Verizon Maryland Inc. v. Public Service Commission of Maryland

Supreme Court of the United States · 2002 · Federal Courts

Federal Courts§ 1331§ 252(e)(6)Ex parte YoungEleventh Amendmentpreemptionstate utility commissionprospective relief

Facts

The Telecommunications Act of 1996 requires incumbent local exchange carriers to provide interconnection and establish reciprocal compensation arrangements, with interconnection agreements submitted to state commissions for approval. Verizon, Maryland's incumbent carrier, had an approved interconnection agreement with a competitor later acquired by WorldCom. After a dispute over whether ISP-bound calls were subject to reciprocal compensation, the Maryland Public Service Commission ordered Verizon to pay compensation for past and future ISP-bound calls, and later rejected Verizon's argument that an FCC ruling relieved it of that obligation. Verizon then filed suit in federal district court alleging that the Commission's order violated the Act and the FCC ruling.

Issue

Whether federal district courts have jurisdiction under 28 U.S.C. § 1331 to hear Verizon's claim that the state commission's order is preempted by federal law, notwithstanding 47 U.S.C. § 252(e)(6). Whether, despite the Eleventh Amendment, Verizon may proceed against the individual state commissioners in their official capacities under Ex parte Young.

Rule

A federal district court has jurisdiction under 28 U.S.C. § 1331 when the plaintiff seeks relief on the ground that state action is preempted by federal law, so long as the federal claim is not immaterial or wholly insubstantial and frivolous. Section 252(e)(6) of the Telecommunications Act does not divest otherwise existing § 1331 jurisdiction absent clear statutory language or fair implication. Under Ex parte Young, a suit may proceed against state officials in their official capacities when the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective; the inquiry does not include deciding the merits.

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Lakeview Fiber, a telecommunications carrier in Ohio, was ordered by the Ohio Communications Board to continue paying a rival carrier under an interconnection arrangement. Lakeview sued in federal district court in Columbus, alleging the board's order is preempted by a federal communications statute and a federal agency rule, and seeking declaratory and injunctive relief.

Does the federal district court have subject-matter jurisdiction under 28 U.S.C. § 1331?

Explanation. Section 1331 jurisdiction exists where the right to relief depends on whether federal law is given one construction or another, so long as the claim is not immaterial or wholly insubstantial and frivolous. A claim that a state commission order is preempted by federal law therefore arises under federal law. The court need not decide the merits to find jurisdiction.