General Sound Tel. Co. v. AT & T COMMUNICATIONS

• Decision Date: 02 March 1987
• Docket Number: Civ. A. No. 85-5833.
• Parties: GENERAL SOUND TELEPHONE CO., INC., t/a GST Corporation v. AT & T COMMUNICATIONS, INC., and AT & T Information Systems, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

654 F. Supp. 1562

GENERAL SOUND TELEPHONE CO., INC., t/a GST Corporation v. AT & T COMMUNICATIONS, INC., and AT & T Information Systems, Inc.

Civ. A. No. 85-5833.

United States District Court, E.D. Pennsylvania.

March 2, 1987.

Kevin T. Fogerty, Allentown, Pa., for plaintiff.

Richard F. Stevens, Allentown, Pa., for defendant.

MEMORANDUM AND ORDER

TROUTMAN, Senior District Judge.

Plaintiff General Sound Telephone Company, Inc., t/a GST Corporation, provides telecommunications equipment, systems and services in competition with defendants AT & T Communications, Inc., (ATTCOM), and AT & T Information Systems, Inc. (ATTIS), both subsidiaries of the American Telephone and Telegraph Company (AT & T).

In 1982, plaintiff sold an Omega telephone system to Lawrence Schiff Silk Mills (LSSM) for its Quakertown, Pennsylvania, office. Late in 1983, plaintiff recommended to its customer that two telephone lines connecting LSSM's Quakertown office with its New York sales office be changed. The recommendation was part of GST's ongoing efforts to make the Omega system fully responsive to LSSM's telecommunications needs. Accordingly, GST placed an order with ATTCOM, a company which manages state interexchange companies providing interstate and intrastate interexchange interLATA long distance telephone services, for an alteration to the two lines. The change involved disconnecting existing circuits and replacing them with a different type, known as Off Premises Station (OPS) circuits.

Although ATTCOM anticipated that the conversion would be completed by late February, 1984, it was not. Worse, on March 30, 1984, LSSM's existing circuits were disconnected by ATTCOM, but the replacement circuits were not connected, leaving LSSM without direct lines to its New York office.

Thereafter, GST made repeated requests to have the work completed, but to no avail. In July, 1984, GST and LSSM were told that one of the new circuits was operational and that the other circuit would soon be operable. That information proved to be erroneous. By September, 1984, when ATTCOM began billing LSSM for the supposedly newly installed circuits, LSSM still did not have the service that had been requested by GST nearly a year before. GST was then obliged to intercede with ATTCOM on behalf of LSSM to correct the error in billing.

Meanwhile, in August, 1984, LSSM's New York office replaced its telephones with an Horizon system from defendant ATTIS, the AT & T subsidiary that sells telecommunications equipment, without soliciting bids from any other company, including GST.

In November, 1984, GST was notified of LSSM's intention to remove the Omega system and replace it with the ATTIS Horizon system, but such was never done. Subsequently, GST cancelled the outstanding order with ATTCOM and ordered the circuits necessary for the LSSM telephone services from International Telephone and Telegraph Company (ITT).

GST filed the instant lawsuit against ATTCOM and ATTIS in October, 1985, as a result of the problems incident to ATTCOM's failure to complete the work on LSSM's telephone lines as ordered by GST. In Count I, GST alleges that ATTCOM tortiously interfered with GST's business relationship with LSSM, causing both the threat to remove the Omega system from the Quakertown office and the purchase of the Horizon system for the New York office. In Count II, GST accuses both ATTCOM and ATTIS of antitrust violations, alleging that ATTCOM's actions were designed to maintain monopoly power and exclude GST from competition in the telecommunications equipment and systems market.

Defendants have moved for summary judgment on both counts, contending that the requisite elements for imposing liability upon the defendants are missing. We shall address the issue of granting summary judgment separately for each count of the complaint, after a brief discussion of principles applicable to summary judgment generally.

