MARYLAND V. UNITED STATES

• Citation: 460 U. S. 1001
• Decision Date: 28 February 1983
• Court: United States Supreme Court

Maryland v. United States

Nos. 82-953, 82-953, 82992, 821001

Decided February 28, 1983

460 U.S. 1001

The judgment is affirmed.

MR. JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE and JUSTICE WHITE join, dissenting from summary affirmance.

These consolidated cases raise questions concerning the settlement of a civil antitrust suit brought by the United States against American Telephone & Telegraph Co. ("AT & T"). In January, 1982, the parties announced a settlement in the form of a consent decree. The proposed settlement was filed in the District Court for the District of Columbia, which ordered the start of procedures provided for in the Antitrust Procedures & Penalties Act, 15 U.S.C. § 16(b)

et seq. ("the Act").

The Act provides:

"Before entering any consent judgment proposed by the United States under this Section, the court shall determine that the entry of such judgment is in the public interest."

15 U.S.C. § 16(e).

The District Court issued a lengthy opinion discussing the proposed decree. 552 F.Supp. 131 (D.D.C. 1982). It found that most of the decree's provisions were in the public interest, but stated that it would not approve the decree unless the parties agreed to several changes. The parties acquiesced,

Page 460 U. S. 1002

and the District Court then approved and entered the amended decree and a final judgment dismissing the case.

The District Court allowed appellants to intervene for purposes of appealing the final judgment and certified their appeals for immediate consideration by this Court under the Expediting Act, 15 U.S.C. § 29(b).

In Nos. 82952 and 821001, several states contend that the decree improperly preempts state regulation of the telephone industry. They contend their regulation of the industry is "state action" which is exempt from the Sherman Act under Parker v. Brown, 317 U. S. 341 (1943). Thus they do not appear to challenge the conclusion that this consent decree is in the public interest; they claim that the district court lacked the authority to override state law by entering this consent decree.

The district court reasoned that,

"[s]ince the conduct which is the subject of these lawsuits is . . . well within the jurisdiction of the federal antitrust laws . . . , it would make no sense to hold that, in providing a remedy for anticompetitive conduct, the court must refrain from interfering with state regulation[, and t]he same rationale applies to . . . a consent decree.' 552 F.Supp. at 158 and n. 111. I am troubled by the notion that a district court, by entering what is in essence a private agreement between parties to a lawsuit, invoke the Supremacy Clause powers of the Federal Government to preempt state regulatory laws. The district court may well be correct, but I am not prepared to create a precedent in this Court by summarily affirming its decision. This is particularly true when it is not at all clear whether the summary affirmance disposes of the merits of the States' contentions."

In No. 82953, a competitor of AT & T argues that the district court should not have eliminated a requirement that Western Electric license its patents for a reasonable royalty to anyone who applies. It also contends that AT & T should not have been permitted to sell telephones through its Phone

Page 460 U. S. 1003

Center Stores because competitors, especially local telephone companies, will not be able to compete effectively. In No. 82992, by contrast, an association of telephone manufacturers, does not object to permitting AT & T to sell telephones, but insists that local telephone companies should not be permitted to do so. These appellants do challenge the district court's conclusion that this settlement is in the public interest.

In order to review the determination that a settlement is in the public interest, it is first necessary to know what "the public interest" means. The Act itself is not very helpful. It does state that

"the court may consider:"

"(1) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration or [sic] relief sought, anticipated effects of alternative remedies actually considered, and any other considerations bearing upon the adequacy of such judgment;"

"(2) the impact of entry of such judgment upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial."

15 U.S.C. § 16(e) (emphasis supplied).

The legislative history reveals that the sponsors of the Act were concerned that the Department of Justice had settled some civil antitrust cases on what they believed to have been unfavorable terms. Senator Tunney spoke of several "blatantly inequitable and improper antitrust settlements." 119 Cong.Rec. 24598 (1973). The Act appears to have been intended to prevent the Department of Justice from settling civil antitrust cases on terms less favorable than Congress thought it should obtain.

Faced with this paucity of guidance, the district court undertook to "defin[e] the public interest in accordance with the antitrust laws." F.Supp. at 149. It noted that, because

Page 460 U. S. 1004

it was dealing with a settlement, it "is not as free to exercise its discretion in fashioning a remedy as it would be upon a finding of liability." Id. at 151. It thought it should approve the settlement "even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is within the reaches of the public interest.'" Id. at 151, quoting United States v. Gillette Co., 406 F.Supp. 713, 716 (D.Mass. 1975). The district court summarized the proper standard as follows:

"After giving due weight to the decisions of the parties as expressed in the proposed decree, the Court will attempt to harmonize competitive values with other legitimate public interest factors. If the decree meets the requirements for an antitrust remedy -- that is, if it effectively opens the relevant markets to competition and prevents the recurrence of anticompetitive activity, all without imposing undue and unnecessary burdens upon other aspects of the public interest -- it will be approved."

Id. at 153.

It is not clear to me that this standard, or any other standard the district court could have devised, admits of resolution by a court exercising the judicial power established by Article III of the Constitution. The Act applies only when a case has been settled. Thus, by definition, there has been no judicial finding of relevant markets, closed or otherwise, to be opened or of anticompetitive activity to be prevented. The district court seems to have assumed first that there was an antitrust violation and second that it knew the scope and effects of the violation. But the parties have settled the case and thereby avoided the necessity for such findings.

...