The opinion of the court was delivered by: KEENAN
B. Operation of Intelsat, immunity, & separate systems
C. United States' separate systems policy
D. Response to the U.S. separate systems policy
I. Plaintiffs' discovery motions
A. The July 20, 1994 order
B. The July 12, 1994 order
2. Plaintiffs' boycott claims
3. Defendant's application for sanctions
C. The September 27, 1994 order
1. Plaintiffs' motion to compel responses
2. Plaintiffs' motion to compel production
3. Defendant's motion for a protective order
4. Defendant's application for sanctions
II. Defendant's motion for summary judgment
III. Sherman Act § 1 conspiracies
A. Comsat's conscious participation in a common scheme
1. Parallel refusals and plus factors
(A) No reasonable inference of parallel refusals
(B) Insufficient evidence of plus factors
(2) Interfirm communications
(3) Customary indications of conspiracy
(b) PAS, Codetel and Tricom
(4) Contrary to self interest
(C) No inference of Comsat participation
2. Refusal to purchase PAS capacity
3. Tracking PAS throughout the world
(A) Latin American ventures
(B) Atlantic Television Service (ATV)
1. Plaintiffs' pricing claims
2. Delaying PAS's entry into Great Britain, France, West Germany and Brazil
4. Commercial disparagement
C. Anticompetitive effects
IV. Plaintiffs' § 2 claims
A. Conspiracy to monopolize
C. Attempted monopolization
VI. State law tortious interference claims
VII. Act of state doctrine & indispensable parties
JOHN F. KEENAN, United States District Judge:
There are four motions before the Court. Plaintiffs have filed three motions objecting to various discovery decisions rendered by Magistrate Judge Nina Gershon. Defendant has filed a motion for summary judgment. For the reasons set forth below, Plaintiffs' discovery motions are denied and the orders of the Magistrate Judge are affirmed in all respects. Defendant's motion for summary judgment is granted as to all claims.
The background of this action has been fully presented in the earlier opinions of this Court and of the Second Circuit. See Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 1990 U.S. Dist. LEXIS 11964, 1990-2 Trade Cas. (CCH) P69,188, 1990 WL 135637 (S.D.N.Y. 1990) (dismissing 1st Am. Compl. on immunity grounds), aff'd in part, rev'd & rem'd in part, 946 F.2d 168 (2d Cir. 1991) (remanded for opportunity to replead), cert. denied, 502 U.S. 1096 (1992); Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 1993 U.S. Dist. LEXIS 3825, 1993-1 Trade Cas. (CCH) P70,184, 1993 WL 97313 (S.D.N.Y. 1993) (denying motion to dismiss 2d Am. Compl.); Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 1994 U.S. Dist. LEXIS 7464, 1994-2 Trade Cas. (CCH) P70,689, 1994 WL 256671 (S.D.N.Y. 1994) (granting leave to file 3d Am. Compl. naming as a Plaintiff PANAMSAT, L.P.; denying leave to add new defendants and claims).
The Court assumes the reader's familiarity with the prior opinions in this action and provides below only a rudimentary recitation of the facts and procedural history.
Plaintiffs consist of various formations of Pan American Satellite ("PAS" or "PANAMSAT") and its founder and principal owner, Reynold V. Anselmo ("Anselmo"). Plaintiff Anselmo formerly did business as Alpha Lyracom, a sole proprietorship, which in turn did business as Pan American Satellite, Alpha Lyracom Space Communications, Inc., a Delaware corporation, and PANAMSAT, L.P., a Delaware limited partnership. PANAMSAT, L.P. succeeded Alpha Lyracom after the commencement of this action. The managing general partner of PANAMSAT, L.P. is PANAMSAT, Inc., which is a corporation that was controlled by Plaintiff Anselmo until his death on September 20, 1995. The executors of Plaintiff Anselmo's estate were substituted as Plaintiffs on January 3, 1996.
