MICHIGAN BELL TELEPHONE CO. v. MCI METRO ACCESS TRANS. SERVICES, INC.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

ROBERTS, District Judge.

I. Introduction

This action arises out of an alleged violation of the Telecommunications Act of 1996, 47 U.S.C. § 251 et. seq. (the "Act"). The Act was designed to open local telephone markets, which had previously been controlled by monopolies, to full, fair and effective competition on a nationwide basis. In construing the Act, the Supreme Court held in AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999), that:

Plaintiff in this case, Michigan Bell Telephone Company d/b/a Ameritech Michigan ("Ameritech") is an incumbent LEC ("ILEC") under the Act and is obligated to allow would be competitors such as Defendant MCImetro Access Transmission Services, Inc., ("MCI") to gain access to its networks, facilities and services so that MCI can provide competitive services. In particular, § 251 of the Act requires an ILEC to allow competing LECs ("CLECs") to purchase for resale "any telecommunications service that the carrier provides at retail to subscribers." Section 251(c)(4).

ILECs meet their § 251 obligations by means of interconnection agreements, negotiated and/or arbitrated pursuant to § 252 of the Act. Section 252(a) provides that interconnection agreements are "binding." Section 252(a). The substantive rules governing interconnection are set by federal law, while Congress entrusted the process of establishing and enforcing interconnection agreements to State commissions. Section 252.

Under the mandate of the Act then, Ameritech negotiated an Interconnection Agreement ("Agreement") with MCI. The Agreement was filed, as required, with the Defendant, Michigan Public Service Commission (the "MPSC"), and approved by the MPSC on July 31, 1997. When a dispute arose as to the enforceability of the provision of the Agreement which required MCI to electronically place orders relating to resale services, MCI filed a challenge with the MPSC.

The MPSC, through its members, Defendants John G. Strand, Robert B. Nelson and David Svanda, entered an Order on January 3, 2000, allowing MCI to fax certain change orders concerning resale service orders, rather than requiring MCI to submit the change orders electronically as required by the Agreement. Although the MPSC recognized the clear language of the Agreement, it nonetheless ruled that since competitors without interconnection agreements could fax change orders under Ameritech's general tariff provisions, MCI should have the same right, despite its agreement to the contrary.

Ameritech now challenges the MPSC decision to allow MCI to proceed under the general tariff provisions applicable to Ameritech rather than pursuant to the negotiated Agreement between the parties.

For the reasons stated below, this Court finds the MPSC acted arbitrarily and capriciously in allowing MCI to circumvent the Agreement. Accordingly, the Court grants Ameritech's Motion for Summary Judgment.

II. The Contentions of The Parties

A. Ameritech's Motion

Ameritech presents this case as a straightforward one involving only the interpretation of the Agreement under general contract principles.

Section 10.13.2(a) of the Agreement required Ameritech to provide an electronic interface for change orders and to update the interface as necessary to comply with industry standards.

(Ameritech Br., Ex. 1 at 41-42).

Section 10.13.2(b) required that change orders be made via the electronic interface described in § 10.13.2(a). "Service orders will be placed by MCImetro and provisioned by Ameritech in accordance with the procedures described in this Section 10.13 and the Implementation Plan." (Ameritech Br. Ex. 1 at 42). The Implementation Plan to which Section 10.13.2(b) refers provides that, "[t]he Manual Ordering Process [i.e. ordering by fax] is intended as an interim and back-up mode only."

The Agreement contained an integration clause, which incorporated only those terms of the Agreement and other documents specifically referenced there:

(Ameritech's Br., Ex. 1, last page). Additionally, § 30.16 of the Agreement stresses, "This Agreement does not obligate either Party to provide arrangements not specifically provided herein." (Ameritech's Br., Ex. 1 at 103).

As recognized by the MPSC, the provisions of the Agreement requiring electronic submission of change orders resulted from MCI's own opposition to manual ordering:

(Ameritech's Br., Ex. 2 at 17).

Indeed, Ms. Ali Miller, MCI's market manager for local services in the Ameritech region, submitted the following testimony to the Commission during that process:

Hence, the parties agreed that electronic ordering would be the exclusive means that they would use for ordering services for resale.

The Defendants dispute none of the above.

