Lead Opinion
Thе issues in this case are (1) whether a telecommunications carrier is barred by the Eleventh Amendment from bringing suit in federal district court
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, аny 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 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.
I. The Telecommunications Act of 1996
A. Background; Preemption of State Regulatory Jurisdiction
In AT&T Corp. v. Iowa Utilities Board,
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 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 рromulgated 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 Competition Provisions in the Telecommunications Act of 1996, 11 FCCR 15499,
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 rule-mаking authority to 'carry out the ‘provisions of this Act,’ which include §§ 251 and 252, added by the Telecommunications Act of 1996.” Id. at 378,
Significantly for purposes of deciding the Eleventh Amendment issues in the present case, the Court in Iowa Utilities, in answer 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 prоgram 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,
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 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 mаtter, 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 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 werе 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.,
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
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,
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,
Eleventh Amendment immunity from suit is not absolute. College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board,
In Seminole Tribe v. Florida,
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,
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.
The New Jersey bank relied upon Parden v. Terminal Railway of Alabama State Docks Department,
The Supreme Court in College Savings, however, expz*essly overruled Parden and its “constructive-waiver experiment [as] ill conceived.”
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 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
In Petty v. Tennessee-Missouri Bridge Commission,
The fundamental difference between the College Savings case and the Petty and Dole cases, as the Court cogently pointed out, 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 аttached 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 Chas C. 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 vol-untariness of waiver destroyed-when what is attached to the refusal to waive is the exclusion of the State from otherwise lawful activity.
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.,
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,
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,
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
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.
C. Application of Ex -parte Young
We аgree with the Sixth, Seventh, and Tenth Circuits that a 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,
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,
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
_ In Seminole Tribe, the Supreme Court noted that the Indian Gaming Regulatory Act (“IGRA”) provided that the sole judicial 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 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 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.
Appellees also argue that the Supreme Court’s decision in Idaho v. Coeur d’Alene Tribe,
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) ap*649 proach to the application of Ex parte Young, see Coeur d’Alene,521 U.S. 261 , 276-282,117 S.Ct. at 2038-2040 ,138 L.Ed.2d 438 (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 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,
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,
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.
Notes
. 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 apрear 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,
. In this opinion, for convenience and hopefully some clarity, we refer to all of the parties and non-parties which have adopted the position on appeal of plaintiff-appellant AT&T
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.
. 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.
. “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).
Dissenting Opinion
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.
Under the Eleventh Amendment, states enjoy broad sovereign immunity from suit in federal court:
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.
U.S. Const, amend. XI. Though the amendment’s text most reasonably applies only to suits in diversity, the Supreme
This immunity extends not only to states but to their agencies, as well.
Whether the 1996 Act violates the Eleventh Amendment is res nova in this Circuit.
First, the carriers assert the application of the doctrine announced in Young to allow suit against the commissioners. Second, they assert that the commission effectively waived its state sovereign immunity by electing to arbitrate the interconnection agreement and approve Bell-South’s SCAT 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.”
The Supreme Court recently addressed the Young and waiver issues in, respectively, Seminole Tribe and College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board,
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 powers
In Young, the Court fashioned a. judicial remedy to provide prospective relief against state officials to redress ongoing violations of federal law, as a special exception to the Eleventh Amendment bar to suit. Under Seminole Tribe, however, judicial relief pursuant to Young is not avаilable 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, Congress acted to supplant that judicial remedy by substituting a statute-based remedial scheme. See Seminole Tribe,
1.
As a judicially-crafted exception to the Eleventh Amendment, the Young doctrine is not a fiction in which courts ought to engage lightly.
Nevertheless, it is Congress that creates federal statutory rights, so it is also Congress that dictates the remedies available to enforce statutory violations.
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, thе duty imposed by § 2710(d)(3). For example, where the court finds that the Staté has failed to negotiate in good faith, the only remedy prescribed is an order directing the State and the Indian tribe to conclude a compact within 60 days. And if the parties disregard 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 Interior who then must prescribe regulations governing class III gaming on the tribal lands at issue. By contrast with this quite modest set of sanctions, 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. 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 paHe Young.
Id. at 74-75,
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 reviеw provisions of a statute 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 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....” 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 reviewable commission conduct, aggrieved parties have a right to judicial relief under the Act, but only after the State commission has made a detemi-nation.
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 to the arbitration process itself) complies with the Act, is to “limit significantly ... the dut[ies] imposed by”
Second, the Act refers • only to cases involving “a State commission.” Id. § 252(e)(6). No reference is made to state commissioners. 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,
2.