This action arises out of PAS's launching, marketing and operating the first international commercial communications satellite outside of the International Telecommunications Satellite Organization ("Intelsat"). Non-party Intelsat is an international organization created under a 1961 United Nations resolution that owns and operates a global satellite communications system. See G.A.Res. 1721, 1 U.N. GAOR Supp. (No. 17), at 6, U.N.Doc. A/5100 (1962). Intelsat is structured on three levels: the Assembly of Parties, the Meeting of Signatories, and the Board of Governors. Each member-nation or "party" has a seat and a vote in the Assembly of Parties. The United States has designated the State Department as its representative to the Assembly of Parties. Each party also designates a "signatory" to market and operate the Intelsat communications system within the party's territory. Each signatory is represented in the Meeting of Signatories and on the Board of Governors. Signatories range from public ministries to private corporations, depending on the level of regulation in a nation. Signatories are often referred to as "PTTs," an acronym for "post, telegraph, and telephone" companies. The Board of Governors consists of approximately twenty-nine persons representing all of the signatories in the day-to-day operations of the system. The Director General of Intelsat heads the Board of Governors. See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *6, 1990-2 Trade Cas. (CCH) P69,188 at 64,580, 1990 WL 135637 at *2; Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 946 F.2d 168, 170 (2d Cir. 1991).
In 1962 Congress enacted the Communications Satellite Act ("CSA") to implement the United States' participation in Intelsat. See 47 U.S.C. §§ 701 et seq.. Defendant Commercial Satellite Corporation ("Comsat") is a private corporation created under the CSA and designated as the United States' signatory to Intelsat. The CSA provides that Comsat "shall be . . . subject to appropriate governmental regulation" and that "the ownership of the corporation [(Comsat)] shall be consistent with the federal antitrust laws." See id. § 701(c). Comsat is subject to extensive Executive Branch supervision by the State Department and the Federal Communications Commission ("FCC") to assure that Comsat's relations with foreign governments are consistent with the United States' foreign policy. See id. P 721(a)(4).
B. Operation of Intelsat, immunity, & separate systems
Any Intelsat transmission requires the action of two PTT signatories, with each responsible for the transmission of a signal to and from a ground station in its territory and an Intelsat satellite. Rates for the use of Intelsat satellite capacity are uniform and, in the aggregate, cover the costs of operating the system. Rates are set by the Board of Governors, not the signatory PTTs such as Comsat. The procurement of satellite capacity is also regulated, with procurement in excess of $ 500,000 requiring approval of the Board. Signatories have no authority to approve procurement.
To join Intelsat, the United States implemented various international agreements including the 1971 Definitive Agreement (the formative document of Intelsat), and the 1976 Headquarters Agreement. See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *5, 1990-2 Trade Cas. (CCH) P69,188 at 64,580, 1990 WL 135637 at *2 (Intelsat's headquarters are located in the United States.). These agreements require that each party-nation grant appropriate privileges, exemptions and immunities to Intelsat, to the other parties, the signatories and their representatives. The 1976 Headquarters Agreement provides "the officers and employees of Intelsat, the representatives of the parties and of the signatories . . . shall be immune from suit and legal process relating to acts performed by them in their official capacity . . . ." Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *8, 1990-2 Trade Cas. (CCH) P69,188 at 64,580-81, 1990 WL 135637 at *3; see Alpha Lyracom, 946 F.2d at 170-72. This Court previously held, and the Second Circuit affirmed, that Comsat as a signatory is the representative of the United States for Intelsat immunity purposes. See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *8, 1990-2 Trade Cas. (CCH) P69,188 at 64,584, 1990 WL 135637 at *6-7.
In addition to technical clearance from the Board and approval of the Assembly of Parties, a proposed separate international system must acquire "landing rights" in each nation to which it intends to deliver a signal. Landing rights are authorization from a party to provide or "land" a satellite signal within that party's national territory. Landing rights are generally procured from or with the assistance of the signatory PTT in each nation. Landing rights may issue either as general or limited grant of authority for the provision of independent services, or through some form of joint venture or other arrangement with the PTT. The scope of authorization is generally governed by the terms of a formal agreement, referred to in the record and herein as an "operating agreement." Depending upon the regulatory structure of a given nation at a given time, landing rights (and therefore operating agreements), may have been literally impossible to obtain.
