Aircapital Cablevision v. STARLINK COMMUNICATIONS

• Decision Date: 06 May 1986
• Docket Number: No. 83-1997-K.,83-1997-K.
• Citation: 634 F. Supp. 316
• Parties: AIRCAPITAL CABLEVISION, INC., and Multimedia Cablevision, Inc., Plaintiffs, v. STARLINK COMMUNICATIONS GROUP, INC., and Jeffry L. Manion, Defendants.
• Court: U.S. District Court — District of Kansas

634 F. Supp. 316

AIRCAPITAL CABLEVISION, INC., and Multimedia Cablevision, Inc., Plaintiffs, v. STARLINK COMMUNICATIONS GROUP, INC., and Jeffry L. Manion, Defendants.

No. 83-1997-K.

United States District Court, D. Kansas.

May 6, 1986.

R. Bruce Beckner of Dow, Lohnes & Albertson, Washington, D.C., Robert Martin of Martin, Pringle, Oliver, Triplett & Wallace, Wichita, Kan., for plaintiffs.

Lauritz S. Helland, of Brown & Finn, Washington, D.C., Donald R. Newkirk of Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., for defendants.

MEMORANDUM AND ORDER

PATRICK F. KELLY, District Judge.

This case is before the Court on plaintiffs' motion for summary judgment on defendant Starlink's counterclaims. Plaintiffs AirCapital Cablevision, Inc. and Multimedia Cablevision, Inc. (Multimedia) filed suit against Starlink Communications Group, Inc. (Starlink) claiming Starlink's sale of home earth stations violated the Communications Act and infringed on copyrights. Starlink counterclaimed, alleging Multimedia's lawsuit was a mere "sham" instigated solely to drive Starlink out of business, and as such, was a violation of the Sherman Act. The claims were bifurcated. In February of 1985, Starlink's motion for summary judgment as to Multimedia's claims was granted by this Court. However, Starlink continued to assert its antitrust claims against Multimedia. Multimedia has now moved for summary judgment, claiming their action in filing the lawsuit was a valid exercise of their First Amendment rights and is protected by the Noerr-Pennington doctrine.

For the reasons set forth below, the Court finds the lawsuit brought by Multimedia against Starlink, along with its incidental publicity, was activity protected by the Noerr-Pennington doctrine. Therefore, Multimedia's motion for summary judgment is granted.

I. Prior Litigation

On November 14, 1983, Multimedia filed a complaint alleging, in 18 counts, that Starlink, a small Kansas retailer of satellite earth station equipment, had violated Section 605 of the Communications Act of 1934, and Sections 106, 111 and 501 of the Copyright Act of 1976, by selling satellite earth station equipment to consumers in the Wichita, Kansas market. Multimedia owns an exclusive cable franchise in the Wichita area. In order to receive and retransmit satellite programming, Multimedia pays fees to various satellite program suppliers (such as HBO). Starlink customers pay nothing to the satellite program suppliers. In its suit, Multimedia sought to enjoin Starlink from selling earth stations, and also prayed for damages.

Starlink denied all liability and counterclaimed under the Sherman Antitrust Act, 15 U.S.C. § 2, alleging Multimedia's lawsuit and its attendant publicity was an attempt to monopolize the provision for facilities for making satellite-delivered signals available to consumers. Starlink claimed the lawsuit was a mere "sham", brought with the sole intent of eliminating Starlink as a competitor. Starlink prayed for treble damages, but not attorney fees.

During the two months following Multimedia's filing of its claim, numerous articles appeared in various newspapers publicizing the lawsuit. Multimedia's agents were quoted as saying Multimedia had plans to sue individual buyers of home earth stations. Starlink's business decreased as a result of the pending lawsuit and the publicity. Starlink suffered a loss of $90,396.00 in 1984, was denied at least two loans, and lost an unknown number of potential customers. However, Starlink was never forced out of business.

In 1984, the Communications Act of 1934 was overhauled by Congress. The amended act clearly establishes the legality of selling and owning satellite earth stations.

On February 13, 1985, this Court granted Starlink's motion for summary judgment. In the memorandum order, this Court discussed Starlink's liability under the former § 605 at length, finding Multimedia had no standing to sue under that act as Starlink was not "intercepting" any of Multimedia's signals, but was receiving the signals directly. The Court denied Multimedia's motion to reconsider the order on May 23, 1985.

