, like all other rights, “defined” by the rights of
others. Thus the defendant has the right to be safe from
38
See Fernandes v. Limmer, 663 F.2d 619, 636 (Former 5th Cir.
Dec. 1981) (“Courts confronted with motions to dismiss a suit for
failure to join purportedly 'indispensable parties' properly
approach the problem pragmatically.”); Schutten v. Shell Oil Co.,
421 F.2d 869, 873 (5th Cir. 1970) (“The 1966 amendment of Rule 19
attempts to remedy this situation by conditioning a finding of
'indispensability' upon 'pragmatic considerations.'”) (citation
omitted).
49 49
needless multiple litigation and from incurring avoidable
inconsistent obligations. Likewise the interests of the
outsider who cannot be joined must be considered. Final-
ly there is the public interest and the interest the
court has in seeing that insofar as possible the litiga-
tion will be both effective and expeditious.
Id.
The district court did not abuse its equitable powers, under
rule 19, to dismiss the entire case. It fairly reasoned that it
“lacks the power [under Seminole Tribe] to create a remedy under
the 1996 Act. The congressional choice of remedy must be respect-
ed. Therefore, the plaintiffs can no longer obtain the relief that
they requested in their complaints against the Public Service Com-
mission.” AT&T Communications, 43 F. Supp. 2d at 604.
Imagine if it were otherwise: The 1996 Act cannot constitu-
tionally subject state commissions to suit. For a federal court
then to rule on the validity of an agreementSSonly as against the
other carrier, and not against the state defendants as wellSSis
potentially to expose the carriers to conflicting orders. AT&T’s
suggestion that the Act allows the FCC to take over regulatory au-
thority from the state commission “[i]f a State commission fails to
act to carry out its responsibility under this section in any pro-
ceeding or other matter under this section,” § 252(e)(5), is of
little help, for the very problem at hand is not the commission’s
failure to act, but the validity of those acts under federal law,
and the Act permits FCC jurisdiction only in cases of the former.
Thus, in rejecting the argument that, under § 252(e)(6), the
50 50
other party to the agreement (here, BellSouth) was the “only proper
part[y] for suit,” one court opined:
It is the [Commission’s] duty, if it chooses to regulate,
not the other party’s, to ensure that the agreement meets
the requirements of the Act . . . . Furthermore, it is
the [Commission’s] function, not the other party’s, to
enforce the agreement. Lacking power to enjoin the [Com-
mission] from enforcing the approved agreement, federal
courts would have little effective remedy for aggrieved
plaintiffs, or would subject companies to the intolerable
prospect of conflicting commands from federal courts and
state regulatory agencies.
Michigan Bell Tel. Co. v. Climax Tel. Co., 202 F.3d 862, 868 (6th
Cir.) (emphasis added), cert. denied, 121 S. Ct. 54 (2000).
To allow suit here against BellSouth potentially either would
expose the carriers to conflicting commands or would prejudice the
state defendants by putting their policy preferences at risk of
reversal notwithstanding their immunity under the Eleventh Amend-
ment from interference by federal courts. Thus, AT&T’s argument
that rule 19(b) ought not bar suit against BellSouth because no
adequate remedy is otherwise available directly confronts another
rule 19(b) factorSSthat is, that any adequate remedy inevitably and
simultaneously would prejudice the Louisiana Commission’s immunity
from interference of the federal courts.
Finally, AT&T complains that “an equitable doctrine cannot be
invoked to defeat the statutory mandate that aggrieved parties have
the right of review of the legality of commission-approved inter-
connection agreement [sic] in federal court.” As I have explained,
however, the statute is unconstitutional, and it is up to Congress
51 51
to fix it.
I respectfully dissent.
52 52