Systemcare, Inc. v. Wang Laboratories Corp.

• Decision Date: 29 May 1996
• Docket Number: No. 95-1032,95-1032
• Citation: 85 F.3d 465
• Parties: , 1996-1 Trade Cases P 71,420, 13 Colo. Bankr. Ct. Rep. 163 SYSTEMCARE, INC., Plaintiff-Counter-Defendant-Appellant, v. WANG LABORATORIES CORPORATION, Defendant-Counter-Claimant-Appellee, v. Michael WRIGHT, Counter-Defendant, United States of America, Amicus Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 465

85 F.3d 465

64 USLW 2766, 1996-1 Trade Cases P 71,420,

13 Colo. Bankr. Ct. Rep. 163

SYSTEMCARE, INC., Plaintiff-Counter-Defendant-Appellant, v. WANG LABORATORIES CORPORATION, Defendant-Counter-Claimant-Appellee, v. Michael WRIGHT, Counter-Defendant, United States of America, Amicus Curiae.

No. 95-1032.

United States Court of Appeals, Tenth Circuit.

May 29, 1996.

Rehearing Granted Sept. 6, 1996.

Ronald Katz, Coudert Brothers, San Francisco, California (Janet A. Hart and Paul S. Schmidtberger with him on the briefs), for Appellant.

Jerrold J. Ganzfried, Howrey & Simon, Washington, DC (Michael J. Cook, Faegre & Benson, Denver, Colorado, and Florinda J. Iascone, Wang Laboratories, Inc., Billerica, MA, with him on the brief; Robert F. Ruyak and Sheila R. Schreiber, Howrey & Simon, Washington, DC, on the brief), for Appellee.

Anne K. Bingaman, Assistant Attorney General, Diane P. Wood, Deputy Assistant Attorney General, Catherine G. O'Sullivan and David Seidman, Attorneys, U.S. Department of Justice, Washington, DC, on the brief for Amicus Curiae.

Before TACHA, HOLLOWAY, and BRISCOE, Circuit Judges.

TACHA, Circuit Judge.

Systemcare, Inc. ("Systemcare") filed this action alleging that Wang Laboratories, Inc. ("Wang") violated the Sherman Act, 15 U.S.C. § 1, by illegally tying the sale of its software support services to the purchase of its hardware support services. The district court granted summary judgment in favor of Wang based upon this court's opinion in City of Chanute v. Williams Natural Gas Co., 955 F.2d 641 (10th Cir.), cert. denied, 506 U.S. 831, 113 S.Ct. 96, 121 L.Ed.2d 57 (1992). Systemcare, Inc. v. Wang Lab., Inc., 787 F.Supp. 179 (D.Colo.1992). Systemcare appeals, maintaining that (1) we should overrule Chanute, (2) the Supreme Court effectively overruled Chanute in Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), and (3) Chanute is factually distinguishable. Wang contends that its intervening bankruptcy proceedings left the district court without jurisdiction over this case and that, consequently, we are without jurisdiction to review it on appeal. We hold that the district court did have jurisdiction over the case, and exercise our jurisdiction under 28 U.S.C. § 1291 to affirm.

Background

Wang manufactured "VS" minicomputers, and designed and copyrighted a software system for use with these computers. Wang now offers both hardware and software support services for its computers. The hardware support services involve maintenance and repair of computer equipment. The software support services include software maintenance bulletins, software updates, on-site and telephone technical assistance, remote link assistance, and the right to copy the software. Because Wang owns the copyright on its software, it alone can provide several of these software services.

Systemcare, an independent service organization, services computer equipment that it does not manufacture. Systemcare services Wang computer hardware in Colorado. In doing so, Systemcare competes with Wang in the provision of hardware support services for VS computers.

Beginning in 1985, Wang offered its minicomputer users a package of hardware and software support services called Wang Software Services ("WSS"). Under the WSS contract, the customer must subscribe to Wang's hardware support program in order to obtain Wang's software support services. Many of Wang's customers have entered into WSS contracts with Wang. Systemcare alleges that the WSS contracts involve unlawful tying because Wang forces its customers to purchase its hardware support services in order to obtain its software support services.

Wang responds that customers are not compelled to purchase its hardware services with its software services because both types of service are separately available on a "per incident" basis. Systemcare, however, contends that per incident services are as costly as WSS contract services and that per incident customers do not receive the same quality of software support services as WSS customers. Because of these cost and quality differences, customers usually choose the WSS contract over the software services offered on a per incident basis. Thus, according to Systemcare, Wang uses its market power in the software support industry to eliminate competition in the hardware support industry. Systemcare alleges that Wang's WSS contracts foreclose competition in an otherwise competitive hardware support industry in violation of section 1 of the Sherman Act.

