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SHIMAZAKI COMMUNS., INC. v. AT&T

May 16, 1986

SHIMAZAKI COMMUNICATIONS, INC. and SHIMAZAKI ELECTRONICS, INC., Plaintiffs,
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY, et al., Defendants



The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, UNITED STATES DISTRICT JUDGE

Defendants American Telephone and Telegraph Co., AT&T Technologies (formerly Western Electric Co.), Bell Telephone Laboratories, Inc., New York Telephone Co., and New Jersey Bell Telephone Co. (collectively "AT&T") move pursuant to Fed. R. Civ. P. 56 for summary judgment, or in the alternative, for partial summary judgment, against the plaintiffs Shimazaki Communications, Inc. ("Shicom") and Shimazaki Electronics, Inc. ("Shimtronics") (collectively "Shimazaki"). Shimazaki cross-moves to strike AT&T's statute of limitations defense.

 FACTS

 Plaintiffs brought this antitrust action pursuant to sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2 (1982). Essentially, plaintiffs claim that AT&T monopolized the market in key telephone systems and private branch exchange systems ("PBX") by requiring that any such systems not manufactured by AT&T could be attached to AT&T's main trunk line only through a protective connecting arrangement ("PCA") which was provided and installed exclusively by AT&T. After June 1, 1978 and pursuant to the FCC's Third Report and Order in In the Matter of Proposals for New or Revised Classes of Interstate and Foreign Message Toll Telephone Service and Wide Area Telephone Service, 67 F.C.C.2d 1255 (1978), performance standards were adopted as an alternative to the PCA requirement for protecting AT&T's system.

 AT&T asserts that Shimazaki's claims are untimely because they were not filed within the four-year statute of limitations provided by 15 U.S.C. § 15(b) (1982) nor within any additional time which may have been provided through a tolling of the statute of limitations. Shimazaki asserts that its claims were timely filed because the statute of limitations was tolled (1) by the Department of Justice lawsuit against AT&T,United States v. American Tel. & Tel. Co., et al., 552 F. Supp. 131 (D.C. 1982) and (2) during the pendency of the class action determination inGlictronix Corp. v. American Tel. & Tel. Co., 603 F. Supp. 552 (D.N.J. 1984).

 Because the PCA requirement ended not later than June 1, 1978, Shimazaki's cause of action must have arisen on or before that date. Thus, Shimazaki, at the latest, had four years from June 1, 1978 in which to file its suit under the Clayton Act unless the statute of limitations was tolled. Shimazaki filed this action on December 7, 1984.

 Shimazaki claims it is entitled to a toll of the statute of limitations pursuant to 15 U.S.C. § 16(i) (1982), *fn1" during the pendency of and for one year following the end of the antitrust action filed by the United States Department of Justice against AT&T on November 20, 1974. Because that action specifically alleged that the PCA requirement was a violation of the antitrust laws, AT&T does not dispute that Shimazaki is entitled to a toll of the statute of limitations until one year following the termination of that suit. Defendant's Memorandum in Support of Their Motion for Summary Judgment, 5 n.**. The parties disagree, however, as to the termination date of that suit.

 A brief history of previous litigation concerning AT&T is required to fully understand the parties' positions on the date of termination issue. In 1956 a consent decree was entered in the United States District Court for the District of New Jersey in an antitrust lawsuit between the United States, the Western Electric Company ("Western Electric"), and AT&T. At the time, Western Electric was a wholly owned subsidiary of AT&T. Pursuant to the 1956 consent decree, AT&T's business was limited to providing common carrier communication services; Western Electric was permitted to manufacture equipment to be used by the Bell System only; and both defendants were required to license their patents to all applicants paying the appropriate royalties. The consent decree remained in effect until modified by subsequent litigation in 1982.

 In 1974 the Justice Department filed a separate antitrust suit against AT&T, Western Electric, and Bell Telephone Laboratories ("Bell Labs") in the District Court for the District of Columbia. After several years of pretrial preparation, the case proceeded to trial in January, 1981. On January 8, 1982, after presentation of the government's case and most of the defendants' case, the parties submitted a Stipulation of Voluntary Dismissal (the "Stipulation of Dismissal") pursuant to Fed. R. Civ. P. 41(a)(1). On the same day the parties submitted a Modification of Final Judgment ("MFJ") in the 1956 New Jersey case, which was transfered from New Jersey to the District of Columbia and consolidated with the 1974 suit already pending there before Judge Harold Greene. Treating the Stipulation of Dismissal and MFJ as a consent decree, Judge Greene ordered the Stipulation of Dismissal lodged and not filed until such time as the Tunney Act requirements, 15 U.S.C. 16(b) (1982), for public hearings and comments could be affected.

 ANALYSIS

 Date the 1974 Suit Terminated

 AT&T insists that the 1974 case ended January 8, 1982, when the Stipulation of Dismissal was submitted to the court. Because such a stipulation can be valid without a court order, AT&T argues that the dismissal is automatic and operates immediately to terminate the case. Judge Greene, however, looked beyond the parties' labeling and treated the Stipulation of Dismissal and MFJ as, in effect, a consent decree and held,

 [t]he parties have designated their agreement as a "Modification of the Final Judgment." However, since the agreement encompasses far more than a modification of the 1956 judgment --and, indeed, . . . deals primarily with the AT&T lawsuit [the 1974 case] -- it would be misleading to refer to the agreement as a modification of the 1956 ...


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