Ctc Communications Corp. v. Bell Atlantic Corp., Civ. 97-395-P-C.

• Decision Date: 12 January 1999
• Docket Number: No. Civ. 97-395-P-C.,Civ. 97-395-P-C.
• Citation: 77 F.Supp.2d 124
• Parties: CTC COMMUNICATIONS CORP., Plaintiff, v. BELL ATLANTIC CORPORATION, Defendant.
• Court: U.S. District Court — District of Maine

77 F.Supp.2d 124

CTC COMMUNICATIONS CORP., Plaintiff, v. BELL ATLANTIC CORPORATION, Defendant.

No. Civ. 97-395-P-C.

United States District Court, D. Maine.

January 12, 1999.

COPYRIGHT MATERIAL OMITTED

Joseph H. Groff, III, Michael A. Nelson, Jensen, Baird, Gardner & Henry, Portland, Maine, Roger D. Young, Anthony P. Cho, Steven Susser, Young & Associates, Southfield, MI, for plaintiff.

Richard H. Dolan, Katherine M. Oberlies, Jeffrey Morton Eilender, Schlam, Stone & Dolan, New York City, Jotham D. Pierce Jr., Jeffrey M. White, Debra L. Brown, Pierce Atwood, Portland, Maine, Robert M. Hayes, Eric Uhl, Melinda J. Caterine, Jonathan E. Kapp, Moon, Moss, McGill & Bachelder, P.A., Portland, Maine, Micki M. Chen, Jack H. White, Robert J. Zastrow, John Thorne, Bell Atlantic Network Services Inc., Arlington, VA, Richard H. Dolan, Schlam, Stone & Dolan, New York City, Dan K. Webb, Robert W. Tarun, Jennifer J. Demmon, Winston & Strawn, Chicago, IL, for defendant.

ORDER AFFIRMING THE RECOMMENDED DECISION OF THE MAGISTRATE JUDGE

GENE CARTER, District Judge.

The United States Magistrate Judge having filed with the Court on November 19, 1998, with copies to counsel, his Recommended Decision on Defendant's Motion for Summary Judgment (Docket No. 118); and Plaintiff having filed its objection thereto on December 7, 1998 (Docket No. 119), to which objection Defendant filed its response on December 24, 1998 (Docket No. 129); and Defendant having filed its objection to the Recommended Decision on December 7, 1998 (Docket No. 120), to which objection Plaintiff filed its response on December 23, 1998 (Docket No. 127); and this Court having reviewed and considered the Magistrate Judge's Recommended Decision, together with the entire record; and this Court having made a de novo determination of all matters adjudicated by the Magistrate Judge's Recommended Decision, and concurring with the recommendations of the United States Magistrate Judge for the reasons set forth in his Recommended Decision, and having determined that no further proceeding is necessary; it is ORDERED as follows:

(1) Plaintiff's objection is hereby DENIED;

(2) Defendant's objection is hereby DENIED;

(3) The Recommended Decision of the Magistrate Judge is hereby AFFIRMED;

(4) Defendant's Motion for Summary Judgment is hereby GRANTED as to any claims in Count I arising out of the provision in the Agency Agreement for a separation payment in the event of elimination of the Defendant's third-party marketing channel, as set forth in paragraph 51 of the First Amended Complaint, and as to any antitrust claims arising out of paragraphs 41(c) and 56(e) in the First Amended Complaint, and is otherwise DENIED.

(5) Plaintiff's implied motion to dismiss claims raised in paragraphs 41(i), 56(m), and 86(j) of the First Amended Complaint is hereby GRANTED.

RECOMMENDED DECISION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

DAVID M. COHEN, United States Magistrate Judge.

The defendant, Bell Atlantic Corporation ("Bell"), has moved for summary judgment on all remaining counts¹ in the First Amended Complaint except Count V-2, which alleges breach of certain resale agreements. The counts at issue allege breach of an agency agreement, violations of the applicable provisions of antitrust law, and violations of the Telecommunications Act of 1996.² I recommend that the court grant the motion in part and deny it in part.

I. Summary Judgment Standard

Summary judgment is appropriate only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "In this regard, `material' means that a contested fact has the potential to change the outcome of the suit under the governing law if the dispute is resolved favorably to the nonmovant. By like token, `genuine' means that `the evidence about the fact is such that a reasonable jury could resolve the point in favor of the nonmoving party....'" McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir.1995) (citations omitted). The party moving for summary judgment must demonstrate an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether this burden is met, the court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor. Cadle Co. v. Hayes, 116 F.3d 957, 959 (1st Cir.1997). Once the moving party has made a preliminary showing that no genuine issue of material fact exists, "the nonmovant must contradict the showing by pointing to specific facts demonstrating that there is, indeed, a trialworthy issue." National Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.1995) (citing Celotex, 477 U.S. at 324, 106 S.Ct. 2548); Fed. R.Civ.P. 56(e). "This is especially true in respect to claims or issues on which the nonmovant bears the burden of proof." International Ass'n of Machinists & Aerospace Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 200 (1st Cir.1996) (citations omitted).

