1RECOMMENDED FOR FULL-TEXT PUBLICATIONPursuant to Sixth Circuit Rule 206ELECTRONIC CITATION: 2000 FED App. 0025A (6th Cir.)File Name: 00a0025a.06UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT_________________MICHIGANBELLTELEPHONECOMPANY, d/b/a AmeritechMichigan,Plaintiff-Appellee,v.CLIMAXTELEPHONECOMPANY,Defendant,JOHNG.STRAND,JOHNC.SHEA, and DAVIDA.SVANDA, Commissioners ofthe Michigan Public ServiceCommission (In TheirOfficial Capacities and not asIndividuals),Defendants-Appellants,UNITEDSTATES OFAMERICA,FEDERALCOMMUNICATIONSCOMMISSION,Intervenors.;>1No. 98-13152Michigan Bell Telephone v. ClimaxTelephone Co., et al.No. 98-1315Appeal from the United States District Courtfor the Western District of Michigan at Grand Rapids.No. 97-00197—Gordon J. Quist, District Judge.Argued: April 29, 1999Decided and Filed: January 18, 2000Before: JONES, BOGGS, and COLE, Circuit Judges._________________COUNSELARGUED:David A. Voges, OFFICE OF THE ATTORNEYGENERAL, PUBLIC SERVICE DIVISION, Lansing,Michigan, for Appellants. John E. Muench, MAYER,BROWN & PLATT, Chicago, Illinois, for Appellee. SusanPacholski, U.S. DEPARTMENT OF JUSTICE, CIVILDIVISION, APPELLATE STAFF, Washington, D.C., forIntervenors.ON BRIEF:David A. Voges, David M.Gadaleto, OFFICE OF THE ATTORNEY GENERAL,PUBLIC SERVICE DIVISION, Lansing, Michigan, forAppellants. John E. Muench, Robert M. Dow, Jr., TheodoreA. Livingston, MAYER, BROWN & PLATT, Chicago,Illinois, Jeffrey V. Stuckey, Joseph A. Fink, John M.Dempsey, Edward R. Becker, DICKINSON WRIGHT,Lansing, Michigan, for Appellee. Susan Pacholski, Mark B.Stern, U.S. DEPARTMENT OF JUSTICE, CIVILDIVISION, APPELLATE STAFF, Washington, D.C., forIntervenors.BOGGS, J., delivered the opinion of the court, in whichJONES, J., joined. COLE, J. (p. 13), delivered a separateopinion concurring in part and dissenting in part.No. 98-1315Michigan Bell Telephone v. ClimaxTelephone Co., et al.3______________________AMENDED OPINION______________________BOGGS, Circuit Judge. Climax Telephone Companyexpanded its local exchange service into the service territoryof Michigan Bell Telephone Company, d/b/a/ AmeritechMichigan (“Ameritech”). Climax petitioned the MichiganPublic Service Commission (the “PSC”) for arbitration of theterms, conditions, and prices for interconnection and relatedarrangements from Ameritech, under Section 252 of thefederal Telecommunications Act of 1996 (the “FTA” or the“Act”), 47 U.S.C. § 252, and “the procedure adopted by the[PSC’s] Order dated July 16, 1996, in Case No. U-11134.”An arbitration panel rendered its decision, to which bothparties objected. The PSC rejected the objections, adoptedthe arbitration panel’s decision, and approved aninterconnection agreement between the parties based on thearbitration panel’s decision.Ameritech sued Climax and the Commissioners of the PSCin their official capacities, seeking declaratory and injunctiverelief against enforcement of the interconnection agreement.The Commissioners moved to dismiss the complaint againstthem, citing provisions of the Act, the doctrine of sovereignimmunity, and the Tenth and Eleventh Amendments. Thedistrict court denied the motion, and the Commissionersappeal its decision. We granted the Federal CommunicationsCommission (“FCC”) intervenor status, and now affirm thejudgment of the district court. Only the interlocutory appealis before us—the merits of the case have not yet beenconsidered below.IClimax is an established local exchange carrier (“LEC”)serving the Climax, Michigan area. On July 30, 1996, Climaxfiled an application with the PSC to provide local exchangeservice in the greater Battle Creek and Kalamazoo, Michigan4Michigan Bell Telephone v. ClimaxTelephone Co., et al.No. 98-13151The terms of the agreement are not important for purposes of the casenow before us. The primary dispute in the case underlying the presentappeal involves a term of the agreement that requires Ameritech to chargeClimax local rates to terminate calls originating within Climax’s largelocal area (but outside Ameritech’s smaller local area), for whichAmeritech would otherwise charge toll rates. Ameritech argues that thisterm is contrary to §§ 251 and 252 of the Act.area, where Ameritech is the incumbent provider. Theapplication showed that Climax intended to establish a localcalling area covering the geographical area served by fourAmeritech local calling areas. In late 1996, Climax andAmeritech began negotiating