Capital Telephone Co., Inc. v. Pattersonville Telephone Co., Inc.

• Decision Date: 13 May 1982
• Citation: 56 N.Y.2d 11,451 N.Y.S.2d 11,436 N.E.2d 461
• Parties: , 436 N.E.2d 461, 1982-2 Trade Cases P 64,799 CAPITAL TELEPHONE COMPANY, INC., et al., Respondents, v. PATTERSONVILLE TELEPHONE COMPANY, INC., et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 11

451 N.Y.S.2d 11

56 N.Y.2d 11, 436 N.E.2d 461, 1982-2

Trade Cases P 64,799

CAPITAL TELEPHONE COMPANY, INC., et al., Respondents, v.PATTERSONVILLE TELEPHONE COMPANY, INC., et al., Appellants.

Court of Appeals of New York.

May 13, 1982.

James B. Ayers, Albany, for appellants.

Keith J. Roland, Albany, for respondents.

Robert Abrams, Atty. Gen. (Robert T. Perry, Asst. Atty. Gen., Shirley Adelson Siegel, Sol. Gen., and Lloyd Constantine, Asst. Atty. Gen., of counsel), amicus curiae.

OPINION OF THE COURT

MEYER, Judge.

Plaintiffs' complaint in this action brought under the provisions of the Donnelly Act(General Business Law, §§ 340-347) alleging violation by defendants and New York Telephone Company(NYT) of the antitrust proscriptions of that act is not precluded by the Public Service Commission's prior dismissal of plaintiffs' complaint to that body pursuant to section 91 of the Public Service Law alleging discriminatory activity by the New York Telephone Company.There having been no hearing before the commission (PSC) and the issues to be determined in the Donnelly Act action being neither identical with the issues under section 91 nor necessarily determined in the prior proceeding before the PSC, the essentials for issue preclusion are not present.The jurisdiction of the PSC to accept tariffs for filing and entertain customer complaints of discrimination does not give it exclusive jurisdiction of a competitor's antitrust action, nor in view of the prior PSC ruling is there present reason for abstention by the court under the doctrine of primary jurisdiction.The order of the Appellate Division modifying Special Term's dismissal of plaintiffs' complaint by denying defendants' motion for summary judgment except as to plaintiffs' Federal antitrust claims should, therefore, 81 A.D.2d 970, 439 N.Y.S.2d 759, be affirmed, with costs, and the certified question answered in the affirmative.

Capital Telephone Company(Capital) is a radio common carrier which provides one-way paging and two-way mobile radio service.Peter A. Bakal is president of Capital but also provides through his own solely owned company similar regulated common carrier service.Pattersonville Telephone Company(Pattersonville) competes with Capital and Bakal in offering one-way paging and two-way mobile radio service but also operates a regular landline telephone service.By letter dated May 26, 1978, Capital and Bakal complained to the PSC that the New York Telephone Company had refused them services which NYT was providing to Pattersonville without charge and denying to them a revenue sharing arrangement which was afforded to Pattersonville.Capital and Bakal therefore asked for an order requiring that they and Pattersonville be treated equally by NYT.

After receiving a written report from its communications division stating that NYT in 1976 had terminated the revenue sharing arrangement, differentiating between Capital and Bakal, as radio telephone utilities, and Pattersonville, as a radio and landline telephone service, and stating that NYT's charges to Capital and Bakal were at the same rate charged by NYT to competing radio carriers and not discriminatory, the PSC declined to issue the requested order.

While the PSC complaint was pending, Capital and Bakal began this action against Pattersonville and Robert A. Dowling, its president.In three causes of action it alleges conspiracy of defendants and NYT relating to division of revenues and the provision of facilities denying to plaintiffs equal treatment and their rights under State and Federal law, violation of section 340 of the General Business Law, and as a result the submission and charging by Pattersonville of below cost tariff rates in violation of State and Federal antitrust law.On defendants' motion for summary judgment, Special Term granted the motion and dismissed the entire complaint, concluding as to plaintiffs' Federal claims that the court lacked subject matter jurisdiction and as to the other claims that plaintiffs were barred by the prior PSC determination, of which they should have sought review in an article 78 proceeding.The Appellate Division, two Justices dissenting, modified by denying the motion except as to the Federal claims and granted leave to appeal on a certified question.

Before this courtdefendants argue that (1) the PSC determination bars the entire action on principles of collateral estoppel, (2) the complaint challenges the propriety of tariffs as to which the PSC has exclusive original jurisdiction, (3) the technical nature of the issues requires abstention by the courts under the doctrine of primary jurisdiction, and (4) the PSC and NYT are necessary parties to the action.