II. Factual Background

The following undisputed material facts are appropriately supported in the summary judgment record.³ CTC is in the business of selling telecommunications services to customers in New York and New England. Affidavit of Robert Fabbricatore ("Fabbricatore Aff."), Exh. B to CTC's Opposition, ¶¶ 5-6. Bell is a telecommunication carrier that sells telecommunication services in the mid-Atlantic states, New York and New England. Declaration of David Mahan ("Mahan Dec."), Exh. A to CTC's Opposition, ¶ 4; SEC Filing, Bell Atlantic Corp., December 31, 1996, Exh. J to CTC's Opposition, at 1. Bell is the corporate successor to NYNEX. E-mail dated April 24, 1997, Exh. L to CTC's Opposition. Bell provides local exchange telephone service within a specified geographic area. See United States v. American Tel. & Tel. Co., 552 F.Supp. 131, 139, 186 (D.D.C.1982). The Telecommunications Act of 1996, codified in part at 47 U.S.C. § 251, imposes certain obligations on local exchange carriers to foster the growth of competition for telecommunications services involving calls that originate and terminate within a local access and transport area ("LATA"). Such services are known as "intraLATA services."

Beginning in 1984, CTC sold intraLATA services pursuant to a series of agency agreements with NYNEX; NYNEX also sold these services directly. Fabbricatore Aff. ¶ 6; Mahan Dec. ¶ 4. The most recent agency agreement between CTC and NYNEX is dated February 1, 1996 ("the Agency Agreement"). Fabbricatore Aff. ¶ 6. The Telecommunications Act of 1996 (sometimes "the Act") took effect on February 8, 1996. Act of February 8, 1996, Pub.L. No. 104-104, 1996 U.S.C.C.A.N. (110 Stat.) 56, 161. After the Act took effect, CTC decided to become a reseller of Bell intraLATA services in competition with Bell. Fabbricatore Aff. ¶¶ 9-12. CTC has entered into written Resale Service Agreements with Bell for the resale of Bell's intraLATA telecommunications services ("the Resale Agreements"). Id. ¶ 15. In February 1997 NYNEX cut its commission payments to its agents by 15%. Mahan Dec. ¶ 8.

The Telecommunications Act of 1996 requires, inter alia, that regional Bell operating companies ("RBOCs") and "incumbent local exchange carriers" ("ILECs") sell at wholesale any telecommunications service that they sell at retail, 47 U.S.C. § 251(c)(4)(A); that ILECs offer elements of their networks for use by their competitors on an "unbundled" basis, 47 U.S.C. § 251(c)(3); and that ILECs allow competitors to interconnect with their networks, 47 U.S.C. § 251(c)(2). Bell Atlantic is both an RBOC and an ILEC. Bell makes as great a profit on the local telephone services it sells at wholesale as it does when it sells the same services at retail. Memorandum of Decision and Order ("Decision on Motion to Dissolve TRO, etc.") (Docket No. 92) at 16; Mahan Dec. ¶ 11.

In August 1997 Bell eliminated its Account Management Program ("AMP"), in which CTC participated as an agent, for customers spending less than $40,000 annually for local telephone services. Mahan Dec. ¶ 12. Bell assumed direct account management for these customers. Id. As an AMP agent, CTC sold Bell products to end-users and was paid a commission on each such sale. Decision on Motion to Dissolve TRO, etc. at 4. Bell also paid fees to CTC to manage the relationship between Bell and its customers by providing information and service to the customer at no additional charge. Id.

The Agency Agreement, which was drafted exclusively by NYNEX, id. at 7, includes a covenant not to compete which provides that

for a period of twelve (12) months after the expiration or termination of this Agreement Representative may not sell, represent, or promote any non-NYNEX IntraLATA services to any NYNEX Business Customer for whom Representative was responsible under the AMP Program, or to whom Representative sold any NYNEX Service, within 12 months prior to such expiration or termination.

Agreement for Sale of Services & Account Management ("Agency Agreement"), Exh. J to Bell's SMF, at § D.1.s., p. 8. The Agency Agreement also provides that the agent shall

[r]etain [accurate and complete books of account, documents and records] for a period of three (3) years from the date of final payment by NYNEX for services rendered under this Agreement. NYNEX and its authorized agents and representatives shall have access to such records for purposes of audit during normal business hours during the term of this Agreement and for three (3) years from the date of final payment. NYNEX shall notify Representative in writing at least seven (7) days before NYNEX intends to conduct such an audit.

Id., § D.1.p., p. 8. NYNEX's responsibilities under...