an interconnection agreementand reached resolution on all but seven issues.On March 10, 1997, just before the end of the statutoryperiod for timely filing of petitions for arbitration,see47U.S.C. § 252(b)(1), Climax petitioned for arbitration.Pursuant to the procedures established in its opinion in casenumber U-11134, the PSC assigned the matter to anarbitration panel composed of two technical staff people andone administrative law judge.SeeCase No. U-11134, 1996WL 467772 (Mich. P.S.C. July 16, 1996). The paneladdressed the five open issues; on May 21, 1997, it adoptedClimax’s proposed resolution as to three issues, Ameritech’sproposed resolution as to one issue, and found that the fifthissue was not properly raised.On June 25, 1997, the PSC adopted the decision of thearbitration panel and ordered the parties to file theinterconnection agreement.1One commissioner dissented.On July 11, 1997, the parties filed the agreement. On July25, 1997, Ameritech moved for a rehearing, which the PSCdenied on August 13.On September 12, 1997, Ameritech filed a complaint infederal district court against Climax and the PSCCommissioners in their official capacity. Ameritech seeksdeclaratory determinations that (1) certain sections of theNo. 98-1315Michigan Bell Telephone v. ClimaxTelephone Co., et al.13_____________________________________________CONCURRING IN PART, DISSENTING IN PART_____________________________________________R. GUY COLE, JR., concurring in part and dissenting inpart. I am in complete agreement with the majority’sdisposition of the Commissioners’ Eleventh Amendmentclaim. I write separately because I do not believe that thiscourt has jurisdiction to consider the interlocutory appeal ofthe Commissioners’ other claims.The Commissioners’ Eleventh Amendment claim is clearlyappealable under the collateral order exception.See Sault Ste.Marie Tribe of Chippewa Indians v. Michigan,5 F.3d 147,149 (6th Cir. 1993).However, the Commissioners’ TenthAmendment and § 252 claims are not appealable collateralorders because those claims are not “effectively unreviewableon appeal from a final judgment.”See Coopers & Lybrand v.Livesay,437 U.S. 463, 468-69 (1978). In addition, thoseclaims do not fall under the doctrine of pendent appellatejurisdiction because they are not “inextricably intertwined”with the Eleventh Amendment claim, such that the EleventhAmendment claim could not be determined without firstaddressing the nonappealable claims.See Chambers v. OhioDep’t of Human Servs.,145 F.3d 793, 797 (6th Cir.),cert.denied,119 S. Ct. 408 (1998).Accordingly, I would affirm the district court’s denial of theCommissioners’ motion to dismiss based on the EleventhAmendment, but dismiss the Commissioners’ other claims forlack of jurisdiction.12Michigan Bell Telephone v. ClimaxTelephone Co., et al.No. 98-1315the scope of a federal court’s inquiry, but it does not limit theproper parties for suit.IIIOnde novoreview, the Commissioners’ claims in thisinterlocutory appeal lack merit as a matter of law. TheEleventh Amendment does not bar Ameritech’s suit becauseAmeritech is seeking injunctive relief against an ongoingviolation of federal law. The Tenth Amendment does not barthe suit because the federal government did not commandeerstate resources. Michigan chose to regulate interconnectionagreements. Finally, the Act does not jurisdictionally bar thesuit. Accordingly, the district court’s denial of theCommissioners’ motion to dismiss is AFFIRMED and thecase is REMANDED for trial.No. 98-1315Michigan Bell Telephone v. ClimaxTelephone Co., et al.5agreement violate the Act, the implementing regulations, statelaw, and the United States Constitution, and (2) the PSC lacksjurisdiction to decide one of the issues. Ameritech also seeksto enjoin enforcement of those sections of the agreement, andto reform the agreement.On November 24, 1997, the Commissioners moved to bedismissed as defendants, on grounds that (1) the district courtlacked personal jurisdiction over them and (2) Ameritechfailed to state a claim on which relief can be granted. Thedistrict court heard oral argument and denied the motion. TheCommissioners appeal the denial of their motion to dismiss.This court ordered the Commissioners to show cause why theappeal should not be dismissed for lack of jurisdiction.See6th Circuit Docket, Case No. 98-1315, March 25, 1998. Onthe Commissioners’ further showing, the order waswithdrawn on the ground that district court orders denyingdismissal on Eleventh Amendment grounds are appealablecollateral orders.SeeOrder, Case No. 98-1315, April 16,1998.IIWhere the district court bases its denial of a motion todismiss for failure to state a claim purely on the legalsufficiency of the plaintiff’s case, we review the decisiondenovo.See Barrett v. Harrington, 130 F.3d 246, 251 (6th Cir.1997) (citingRMI Titanium v. Westinghouse Electric Corp.,78 F.3d 1125, 1134 (6th Cir. 1996)). All factual allegationsin the complaint are accepted as true.Nishiyama v. DicksonCounty, 814 F.2d 277, 279 (6th Cir. 1987) (en banc).