594 F.2d 730 (9th Cir. 1979), 76-3428, Thornhill Pub. Co., Inc. v. General Telephone & Electronics Corp.
|Citation:||594 F.2d 730|
|Party Name:||THORNHILL PUBLISHING COMPANY, INC., a Washington Corporation, Plaintiff-Appellant, v. GENERAL TELEPHONE & ELECTRONICS CORPORATION, General Telephone Company of the Northwest, Inc., and General Telephone Directory Company, corporations, Defendants-Appellees.|
|Case Date:||February 06, 1979|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Rehearing Denied March 22, 1979.
Joseph M. Alioto (argued), San Francisco, Cal., for plaintiff-appellant.
Michael Malina (argued), Kaye, Scholer, Fierman, Hays & Handler, New York City, for defendants-appellees.
Appeal from the United States District Court for the Western District of Washington.
Before: CHAMBERS and HUFSTEDLER, Circuit Judges, and RENFREW, [*] District Judge.
RENFREW, District Judge:
Plaintiff-appellant Thornhill Publishing Company, Inc. ("Thornhill"), brought this antitrust suit against defendant-appellee General Telephone & Electronics Corporation ("GTE") and its wholly owned subsidiaries, General Telephone Company of the Northwest, Inc. ("Northwest"), and General Telephone Directory Company ("Directory"), alleging violations of Sections 1 and 2 of the Sherman Act and Section 7 of the Clayton Act. Thornhill, a publisher and distributor of telephone directories, alleged that appellees combined and conspired to unreasonably restrain and to monopolize trade in the publication and sale of telephone directories and in the sale of advertising space and linage in telephone directories. Thornhill claimed that appellees refused to sell, lease, or otherwise make available to Thornhill the names, addresses, and
phone numbers of Northwest's telephone customers. The complaint also charged that appellees made false representations concerning appellant's business, confiscated appellant's telephone directories, and threatened certain financial institutions with withdrawal of patronage or litigation if they continued doing business with Thornhill. Finally, Thornhill alleged that as part of this combination and conspiracy appellees instituted a lawsuit against Thornhill. In that lawsuit, filed in the Western District of Washington in 1970, Northwest obtained a judgment against Thornhill for infringement of Northwest's copyright on certain of its telephone directories and was awarded injunctive relief and damages. Thornhill claims that that lawsuit and appellees' other alleged activities constitute violations of Sections 1 and 2 of the Sherman Act. Thornhill also contends that GTE's acquisition of Directory, prior to 1970, had the effect of eliminating competition among those seeking to acquire the names, addresses and telephone numbers of customers of GTE and Northwest, since GTE allegedly agreed with Directory not to disclose that information. Thornhill therefore claims that the acquisition violated Section 7 of the Clayton Act.
Appellees moved for summary judgment under Rule 56 on two grounds. First, appellees argued that Thornhill's antitrust claims were barred by principles of Res judicata because Thornhill should have raised them as compulsory counterclaims in the prior copyright infringement suit. Second, they contended that the acts complained of were outside the jurisdictional reach of the Sherman Act, as Thornhill's telephone directory business is not in and does not substantially affect interstate commerce. The district court ruled in favor of appellees on both grounds and dismissed the suit. This appeal followed. We affirm the district court's ruling on the interstate commerce issue and therefore do not reach the compulsory counterclaim issue.
I. PROCEDURAL POSTURE OF THE CASE
Appellees moved for summary judgment under Rule 56, asserting that "the alleged conduct claimed to have violated the antitrust laws affected (if at all) purely Intrastate activities and is thus beyond the jurisdictional reach of the Sherman Act," and asked that the "motion for summary judgment be granted dismissing the complaint in all respects." The trial court granted the motion and dismissed the complaint with prejudice. 1
The Sherman Act prohibits every contract, combination or conspiracy "in restraint of trade or commerce among the several States," 15 U.S.C. § 1, and also prohibits monopolizing "any part of the trade or commerce among the several States." 15 U.S.C. § 2. The requirement that the restraint of trade be a restraint on interstate commerce is generally referred to as a prerequisite for federal jurisdiction. Many courts have dismissed Sherman Act claims for lack of subject matter jurisdiction where the required nexus with interstate commerce was lacking. 2 Other courts have considered the interstate commerce issue in the context of motions going to the merits of the case either motions for dismissal for failure to state a claim for relief
under Rule 12(b)(6), 3 or motions for summary judgment under Rule 56. 4 In many cases the defendants move for dismissal under both Rule 12(b)(1) and Rule 12(b)(6). 5
In this case appellees moved for summary judgment under Rule 56, thus seeking a judgment on the merits, 6 yet their motion was phrased in terms of an attack on the court's jurisdiction. In ruling on appellee's motion, the trial court apparently applied the standards applicable to a motion for summary judgment.