The telephone carriers and the majority would apply a narrower reading of Seminole Tribe, however, limiting its scope to the particular federal statute that decision construed. The carriers argue 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 violations 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. Section 252(e)(6) limits the scope of Commission conduct subject to scrutiny by federal courts and thus supplants Young. Under Seminole Tribe,
This is the carriers’ strongest argument against applying Seminole Tribe, which is silent on the question, because Seminole Tribe does not expressly state that a federal statute limiting defendants 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
B.
Because the Act confers exclusive jurisdiction in the federal courts,
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. Thеre is no actual waiver in this case, and, even if constructive waiver is still available as a matter of law, the state defendants did not waive its immunity voluntarily. They therefore have retained 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 consent 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,
B.
For a waiver to be effective, it must be completely voluntary and not coerced or based on an unconstitutional condition. The majority errs in concluding that the supposed waiver here meets that requirement.
“[Wjhere the constitutionally guaranteed protection of the States’ sovereign immunity is involved, the point of сoercion 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 laioful activity.” College Sav. Bank,
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.
Under College Savings Bank, even a clearly-induced waiver is ineffective if arbitration of interconnection agreements or approval of SGAT’s by a state commission constitutes “otherwise lawful activity.” Id. at 687,
Before the 1996 Act, state commissions regulated local telephone service markets within their jurisdiction. The Act takes that local regulatory power from the states,
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 solution it would endorse. This hardly rises to a voluntary waiver of 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 indisputable (if non-exclusive) domain of the states. Like other matters of commerce, local telephone 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.,
To be sure, Congress could have preempted state regulation of all telеphone.
In pursuit of legitimate ends such as telephone regulation, Congress may not offend state sovereignty. This was so in the commandeering cases
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 federalism,” Hodel,
III.
The Eleventh Amendment bars AT&T from suing the state defendants but not from suing BellSouth. AT&T thus argues that the district court abused its discretion when it dismissed the entire case, even as to BellSouth.
Authority to dismiss an entire case because of the unavailability of one particular party is governed by Fbd.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 party be considered indispensable and the case dismissed.” Shelton,
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 being 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 prejudicial 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 adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.
The determination of whether a party is “indispensable” is thus a pragmatic one.
[t]he plaintiff has the right to “control” his own litigation and to choose his own forum. This “right” is, however, like all other rights, “defined” by the rights of others. Thus the defendant has the right to be safe from needless multiple litigation and from incurring avoidable inconsistent obligations. Likewise the interests of the outsider who cannot be joined must be considered. Finally there is the public interest and the interest the court has in seeing that insofar as possible the litigation 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 respected. Therefore, the plaintiffs can no longer obtain the relief that they requested in their complaints against the Public Service Commission.” AT&T Communications,
Imagine if it were otherwise: The 1996 Act cannot constitutionally subject state commissions to suit. For a federal court then to rule on the validity of an agreement — only as against the other carrier, and not against the state defendants as well — is potentially to expose the carriers to conflicting orders. AT&T’s suggestion that the Act allows the FCC to take over regulatory authority from the state commission “[i]f a State commissiоn fails to act to carry out its responsibility under this section in any proceeding 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 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 [Commission] 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.,
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 Amendment 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) factor — that 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 interconnection agreement [sic] in federal court.” As I have explained, however, the statute is unconstitutional, and it is up to Congress to fix it.
I respectfully dissent.
. "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).
. See Seminole Tribe v. Florida,
. See id. at 69-70,
. See, e.g., Hans,
. See P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy,
. The majority relies substantially on AT&T Corp. v. Iowa Utilities Board,
. The majorit}' summarily rejects this argument, and I agree.
. See Seminole Tribe,
. See Seminole Tribe,
. See Seminole Tribe,
. See Young,
. See Pennhurst State Sch. & Hosp. v. Halderman,
. 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.”)
. See also Currie,
. See GTE Southwest, Inc. v. Graves,
. Seminole Tribe,
. 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,
. See id. at 75 n. 17,
. The state defendants additionally argue that the Act's judicial 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,
. See Currie,
. See Seminole Tribe,
. "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 apprоved. 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).
. See Coeur d’Alene Tribe,
. See id. at 291-92,
. See id. at 294,
. See College Sav. Bank,
. 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,
. See Dole,
. See AT&T Corp.,
. See FERC v. Mississippi,
. See FERC,
. See Printz v. United States,
. The majority’s erroneous disposition of the other issues on appeal rendered unnecessary a discussion by the majority of this indispensable-party issue.
. See Fernandes v. Limmer,