In March 1999, Ameritech informed MCI that it was going to upgrade its electronic interface to become Y2K ready. In order to maintain compatibility, MCI was requested to complete the same upgrade by June 30, 1999 (MCI Br., Ex. H). In response, a representative of MCI sent an email informing Ameritech that it (MCI) decided not to upgrade its electronic interface and that it would instead fax change orders (Ameritech Br., Ex. 5). According to MCI, its change of position resulted from a plummeting of the number of resale service orders MCI was placing with Ameritech, down to 3 to 5 per day (MCI Br. at 7). Under those circumstances, MCI viewed the funding of an electronic interface upgrade is "`throwing money down a rat hole.'" (Quote of former MCI President and COO, Timothy F. Price, Ameritech Br., Ex. 2 at 17).

Ameritech responded by letter on May 26, 1999, lambasting MCI's "unilateral funding decision" to fax orders to Ameritech. MCI did not heed Ameritech's objections and, instead, proceeded to fax change orders to Ameritech. After Ameritech refused to process those faxed orders, MCI filed a complaint with the MPSC.

Ameritech contends that the MPSC misinterpreted the Agreement when it concluded that the agreement did not preclude MCI from submitting faxed change orders pursuant to Ameritech's general tariff because, according to the MPSC, the Agreement did not specifically prohibit either party from availing itself, of the tariff.

Further, Ameritech argues, the integration clause establishes that the parties did not intend that MCI be permitted to invoke the tariff. Only tariff provisions referenced in the Agreement were made part of the agreement.

Ameritech contends that the MPSC decision violated federal law because the Act deems interconnection agreements binding on the parties. Ameritech additionally relies upon the Sierra-Mobile doctrine, and distinguishes the Strand decision, both discussed below.

B. The Commissioners' Response

The MPSC Commissioners argue that the decision to allow MCI to fax change orders is consistent with the pro-competition and anti-discrimination goals of the Act. Denying MCI the right to fax change orders in the manner other CLECs are allowed would be discriminatory.

According to the MPSC, it was Ameritech's responsibility to get MCI to waive the requirements of the tariff. Absent such a waiver, nothing prevented MCI from ordering services pursuant to the tariff. In addition, the MPSC placed the burden on Ameritech to demonstrate that it is not discriminating against MCI by excluding it from the tariff.

Further, the MPSC's contends that its actions did not violate the Act because it has the authority to prescribe regulations deemed necessary to further competition. Also, the Sierra-Mobile "exception" to the filed rate doctrine is inapplicable here, because MCI is only accepting the terms of another offer, not unilaterally filing a new tariff. The MPSC additionally relies upon the filed rate doctrine described in Global Access Ltd. v. AT&T Corp., 978 F.Supp. 1068 (S.D.Fla.1997).

C. MCI's Response

MCI contends that this Court is without jurisdiction to review the MPSC's interpretation of the Agreement because it is governed by State law. MCI asserts that this Court's scope of review is limited to determining whether the MPSC's decision violated federal law.

MCI then turns to its argument that the Act did not extinguish MCI's state law right to submit change orders pursuant to the tariff. Under Michigan law, Ameritech cannot refuse to sell tariffed services to any competing carrier. Also, although the Agreement was "binding," that term is distinguishable from "exclusive." This is especially true in light of the Act's reservation of State authority.

Like the MPSC, MCI contends that a ruling in favor of Ameritech would subvert the Act's goal of nondiscrimination. It further argues that the "pick and choose" rule of § 252(i) of the Act does not preclude CLECs which have entered into interconnection agreements from purchasing under and availing themselves of, state tariff provisions. The decision in Michigan Bell Telephone Co. v. Strand, 26 F.Supp.2d 993 (W.D.Mich.1998), is directly on point and sanctions allowing MCI to rely upon the tariff, MCI asserts.

Regarding opinions holding that interconnections agreements control over tariffs, MCI states that they were wrongly decided. Congress never intended such agreements to be unchanging or to be the sole method for a carrier to purchase services, according to MCI.

