Southern Pacific Communications Co. v. American Tel. & Tel. Co., 83-1864

• Decision Date: 31 July 1984
• Docket Number: No. 83-1864,83-1864
• Citation: 238 U.S.App.D.C. 340,740 F.2d 1011
• Parties: , 1984-2 Trade Cases 66,132 SOUTHERN PACIFIC COMMUNICATIONS COMPANY, et al., Appellants, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1011

740 F.2d 1011

238 U.S.App.D.C. 340, 1984-2 Trade Cases 66,132

SOUTHERN PACIFIC COMMUNICATIONS COMPANY, et al., Appellants, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, et al.

No. 83-1864.

United States Court of Appeals District of Columbia Circuit.

Argued March 20, 1984.

Decided July 31, 1984.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 78-00545).

George L. Saunders, Jr., Washington, D.C., with whom Michael S. Yauch, C. John Buresh, Stewart A. Block, Washington, D.C., Howard J. Trienens, New York City, and Raymond Brenner, Washington, D.C., were on the brief, for appellees. Julie D. Nelson, Washington, D.C., also entered an appearance for appellees.

Frederick P. Furth, San Francisco, Cal., with whom Thomas R. Fahrner, Daniel S. Mason, Charles P. Wolff, Michael P. Lehmann, Craig C. Corbitt, San Francisco, Cal., Stephen Ailes, Richard A. Whiting, Richard Diamond and James H. Pipkin, Washington, D.C., were on the brief, for appellants. Edmund W. Burke, Washington, D.C., also entered an appearance for appellants.

Before WALD and EDWARDS, Circuit Judges, and SWYGERT, ^* Senior Circuit

Judge, United States Court of Appeals for the Seventh Circuit.

Opinion for the Court filed by Senior Circuit Judge SWYGERT.

SWYGERT, Senior Circuit Judge:

This appeal arises out of an antitrust action brought by Southern Pacific Communications Company and Transportation Microwave Corporation ("SPCC") against American Telephone and Telegraph Company and the local Bell Operating Companies ("AT & T"). Following a bench trial, the district court entered judgment for AT & T and this court affirmed. SPCC v. AT & T, 556 F.Supp. 825 (D.D.C.1982), aff'd, 740 F.2d 980 (D.C.Cir. 1984). Prior to our affirmance, SPCC had moved the district court, pursuant to Fed.R.Civ.P. 60(b)(6), ¹ to vacate the judgment. The motion was denied. SPCC v. AT & T, 567 F.Supp. 326 (D.D.C.1983). We now affirm the district court's denial of SPCC's Rule 60(b) motion to vacate.

I

The facts of the antitrust action underlying this appeal are fully set forth in SPCC v. AT & T, 740 F.2d 980 at 984-987, supra. We will discuss only the additional facts relevant to SPCC's Rule 60(b) motion.

1. SPCC's Rule 60(b) Motion

The district court issued a Memorandum Opinion and Order entering judgment for AT & T and dismissing the case with prejudice on December 21, 1982. In February 1983 SPCC moved the district court, pursuant to Fed.R.Civ.P. 60(b)(6), to vacate the judgment in light of judgments in two other antitrust actions against AT & T, MCI Communications Corp. v. AT & T, No. 74-C-633 (N.D.Ill.1980), aff'd in part and rev'd in part, 708 F.2d 1081 (7th Cir.), cert. denied, U.S. 104 S.Ct. 234, 78 L.Ed.2d 226 (1983) ("the MCI case"); and United States v. AT & T, 552 F.Supp. 131 (D.D.C.1982), aff'd summarily sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983).

SPCC claims that the jury verdict in the MCI case precludes relitigation by AT & T of five factual issues. ² The first issue is the definition of the relevant market. ³ The other four issues are whether AT & T willfully maintained its monopoly power by: (1) negotiating interconnection contracts in bad faith and then abandoning the contract process in bad faith to file tariffs with state regulatory commissions; ⁴ (2) improperly denying FX and CCSA interconnections; ⁵ (3) providing inappropriate or ineffective equipment and procedures for interconnection; ⁶ and (4) refusing to provide interconnections outside strictly limited geographical areas.

SPCC also claims that the judgment in United States v. AT & T, supra, 552 F.Supp. 131, together with the court's denial in that case of AT & T's motion to dismiss the government's suit, United States v. AT & T, 524 F.Supp. 1336 (D.D.C.1981), conclusively establish that AT & T monopolized the relevant market of intercity telecommunications service in violation of section 2 of the Sherman Act by: (1) refusing to provide FX and CCSA interconnections; (2) providing inappropriate or inefficient equipment and procedures for interconnection; (3) pricing access to local distribution facilities in a discriminatory manner; ⁷ (4) negotiating interconnection contracts and then filing tariffs with state regulatory commissions in bad faith; and (5) pricing Telpak and Hi/Lo without regard to cost. ⁸ According to SPCC, AT & T is precluded from relitigating these issues under section 5(a) of the Clayton Act, which provides:

A final judgment or decree ... rendered in any ... proceeding brought by ... the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken. Nothing contained in this section shall be construed to impose any limitation on the application of collateral estoppel....