“Where a trial court’s ruling on jurisdiction is based in parton the resolution of factual disputes, a reviewing court mustaccept the district court’s factual findings unless they areclearly erroneous. However, review of the district court’sapplication of the law to the facts isde novo.”RMI Titaniumv. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir.6Michigan Bell Telephone v. ClimaxTelephone Co., et al.No. 98-13151996) (internal citations removed) (citingYnclan v. Dep’t ofthe Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991)).Questions of statutory interpretation, like all matters of law,are reviewedde novo.See United States v. Brown, 915 F.2d219, 223 (6th Cir. 1990).A. The Telecommunications Act of 1996Congress enacted the FTA to promote competition in alltelecommunications markets, including the local servicemarket.SeeH.R. Conf. Rep. No. 104-458, at 113 (1996),reprinted in1996 U.S.C.C.A.N. 124. Title I, Part II of theAct provides standards and procedures to allow startupcarriers to interconnect their networks to the incumbentcarrier’s network, to access the incumbent carrier’s networkelements piece-by-piece, to purchase the incumbent carrier’sretail services “at wholesale rates” for resale, and to accessthe incumbent carrier’s physical infrastructure and facilitiesfor connection purposes. 47 U.S.C. §§ 251(b)(4) and251(c)(6). The Act contemplates that state public utilitycommissions will assume regulatory authority overinterconnection agreements; if a state chooses not to do so “inany proceeding or other matter under this section,” the FCCwill assume regulatory authority “with respect to theproceeding or matter.” 47 U.S.C. § 252(e)(5).The Act requires incumbent providers to negotiate in goodfaith with new entrants; if the parties cannot resolve theirdifferences, either party may petition the regulatory authorityfor arbitration of the unresolved issues.See47 U.S.C.§§ 251(c), 252(b). The arbitration panel “shall limit itsconsideration of any petition [for arbitration] (and anyresponse thereto) to the issues set forth in the petition and inthe response, if any . . . .” 47 U.S.C. § 252(b)(4)(A). Thearbitration panel must ensure that its resolution meets therequirements of § 251 and the FCC regulations implementing§ 251,see47 U.S.C. § 252(c)(1), and the regulatory authoritymay reject an arbitrated resolutiononly ifit does not meetNo. 98-1315Michigan Bell Telephone v. ClimaxTelephone Co., et al.11The Commissioners’ Tenth Amendment argument is alsounavailing. The Commissioners argue that the doctrine ofNew York v. United States, 505 U.S. 144 (1992), andPrintzv. United States, 521 U.S. 98 (1997), prohibits Ameritech’ssuit as a “commandeering” of state resources. Michiganchose to regulate interconnection agreements under the Act.It could have chosen not to participate, in which case it wouldnot have arbitrated and reviewed the agreement betweenAmeritech and Climax. Michigan did, in fact, arbitrate andreview the agreement, precisely the action complained of.The state cannot have it both ways. The United States did notcompel its actions and, consequently, the Tenth Amendmentdoes not bar Ameritech’s suit.See, e.g., New York, 505 U.S.at 167, 179 (Congress may offer the states a choice ofregulating activity);FERC v. Mississippi, 456 U.S. 742, 768(1982).Finally, the Commissioners argue that they are not properparties under § 252(e)(6). They point out that § 252(e)(6)provides that “[i]n any case in which a State commissionmakes a determination . . . , any party aggrieved by suchdetermination may bring an action in an appropriate Federaldistrict court to determine whether the agreement . . . meetsthe requirements of section 251 [and 252],” arguing that theother party to the agreement is the only proper parties for suit.This argument misses the point. The heading of subsection(e)(6) is “Review of State commissionactions” (emphasisadded). It is the PSC’s duty, if it chooses to regulate, not theother party’s, to ensure that the agreement meets therequirements of the Act both at the time of arbitration, 47U.S.C. § 252(c), and at the time of approval, 47 U.S.C.