III. Applicable Law

A. Summary Judgment Standard

Ameritech contends it is entitled to summary judgment against the Defendants because of the clear and unambiguous language of the Agreement. Under Fed. R.Civ.P 56(c), summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Copeland v. Machulis, 57 F.3d 476, 478 (6th Cir.1995). A fact is "material" and precludes a grant of summary judgment if "proof of that fact would have [the] effect of establishing or refuting one of the essential elements of the cause of action or defense asserted by the parties, and would necessarily affect application of appropriate principle[s] of law to the rights and obligations of the parties." Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984). The court must view the evidence in the light most favorable to the nonmoving party and it must also draw all reasonable inferences in the nonmoving party's favor. Cox v. Kentucky Dept. of Transp., 53 F.3d 146, 150 (6th Cir.1995).

The moving party bears the initial burden of showing that there is no genuine issue of material fact. Snyder v. Ag Trucking, Inc., 57 F.3d 484, 488 (6th Cir. 1995). To meet this burden, the movant may rely on any of the evidentiary sources listed in Rule 56(c). Cox, 53 F.3d at 149. Alternatively, the movant may meet this burden by pointing out to the court that the nonmoving party, having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case, and on which that party will bear the burden of proof at trial. Tolton v. American Biodyne, Inc., 48 F.3d 937 (6th Cir.1995); Street v. J.C. Bradford & Co., 886 F.2d 1472 (6th Cir.1989).

Once the moving party has met its burden, the burden shifts to the nonmoving party to produce evidence of a genuine issue of material fact. Rule 56(e); Cox, 53 F.3d at 150. The nonmoving party cannot rest on its pleadings, but must present significant probative evidence in support of its complaint. Copeland, 57 F.3d at 479.

The Telecommunications Act of 1996 is the statute on which Ameritech contends it is entitled to judgment as a matter of law.

B. The Telecommunications Act of 1996

In order to further competition, the Act requires an ILEC such as Ameritech, to provide access to its customers by, inter alia, eliminating physical and financial barriers.

Michigan Bell Telephone Co. v. Climax Telephone Co., 202 F.3d 862, 865 (6th Cir. 2000).

In addition to imposing a duty of good faith negotiation on ILECs, § 251(c)(1), the Act provides other mechanisms for assuring that CLECs are able to achieve fair agreements with ILECs. If negotiations fail, either party may petition the state commission to arbitrate open issues. Section 252(b). An ILEC's or CLEC's failure to cooperate in negotiations or with the arbitration process "shall be considered a failure to negotiate in good faith." Section 252(b)(5).1

Further, regardless of whether the interconnection agreement was achieved by way of negotiations or arbitration, the State commission must approve the agreement. Section 252(e). Any appeal of the State commission's decision must be made to federal court.

Section 252(e)(6).

The question raised by § 252(e)(6) is what constitutes "a determination under this section." On its face, § 252 addresses only the procedures for negotiating and/or arbitrating an interconnection agreement. However, § 252 has been interpreted to instill a broader type of authority in State commissions:

Southwestern Bell Telephone Co. v. Public Utility Com'n of Texas, 208 F.3d 475, 479-480 (5th Cir.2000).

However, there is no question that by enacting the Act, Congress diminished the authority of the States to regulate local telecommunications competition. "[T]he question ... 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." Id. at 378, n. 6, 119 S.Ct. 721. Nonetheless, while the States' authority has been diminished, the Act reserved a role for them. The Act is a "scheme of cooperative federalism" in which Congress reconciled "such competing interests as federal uniformity and state autonomy." Southwestern Bell Telephone Co. v. Connect Communication Corp., 225 F.3d 942, 948 (8th Cir.2000). In attempting reconcile these competing interest, the Act's delineation between the federal and state authority is not clear. "It would be gross understatement to say that the Telecommunications Act of 1996 is not a model of clarity." AT&T at 397, 119 S.Ct. 721. As a consequence, litigation to resolve the federal-state ambiguities has abounded.

IV. ANALYSIS

At first glance, the factual underpinnings of the instant dispute may appear trivial. MCI submits only about 3 to 5 change orders per day to Ameritech (Ameritech's Br., Ex. 2 at 3). After reviewing the case, the MPSC described the controversy at issue this way: "In the ALJ's words, `the subject matter or what's at issue in terms of the magnitude of dollars involved is Judge Wappner [sic] stuff, People's Court.'" (Ameritech's Br., Ex. 2 at 25).

