Intern. Tel. & Tel. Corp. v. United Tel. Co. of Florida

• Decision Date: 08 September 1975
• Docket Number: No. 72-17-Civ.-F.M.-K.,72-17-Civ.-F.M.-K.
• Citation: 433 F. Supp. 352
• Parties: INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION, Plaintiff, v. UNITED TELEPHONE COMPANY OF FLORIDA, Defendant.
• Court: U.S. District Court — Middle District of Florida

433 F. Supp. 352

INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION, Plaintiff, v.UNITED TELEPHONE COMPANY OF FLORIDA, Defendant.

No. 72-17-Civ.-F.M.-K.

United States District Court, M. D. Florida, Fort Myers Division.

September 8, 1975.

COPYRIGHT MATERIAL OMITTED

Blecher, Collins & Hoecker, Los Angeles, Cal., Daniel R. Solin, New York City, for plaintiff by Maxwell M. Blecher; Cromwell A. Anderson, Smather & Thompson, Miami, Fla., Peter J. Winders, Tampa, Fla., of counsel.

Anderson, Russell, Kill & Olick, New York City, for defendant by Lawrence Kill, Jerold Oshinsky, New York City; Warren E. Baker, Kansas City, Mo., John Germany, Holland & Knight, Tampa, Fla., Edwin L. Mason, Mason & Erwin, Tallahassee, Fla., of counsel.

PALMIERI, District Judge.¹

Preliminary Statement

The plaintiff, International Telephone and Telegraph Corporation(ITT), although engaged in various lines of business is, for purposes of this lawsuit, a substantial manufacturer and distributor of telephone equipment.The defendant, United Telephone Company of Florida (United), is an operating telephone company enfranchised by the State of Florida and furnishing exclusive telephone services to subscribers within an area comprising 13 counties, including the cities of Fort Myers and Tampa.

ITT charges United with the unlawful use of its monopoly power by allegedly stifling competition in the sale and distribution of telephone equipment in violation of Section 2 of the Sherman Act.Specifically it claims that United brought about the cancellation of a sales contract of ITT for telephone equipment as a result of anticompetitive motivations.

The controversy came about as the result of the construction of an extensive real estate development in the Fort Myers area covering more than 75 acres, known as Shell Point Village(the Village).The development was established as a retirement community but included important lodging, shopping and other facilities available to the public generally, including 200 room motel, a restaurant and a marina.A suitable communications system was required so as to permit internal telephone calls between the many component units of the Village and between them and points outside the Village.A proposed solution was offered by ITT through the use on the Village premises of central office equipment which it would supply.The equipment was intended to permit intra-state and inter-state communications by telephone through an interconnection with the licensed system of United.The contemplated arrangement would have provided service in and out of interconnected trunk lines of United for the benefit of residents, guests, businesses and the general public at the Village.

Since the Village was not a telephone company and had no required certificate from the State of Florida, it could not, under Florida statutes, sell telephone services to its residents (except for internal communications) because this would constitute the use of customer-owned equipment to resell telephone services to others.Since the proposed installation at the Village could not be made operative without the interconnection with the trunk lines and general facilities of United, it was a matter of some importance to United and to all concerned that compliance with Florida law be determined.

The matter was placed before the appropriate forum, the Florida Public Service Commission, by United on July 24, 1970, on notice to the Village.United's complaint alleged its belief that the Village's proposed telephone system would involve resale of services without a certificate in contravention of statute and in violation of United's tariff.United also informed the Commission by letter that because some of the contemplated uses of the telephone system were lawful it believed that it was obliged to interconnect, which it was fully prepared to do, and to seek interdiction by the Commission of the unlawful conduct.

