157 F.3d 922 (2nd Cir. 1998), 97-9258, Filetech S.A. v. France Telecom S.A.

Docket Nº:Docket Nos. 97-9258, 97-9314.
Citation:157 F.3d 922
Party Name:FILETECH S.A., Filetech U.S.A., Inc., Plaintiffs-Appellants-Cross-Appellees, v. FRANCE TELECOM S.A., France Telecom Incorporated, Defendants-Appellees-Cross-Appellants.
Case Date:October 06, 1998
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 922

157 F.3d 922 (2nd Cir. 1998)

FILETECH S.A., Filetech U.S.A., Inc.,

Plaintiffs-Appellants-Cross-Appellees,

v.

FRANCE TELECOM S.A., France Telecom Incorporated,

Defendants-Appellees-Cross-Appellants.

Docket Nos. 97-9258, 97-9314.

United States Court of Appeals, Second Circuit

October 6, 1998

Argued May 19, 1998.

Page 923

Ron Soffer, Fisher & Soffer, New York City (Ivan S. Fisher, of counsel), for Plaintiffs-Appellants-Cross-Appellees.

Francis J. Menton, Jr., Willkie Farr & Gallagher, New York City (Thomas H. Golden, Anne E. Beaumont, of counsel), for Defendants-Appellees-Cross-Appellants.

Before: KEARSE and MINER, Circuit Judges, and SCULLIN, District Judge. [*]

MINER, Circuit Judge:

Plaintiffs-appellants-cross-appellees Filetech S.A. and Filetech U.S.A., Inc. (collectively, "Filetech") appeal from so much of a judgment of the United States District Court for the Southern District of New York (Haight, J.) as dismissed the complaint in this action on the ground of international comity. According to the complaint, defendants-appellees-cross-appellants, France Telecom S.A. and France Telecom Incorporated (collectively, "France Telecom"), were engaged in anticompetitive conduct violative of various provisions of the Sherman Antitrust Act, 15 U.S.C. § 1 et seq. France Telecom cross-appeals from so much of the same judgment as denied dismissal of the complaint for lack of subject matter jurisdiction. The jurisdiction contention was grounded in (1) the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 et seq. ("FSIA"); and (2) the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6a ("FTAIA").

For the reasons that follow, we vacate the judgment of the district court and remand for further proceedings consistent with this opinion.

BACKGROUND

I. The Parties and the Business

Filetech S.A., formerly known as Filetech S.A.R.L., is a French corporation with its principal place of business in France. It was formed in 1988 and is engaged in the business of selling marketing lists. These lists of French residents are tailored to meet various criteria required by its customers. Filetech S.A. obtains data on French residents from, among other sources, lists of telephone subscribers compiled by France Telecom S.A.

Filetech U.S.A., Inc. ("Filetech USA") is a subsidiary of Filetech S.A. It was incorporated in the State of New York, has a business office in New Jersey and has designated its

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attorney's New York office for service of process. Filetech USA was formed in 1994 for the purpose of carrying out business operations in the United States. However, neither the complaint nor the record indicates that any business has thus far been conducted; rather, the complaint alleges that some such business might be conducted in the future.

France Telecom S.A. is a French corporation with its principal place of business in France. At the time the complaint was filed, France Telecom S.A. was wholly-owned by the Republic of France and owned and operated all telephone facilities in France. However, the passage of certain European Union directives has ended the monopoly of France Telecom S.A. and has required that the company incorporate, with the French government remaining the majority shareholder in the new corporate entity. France Telecom Inc. ("FTI"), a wholly-owned subsidiary of France Telecom S.A., is a New York corporation with New York as its principal place of business.

France Telecom S.A. engages in other commercial activities besides its telephonic services business. For example, it makes its lists of subscribers available so that marketing lists may be compiled from them. It engages in this business primarily through two services, "Teladresses" and "Marketis." The record indicates, however, that FTI has no involvement in this business either in the U.S. or abroad. "Teladresses" is a service that provides mailing lists tailored to a customer's particular criteria and is capable of generating lists of millions of names. Once the customer provides the relevant criteria, lists are generated and the customer is billed. "Marketis" is a service accessible through any personal computer with a modem, or through a "Minitel," a small computer terminal. This terminal is made available by France Telecom S.A. to its telephonic service customers on request and is designed exclusively to provide access to the databases of France Telecom S.A. Using Marketis through either the Minitel on-line service or a Minitel terminal, a customer can develop a specialized mailing list. Minitel services are available in the U.S. through France Telecom S.A.'s indirect subsidiary, Minitel Services Company ("MSC").

