Bell Atlantic Corp. v. At&T Corp.

• Citation: 339 F.3d 294
• Decision Date: 16 July 2003
• Docket Number: No. 02-40656.,02-40656.
• Parties: BELL ATLANTIC CORPORATION; et al., Plaintiffs, Rochelle Communications Inc.; Adroit Medical Systems Inc., a Tennessee Corporation, Plaintiffs-Appellants, v. AT&T CORPORATION; et al., Defendants, AT&T Corporation, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

339 F.3d 294

BELL ATLANTIC CORPORATION; et al., Plaintiffs, Rochelle Communications Inc.; Adroit Medical Systems Inc., a Tennessee Corporation, Plaintiffs-Appellants, v. AT&T CORPORATION; et al., Defendants, AT&T Corporation, Defendant-Appellee.

No. 02-40656.

United States Court of Appeals, Fifth Circuit.

July 16, 2003.

Revised August 4, 2003.

COPYRIGHT MATERIAL OMITTED

Robert Stephen Berry, James Daniel Leftwich, Gregory Mark Baruch (argued), Berry & Leftwich, Washington, DC, for Plaintiffs-Appellants.

Charles W. Douglas, Thomas K. Cauley, Jr., David F. Graham (argued), Constantine Louis Trela, Brian A. McAleenan, Sidley, Austin, Brown & Wood, Chicago, IL, for Defendant-Appellee.

Appeal from the United States District Court for the Eastern District of Texas.

Before GARWOOD, SMITH and BARKSDALE, Circuit Judges.

GARWOOD, Circuit Judge:

In this Rule 23(f) interlocutory appeal, the plaintiffs-appellants, Rochelle Communications, Inc. (Rochelle) and Adroit Medical Systems, Inc. (Adroit), challenge the district court's denial of their motion to certify two classes of plaintiffs allegedly injured by the refusal of the defendant, AT&T Corp. (AT&T), to permit the passage of caller identification (caller ID) data across its long-distance telephone network. Because we conclude that the appellants cannot satisfy the predominance requirement of Rule 23(b), we affirm.

Facts and Proceedings Below

In 1996, Bell Atlantic Corp. (Bell) brought suit under section 4 of the Clayton Act¹ against AT&T and its subsidiary Lucent Technologies, Inc., seeking treble damages and injunctive relief for alleged violations of the antitrust laws. According to Bell, AT&T attempted to monopolize the market for caller-ID service in violation of section 2 of the Sherman Act² when, for approximately four years beginning in 1992, AT&T blocked the free passage of caller-ID data over its long-distance network. Shortly after Bell brought suit, the named class plaintiffs, Rochelle and Adroit, intervened and moved to certify two classes of plaintiffs who allegedly suffered antitrust injury because of AT&T's conduct during the class period, a period running between March 19, 1992, and November 30, 1995.³

A. Caller ID

The decision to certify a class may often necessitate a highly factual inquiry, see Alabama v. Blue Bird Body Co., Inc., 573 F.2d 309, 316 (5th Cir.1978), and the propriety of class certification here hinges in part upon evidence introduced below concerning the nature and operation of caller ID.

The record reflects that caller ID is a service marketed and provided by local telephone companies that permits the display, on a device either attached to or incorporated into the telephone of the recipient of a call, of the telephone number, and occasionally the name, of the calling party. The service operates by transmitting data containing, at a minimum, a calling party's telephone number (CPN) over the telephone networks until it ultimately reaches, and is displayed on, the call recipient's caller-ID display unit.⁴

There is no dispute that access to caller ID information may be of benefit to a number of businesses and may, for certain businesses, produce substantial efficiency gains and accompanying cost savings. Businesses, for example, may use caller ID data to return calls received after hours where the caller left an incomplete message or no message at all. And because the display units also are sometimes able to record information for later recall, the caller ID display units may also be used to track call volume. In addition, businesses that maintain reverse-charge, long-distance telephone numbers benefit from caller ID by using the calling party number to screen out unwanted calls, thereby reducing long-distance calling expenses.