Yet, there is a much larger issue at stake. At stake is whether, under the scheme of cooperative federalism envisioned by the Act, the provisions of the Interconnection Agreement are binding on MCI. Or, as MCI contends, may it opt to rely upon portions of Ameritech's tariff that conflict with the Interconnection Agreement?

A. Jurisdiction

Despite MCI's contention to the contrary, this Court holds that it has jurisdiction to review the MPSC decision that the electronic processing provision of the Agreement can give way to the faxing provision of Ameritech's general tariff. In doing so, the Court follows the broader interpretation of federal jurisdiction in these matters that have been adopted in the Ninth, Fourth, Fifth and Tenth Circuits. See U.S. West Communications v. MFS Intelenet, Inc., 193 F.3d 1112, 1117, 1124 n. 15 (9th Cir.1999); GTE South, Inc. v. Morrison, 199 F.3d 733, 745 (4th Cir. 1999); Southwestern Bell, 208 F.3d at 482; Southwestern Bell Telephone Co. v. Brooks Fiber Communications of Oklahoma, Inc., 235 F.3d 493, 498 (10th Cir.2000).

As the Tenth Circuit reasoned, federal review of State law issues in cases involving the Act represents a proper exercise of supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a). Brooks Fiber, 235 F.3d at 498. "In addition, having decided that the state commissions have the authority to interpret and enforce interconnection agreements and that the appropriate forum for review of these decisions is federal court, it would be a waste of judicial resources to limit the court's consideration to federal issues only." Id.

Importantly, the Sixth Circuit has endorsed federal review of State law issues in Telecommunications Act cases. A Western District of Michigan judge observed that, since § 252(e)(4) expressly deprives State courts with jurisdiction over cases relating to interconnection agreements, "federal courts very well may provide the only forum for review of state law issues arising in relation to interconnection agreements." Michigan Bell Telephone Co. v. Climax Telephone Co., 121 F.Supp.2d 1104, 1115 (W.D.Mich.2000). Thus, if as MCI contends, this Court cannot interpret the Interconnection Agreement, neither party would have a forum to review the MPSC's interpretation of that Agreement.

Additionally, the Sixth Circuit Court recently held that a federal court has jurisdiction to review any State order that permits circumvention of Act requirements:

GTE North, Inc. v. Strand, 209 F.3d 909, 919 (6th Cir.2000).

Furthermore, the Sixth Circuit among others, has held that State public service commissioners may be sued in federal court. Michigan Bell Telephone Co. v. Climax Telephone Co., 202 F.3d 862, 867-868 (6th Cir.2000). Pursuant to the Ex parte Young doctrine, a suit against state officials seeking equitable relief of ongoing violations of federal law is not barred by the Eleventh Amendment. Id. at 867.

Id. at 868.

Accordingly, this Court holds that it has jurisdiction to review the MPSC's interpretation of the Agreement, under both State and federal law.

B. Scope of Review

The Court is permitted to consider de novo whether the MPSC's decision is in compliance with the Act, but must review all other issues decided by the MPSC under an arbitrary and capricious standard. Southwestern Bell, 208 at 482. In MCI Telecommunications Corp. v. Michigan Bell Telephone Co., 79 F.Supp.2d 768, 773 (E.D.Mich.1999), the court provided the following principles to consider when applying the arbitrary and capricious standard:

When applying the arbitrary and capricious standard to an agency's actions, the court must review only the reasons articulated by the agency. "We may not supply a reasoned basis for the agency's action that the agency itself has not given." Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983), quoting SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1760, 91 L.Ed. 1995 (1947). This rule been applied by district courts in their review of State public service commission decisions in Telecommunications Act cases and related matters. See MCI Telecommunications, 79 F.Supp.2d at 773, ("A court can uphold the state commission's decision only on the grounds set forth in the decision."); MCI Telecommunication Corp. v. Bell Atlantic-Virginia, Inc., 1998 U.S.Dist. LEXIS 17558, *17 (E.D.Virg.1998) ("A court may only uphold agency actions on the basis articulated by the agency itself.").

Consequently, justifications of the MPSC's decision made by it and MCI that differ from, or are in addition to, those articulated in the decision, are rejected by this Court.

