Central Telecommunications v. TCI Cablevision

• Decision Date: 05 June 1985
• Docket Number: No. 83-4068-CV-C-5.,83-4068-CV-C-5.
• Citation: 610 F. Supp. 891
• Parties: CENTRAL TELECOMMUNICATIONS, INC., Plaintiff, v. TCI CABLEVISION, INC., Community Telecommunications, Telecommunications, Inc., Defendants.
• Court: U.S. District Court — Western District of Missouri

610 F. Supp. 891

CENTRAL TELECOMMUNICATIONS, INC., Plaintiff, v. TCI CABLEVISION, INC., Community Telecommunications, Telecommunications, Inc., Defendants.

No. 83-4068-CV-C-5.

United States District Court, W.D. Missouri, C.D.

June 5, 1985.

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R. Lawrence Ward, G. Stephen Long, Thomas J. Whittaker, Shughart, Thomson & Kilroy, Kansas City, Mo., for plaintiff.

Harold R. Farrow, Richard Moore, Omer Rains, Farrow, Schildhause, Wilson & Rains, Oakland, Cal., for defendants.

ORDER

SCOTT O. WRIGHT, Chief Judge.

Pending before the Court are the following post-trial motions: (1) defendants' motion for judgment non obstante veredicto; (2) defendants' alternative motion for a new trial; (3) defendants' motion for clarification of the judgment; (4) plaintiff's motion for enhancement of its attorney's fees; and (5) defendants' motion for a stay of execution pending appeal. For the reasons set forth below, the Court will make the following rulings: (1) defendants' motion for j.n.o.v., alternative motion for a new trial, and motion for a stay of execution will be overruled; (2) defendants' motion for clarification will be sustained and the judgment in this case will be amended to preclude the possibility of double recovery by plaintiff; and (3) plaintiff's motion for enhancement of its attorney's fees will be overruled.

I. Background

On January 22, 1985, the jury returned verdicts against defendants of $10,800,000.00 on each of plaintiff's antitrust claims,¹ and $10,800,000.00 for actual damages and $25,000,000.00 for punitive damages on plaintiff's state law claim for tortious interference with a business expectancy.² These verdicts were rendered by an extremely attentive jury at the conclusion of a thirty-one day trial.

Plaintiff's claims arose out of a dispute over cable television franchise rights in Jefferson City, Missouri.³ In 1978, defendants⁴ (hereinafter collectively referred to as "TCI") bought the only existing cable television franchise⁵ in Jefferson City. By its terms, the franchise which TCI purchased was scheduled to expire in April, 1981.

As is customarily done in cities across the country, Jefferson City initiated an RFP⁶ process to solicit bids to determine the recipient of the next cable television franchise. Being the incumbent operator, defendants naturally enjoyed the inside track in the competition for the next franchise. Nevertheless, city officials remained open to the option of refusing to renew TCI's franchise, particularly in view of mounting consumer dissatisfaction with existing service.

In 1980, a group of local investors formed the plaintiff company (hereinafter referred to as "Central") for the express purpose of competing for a cable television franchise in Jefferson City. Aware of the public's dissatisfaction with the incumbent operator, Central began arranging financing and responded to the city's RFP by offering expanded services for less money. In contrast, defendants refused to participate directly in the RFP process. Instead, TCI undertook various tactics designed to ensure that it could not be displaced as the sole cable television franchisee in Jefferson City. Many of these activities were performed by Paul Alden, a "troubleshooter" in defendants' franchise renewal department. For example, Mr. Alden threatened to destroy the career of Elmer Smalling, a consultant who was evaluating the RFP responses for the city. Mr. Alden also attempted to intimidate city officials by threatening to flood the Jefferson City market with satellite dishes if defendants' franchise was not renewed. This threat, as it turned out, was a complete fraud: Mr. Alden represented that his company had exclusive control over the distribution of satellite dishes in the Jefferson City area when, in fact, his company had never participated in the satellite dish business. In addition, TCI sent shock waves through the Jefferson City community by announcing to the public that all cable television services would be terminated unless its franchise was renewed. Defendants applied additional pressure on city officials by refusing to pay the city approximately $60,000.00 in past-due franchise fees unless and until their franchise was renewed. Finally, on March 16, 1981, defendants filed a multi-count lawsuit against the city and began to engage the city in protracted litigation. The gravamen of this lawsuit was the claim that the First Amendment prohibited the city from terminating an entrenched cable television operator's right to provide cable services in the community.