15 U.S.C. Sec. 16(a) (1982).

2. The MCI Case

In 1974 MCI filed a complaint against AT & T in the United States District Court for the Northern District of Illinois under section 4 of the Clayton Act, 15 U.S.C. Sec. 15 (1982), alleging monopolization and conspiracy in restraint of trade. The case was tried to a jury between February and June 1980. Fifteen of MCI's monopolization charges were ultimately submitted to the jury which was instructed to make a separate finding of liability as to each charge but permitted to award damages in a lump sum. The jury found in favor of MCI on ten of the fifteen charges and awarded MCI $600 million in damages. After losing various posttrial motions, AT & T filed notice of appeal in August 1980. In September 1980 MCI filed notice of cross-appeal. On January 12, 1983 the United States Court of Appeals for the Seventh Circuit issued its opinion sustaining in part and reversing in part the jury verdict and remanding the case for a new trial on the issue of damages. MCI v. AT & T, 708 F.2d 1081 (7th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 234, 78 L.Ed.2d 226 (1983).

SPCC filed its complaint against AT & T on March 27, 1978. In February 1982 SPCC made a motion in limine for an order defining legal issues under section 2 of the Sherman Act. In one of its briefs filed in connection with the motion, SPCC argued that the jury verdict in the MCI case precluded AT & T from relitigating the issue of the relevant market. Plaintiffs' Reply Memorandum on Section 2 of the Sherman Act, at 2-3 (filed Feb. 17, 1982). This issue, among others, was referred to two Special Masters. On April 22, 1982 the Special Masters ruled:

[I]n MCI v. AT & T a finding of fact was made by the jury as to the relevant market. The finding was in response to a charge to the jury reciting that MCI contended the relevant market was "inter-city business and data communication services in the United States during the period from 1969 through mid-1974," consisting of "private line services, and other services which can be used instead of private line services, such as WATS and business long distance." That finding is the basis of a judgment now on appeal.

If that finding is not reversed on appeal, it may be relied on by SPCC.

The issue is obviously substantially the same, and should be treated as such unless AT & T can suggest some reason why it should not be regarded as the same issue. On the premise that it is the same issue, the finding is preclusive against AT & T, Parklane Hosiery Co. v. Shore, 439 U.S. 322 [99 S.Ct. 645, 58 L.Ed.2d 552] (1979), unless AT & T can show "compelling circumstances" permitting it to relitigate this issue.... If the finding in MCI v. AT & T is reversed, or compelling reasons are shown why the finding should not be preclusive here, then the definition of the market in this case is a question of fact to be determined afresh according to accepted antitrust legal standards.

Opinion of the Special Masters at 5-6 (filed Apr. 22, 1982) (hereinafter "Special Masters' April 22 opinion").

AT & T appealed the Special Masters' April 22 Opinion and, in response, SPCC filed a motion to adopt the Opinion with modifications, Plaintiffs' Motion to Adopt, with Modifications, the Special Masters' April 22 Opinion, at 7-9 (filed May 3, 1982). The district court deferred consideration of the appeal pending trial. Order Holding in Abeyance Special Masters' 4-22-82 Opinion (May 6, 1982). Trial in the case commenced on May 10, 1982 and lasted for more than thirty days. In July 1982 SPCC filed proposed conclusions of law, in which SPCC proposed that AT & T be estopped from challenging the definition of the relevant market adopted by the jury in the MCI case. Plaintiffs' Proposed Findings of Fact and Conclusions of Law, at 355 (filed July 21, 1982). On December 21, 1982 the district court issued a Memorandum Opinion and Order entering judgment for AT & T. Without reference to the Special Masters' April 22 Opinion, the court defined the relevant market as interstate, intercity private line services to customers other than the federal government. SPCC v. AT & T, supra, 556 F.Supp. at 871-77.

3. The Government Case, United States v. AT & T

In 1949 the United States filed an antitrust action against Western Electric Company and AT & T in the United States District Court for the District of New Jersey. United States v. Western Electric Co., 531 F.Supp. 894 (D.N.J.1981). The action resulted in a consent decree entered in 1956. United States v. Western Electric Co., 1956 Trade Cas. (CCH) p 68,246 (D.N.J.1956) (Final Judgment). The 1956 decree limited the business that defendants could engage in but did not direct any divestiture or other structural relief originally sought by the government. In 1974 the...