Caribbean Broadcasting System, Ltd. v. Cable & Wireless P.L.C.

• Decision Date: 17 July 1998
• Docket Number: No. 96-7246,96-7246
• Parties: , 1998-2 Trade Cases P 72,209, 41 Fed.R.Serv.3d 49 CARIBBEAN BROADCASTING SYSTEM, LTD. and Alvin L. Korngold, Appellants, v. CABLE & WIRELESS PLC, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1080

148 F.3d 1080

331 U.S.App.D.C. 226, 1998-2 Trade Cases P 72,209,

41 Fed.R.Serv.3d 49

CARIBBEAN BROADCASTING SYSTEM, LTD. and Alvin L. Korngold, Appellants, v. CABLE & WIRELESS PLC, et al., Appellees.

No. 96-7246.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 5, 1997.

Decided July 17, 1998.

Appeal from the United States District Court for the District of Columbia (No. 93cv02050).

Whitney L. Ellenby argued the cause for appellants, with whom Robert A. Skitol and Philip J. Mause were on the briefs.

Theodore Case Whitehouse argued the cause for appellees and filed the brief for Cable & Wireless PLC, and Cable & Wireless (West Indies) Ltd.

Terrence J. Leahy filed the brief for appellee Caribbean Communications Company Limited.

Before: WILLIAMS, GINSBURG, and HENDERSON, Circuit Judges.

GINSBURG, Circuit Judge:

Caribbean Broadcasting System appeals the judgment of the district court dismissing its antitrust complaint against Cable & Wireless, Cable & Wireless (West Indies), and Caribbean Communications Company. We reverse in part and affirm in part.

I. Background

Plaintiff CBS and defendant CCC own competing FM radio stations located in the Eastern Caribbean, which includes Puerto Rico and the Virgin Islands. Defendant C&W and its subsidiary C&W (West Indies), hereinafter jointly C&W, operate a worldwide telecommunications system and publish the local telephone directory in the Caribbean. During the mid-1980s C&W and CCC entered into a joint venture in which CCC was to develop a Caribbean-wide FM broadcasting system that C&W would then use to offer an FM paging service.

Beginning in 1984 CBS tried without success to sell advertising on its nascent FM broadcast station based in the British Virgin Islands. Attributing its failure to deception practiced by CCC and C&W as part of an attempt to gain and keep a monopoly for CCC's "Radio GEM," CBS sued them both in Florida state court. The defendants removed the case to a federal court, which dismissed it without prejudice; CBS appealed to the Eleventh Circuit, but later voluntarily dismissed the appeal and refiled its complaint in the United States District Court for the District of Columbia. CBS later sought and was granted leave to file a First Amended Complaint in order to correct a technical error in its description of the ownership of CBS.

The eleven counts of CBS's complaint fall into three basic categories. First, it charged that CCC, by falsely claiming that Radio GEM's signal reached the entire Eastern Caribbean, had led advertisers to believe they could fulfill their advertising needs by dealing only with Radio GEM, in violation of the prohibition of attempted and actual monopolization in the Sherman Act, see 15 U.S.C. §§ 1-2, and the prohibition of false representations in the Lanham Act, see 15 U.S.C. § 1125(a). Second, CBS charged that CCC had conspired with C&W to maintain CCC's monopoly over radio broadcast in the Eastern Caribbean, in violation of the Sherman Act. In furtherance of the conspiracy (still according to CBS), C&W had filed sham objections to CBS's application for a broadcast license, thereby delaying CBS's entry into broadcasting for more than two years. Third, CBS charged that C&W had violated the Sherman Act by denying it access to essential facilities; specifically, CBS alleged that C&W had persistently published an incorrect telephone listing for CBS and denied CBS access to its microwave transmitters in order to prevent CBS from reaching the entire Eastern Caribbean.

The district court dismissed the complaint in two stages. In its first opinion, dealing only with the claims against C&W, the court held that (1) it lacked subject matter jurisdiction over the claims of monopolization (in counts II-X) because "plaintiffs [did] not allege[ ] necessary facts to substantiate a claim of adverse effect on U.S. commerce arising out of Defendants' alleged misconduct"; and (2) CBS failed (in Count XI) to state a claim upon which relief could be granted because it did not "allege sufficient facts to establish that Defendants denied [CBS] use of an essential facility." See Caribbean Broadcast System Ltd. v. Cable & Wireless PLC, 1995 WL 767164 (D.D.C.1995). The court explained that the complaint "never identifies any facility to which CBS was denied access nor a single instance in which access to a facility was actually requested or denied," and fails to establish that C&W had ever been a competitor of CBS. CBS sought reconsideration or, in the alternative, leave to file a second amended complaint. The district court denied reconsideration, clarified that its dismissal of Counts II-XI was with prejudice, and denied as both "untimely" and "futile" CBS's request to file a second amended complaint.