At a more sophisticated level, the caller-ID data transmitted to a call recipient may be linked, through the use of computer telephony integration (CTI) equipment and software, to a business's computerized database. CTI equipment thus allows a business to use a caller ID signal to rapidly retrieve information related to a particular caller, permitting a business, for example, to route a call to a specific employee, or to provide faster and more efficient service to a customer, resulting in reduced telephone bills and labor costs, and in some circumstances, increased customer goodwill.⁵

A number of technological prerequisites, however, must be met before a call recipient can receive a caller ID signal. Chief among these is the need for each portion of the telephone network that the caller ID signal must traverse to be connected to a telephone network known as the Signaling System 7 (SS7) network.⁶ Thus, for any given call to carry a caller ID signal to a call recipient over the AT&T long-distance network, the local telephone exchange networks of both the caller and call recipient must have SS7 capability, and the local telephone exchange networks of both caller and call recipient must be connected to AT&T's long-distance SS7 network.⁷

Even where there was complete SS7 connectivity, however, a number of additional factors, other than AT&T's conduct, may have prevented the unimpeded passage of a caller ID signal during the class period. Some states, concerned with the implications of caller ID for privacy rights and existing wiretapping legislation, imposed regulations that blocked the transmission of CPN on all calls, both local and long-distance. In re Rules and Policies Regarding Calling Number Identification Service—Caller ID, 9 F.C.C. Rcd. 1764 (1994). Thus AT&T alleged, and the plaintiffs do not dispute, that Texas prohibited the transmittal of CPN for a substantial portion of the class period, while California did not permit the passage of CPN at any time during the class period. Pennsylvania did not amend its statutes to permit caller ID service until December 1993. See 66 PA. CONS.STAT. § 2906(a) (providing for caller ID service and overruling Barasch v. Pennsylvania Public Utility Commission, 133 Pa.Cmwlth. 285, 576 A.2d 79 (1990), which held that caller ID violated state wiretap laws). Other states required, and still require, that telephone companies provide consumers with the option of blocking the display of their telephone numbers. See, e.g., CAL. PUB. UTIL.CODE § 2893(a) (West 2003) (requiring, with certain exceptions, that "every telephone call identification service ... shall allow a caller to withhold display of the caller's telephone number"); 66 PA. CONS. STAT. § 2906(a) (same). Finally, beyond state regulations and SS7 connectivity, other technological barriers may have prevented the transmission of caller ID data during the class period. Thus, the record indicates that CPN does not accompany a call where the call is placed either from a pay phone or from a cellular phone. In addition, caller ID service may be unavailable where either the calling party or the call recipient employs a private branch exchange (PBX) telephone system, a type of telephone system widely used by businesses during the class period.

Assuming, however, that none of these various barriers would have impeded the receipt of caller ID, there is no question but that caller ID was unavailable on certain calls during the class period because of AT&T's decision to block the free transmission of caller ID signals over its long-distance network. Moreover, for purposes of deciding class certification, we shall simply assume without deciding, as did the district court, that such conduct amounted to an attempt to monopolize the market for caller ID service in violation of the Sherman Act. The only question remaining before this court, therefore, is the propriety of the district court's denial of class certification.

B. Class Definitions

The named plaintiffs, Rochelle and Adroit, initially sought to certify two classes of plaintiffs who they maintained suffered antitrust injury as a result of AT&T's blocking of caller ID data: (1) a reverse charge class comprising business and organizations who purchased AT&T's reverse-billed ("1-800") long-distance service; and (2) a call recipient class comprising businesses and organizations that were actual or potential purchasers of caller-ID service for long-distance calls.⁸

After a hearing during which the district court received evidence concerning the operation of caller ID service and the nature of the antitrust injury alleged, the plaintiffs moved to redefine the putative classes.⁹ The plaintiffs' amended motion for class certification, the denial of which is before us, removed certain problematic aspects of the initial definitions, and defined the reverse charge class as

"All businesses and organizations that, at any time between March 19, 1992 and November 30, 1995, were actual purchasers from AT&T of reverse-billed (typically `800') switched-access, long distance service, and were actual purchasers of Caller-ID service for the processing of incoming switched-access telephone calls."

The call recipient class, whose members who were not necessarily all AT&T subscribers, was defined as

"All business and organizations that, at any time between March 19, 1992 and November 30, 1995 (a) were actual purchasers of Caller-ID service for the processing of incoming switched-access telephone calls; and (b) received at least one AT&T long-distance call carried over the SS7 signaling network each month during which such purchaser was a subscriber to the switched-access Caller-ID service."

In addition to defining the proposed classes, the plaintiffs' motion for certification also included a formula for calculating the amount of damages to which the plaintiffs claimed the class members were entitled. Specifically, the plaintiffs proposed to calculate damages for individual class members in both classes based upon the national "average number of seconds saved per call" [both long-distance and local] through the use of caller ID, an average wage rate for the typical employee...