§ 252(e)(2)(B). Furthermore, it is the PSC’s function, not theother party’s, to enforce the agreement. Lacking power toenjoin the PSC from enforcing the approved agreement,federal courts would have little effective remedy for aggrievedplaintiffs, or would subject companies to the intolerableprospect of conflicting commands from federal courts andstate regulatory agencies. The language quoted above limits10Michigan Bell Telephone v. ClimaxTelephone Co., et al.No. 98-1315v. Arte Publico Press, 157 F. 3d 282 (5th Cir. 1998)).AccordBellAtlantic-Md., Inc., v. MFS Intelenet of Md., Inc.,Civil Case No. S 99-2061 (D. Md. Oct. 29, 1999).TheEx parte Youngdoctrine operates as an exception to thegeneral rule of sovereign immunity that states may only besued with their consent. UnderEx parte Young,suits againststate officials seeking equitable relief for ongoing violationsof federal law are not barred by the Eleventh Amendment.Exparte Young, 209 U.S. at 159-60. The PSC not only approvedthe interconnection agreement, it is responsible for ongoingenforcement of the agreement. Ameritech alleges that theagreement violates federal law, and is seeking equitable relief.Taking the alleged facts as true, as we are required to do whenreviewing a dismissal for failure to state a claim, Ameritechhas stated a claim against the Commissioners, and thusagainst the state of Ohio, for equitable relief from an ongoingviolation of federal law. UnderEx parte Young, Ameritechis entitled to proceed.Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996)andIdaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997), donot affect the application ofEx parte Youngto § 252 cases.Recently, the Supreme Court once again affirmed the vitalityofEx parte Young, even while strongly reaffirming states’rights against suit. SeeAlden v. Maine, ___ U.S. ___, 119 S.Ct. 2240, 2266-68 (1999) (sovereign immunity does not barcertain actions against state officers for injunctive ordeclaratory relief) (contrastingEx parte YoungwithSeminoleTribeandCoeur d’Alene Tribe).If Ameritech is correct in its claim that the agreementviolates federal law, the PSC’s ongoing enforcement of theinterconnection agreement constitutes an ongoing violation offederal law, against which Ameritech seeks injunctive relief.Therefore, underEx parte Young, the Eleventh Amendmentdoes not bar Ameritech’s suit against the Commissioners.No. 98-1315Michigan Bell Telephone v. ClimaxTelephone Co., et al.7those requirements,see47 U.S.C. § 252(e)(2)(B). When astate acts as the regulatory authority, “any party aggrieved by[its] determination may bring an action in an appropriateFederal district court to determine whether the agreement orstatement meets the requirements of section 251 of this titleand this section [252].” 47 U.S.C. § 252(e)(6). The Actexpressly deprives state courts of jurisdiction to review theapproval or rejection of an agreement by state regulatoryauthorities.See47 U.S.C. § 252(e)(4).B. Issues Presented on AppealThe Commissioners raise four issues: (1) whether they areproper parties in a federal court action filed pursuant to 47U.S.C. § 252(e); (2) whether the Eleventh Amendment barsnaming the Commissioners in this suit; (3) whether the PSC,in arbitrating the agreement, waived sovereign immunity; and(4) whether the Tenth Amendment bars naming theCommissioners in this suit. Ameritech raises the issue ofwhether this court has jurisdiction to conduct interlocutoryreview of the Commissioners’ “proper parties” and TenthAmendment claims.Ameritech and the FCC both cite numerous district courtcases, twenty-three altogether, each of which denies the stateregulatory agency’s motion to dismiss. Recently, the SeventhCircuit became the first appellate court to consider the issue.MCI Telecommunications Corp. v. Illinois CommerceComm’n, 168 F.3d 315 (7th Cir. 1999). The panel rejectedthe Commissioners’ Eleventh Amendment argument andaffirmed the district court’s denial of their motion to dismiss.C. Jurisdiction to Decide the Appeal“Ordinarily, appellate jurisdiction is lacking to hear anappeal from an order denying a Rule 12(b)(6) motion todismiss since such an order is interlocutory in nature.”SuarezCorp. Indus. v. McGraw, 125 F.3d 222, 225 (4th Cir. 1997);see alsoHill v. New York, 45 F.3d 653, 659 (2d Cir. 1995) (“a8Michigan Bell Telephone v. ClimaxTelephone Co., et al.No. 98-1315denial of a motion to dismiss is ordinarily considered nonfinal, and therefore not immediately appealable”).The Commissioners invoke the jurisdiction of this courtpursuant to 28 U.S.C. § 1291 and the collateral order doctrineofCohen v. Beneficial Indus. Loan Corp., 337 U.S. 541,545–46 (1949). “The courts of appeals . . . shall havejurisdiction of appeals from all final decisions of the districtcourts of the United States.” 