The parties dispute each other's contentions with respect to the nature and amount of commercial activity undertaken by France Telecom S.A. in the United States. France Telecom claims that it has not sold a significant number of mailing lists in the U.S. For example, it asserts that the amount of "Teladresses" usage originating here in 1993 and 1994--the most recent years for which data is available--is de minimis. In 1993, exactly one bill for an amount of just over $3,500 was sent to a customer in the U.S. and, in 1994, not a single bill was sent to a customer here. France Telecom contends that the use of "Marketis" in the United States also was minimal. During the first four months of 1995, the year in which the present litigation was commenced, it asserts that not a single customer accessed Marketis through MSC. Between May and July of that year, U.S. subscribers to MSC accessed Marketis fourteen times, for a total duration of approximately one hour. At least six of these calls were placed by employees of either France Telecom S.A. or MSC as part of their investigation of Filetech's claims. Based on the total duration of these calls, France Telecom estimates that a maximum of about 1,500 names and addresses could have been downloaded.

France Telecom claims that it does not advertise its mailing lists business in the U.S. or engage in any other activity aimed at attracting American customers for such services. While France Telecom concedes that it markets Minitel through MSC, it contends that such marketing is not aimed at the mailing lists business. Marketis is only one of more than 23,000 services provided through Minitel, an "on-line" information service oriented to the French-speaking world. France Telecom also contends that most of the approximately 3,000 active subscribers to Minitel in the U.S., at the time of this litigation, were French individuals living in the U.S., French businesses located in the U.S. or French government personnel stationed in the U.S. Accordingly, France Telecom asserts that American citizens and American companies are not the targets of France Telecom S.A.'s limited U.S. marketing efforts.

Page 925

In addition to Teladresses and Marketis, France Telecom S.A. offers marketing lists on a specially formatted version of a CD-ROM directory. However, at the time of submission of briefs to the district court, only thirty-four CD-ROMS had been sold worldwide, none of which sales occurred in the United States. France Telecom asserts that it neither markets nor intends to market such disks here.

Filetech paints a very different picture of the commercial activity of France Telecom in the United States. Filetech alleges that France Telecom engages in substantial commercial activity relating to the marketing lists business here. According to Filetech,

France Telecom [S.A.] maintains extensive business in the United States directly and through several entities.... France Telecom [S.A.], markets its directory and data services, which are available through the Internet in 126 cities throughout the United States for the price of a local call. The brochure of the Minitel Services Company, a United States entity, tells its potential subscribers that they can compose mailing lists by accessing the directory in the United States.

Filetech also asserts that Minitel subscribers receive free software providing access to the mailing lists and that the data is also available via CD-ROM. Additionally, Filetech claims that FTI refers callers to a toll-free phone number, answered by an English-speaker, who can explain "the different possibilities of obtaining France Telecom data." France Telecom replies that this toll-free number rings in France at the "France Telecom International Business Center" and notes that if a caller in the United States wishes to purchase a mailing list, he or she is provided with a separate French phone number in order to make the necessary arrangements. This call, in turn, would require international toll charges to be incurred.

At oral argument, we pressed the parties on their contentions regarding the commercial activities of France Telecom in the United States. Filetech once again argued that individuals in over one hundred cities could access France Telecom S.A.'s database through Minitel merely by dialing a local phone number via modem or Minitel terminal and using an access code obtained through Minitel. Filetech attached great weight to the fact that the required call is not an international one. It also contended that France Telecom markets its services via the Internet. France Telecom responded by pointing out (1) that during the two years prior to its motion to dismiss in the instant case, France Telecom had made only two sales of mailing lists in the U.S. through Teladresses; and (2) that its Marketis service had been used fourteen times, at least six of which involved uses by France Telecom S.A. itself or certain of its affiliates in preparation for the litigation subject of this appeal.

Notably, France Telecom asserted at oral argument that any individual in the United States seeking to obtain the phone lists, purged as hereinafter described, via Minitel, must possess a French phone...

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