II. Present Antitrust Action

Starlink bases its present antitrust claims against Multimedia on the action previously brought by Multimedia against Starlink for violation of the Communications Act. Starlink alleges the action, along with the publicity, was instituted for the purpose of eliminating competition and perpetrating Multimedia's monopoly in the satellite signal receiving business, and that the earlier action was a mere "sham".

Multimedia claims its lawsuit against Starlink, as well as any incidental publicity, is protected from antitrust scrutiny by the Noerr-Pennington doctrine. See Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973); California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972); Hydro-Tech Corp. v. Sundstrand Corp., 673 F.2d 1171 (10th Cir.1982); Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc., 674 F.2d 1252, 1263 (9th Cir.1982).

This doctrine was developed in three principal Supreme Court cases, beginning with Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961). In Noerr, a group of trucking companies sued their competitors, a group of railroads, for violations of the Sherman Act. Their antitrust claims were premised on the railroads having conducted a "publicity campaign against truckers designed to foster the adoption and retention of laws and law enforcement practices destructive of the trucking business, to create an atmosphere of distaste for the truckers among the general public, and to impair the relationships existing between the truckers and their customers." Noerr, 365 U.S. at 129, 81 S.Ct. at 525. In reversing the judgment holding that the railroads' campaign had violated the antitrust laws, the Supreme Court held that "at least insofar as the railroads' campaign was directed toward obtaining governmental action, its legality was not at all affected by any anti-competitive purpose it may have had." 365 U.S. at 139-40, 81 S.Ct. at 530-31 (emphasis added). Prior to so ruling, the court had observed that "it is neither unusual nor illegal for people to seek action on laws in the hope that they may bring about an advantage to themselves and a disadvantage to their competitors." 365 U.S. at 139, 81 S.Ct. at 530. The court further found that a contrary construction of the Sherman Act not only would deprive public officials of valuable sources of information on matters affecting their decision making, but also would deprive people of their right to petition with regard to issues significantly affecting their own interests.

The antitrust immunity established in Noerr was reaffirmed and expanded in scope in the case of United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). In cooperation with union officials, several large coal companies attempted to eliminate competition from smaller coal companies by persuading the Secretary of Labor to set a higher minimum wage for companies selling coal to the Tennessee Valley Authority. In reversing a jury verdict for the smaller coal companies, the Supreme Court stated: "joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition. Such conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act." 381 U.S. at 670, 85 S.Ct. at 1593.

Seven years later the Supreme Court extended the immunity from antitrust liability to the administrative and judicial processes. In California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, a group of highway carriers had allegedly conspired to deter competitors from obtaining new or expanded operating rights from the California Public Utilities Commission by opposing every such application, regardless of its merits. Writing for the court, Justice Douglas stated that the immunity formed by the Noerr-Pennington doctrine was grounded in the First Amendment rights of association and petition. Although the court extended the scope of the antitrust immunity, the court stressed that the doctrine was not an absolute immunity without exception. "We said ... in Noerr that there may be instances where the alleged conspiracy is `a mere sham to cover what is actually nothing more than an attempt to interfere with business relationships of a competitor and the application of the Sherman Act would be justified.'" 404 U.S. at 511, 92 S.Ct. at 612, quoting Noerr, 365 U.S. at 144, 81 S.Ct. at 533. The court did not attempt, however, to define the perimeters of the sham exception. The court did state that misrepresentations, condoned in the political arena, are not immunized in the adjudicatory process, and that a conclusion of sham activity may result from the finding of wrongful conduct such as inducing the perjury of witnesses, the use of a patent obtained by fraud, or the bribery of a public purchasing agent. The court further stated that there are other forms of illegal and reprehensible practice which may corrupt the administrative or judicial processes and which may result in a finding of "sham", such as a pattern of baseless, repetitive claims indicating abuse of the administrative or judicial processes culminating in the illegal result of effectively barring competitors from meaningful access to adjudicatory tribunals. The court explained that such subversion of the administrative or judicial process cannot acquire antitrust immunity as "political expression," since First Amendment rights may not be used as the means or pretext for achieving "substantive evils."

Two years later, in Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, the court summarily affirmed a district court's finding that an electric company's repeated...