It is now quite clear that as to issues on which the nonmoving party bears the burden of proof, summary judgment may be granted where the moving party demonstrates that there is an absence of proof to support the nonmovant's claim or defense. Celotex Corp. v. Catrett, 477 U.S. ___, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Stated another way, there is no genuine issue of material fact in dispute if there is insufficient evidence to establish a claim or a defense.

When such an argument is made by the moving party, it is the responsibility of the proponent of the claim or defense to demonstrate to the Court that there is sufficient evidence available from which a jury might return a verdict in his favor under the governing law. Anderson v. Liberty Lobby, 477 U.S. ___, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Bushman v. Halm, 798 F.2d 651 (3d Cir.1986).

Moreover, the evidence relied upon must be examined in light of the proponent's evidentiary burden at trial. In other words, the Court is obliged to measure the evidence available to defeat the summary judgment motion against the standard to be applied by the jury at trial, whether it be preponderance of the evidence, clear and convincing evidence, or some other standard imposed by the substantive law which governs the issue. Id.

Thus, in determining whether there are factual issues for trial, the Court must examine the record in light of the elements necessary to establish the claim or defense in question and in light of the standard under which the jury will be required to consider the evidence. Only those issues essential to the claim or defense can possibly be material and such issues can be in dispute only if the nonmovant can point to sufficient conflict in the evidentiary sources listed in Fed.R.Civ.P. 56(c) & (e) such that a jury's resolution of the issues is required. The nonmovant may not conjure a genuine issue of material fact by relying upon the allegations of the complaint alone or by relying upon evidence that is "merely colorable" rather than "significantly probative". Anderson, 477 U.S. ___, 106 S.Ct. 2511, 91 L.Ed.2d 212.

On the other hand, the Court is precluded from considering credibility or weight of the evidence and from drawing its own inferences from the evidence. Id. at ___, 106 S.Ct. at 2513, at 216. With these principles in mind, we now consider the issues presented by this case.

Count I — Intentional Interference with Business Relations

Pennsylvania recognizes the tort of intentional interference with prospective contractual relations as set forth in the RESTATEMENT OF TORTS § 766 (1939) and the RESTATEMENT (SECOND) OF TORTS § 766B (1977), Glenn v. Point Park College, 441 Pa. 474 (1971); Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466 (Pa.1979). The elements of a cause of action for this claim are:

(1) a prospective contractual relation;

(2) the purpose or intent to harm the plaintiff by preventing the relation from occurring;

(3) the absence of privilege or justification on the part of the defendant; and

(4) the occasioning of actual damage resulting from the defendant's conduct.

Thompson, 412 A.2d at 471 (footnote omitted).

Recognizing that the concept of damage to "prospective" contractual relations is difficult to grasp and to apply consistently, the Pennsylvania Supreme Court provided guidance in the Glenn case, holding that the first element may be established when it appears "reasonably probable" that the relationship between the plaintiff and the third party would have resulted in an actual contract absent the defendant's interference. The Court went on to describe its holding as "an objective standard which of course must be supplied by adequate proof". 441 Pa. at 481.

Plaintiff in this case complains only of not being given the opportunity to bid on providing a telephone system for LSSM's New York office. (See, Brief of Plaintiff in Opposition to Motion for Summary Judgment, Doc. # 11 at 13, 20, 22). Plaintiff contends that the fact that it had placed a telephone system in the LSSM Quakertown office makes it "reasonably probable" that LSSM would have requested a bid from GST for the New York office. In support of its claim, plaintiff has produced the affidavit of Morton Schiff, LSSM president, wherein he stated that the problem with the lines between LSSM's Quakertown and New York offices was the cause of LSSM's failure to consider a GST system for its New York office. Significantly, the affidavit does not state that absent that problem, LSSM might have purchased a GST system.

Viewed objectively and compared with a similar situation considered by the Pennsylvania Supreme Court in Thompson Coal, we...