On August 7, 1970, the Commission entered a show cause order against the Village, to which the Village did not respond.However, by answer filed September 9, 1970, the Village denied that its telephone services would be "for hire" and moved to dismiss United's complaint.The motion was denied.On November 20, 1970, the Commission granted intervention to ITT in support of the Village and to General Telephone Company of Florida, Florida Telephone Corp. and Southern Bell Telephone and Telegraph Company in support of United.On November 27, 1970, ITT filed an answer denying that the telephone system which it proposed to sell the Village would be used for resale of services and moving to dismiss United's complaint.This motion was also denied.Neither the Village nor ITT sought review of the show cause order or the denials of their motions to dismiss.ITT was dilatory in its discovery, serving interrogatories on United one year after intervention was granted.ITT failed to place before the Commission any of the factual matters or legal theories which it now urges upon this court, and was finally dismissed as an intervenor on April 7, 1972, on the ground that its contract with the Village, which formed the basis for its intervention, had been cancelled.²ITT never sought review of the order of dismissal.

This proceeding was ultimately terminated as moot when, after it had been pending over a year and a half, the Village abandoned its intention of installing a telephone system.During the entire pendency of the proceedings before the Commission, ITT, despite early intervention, never pressed for the adjudication of any issue and played a largely inactive and ineffective role.The Commission expressly stated in its final order, however, that had the Village's proposal been found to involve the resale of services, as ITT conceded at the trial of this lawsuit that it did, it would have been in violation of Florida law because of the lack of a certificate of public convenience and necessity.

The findings of fact and conclusions of law which follow are intended to amplify and supplement what has already been said and to demonstrate that United is entitled to judgment dismissing the action of ITT against it, and that its counterclaims against ITT must be dismissed.

FINDINGS OF FACT

I.The Parties

1.PlaintiffInternational Telephone and Telegraph Corporation(ITT) is a Delaware corporation with its principal place of business in New York City, New York, which manufactures and sells telephone equipment.

2.DefendantUnited Telephone Company of Florida (United) is a Florida corporation with its principal place of business in Fort Myers, Florida, which provides exclusive telephone service to all or part of 13 counties in the State of Florida under a certificate of public convenience and necessity issued by the Florida Public Service Commission(PSC or the Commission).

3.ITT does not have a certificate of public convenience and necessity to operate a telephone company within the area served by United in the State of Florida.

II.Shell Point Village

4.The controversy involves a proposed telephone system for Shell Point Village(the Village), a large real estate development covering more than 75 acres of land near Fort Myers, Florida, within the United telephone service area.

5.The Village was established by the Alliance Development Association.It was built and is operated by the Christian and Missionary Foundation³ as a nonprofit retirement community which includes, in addition to its residential facilities, a 200 room motel, restaurant, marina, nursing pavilion, business concessions and other facilities available and advertised to the public generally.

6.The Village's residents pay an initial fee designated as a "Founder's Gift" and then pay a monthly fee to cover the Village's operating and maintenance expenses.

7.Immediately adjacent to the Village is a residential subdivision known as Palm Acres which, though not a part of the Village, is the residence of certain of its medical and administrative employees.

III.The ITT-Shell Point Village Contract

8.On February 11, 1970, ITT and the Village entered into a contract under which ITT was to provide and install specifically designated customer-owned telephone equipment at the Village.

9.This equipment was to serve not only as an internal communications network within the Village, but ITT warranted that the equipment could lawfully be used to serve the businesses, administrative needs and residents of the Village by providing interconnection with the telephone company's network to allow for incoming and outgoing local, intra-state and interstate telephone service.

10.The equipment was also to be installed in the homes of four Village employees in Palm Acres.Although intended as an internal communications link for emergencies, the Palm Acres residents would have had complete telephonic access to the Village's residents and businesses through the Village's private telephone system, and there was no effective means to prevent calls from Palm Acres to persons outside the Village on Village equipment.

11.Equipment which connects individual telephones of a user with one another and with the public network of the operating telephone company in whose area the subscriber is located is known as a private branch exchange (PBX).

12.By letter dated April 30, 1970, the Village notified United of its contract with ITT for a telephone system to be operational by August 8, 1970, and advised that technical specifications could be obtained from ITT.

13.Both ITT and the Village refused to supply the technical information which United sought immediately upon this notification unless United agreed to waive the use of an interface or coupling device between the ITT system and the United lines.

14.United considered the use of an interface device, which was and is uniformly required in all interconnection situations in Florida, essential to the protection of its equipment, and in order to be prepared...