Procedural History

Systemcare filed its complaint against Wang on October 11, 1989, in the United States District Court for the District of Colorado. Wang answered and asserted counterclaims against Systemcare and its president under federal and state trademark infringement law. After discovery closed, Wang moved for summary judgment on the section 1 claim. The district court deferred ruling on the motion and directed both parties to submit briefs regarding a recently-decided Tenth Circuit case, City of Chanute v. Williams Natural Gas Co., 955 F.2d 641 (10th Cir.), cert. denied, 506 U.S. 831, 113 S.Ct. 96, 121 L.Ed.2d 57 (1992). The district court, relying on Chanute, granted Wang's motion for summary judgment. Systemcare, Inc. v. Wang Lab., Inc., 787 F.Supp. 179 (D.Colo.1992). Systemcare then moved under Fed. R. Civ. Proc. 59(e) to alter or amend judgment.

On August 18, 1992, prior to oral argument on Systemcare's Rule 59(e) motion, Wang filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Massachusetts. All judicial proceedings against Wang, including Systemcare's Rule 59(e) motion, were automatically stayed pursuant to 11 U.S.C. § 362(a). In keeping with that automatic stay, the Colorado district court entered an order on September 4, 1992, staying the litigation against Wang in the District of Colorado. On December 10, 1992, the Colorado district court retired the case from its active docket. Wang continued to operate its business as a debtor-in-possession pursuant to 11 U.S.C. § 1107.

Systemcare then turned its attention to the bankruptcy court. On February 5, 1993, Systemcare filed a proof of claim against the bankruptcy estate. The proof of claim specifically identified the pending Colorado case, stated that the debt to Systemcare was confined to the period from 1986 to the date of Wang's bankruptcy petition, and valued the claim at $1,548,000. Wang valued the claim at zero. On March 4, 1993, Systemcare filed a motion pursuant to 11 U.S.C. § 362(d)(1) for partial relief from the automatic stay in order to pursue injunctive relief in the Colorado case. The bankruptcy court denied that motion in a minute order dated May 6, 1993, and the Massachusetts District Court affirmed that decision on January 4, 1996.

Systemcare filed a second motion for relief from the automatic stay with the bankruptcy court on October 26, 1993. In response, Wang opposed the motion for relief from the stay and moved for summary judgment on Systemcare's claim against the bankruptcy estate. By minute order dated December 20, 1993, the bankruptcy court denied Systemcare's second motion for relief from the stay and granted Wang's motion for summary judgment on Systemcare's claim. Systemcare's appeal of that order is currently pending before the Massachusetts district court.

Wang's plan of reorganization was confirmed on September 21, 1993. The confirmation order discharged Wang's debts and permanently enjoined all proceedings with respect to such debts. The discharge ended the automatic stay. 11 U.S.C. § 362(c)(2). Over a year later, on September 26, 1994, Systemcare moved the Colorado district court to reactivate the case and rule on Systemcare's still-pending Rule 59(e) motion. On December 15, 1994, the Colorado district court granted Systemcare's motion to reactivate and denied Systemcare's pending Rule 59(e) motion, thus rendering a final judgment. Systemcare now appeals that decision.

Jurisdiction

Wang contends that the Colorado district court lacked jurisdiction to reactivate and render judgment in this case. We disagree. Wang initially argues that its bankruptcy automatically stayed all pre-petition lawsuits against Wang. The filing of Wang's bankruptcy petition automatically stayed "the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title...." 11 U.S.C. § 362(a)(1). In accordance with the automatic stay, the Colorado district court stayed and eventually removed the case from its active docket. The district court only reactivated the case after the expiration of the § 362(a) stay, and thus the automatic stay presented no bar to the court's jurisdiction.

Wang further maintains that upon consummation of its plan of reorganization, the bankruptcy court replaced the automatic stay with a permanent injunction prohibiting all prepetition lawsuits. Wang's plan and the bankruptcy court order confirming that plan, consistent with 11 U.S.C. § 524, discharged Wang's pre-confirmation debts. Section X.B.2.d of the plan states:

Except as expressly provided in the Plan, WLI [Wang Laboratories, Inc.] is discharged effective upon the Confirmation Date from any "debt" (as that term is defined in section 101(12) of the Bankruptcy Code), and WLI's liability in respect thereof is extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable, or known or unknown, or that arose from any agreement of WLI that has either been assumed or rejected in the Chapter 11 Case or pursuant to the Plan, or obligation of WLI incurred before the Confirmation Date, or from any conduct of WLI prior to...