Rafferty v. Nynex Corp., Civ. A. No. 87-1521.

• Decision Date: 23 July 1990
• Docket Number: Civ. A. No. 87-1521.
• Citation: 744 F. Supp. 324
• Court: U.S. District Court — District of Columbia
• Parties: Scott J. RAFFERTY, Plaintiff, v. NYNEX CORPORATION, et al., Defendants.

744 F. Supp. 324

Scott J. RAFFERTY, Plaintiff, v. NYNEX CORPORATION, et al., Defendants.

Civ. A. No. 87-1521.

United States District Court, District of Columbia.

July 23, 1990.

Scott J. Rafferty, Washington, D.C., for plaintiff.

Scott W. Muller, Linda Chatman Thomsen, Davis Polk & Wardwell, Washington, D.C., Guy Miller Struve, James D. Liss, Richard M. Baumann, David C. Howard, Seth R. Lesser, Davis Polk & Wardwell, New York City, for defendants.

MEMORANDUM

HAROLD H. GREENE, District Judge.

Pending before the Court is the summary judgment motion of defendants NYNEX Corp. and Telco Research Corp. (a NYNEX subsidiary), seeking the dismissal of a number of antitrust, contract, and tort claims relating to plaintiff's termination as a senior vice president of Telco. Plaintiff, a lawyer who is proceeding pro se, asserts that he was fired as a result of inquiries he made to determine whether Telco was violating the consent decree entered in United States v. American Tel. & Tel., 552 F.Supp. 131 (D.D.C.1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983). Upon its consideration of the parties' voluminous papers, the Court grants the motion in part and denies it in part.

I Facts

In April 1986, NYNEX acquired Telco and recruited Rafferty to serve as its second senior officer and the head of its consulting division. NYNEX is a Regional Company subject to the consent decree entered on August 24, 1982 in the AT & T antitrust case, which bars the Regional Companies from certain lines of business — long distance telephone services, telecommunications manufacturing, and information services.¹ Telco markets telecommunications management software and consulting services.

Rafferty has alleged that Theodore Engkvist, a NYNEX executive and chairman of Telco's board, informed him that the company had obtained a waiver to perform, inter alia, non-software consulting, although the company had obtained only a "software waiver" to provide and market software and associated services which did not cover its non-software consulting operations.² Plaintiff was concerned whether the activities of his division complied with the decree, and he asked NYNEX's attorneys on October 20 and 22, 1986 to provide an opinion letter confirming Engkvist's representations that the activities were within the scope of the waiver.³ On November 10, 1986, Telco's management discharged Rafferty for what it asserts are legitimate reasons, and it closed the consulting division he had been hired to head. Eventually, plaintiff brought this action, which consists of six separate claims.

The Court analyzes below each of these claims in light of the facts and the law adduced by the parties. This task has been complicated by the fact that the plaintiff who, although a lawyer, appears to have limited familiarity with several of the legal issues and principles involved. Additionally, the basis for plaintiff's reasoning and his conclusions are not always easy to follow, see, e.g., notes 6 and 9, infra, and, as the Court occasionally notes at appropriate places, he sometimes misrepresents the law, the facts, and the position of his opponents,⁴ and he quotes statements from court decisions out of context.⁵ Because plaintiff is proceeding pro se, the Court has attempted to ascertain or construct what he meant where the rationale of his assertions is confusing, and on that basis some of his claims are upheld. However, greater exactitude and less verbosity⁶ will be required hereafter.

II First Claim: Antitrust

Plaintiff's first claim seeks redress for what he broadly describes as a violation of the antitrust laws. As best as the Court can tell,⁷ Rafferty alleges that his termination for seeking legal advice⁸ and for refusing to acquiesce in violations of the consent decree, as well as other actions taken by Telco and NYNEX, violated the decree and therefore also Section 4 of the Clayton Act.⁹ There are several flaws to this claim of a violation of Section 4.

First. Section 4(a) of the Clayton Act grants a private right of action to persons injured "by anything forbidden by the antitrust laws." Section 1 of the Act, 15 U.S.C. § 12, contains a specific definition of "antitrust laws" for purposes of Section 4(a), and that definition is "exclusive." Nashville Milk Co. v. Carnation Co., 355 U.S. 373, 375-76, 78 S.Ct. 352, 353-54, 2 L.Ed.2d 340 (1958). See also, New Jersey Wood Finishing Co. v. Minnesota Mining & Mfg. Co., 332 F.2d 346, 350 (3rd Cir.1964), aff'd, 381 U.S. 311, 85 S.Ct. 1473, 14 L.Ed.2d 405 (1965) ("antitrust laws" means specific statutes listed in Clayton Act Section 1; other statutes not included). There is no support for the proposition that violation of a consent decree violates Section 4 of the Clayton Act.¹⁰

Indeed, it has been specifically established that a private party cannot premise a treble damage action under Section 4 upon violations of a government consent decree. Paul M. Harrod Co. v. A.B. Dick Co., 194 F.Supp. 502, 504 (N.D.Ohio 1961);¹¹ See also, Sound, Inc. v. American Tel. & Tel. Co., 1979-2 Trade Cas. ¶ 62,974, at 79,547-48 (S.D.Iowa 1979, aff'd, 631 F.2d 1324 (8th Cir.1980)); Cinema Service Corp. v. Twentieth Century-Fox Film Corp., 477 F.Supp. 174, 177-78 (W.D.Pa.1979); Control Data Corp. v. International Business Machines Corp., 306 F.Supp. 839, 846 (D.Minn.1969), aff'd, 430 F.2d 1277, 1278 (8th Cir.1970).

