United States v. American Tel. & Tel. Co.

• Decision Date: 11 September 1981
• Docket Number: Civ. A. No. 74-1698.
• Citation: 524 F. Supp. 1336
• Parties: UNITED STATES of America, Plaintiff, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY; Western Electric Company, Inc.; and Bell Telephone Laboratories, Inc., Defendants.
• Court: U.S. District Court — District of Columbia

524 F. Supp. 1336

UNITED STATES of America, Plaintiff, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY; Western Electric Company, Inc.; and Bell Telephone Laboratories, Inc., Defendants.

Civ. A. No. 74-1698.

United States District Court, District of Columbia.

September 11, 1981.

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Gerald A. Connell, U. S. Dept. of Justice, Antitrust Div., Washington, D. C., for plaintiff.

Jim G. Kilpatric, Dewey, Ballantine, Bushby, Palmer & Wood, New York City, George L. Saunders, Jr., Sidley & Austin, Washington, D. C., for defendants.

OPINION

HAROLD H. GREENE, District Judge.

Defendants have moved to dismiss this action pursuant to Rule 41(b) of the Federal Rules of Civil Procedure, asserting that the government, having concluded its case-in-chief, has failed to demonstrate a right to relief. The complaint charges violations of section 2 of the Sherman Act, 15 U.S.C. § 2, by the American Telephone and Telegraph Company (AT&T) and two of its subsidiaries, the Western Electric Company (Western), and the Bell Telephone Laboratories, Inc. (Bell Labs), the basic allegation being that the defendants (Bell System)¹ have monopolized the telecommunications market in the United States.²

Following a period of intensive pretrial activity,³ trial was begun on January 15, 1981, and the first witness was called on March 4, 1981.⁴ The presentation of evidence on behalf of the government spanned a period of four months,⁵ and it included the examination of close to one hundred witnesses and the introduction of thousands of documents and additional thousands of stipulations. In keeping with the massive nature of the action, defendants have filed a memorandum of over 550 pages in support of their motion, and the government's brief in opposition is almost equally lengthy. Thus, there is a voluminous record before the Court. Although not every detail of the evidence is discussed in this opinion, it does consider fully all the principal issues (whether or not they are being finally decided) in order to provide to the parties the Court's views on the structure of this factually and legally complex case. Before examining the specific issues raised by the record, the Court must resolve several preliminary questions.

I General

A. The first question to be determined concerns the standard to be applied in determining whether the government's case is adequate to withstand the motion.

Rule 41(b) provides in part that

After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. The court as trier of the facts may then determine them and render judgment against the plaintiff or may decline to render any judgment until the close of all evidence.⁶

This Rule, and judicial interpretations thereof, grant to the courts considerable discretion in their treatment of motions to dismiss in non-jury cases. A court faced with a Rule 41(b) motion—unlike one passing on a motion for a directed verdict in a jury case—is not required to view the record in the light most favorable to the plaintiff, or to deny the motion if a prima facie case has been made out; rather, it is empowered to weigh and evaluate the evidence the plaintiff has presented and to grant the motion if it is convinced that, on the merits, the evidence preponderates against the plaintiff. Ellis v. Carter, 328 F.2d 573, 577 (9th Cir. 1964); Island Service Co. v. Perez, 309 F.2d 799, 803 (9th Cir. 1962); Huber v. American President Lines, 240 F.2d 778 (2d Cir. 1957).

Yet a court is not required to grant a defendant's motion at this stage of the proceedings even if under the law that motion might have been granted. SEC v. Murphy, 626 F.2d 633, 659 (9th Cir. 1980). Rule 41(b) and the case law permit a trial judge to decline to render any judgment at all until the close of all the evidence. Weissinger v. United States, 423 F.2d 795, 797 (5th Cir. 1970). The decision on the motion to dismiss is a "tentative and inconclusive ruling on the quantum of plaintiff's proof," which does not preclude a court from making findings and conclusions at the close of the case that are inconsistent with its prior tentative ruling. Armour Research Foundation v. Chicago, Rock Island & Pacific Railroad Co., 311 F.2d 493, 494 (7th Cir. 1963).