Notwithstanding TCI's efforts to subvert the RFP process and retain its entrenched position, city officials continued to review the bids submitted by plaintiff and other applicants. The chief competitors in the RFP process were Central and Teltran, a cable television operator based in Columbia, Missouri. The city's consultant, Elmer Smalling, rated Central and Teltran equally. In November, 1981, however, Teltran withdrew its application, thus leaving plaintiff as the best candidate for a new franchise. On January 25, 1982, the city council of Jefferson City passed an ordinance authorizing the city attorney to begin negotiating franchise documents with plaintiff. While these negotiations were being conducted, defendants continued pressuring the city to renew its franchise.

On April 16, 1982, after a series of secret meetings between TCI and various city officials, Mayor Hartsfield announced that an agreement had been reached whereby the city would renew defendants' franchise and defendants would dismiss their lawsuit against the city. Nevertheless, on April 20, 1982, the city council voted by a 7-3 majority to award a non-exclusive franchise to plaintiff. Mayor Hartsfield promptly vetoed the ordinance granting a franchise to plaintiff. The next item on the council's agenda was a proposed ordinance which would renew defendants' franchise. The council was deadlocked at a 5-5 vote. The mayor cast the tie-breaking vote and, as a result, TCI retained its position as the only cable television operator in Jefferson City.

Contending that it had been wrongfully deprived of a franchise, Central brought the instant lawsuit. TCI counterclaimed. After thirty-one days of trial, the Court granted plaintiff's motion for a directed verdict on defendants' counterclaims. Central submitted its case to the jury on three theories: (1) conspiracy to unreasonably restrain trade; (2) actual monopolization; and (3) tortious interference with a business expectancy. The jury found for plaintiff under each theory. The post-trial motions presently before the Court ensued.

II. Motion for J.N.O.V.

TCI's motion for j.n.o.v. advances two primary arguments for overturning the jury's verdicts. Only these two arguments will be addressed herein; the other grounds raised by defendants are rejected as being without merit.

A. Noerr-Pennington Defense

The first substantial argument raised by defendants is that all of their allegedly wrongful conduct was protected activity within the purview of the Noerr-Pennington doctrine. There are two distinct components of the Noerr-Pennington doctrine, both of which are based on the notion that civil liability should not be imposed on persons for exercising their First Amendment right to petition the government.⁷ The first prong of the Noerr-Pennington defense is the protection of legitimate efforts to lobby or influence public officials with respect to political action, even if those efforts are designed to eliminate competition.⁸ The second strand of the Noerr-Pennington defense is the protection of genuine efforts to seek redress through the judicial process, even if the outcome of such litigation is certain to affect or eliminate competition.⁹ Both the lobbying and litigation aspects of the Noerr-Pennington doctrine are implicated in the instant case.

1. Litigation

Under the Noerr-Pennington doctrine, participation in the judicial process cannot be asserted as a basis for civil antitrust liability "unless it may be characterized as a sham cover for what is really just an attempt to directly interfere with the business relations of a competitor."¹⁰ The fundamental question underlying the issue of whether a lawsuit was a mere sham and thus unprotected conduct is one of intent.¹¹ In the instant case, plaintiff introduced evidence concerning defendants' 1981 lawsuit against Jefferson City wherein defendant had sought to enjoin the city from displacing it as a cable television operator. At first, plaintiff attempted to show that this lawsuit fell within the sham exception to the Noerr-Pennington doctrine.¹² As the trial progressed, however, plaintiff apparently had doubts about the sufficiency of the evidence to support a finding that the 1981 lawsuit was a sham and, consequently, withdrew the issue from the jury's consideration. The withdrawal instruction expressly directed the jury that it could not consider defendants' 1981 lawsuit against Jefferson City to have been unlawful conduct. This withdrawal instruction adequately informed the jury that defendants' 1981 lawsuit was protected litigation under the Noerr-Pennington doctrine.¹³ It must be assumed that the jury followed the Court's instructions and did not rely on the 1981 lawsuit in arriving at its verdicts. Defendants' arguments to the contrary¹⁴ are contradicted by the plain language of the jury instructions.

2. Lobbying

As noted above, the lobbying prong of the Noerr-Pennington doctrine extends a cloak of immunity from civil liability to legitimate efforts to influence public officials with respect to political action.¹⁵ It bears emphasis, however, that only legitimate lobbying efforts are protected; conduct that extends beyond "traditional political activity" may not be protected.¹⁶ Thus, when accompanied by illegal or fraudulent actions, efforts to influence public officials are not exempt under the Noerr-Pennington doct...