C. The Court Finds that the MPSC's Interpretation of the Agreement was Arbitrary and Capricious

The MPSC found that the plain language of the Agreement required MCI to electronically submit change orders. Further, it rejected MCI's claim that provisions of the Agreement authorized it to rely on the tariff provisions. Nevertheless, the MPSC held that the Agreement did not forbid MCI from relying on a contrary tariff provision. The Court finds that this interpretation of the Interconnection Agreement was a clear error of judgment and an arbitrary and capricious one, in at it runs counter to the evidence. MCI Telecommunications, 79 F.Supp.2d. at 773.

In finding that the Agreement required electronic filing of change orders, the MPSC stated:

(Ameritech's Ex. 2 at 11-13).

Additionally, the MPSC ejected MCI's claim that provisions of the Agreement specifically permit MCI to use the manual ordering procedures set forth in Ameritech Michigan's tariffs.

(Ameritech Br., Ex. 2 at 14-15).

In the end, the MPSC "determined that nothing in the interconnection agreement supports MCI's position that Ameritech Michigan must accept MCI's faxed MACD orders...." (Ameritech Br., Ex. 2 at 17). This finding should have been determinative. However, in holding otherwise, the MPSC relied in part on the fact that the Agreement did not specifically preclude MCI from invoking a contrary tariff provision:

(Ameritech's Br., Ex. 2 at 20-21).

The MPSC's analysis, as Ameritech suggests, is akin to stating that, while a contract mandates white paint, yellow paint is okay unless it is specifically excluded. The MPSC's analysis literally took the mandate out of the provision it found to be mandatory.

Furthermore, the agreement evidenced an intent to be comprehensive with respect to the matters covered in it. Section 30.18 stated:

(Ameritech's Br., Ex. 1, last page, emphasis added).

Diminishing the import of § 30.18, the MPSC truncated that section and found that "Section 30.18 is not applicable because MCI has not attempted to impose new terms through a subsequent purchase order or communication as discussed in that section." The MPSC completely ignored the main thrust of § 30.18: that "[t]he terms contained in this Agreement and any ... tariff provisions referenced herein ... constitute the entire agreement between the Parties with respect to the subject matter hereof...." The portion of § 30.18 stating that neither party could impose a new term by way of a subsequent purchase order or the like is only an elaboration of the parties' intent that the Agreement be considered comprehensive and complete.

Hence, the Court finds that the MPSC clearly erred in relying upon the limited portion of § 30.18 that prohibited the parties from imposing new terms via subsequent purchase orders or communications.

Further, since the manner in which MCI was allowed to submit a change order was clearly part of the subject matter of the Agreement, the Court finds that, pursuant to § 30.18, the parties intended for electronic filing to be the exclusive means by which MCI could submit change orders.

D. The Court Finds that the MPSC's Decision is a Violation of the Act

The Court further finds that the MPSC's decision violated the Act. Under the Act, interconnection agreements are binding documents. 47 U.S.C. § 252(a)(1) provides:

Both the MPSC and MCI point out that the Act allows the State to continue regulating local telephone traffic. However, such regulation must be consistent with the Act. Section 261(c) states:

Similarly, § 251(d)(3) clarifies:

Thus, while the State may continue to enforce tariff provisions, it must do so in a manner that is consistent with the Act. By enforcing the tariff provision in this case despite MCI's contrary binding obligation in the Agreement, the State has regulated in a manner that is inconsistent with the Act. In other words, the Court finds that, pursuant to the Act, the State may impose and enforce tariff provisions, but cannot enforce a tariff in a manner that violates a party's rights under negotiated interconnection agreement.

1. Other Decisions Support a Finding that the MPSC's Order Violated the Act

This Court's holding is consistent with other decisions where identical or similar issues have been addressed. For example, in In re U.S. WEST Communications, Inc., 1998 WL 992036, *36 (Or.P.U.C. Nov 13, 1998), the Oregon Public Utility Commission held, "[C]arriers bound by interconnection agreements should not be permitted to use the building block tariff to supplement or supplant any terms, conditions, or prices that are covered in an interconnection agreement."

Likewise, in a matter substantially identical to the instant dispute, the Illinois Commerce Commission ruled that the terms of an interconnection agreement controlled over those in a tariff.

MCImetro Access Transmission Services, Inc v. Illinois Bell Telephone Co, docket 98-0379, p. 32 (September 10, 1999).