Second. The weight of authority holds that employees do not have standing under Section 4. See, e.g., Adams v. Pan American World Airways, Inc., 828 F.2d 24 (D.C. Cir.1987). Plaintiff relies on Ostrofe v. H.S. Crocker Co., 740 F.2d 739, 744 (9th Cir.1984), and Donahue v. Pendleton Woolen Mills, Inc., 633 F.Supp. 1423, 1429-30 (S.D.N.Y.1986), which create an exception for "whistleblowers," but most of the courts which have considered the issue have rejected the holding of these cases. See Fallis v. Pendleton Woolen Mills, Inc., 866 F.2d 209, 210 (6th Cir.1989); Bichan v. Chemetron Corp., 681 F.2d 514 (7th Cir.1982); Boisjoly v. Morton Thiokol, 706 F.Supp. 795, 804-05 (D.Utah 1988); Thomason v. Mitsubishi Electric Sales of America, Inc., 701 F.Supp. 1563, 1570 (N.D.Ga.1988); Reitz v. Canon USA Inc., 695 F.Supp. 552, 553-54 (S.D.Fla.1988), and Haigh v. Matsushita Electric Corp., 676 F.Supp. 1332, 1346 (E.D.Va.1987).¹² In any event, Rafferty has testified that he is not a whistleblower. Rafferty Deposition at 1088-89. Accordingly, the Court can find no basis for extending the holding of Ostrofe and Donahue¹³ to the circumstances here.

Third. Plaintiff asserts that he suffered the requisite "antitrust injury" because he lost his job at Telco and has not secured comparable employment. However, "only harm stemming from a reduction in competition qualifies as an injury cognizable under the antitrust laws." Adams, 828 F.2d at 26.¹⁴ Rafferty does maintain that he was an "arguable beneficiary" of the allegedly illegal conduct while employed by Telco, Opposition at 20-21, but he does not — indeed he cannot — contend that his injury resulted from a reduction in competition.¹⁵

For these reasons, it is the Court's conclusion that Count One must be dismissed.

III Second Claim: Third-Party Beneficiary

Plaintiff alleges next that the consent decree is a contract binding on NYNEX, and that NYNEX employees are third-party beneficiaries of that contract. He further claims that his termination violated the decree because it resulted from his efforts to clarify and rectify NYNEX's breaches of the decree, and that as a third-party beneficiary he is entitled to recover. That claim, too, must fail.

First. Plaintiff's claims to third-party beneficiary status rest on a provision of the consent decree (Section V) requiring the Regional Companies to advise employees on their obligations under the decree. This provision is one of a number intended to ensure compliance with the decree. While it requires employees to comply with the decree, there is nothing in Section V, anywhere else in the decree, or in the Court's explanations of the decree,¹⁶ to provide, or even to suggest, that employees of the Regional Companies were intended to benefit from it, as distinguished from being required to comply with it.¹⁷

Second. Even if there were some merit to the decree analysis, plaintiff could still not prevail, for it is well established that a private party cannot sue as a third-party beneficiary of a government consent decree. Control Data Corp. v. IBM Corp., 306 F.Supp. 839, 846-48 (D.Minn.1969), aff'd sub nom. Data Processing Financial & General Corp. v. IBM Corp., 430 F.2d 1277, 1278 (8th Cir.1970); Cinema Service Corp. v. Twentieth Century-Fox Film Corp., 477 F.Supp. 174, 178 (W.D.Pa.1979); May Department Stores Co. v. First Hartford Corp., 435 F.Supp. 849, 852-53 (D.Conn.1977); National Union Electric v. Emerson Electric Co., 1981-82 Trade Cas. ¶ 64,274 (N.D.Ill.1981). See also, Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750, 95 S.Ct. 1917, 1932, 44 L.Ed.2d 539 (1975); Federal Trade Commission v. Owens-Corning Fiberglas, 853 F.2d 458, 464 (6th Cir.1988) (Clayton Act does not create a private enforcement remedy).

Plaintiff's arguments to the contrary misrepresent the law and are otherwise unpersuasive. Thus, plaintiff quotes Control Data as declining to express an opinion on the issue of whether the decree conferred rights on third-party beneficiaries. Not only is the language plaintiff purports to quote (Opposition at 24) taken wholly out of context, but Control Data categorically rejected the third-party beneficiary theory after discussing it thoughtfully and at some length.¹⁸

Equally unhelpful are plaintiff's citations to third-party beneficiary cases involving consent agreements under the civil rights statutes and other areas of the law, given the ample authority in the antitrust area itself. Indeed, several of the cited cases expressly recognize the well-settled law in the antitrust...