C. United States' separate systems policy
In 1983 the FCC received several applications to operate separate satellite systems, ultimately resulting in Presidential Determination No. 85-2. See 49 Fed. Reg. 46,987 (1984); Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *10, 1990-2 Trade Cas. (CCH) P69,188 at 64,581-82, 1990 WL 135637 at *3-4; Alpha Lyracom, 946 F.2d at 171-72. Determination No. 85-2 allowed the development of separate systems but directed the State Department to consult with Intelsat before authorizing any separate system to ensure that the United States met its obligations under the Definitive Agreement. The President also instructed the Secretaries of the State Department and the Commerce Department to set criteria for final FCC approval of any separate systems. Under these criteria, the FCC required (a) that each new system be restricted to providing services through the sale or long-term lease of transponders or space segment capacity for communications not interconnected with public switched message networks, and (b) that one or more foreign authorities authorize the use of each proposed separate system prior to FCC approval by granting the proposed system landing rights and by entering into Article XIV consultation procedures with the United States' party to insure technical compatibility of the proposed system with Intelsat satellites. Congress ratified these conditions in the Foreign Relations Authorization Act, Fiscal Years 1986-87 ("FRAA"). See Pub. L. No. 99-93, 99 Stat. 405, 425-2 (1985); Alpha Lyracom, 946 F.2d at 171-73.
While the first applications for approval of proposed separate satellite systems were still pending, the FCC issued a Report and Order dated July 25, 1985 stating that the FCC would not issue a final license for the operation of any separate system "until the U.S. has completed coordination of that system with Intelsat pursuant to Art. XIV(d)." See In re Establishment of Satellite Systems Providing International Communications, FCC Docket No. 84-1299, at 143 (July 25, 1989) ("FCC Report and Order"). In September 1985, the FCC preliminarily approved Plaintiffs' application to operate a subregional Western Hemisphere satellite system. In September 1987, Plaintiffs received final FCC approval to launch in June 1988 Plaintiffs' first satellite, the "PAS-1." See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *2, 1990-2 Trade Cas. (CCH) P69,188 at 64,582, 1990 WL 135637 at *4.
D. Response to the United States' separate systems policy
The other parties and signatories to Intelsat widely opposed Presidential Determination No. 85-2 and the United States' support of separate satellite systems. These participants in Intelsat were concerned that permitting competing systems would lead to the destruction of the Intelsat network, to the great disadvantage of regions less technologically developed than the United States. This concern was heightened by the fact that the United States was by far the largest participant in Intelsat, and that any action by the United States greatly effected the global system. As a result, at the fourteenth session of the Meeting of Signatories, held in April 1984, the signatories discussed and unanimously ratified a resolution agreeing not to sponsor the development of separate systems. See PAS Ex. 3085 (record of the Fourteenth Meeting of Signatories of Intelsat). Comsat voted in favor of the resolution. Under the direction of the State Department, however, Comsat also presented to the Meeting of Signatories a statement on the United States' position in favor of separate systems. See PAS Ex. 3085, Attachment No. 2, at 29, Annex (iii) (statement by the signatory of the United States). At the fifteenth session of the Meeting of Signatories, held in April 1985, and the sixteenth session, held in April 1996, the signatories passed resolutions reaffirming their opposition to separate satellite systems as harmful to the Intelsat network. See PAS Ex. 3082 (record of the Fifteenth Meeting of Signatories of Intelsat (Apr. 16, 1985)); PAS Ex. 3084 (record of the Sixteenth Meeting of Signatories of Intelsat (Apr. 10, 1986)).