MCImetro's recognition that to allow MCI to avoid its obligation under the interconnection agreement would frustrate the federal scheme favoring individually negotiated contracts, is especially germane in light of the fact that § 251(d)(3)(C) allows State regulation only to the extent that it "does not substantially prevent implementation of the requirements of this section and the purposes of this part."

In U.S. West Communications, Inc. v. Hix, 93 F.Supp.2d 1115 (D.Colo.2000), the court likewise held that allowing a party to an interconnection agreement to rely upon a contrary tariff provision would eviscerate the Act. In its conclusions of law, the court stated:

Id. at 30-31.

In an analogous case, MCI Telecommunications Corp. v. GTE Northwest, Inc., 41 F.Supp.2d 1157, 1178 (D.Or.1999), the court agreed that the scheme calling for individually negotiated, terms and conditions of an agreement are essential aspects of the Act. The state commission in GTE Northwest attempted to require GTE to file a tariff that included mandatory unbundled elements at prices fixed by the commission. If that were allowed, the court held, a CLEC would thereby be able to bypass the negotiation and enforcement procedures of the Act.

MCI v. GTE Northwest at 1177-1178, (emphasis added).

Similarly, the court in Global Access Ltd. v. AT&T Corp., 978 F.Supp. 1068 (S.D.Fla.1997), held that a carrier should not be allowed to frustrate the federal scheme favoring negotiated contracts. Global Access concerned a dispute under the Communications Act of 1934, 47 U.S.C. § 151, et seq. The 1934 Act applies to interstate communication rather than local phone traffic. Similar to the interconnection agreements created under the Act, a 1991 amendment to the 1934 Act allows for "contract tariffs." The parties in Global Access had entered into such a tariff, but, unilaterally, AT & T later filed a modified contract tariff. In passing upon the validity of the modified tariff, the court first noted the primacy of contract law.

Global Access at 1073.

The Global Access court acknowledged the filed rate doctrine, which AT & T argued applied in that case, and which the MPSC argues applies to this case:

Id.

What the MPSC neglects to mention that the Global Access court, while discussing the filed rate doctrine, found that it was the Sierra-Mobile doctrine that applied instead.

Additionally, the court held that allowing AT & T to unilaterally amend the contract tariff would undermine the federal scheme.

Id. at 1074.

Although Global Access presents a distinguishable fact pattern, its message is applicable to this case: if a common carrier, such as MCI, can simply invoke a tariff provision that is contrary to its interconnection agreement when it no longer likes its agreement, the Act's goals would be frustrated and the interconnection agreement regime rendered meaningless. And, since the Telecommunications Act favors individually negotiated arrangements, MCI v. GTE Northwest at 1177-1178, the judicially-created preference of one rate for all should not be applied to Telecommunications Act cases.

In support of the claim that the MPSC is entitled to enforce the tariff in this case, the MPSC and MCI also rely heavily upon Michigan Bell Telephone Co. v. Strand, 26 F.Supp.2d 993, 1000-1001 (W.D.Mich. 1998). The Court finds however, that that opinion does not support the MPSC's decision.

In Strand, the court upheld an order of the MPSC that Ameritech claimed modified its interconnection agreements with MCI. In the order at issue, the MPSC determined the rates for "common transport," which was defined as being synonymous with "shared transport," a term used by the Federal Communication Commission. The interconnection agreements at issue included provisions concerning shared transport. In the action before the district court, Ameritech argued that the MPSC's order effectively replaced the "shared transport tariffs" with something different — "common transport tariffs." The new requirement was imposed without the negotiation, mediation or arbitration procedures authorized by the Act, Ameritech contended. The court disagreed, holding that the MPSC order constituted a consistent State regulation.

Strand at 1000-1001, (emphasis added).

The Strand decision does not allow the MPSC to enforce a tariff provision that is directly contrary to an interconnection agreement. Indeed, the Strand court specifically found that there was no significant difference between the shared transport requirement of the interconnection agreement and the common transport requirement in the tariff. Further, while the Strand court held that the State could impose the common transport requirement, it could do so only "to the extent of any minimal difference between it and `shared transport' ...." Id. at 1000. Hence, the Strand court interpreted the Act as allowing the State to impose different, not inconsistent, regulations. This Court finds, therefore, that Strand does not support the MPSC's decision to allow MCI to rely upon a tariff provision that is directly contrary to the Interconnection Agreement. And, even if Strand could be interpreted to allow the imposition of an inconsistent tariff provision, this Court declines to follow it, as the weight of decisions is to the contrary.