28 U.S.C. § 1291. To beappealable as a collateral order, a district court’s order must1) conclusively decide the disputed issue; 2) resolve animportant issue separate and independent from the merits ofthe action; and 3) be effectively unreviewable on appeal froma final judgment.Coopers & Lybrand v. Livesay, 437 U.S.463, 468–69 (1978). The Commissioners assert that theirTenth and Eleventh Amendment claims were conclusivelydetermined by the district court, that they are completelyseparate from Ameritech’s claim that the agreement isinconsistent with federal law, and that they would beeffectively unreviewable on appeal from a final judgment.The Commissioners also argue that the Tenth Amendmentclaim is “inextricably intertwined” with their other claims,and assert jurisdiction under the doctrine of “pendentappellate jurisdiction.”See Chambers v. Ohio Dep’t ofHuman Servs., 145 F.3d 793, 797 (6th Cir. 1998).Ameritech concedes that this court has jurisdiction to hearthe Commissioners’ Eleventh Amendment claim.See PuertoRico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc.,506 U.S. 139, 142–48 (1993);Sault Ste. Marie Tribe ofChippewa Indians v. Michigan, 5 F.3d 147, 149 (6th Cir.1993).Ameritech argues that this court does not havejurisdiction to hear the claim that the Commissioners are notproper parties, nor the claim that the Act violates the TenthAmendment. The district court’s order is not a propercollateral order with respect to either claim, Ameritechcontends, nor is either claim “inextricably intertwined” withthe Eleventh Amendment claim to confer jurisdiction.SeeChambers, 145 F.3d at 797 (“pendent appellate jurisdictionNo. 98-1315Michigan Bell Telephone v. ClimaxTelephone Co., et al.92Similarly, the Seventh Circuit recently decidedMCITelecommunications Corp. v. Illinois Commerce Comm’n,168 F.3d 315(7th Cir. 1999), against the Illinois Commissioners. Although we agreewith the result, we do not base our decision on the reasoning in that casebecause the court reached its decision by applying the constructive waiverdoctrine, which has since been limited by the Supreme Court inCollegeSavings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 119S. Ct. 2219 (1999), and did not reach theEx parte Youngissue. SeeMCI,168 F.3d at 320-23,amended183 F.3d 558, 564-67. The Seventh Circuithas subsequently granted rehearing en banc on this opinion. 183 F.3d567-68.On March 29, 1999, the Middle District of Louisiana apparentlybecame the first court to grant immunity to a state regulatory body. SeeAT&T Communications of South Central States v. BellsouthTelecommunications, Inc., 43 F. Supp. 2d 593 (M.D. La. 1999). Thecourt considered itself bound by Fifth Circuit precedent interpretingSeminole Tribeas extinguishing waiver. Seeid. at 600-01 (citingChavez. . . only may be exercised when the appealable issue at handcannot be resolved without addressing the nonappealablecollateral issue”). Clearly, the Eleventh Amendment claimcan be resolved without resolving either of the other claims.All of the Commissioners’ claims are separate andindependent of the issue of whether the agreement isconsistent with federal law, have been conclusively decidedbelow, and would be effectively unreviewable on appeal froma final judgment. We must decide the Eleventh Amendmentclaim in any event, and it would be a waste of judicialresources not to hear the other claims now. Finally, all of theCommissioners’ claims are unavailing.D. DiscussionAlthough the Commissioners disagree, the case before thiscourt is a straightforwardEx parteYoungcase. SeeEx parteYoung,209 U.S. 123 (1908). Most district courts that haveaddressed this issue have applied theEx parte Youngdoctrineand denied the state regulatory authorities’ motions todismiss.2We now do the same.