In its second opinion the district court dismissed the Lanham Act claim (in Count I) for lack of personal jurisdiction over CCC. The court stated that because CBS

fails to allege any connection whatsoever between CCC and the District of Columbia.... [it appears that] CCC does not possess sufficient, minimum contacts with [the District] to satisfy the due process requirements of the Constitution and comport with 'traditional notions of fair play and substantial justice.'

Caribbean Broadcast System v. Cable and Wireless PLC, C.A. No. 93-2050, slip op. at 4-5 (D.D.C. Oct. 17, 1996). The district court also denied CBS's request for jurisdictional discovery, for three reasons: CBS had "not offered a scintilla of evidence to suggest that CCC has even the slightest connection with the District of Columbia"; CBS "well kn[ew] that CCC has contacts with, and therefore could appropriately be sued in ... Wisconsin or the Virgin Islands"; and "it is simply too late ... in the history of th[is] litigation ... to now allow Plaintiff to conduct the investigation."

CBS now argues that the district court erred in dismissing its complaint for lack of subject matter jurisdiction and failure to state a claim, in denying jurisdictional discovery against CCC, and in dismissing its Lanham Act claim against CCC with, rather than without, prejudice.

II. Discussion

We hold first that the district court erred in denying CBS leave to file its proposed Second Amended Complaint, which properly alleged subject matter jurisdiction over the claims of monopolization. We agree with the district court, however, that CBS's complaint failed to allege that CCC and C&W had denied CBS the use of an essential facility. Finally, we hold that the district court did not abuse its discretion in denying jurisdictional discovery and did not dismiss the complaint against CCC with prejudice.

A. Denial of Leave to Amend the Complaint

As noted, the district court early on granted CBS leave to file a First Amended Complaint correcting the description of CBS's ownership. After the district court dismissed Counts II-XI for lack of subject matter jurisdiction, CBS sought to make a second amendment--in order to clarify the jurisdictional allegations in its complaint--but the district court denied leave to amend on the grounds that such an amendment would be both untimely and futile. CBS contests both points. For its part, C&W argues that the district court ruled correctly because CBS had already failed "in five attempts encompassing this case and others" to file a proper complaint.

Federal Rule of Civil Procedure 15(a) provides that a party may amend its pleading once as a matter of course and thereafter by leave of court, which "leave shall be freely given when justice so requires." We have recently had occasion to point out that "it is an abuse of discretion to deny leave to amend [without giving a] sufficient reason." Firestone v. Firestone, 76 F.3d 1205, 1208 (1996) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)); see also Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir.1991) (noting that district court's discretion to dismiss without leave to amend is "severely restricted" by command of Rule 15(a) that such leave be "freely given"). In this case we conclude that neither of the reasons given by the district court is sufficient.

First, the amendment would not have been "futile" because, as explained below, the allegations of the second amended complaint support subject matter jurisdiction. Second, there is no indication that the amendment was in any cognizable way "untimely." The statute of limitations had not run, nor was there any prejudice to the defendants by reason of the timing. See, e.g., Confederate Memorial Ass'n v. Hines, 995 F.2d 295, 299 (D.C.Cir.1993) (noting that Fed.R.Civ.P. 15(a) gives court power to grant leave to amend complaint even after case is dismissed); 6 Charles Alan Wright Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure: Civil 2d § 1488, at 652, 659, 662-69 (1990 & Supp.1997) ("Rule 15(a) does not prescribe any time limit within which a party may apply to the court for leave to amend.... In most cases delay alone is not a sufficient reason for denying leave.... If no prejudice [to the non-moving party] is found, the amendment will be allowed").

C&W makes much of the district court's statement that it was denying CBS leave to amend in view of the "entire lengthy record herein," but C&W's argument is not entirely clear. C&W could be arguing that the district court's mention of having considered the "entire lengthy record" indicates that the court, in concluding that amendment would be both untimely and futile, relied in part upon the overall history of the dispute, including the case CBS had previously initiated in Florida. Whether the court meant to encompass that history within the reason for its decision is not clear, however; the "lengthy record" in question may well refer only to the present litigation, which alone had been going on for more than three years at the time. In either event, the district court erred; the prolonged nature of a case does not itself affect whether the...