2. The Court rejects the MPSC's and MCI's discrimination arguments

In their briefs and arguments to this Court, the MPSC and MCI assert that requiring MCI to electronically file its change order would be discriminatory because other carriers are allowed to fax their orders pursuant to the tariff. However, in the proceedings before it, the MPSC found MCI's claim of discriminatory treatment to be both without merit and without credibility.

(Ameritech's Br, Ex. 2 at 17).

It is well settled that "[a] court can uphold the state commission's decision only on the grounds set forth in the decision." MCI Telecommunications, 79 F.Supp.2d at 773. Accord, MCI Telecommunication, 1998 U.S.Dist. LEXIS 17558 at *17, ("A court may only uphold agency actions on the basis articulated by the agency itself."). Since the MPSC rejected MCI's discrimination, this Court should not revive it here.

Moreover, as described above, the Act favors individually negotiated agreements. Consequently, some disparate treatment of carriers is to be expected. As importantly, CLECs have numerous protections against being forced into unfair agreements. The ILEC must negotiate the terms and conditions of agreements with a CLEC seeking access to the ILEC's market in good faith. Section 251(c)(1). If negotiations fail, either party may petition the state commission to arbitrate open issues. Section 252(b). An ILEC's or CLEC's failure to cooperate in negotiations or with the arbitration process "shall be considered a failure to negotiate in good faith." Section 252(b)(5).

Further, regardless of whether an interconnection agreement was achieved by way of negotiations or arbitration, the State commission must approve the agreement. Section 252(e). If the CLEC is still dissatisfied, it may appeal to federal court. Section 252(e)(6).

Moreover, the CLEC has an advantage. It can take advantage of favorable terms provided by the ILEC in interconnection agreements with other CLECs. Section 252(i) provides, "A local exchange carrier shall make available any interconnection, service, or network element provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement." This is known the "pick and choose" rule. AT & T Corp., 525 U.S. at 395, 119 S.Ct. 721.

In short, the Act scheme assures that CLECs are treated fairly.

3. The Pick and Choose Rule

MCI argues that the pick and choose rule of § 252(i) demonstrates that Congress did not mean to preclude CLECs that have entered into interconnection agreements from purchasing under the terms of a State tariff. The Court finds this argument unavailing. The plain language of § 252(i) only allows CLEC to opt into "an agreement approved under this section." State tariffs are obviously not agreements approved under the Act. Further, tariffs are inherently different from interconnection agreements. As recognized by the Hix court:

Hix at 30-31.

Given the inherent difference between interconnection agreements and State tariffs, the Court finds that the language of § 252(i) that permits CLECs to opt only into other interconnection agreements was intentional. Congress intended to allow CLECs to pick and choose from interconnection agreements, but not from State tariffs.

Moreover, the Hix court recognized that "permitting CLECs to `pick and choose' from tariff provisions may undermine federal court review of interconnection obligations under the Telco Act." Hix at 31. This is so because "[t]he CLECs could simply opt into more favorable provisions in a tariff to avoid the exclusive federal court review Congress envisioned." Id.

V. Conclusion

The MPSC's decision that the Interconnection Agreement did not forbid MCI from faxing change orders pursuant to the tariff was a clear error of judgment. In rendering its decision, the MPSC failed to abide by, clear and unambiguous terms of the Agreement, and the oft cited principles of contract law as summarized in Zurich Ins. Co. v. CCR and Co., 226 Mich.App. 599, 604, 576 N.W.2d 392 (1997):

The face of this Agreement is clear in its import.

Furthermore, the MPSC's decision violated the Act. Allowing MCI to take advantage of a tariff provision that was contrary to binding language in its Agreement constituted an inconsistent State regulation. If a party to an interconnection agreement is unilaterally allowed to rely upon more favorable tariff provisions, once agreed upon contract terms are no longer feasible from a business standpoint, the Act's scheme favoring negotiated contracts will be undermined.

Ameritech's Motion for Summary Judgment is GRANTED. The Court accordingly:

IT IS SO ORDERED.