We affirm the trial court's ruling. We find that the material facts relating to the interstate commerce issue are not in dispute and that the undisputed facts establish that the nexus with interstate commerce required by the Sherman Act is not present in this case.
Since the material facts are not in dispute, we need not decide whether the trial court was required to apply summary judgment standards in ruling on appellees' motion or whether the court could properly have considered this a purely jurisdictional issue and therefore could have treated the motion as a motion to dismiss for lack of jurisdiction under Rule 12(b)(1). A motion to dismiss for lack of subject matter jurisdiction may either attack the allegations of the complaint or may be made as a "speaking motion" attacking the existence of subject matter jurisdiction in fact. Land v. Dollar, 330 U.S. 731, 735 & n.4, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 890-892 (3 Cir. 1977); Exchange Nat'l Bank v. Touche Ross & Co., 544 F.2d 1126, 1130-1131 (2 Cir. 1976). Where the jurisdictional issue is separable from the merits of the case, the judge may consider the evidence presented with respect to the jurisdictional issue and rule on that issue, resolving factual disputes if necessary. Berardinelli v. Castle & Cooke, Inc., 587 F.2d 37 (9 Cir. 1978); Mortensen v. First Fed. Sav. & Loan Ass'n, supra, 549 F.2d at 891; Sinclair v. Spatocco, 452 F.2d 1213 (9 Cir. 1971), Cert. denied, 409 U.S. 886, 93 S.Ct. 102, 34 L.Ed.2d 142 (1972); Appelt v. Whitty, 286 F.2d 135 (7 Cir. 1961). The standards applicable to a Rule 12(b)(1) speaking motion differ greatly from the standards for ruling on a motion for summary judgment. Faced with a factual attack on subject matter jurisdiction,
"the trial court may proceed as it never could under Rule 12(b)(6) or Fed.R.Civ.P. 56. * * * (N)o presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist." Mortensen v. First Fed. Sav. & Loan Ass'n, supra, 549 F.2d at 891 (footnote omitted).
If the interstate commerce requirement of the Sherman Act is an element of the substantive offense as well as a jurisdictional requirement, a motion directed to the interstate commerce issue should be accorded Rule 56 treatment, for a ruling on that issue would be a ruling on the merits. Although a court considering a motion relating
to jurisdiction as well as a motion on the merits generally would decide the jurisdictional issue first, 7 if the attack on jurisdiction requires the court to consider the merits of the case, the court has jurisdiction to proceed to a decision on the merits. Land v. Dollar, supra, 330 U.S. at 739, 67 S.Ct. 1009. See also Romero v. International Terminal Operating Co., 358 U.S. 354, 359, 79 S.Ct. 468, 3 L.Ed.2d 368 (1958); Bell v. Hood, 327 U.S. 678, 682-683, 66 S.Ct. 773, 90 L.Ed. 939 (1946).
In Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 602 (9 Cir. 1976), we concluded that in a Sherman Act case a motion challenging the existence of a sufficient relationship with foreign commerce should be accorded Rule 56 treatment rather than being treated as a speaking motion under Rule 12(b)(1), because the existence of a sufficient relationship with foreign commerce relates to the merits of the claim as well as to subject matter jurisdiction. This conclusion was based on the Supreme Court's statement in Hospital Bldg. Co. v. Trustees of Rex Hospital, 425 U.S. 738, 742 n.1, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976), that the interstate commerce issue is identical whether a dismissal is sought under Rule 12(b)(1) or under Rule 12(b)(6). We reasoned that since the interstate commerce element went to the merits of the claim, a dismissal should be based on a Rule 12(b)(6) motion or a summary judgment motion, rather than a Rule 12(b)(1) motion:
Although the Supreme Court in Hospital Building did not elaborate, it seems settled that, when a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiffs' substantive claim for relief, a motion to dismiss for lack of subject matter jurisdiction rather than for failure to state a claim is proper only when the allegations of the complaint are frivolous. O'Neill v. Maytag, 339 F.2d 764, 766 & n.3 (2d Cir. 1964). See Bell v. Hood, 327 U.S. 678, 682-83, 66 S.Ct. 773, 90...
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