I

Collateral estoppel (or issue preclusion as is its more modern name, seeMatter of American Ins. Co.43 N.Y.2d 184, 189, n. 2, 401 N.Y.S.2d 36, 371 N.E.2d 798) applies to administrative as well as judicial proceedings (Bernstein v. Birch Wathen School, 51 N.Y.2d 932, 434 N.Y.S.2d 994, 415 N.E.2d 982;Matter of Evans v. Monaghan, 306 N.Y. 312, 323-324, 118 N.E.2d 452;United States v. Utah Constr. Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642;Tipler v. Du Pont de Nemours & Co., 6 Cir., 443 F.2d 125, 128;seeRestatement, Judgments2d § 131).Required for application of the doctrine in either type proceeding are that the issue as to which preclusion is sought be identical with the issue decided in the prior proceeding, that the issue have been necessarily decided in the prior proceeding, and that the litigant who will be held precluded in the present proceeding have had a full and fair opportunity to litigate the issue in the prior proceeding (Gilberg v. Barbieri, 53 N.Y.2d 285, 291, 441 N.Y.S.2d 49, 423 N.E.2d 807;Schwartz v. Public Administrator of County of Bronx, 24 N.Y.2d 65, 71, 298 N.Y.S.2d 955, 246 N.E.2d 725;seeB. R. De Witt, Inc. v. Hall, 19 N.Y.2d 141, 278 N.Y.S.2d 596, 225 N.E.2d 195).The burden of establishing the first two elements rests upon the proponent of preclusion, but as to the lack of a full and fair opportunity to contest, the burden is on the opponent (Schwartz v. Public Administrator of County of Bronx, 24 N.Y.2d 65, 73, 298 N.Y.S.2d 955, 246 N.E.2d 725;supra;B. R. De Witt, Inc. v. Hall, 19 N.Y.2d 141, 148, 278 N.Y.S.2d 596, 225 N.E.2d 195, supra ).

A

The fact that the charges made by NYT and Pattersonville are based upon tariffs filed by those public utilities does not protect the utilities or others acting in combination with them from antitrust liability (Columbia Gas of N. Y. v. New York State Elec. & Gas Corp., 28 N.Y.2d 117, 320 N.Y.S.2d 57, 268 N.E.2d 790;Cantor v. Detroit Edison Co., 428 U.S. 579, 596, 96 S.Ct. 3110, 3120, 49 L.Ed.2d 1141;Northeastern Tel. Co. v. American Tel. & Tel. Co., 2 Cir., 651 F.2d 76, 82, cert. den.455 U.S. 943, 102 S.Ct. 1438, 71 L.Ed.2d 654).But defendants, emphasizing that plaintiffs complained to the PSC about the "illegal, preferential and anticompetitive conduct" of NYT in charging them for services provided to Pattersonville without charge, argue that both proceedings involve anticompetitive conduct and that, therefore, the PSC in considering plaintiffs' complaint determined the identical issue involved in this action.Whether the issues in the two proceedings are identical depends, however, not upon how one or all of the parties characterize them, but on what facts are determinative of each proceeding in light of the substantive law principles, common law or statutory, governing each.

The question before the PSC was whether under section 91 of the Public Service Law the charge made by NYT to plaintiffs was an "unjust or unreasonable charge"(subd. 1), "greater or less compensation for any service rendered" than that charged or received from any other person for "a like and contemporaneous service"(subd. 2) or gave "any undue or unreasonable preference or advantage to any person, corporation or locality"(subd. 3).The question to be decided by the court in this Donnelly Act action is whether "or the free exercise of any activity * * * in the furnishing of any service * * * is or may be restrained" or "the furnishing of any service in this state is or may be restrained" for the purpose of "establishing or maintaining monopoly or unlawfully interfering with the free exercise of any activity"(General Business Law, § 340, subd. 1).

The distinction between the issues under the two statutes is placed in perspective by reference to State of New York v. Mobil Oil Corp., 38 N.Y.2d 460, 381 N.Y.S.2d 426, 344 N.E.2d 357.We there held that price discrimination per se was outside the scope of the Donnelly Act and dismissed a Donnelly Act complaint which contained "no allegation of any agreement or commitment on the part of either the oil company or of its dealers or any of them"(38 N.Y.2d, at p. 464, 381 N.Y.S.2d 426, 344 N.E.2d 357) but only a "unilateral practice"(id., at p. 466, n. 4, 381 N.Y.S.2d 426, 344 N.E.2d 357).The issue before the PSC on the present plaintiffs' complaint was whether there was discrimination between Pattersonville and plaintiffs as to the revenues, settlements, services and facilities provided by NYT; whether it came about by agreement had no bearing.The complaint before us alleges an agreement between Pattersonville and NYT relating to revenues, settlements, services and facilities for the purpose of denying plaintiffs their rights under State law and, by permitting Pattersonville to charge lower rates than plaintiffs, of interfering with plaintiffs' business activities in violation of the Donnelly Act.In the trial of the instant action the fact that the PSC found NYT's activity "not illegal as a matter of law" will not constitute a defense because discrimination which may be justifiable under section 91 of the Public Service Law"may still be unlawful if it can be shown to have actually restrained competition"(Columbia Gas of N. Y. v. New...