Several of the courts of appeal have admonished trial judges to grant Rule 41(b) dismissals sparingly. "Except in unusually clear cases the district judge can and should carry defendant's Rule 41(b) motion with the case—or simply deny it, since the effect will be the same—let the defendant put on his evidence, and then enter a final judgment at the close of the evidence." Riegel Fiber Corp. v. Anderson Gin Co., 512 F.2d 784, 793 n. 19 (5th Cir. 1975); cf. Poller v. Columbia Broadcasting System Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). The reason for caution in such instances is that "an appellate reversal for error in granting the motion may require an entire new trial." SEC v. Murphy, supra, 626 F.2d at 659; see White v. Rimrock Tidelands, Inc., 414 F.2d 1336 (5th Cir. 1969). This concern is particularly pertinent to the present action, in light of the lengthy course of the pretrial and trial proceedings up to this point, and the desire of no doubt all those involved to avoid the expenditure of time and resources that would result from the necessity of a second trial. In its weighing of the government's evidence, the Court has kept these general principles in mind.

B. Another preliminary question involves the manner in which the evidence presented by the government should be divided for the purpose of considering its sufficiency in light of the motion. Defendants have suggested that, should the Court decline to dismiss the case in its entirety, it should adopt an episode-by-episode approach —that is, that it should examine the sixty-odd episodes⁷ one-by-one, and separately determine the sufficiency of the evidence adduced with respect to each under the antitrust laws. The government, on the other hand, supports a "course of conduct" approach. It argues that the Bell System has engaged in a pattern of anticompetitive conduct since the end of World War II, that this overall pattern of conduct requires an interrelated examination of all the proof adduced thus far, and that the Court should therefore determine the sufficiency of the evidence in an aggregate, rather than a piecemeal fashion.

The episode-by-episode approach must be rejected.⁸ From a purely technical point of view, there is but a single claim of violation of the Sherman Act before the Court, and procedurally that claim may not be segmented for dismissal purposes.

Substantively, too, defendants' approach is inappropriate. It is true that the government's evidence may be weaker with respect to certain episodes than to others; for example, defendants have raised serious questions as to whether the misfortunes befalling certain of Bell's competitors were caused by the Bell System or by defective products or mismanagement within the competing companies. See, e. g., p. 1351, infra. However, the theory of the government's case is, basically, that the defendants engaged in a general, overall practice of anticompetitive behavior and that, in implementation of that practice, they resisted competition from weak and strong companies alike. Upon that basis, the government's claim is not defeated by the circumstance that some of Bell's competitors may have fallen prey to their own internal difficulties rather than to Bell System activities; even if actual injury to a competitor was not caused by the conduct of defendants, proof of that conduct may still be relevant as evidence of their intent to discourage all competitors, large and small. See Hecht v. Pro-Football Inc., 570 F.2d 982, 990 (D.C. Cir.1977). In any event, fragmentation of the government's proof on the basis of "episodes" designed essentially only for pretrial procedural purposes (see note 7, supra) has no basis either in precedent or in logic.

It is clear, moreover, that otherwise innocent or ambiguous behavior may violate the Sherman Act when considered together with the remainder of the conduct. See Poller v. Columbia Broadcasting System, Inc., supra, 368 U.S. at 468-69, 82 S.Ct. at 488-89; Maryland and Virginia Milk Producers Association, Inc. v. United States, 362 U.S. 458, 471-72, 80 S.Ct. 847, 855-56, 4 L.Ed.2d 880 (1960); Schine Chain Theatres v. United States, supra, 334 U.S. at 119, 68 S.Ct. at 952; American Tobacco Co. v. United States, 328 U.S. 781, 809, 66 S.Ct. 1125, 1138, 90 L.Ed. 1575 (1946). Such behavior may thus be relied upon to sustain other evidence so as to form a pattern of conduct made unlawful by that statute.⁹

The decisions cited in defendants' pretrial brief in support of an episode-by-episode or a "discrete conduct" approach to the evidence involved private antitrust actions, where courts quite appropriately held that evidence of anticompetitive conduct involving injury to non-parties could not help a private plaintiff who was not able to show anticompetitive injury to himself. See, e. g., California Computer Products Inc. v. IBM, 613 F.2d 727, 743 (9th Cir. 1979). But this action is not a private suit, and the government's case does not hinge upon proof of injury to every Bell competitor about whom evidence has been adduced.

Notwithstanding all of these considerations, it is apparent that, in a case of this scope and size, it would be impossible to examine the evidence without somehow dividing it into separate parts, even if only for the purposes of analysis. The evidence introduced during the trial appears to...