US Supreme Court to Review State Telecom Case

On March 5, 2001, the United States Supreme Court granted certiorari and agreed to hear an appeal from a decision of the Seventh Circuit Court of Appeals in Illinois Bell Telephone Company d/b/a Ameritech Illinois v. WorldCom Technologies, Inc., 179 F.3d 566 (7th Cir. 1999).

As most people in the industry know, Ameritech is an incumbent local exchange carrier (ILEC) owned by SBC Communications, Inc. The underlying proceeding before the Illinois Commerce Commission (ICC) involved what has now become a common complaint by ILECs against competitive local exchange carriers (CLECs). Specifically, Ameritech tried to avoid paying reciprocal compensation to CLECs by arguing that calls bound for Internet service providers (ISPs) are not local and therefore not subject to the reciprocal compensation requirements of the Federal Telecommunications Act of 1996 (FTA96), 47 U.S.C. § 251 et seq., and resulting interconnection agreements.

The ICC disagreed with Ameritech and found that calls to ISPs were properly classified as local and subject to the reciprocal compensation provisions in the parties' interconnection agreements. Ameritech appealed the decision of the ICC to the United States District Court for the Northern District of Illinois. In doing so, Ameritech relied on Section 252(e)(6) of FTA96 which provides, in part, that when 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." The ICC Commissioners subsequently moved to dismiss Ameritech's appeal for lack of subject matter jurisdiction, arguing that FTA96 only permits federal court review of an "agreement," not an order or ruling from a state commission. The District Court refused to dismiss the appeal, but upheld the ICC's ruling that calls to ISPs were local and subject to reciprocal compensation.

Ameritech then appealed to the United States Court of Appeals for the Seventh Circuit, and the ICC Commissioners cross-appealed. The Seventh Circuit affirmed the District Court's decision, holding that the ICC Commissioners' ruling was subject to review by Federal courts and did not violate federal law.

The Supreme Court's grant of certiorari is limited to three questions: (1) whether the ICC's action relating to the enforcement of an interconnection agreement previously approved under Section 252 of FTA96 constitutes a determination under Section 252; (2) whether a state commission's acceptance of Congress' invitation to participate in a federal regulatory scheme that provides for review of state commission determinations in federal court constitutes a waiver of a state's immunity under the Eleventh Amendment to the United States Constitution; and (3) whether an official-capacity action seeking prospective relief against state public utility commissioners for alleged ongoing violations of federal law in performing regulatory functions under FTA96 could be maintained under the doctrine of Ex parte Young, 209 U.S. 123 (1908). The Ex parte Young doctrine allows private parties to sue individual state officials for prospective relief to enjoin ongoing violations of federal law.

Essentially, what this grant of certiorari means is that the Supreme Court will decide whether federal courts have the power to review certain actions taken by state public utility commissions involving local exchange carriers and FTA96. The case will be heard and a ruling is expected during the Supreme Court's October 2001 term.

Elliott S. Cappuccio is an associate in the San Antonio office of Stumpf Craddock Massey & Pulman, P.C. (SCM&P). Mr. Cappuccio practices primarily in the fields of telecommunications law, commercial litigation, and consumer law.

SCM&P is a full-service law firm with practice areas that include, among others: Telecommunications; Internet; Corporate & Venture Structuring; IP Protection; Banking & Bankruptcy; Real Estate; and Commercial & Civil Litigation. In these areas, SCM&P represents CLECs, IXCs, ISPs, ESPs, ASPs, and many other providers and users of telecommunications services, equipment, and bandwidth.

SCM&P offers its clients a unique advantage over other law firms: we do not, have not, and will not represent the incumbent telecom monopolies. We are Counsel To The Competition.™