Plaintiffs' First Amended Complaint cites the 1984 Intelsat signatory resolution and the 1985 and 1986 reaffirming resolutions as admissions of a conspiracy involving Intelsat, Comsat and the PTTs. After the Second Circuit affirmed this Court's ruling on Comsat's signatory immunity, Plaintiffs' deleted from their Second and Third Amended Complaints any claims specifically based on the resolutions, referring to the resolutions only as "evidence" of a conspiracy between Comsat and the PTTs acting as common carriers outside of their roles as Intelsat signatories. Compare 1st Am. Compl. PP 28(c)-(d), with 2d Am. Compl. P 28(b) (omitting references to the resolutions).
Plaintiffs' filed the original Complaint on July 25, 1989, and filed a First Amended Complaint on November 22, 1989. On September 13, 1990, the Court dismissed the First Amended Complaint on immunity grounds without reaching the merits of the underlying antitrust claims. See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, 1990-2 Trade Cas. (CCH) P69,188, 1990 WL 135637 (S.D.N.Y. 1990). The Court found that signatories were "representatives of the parties;" that the immunity clause of the Headquarters Agreement covering representatives therefore applied to signatories such as Comsat; and that the antitrust consistency clause of the CSA does not apply to Comsat's actions as a signatory. 1990 U.S. Dist. LEXIS 11964, See id. at 64,582-83, 1990 WL 135637 at *6. In the alternative, the Court dismissed the First Amended Complaint pursuant to Fed. R. Civ. P. 19 for failure to join Intelsat, the Intelsat parties, and the Intelsat signatory PTTs as necessary and indispensable parties. 1990 U.S. Dist. LEXIS 11964, See id. at 64,584-85, 1990 WL 135637 at *9-10. The Court also dismissed Plaintiffs' state law interference with prospective advantage claim for failure specify the contracts that were lost. See id. at 64,585-86, 1990 WL 135637 at *10.
The Second Circuit affirmed this Court's rulings on Defendant's immunity and on the antitrust exclusion clause. See Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 946 F.2d 168 (2d Cir. 1991), cert. denied, 502 U.S. 1096, 117 L. Ed. 2d 419, 112 S. Ct. 1174 (1992). The Circuit remanded only to give Plaintiffs an opportunity to replead their claims against Comsat in its role as a common carrier, and not as an immune signatory. See Alpha Lyracom, 946 F.2d at 175. The Circuit also warned Plaintiffs that if they presented only a formalistic repleading of the claims in the First Amended Complaint, the "District Court should not hesitate to dismiss [Plaintiffs' complaint] again." Id..
Id. Regarding the PTTs as necessary parties, the Circuit stated:
We need not consider the District Court's alternative ground for dismissal of the antitrust claims--failure to join indispensable parties under Civil Rule 19, since any allegations that Alpha Lyracom is able to replead challenging COMSAT's conduct in its role as common carrier are unlikely to encounter the indispensable party concerns Judge Keenan noted with respect to the "signatory" allegations.
Id. Concerning the state law claims, the Circuit stated:
Similarly, we need not assess the adequacy of appellant's state law claims for tortious interference with business opportunities since all of these allegations concern COMSAT's consultative activity within INTELSAT relating to the authorization of a competing satellite system. Those are plainly "signatory activities." Appellants may, if so advised, replead state law claims, confined to COMSAT's common carrier role, bearing in mind the strict pleading requirements of state law claims emphasized by the District Court.
Plaintiffs' filed their Second Amended Complaint on November 12, 1991. The Second Amended Complaint restated the conspiracy, antitrust and state law claims of the First Amended Complaint, but omitted references to the PTTs as "other Intelsat signatories" and inserted repeated assertions that "all of this conduct has been undertaken by Comsat outside of its capacity as United States signatory to Intelsat." 2d Am. Compl. P 27.
On March 30, 1993, the Court denied Comsat's motion to dismiss the Second Amended Complaint. The Court rejected Comsat's challenge to subject matter jurisdiction and denied the applicability of the act of state doctrine. See Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 1993 U.S. Dist. LEXIS 3825, 1993-1 Trade Cas. (CCH) P70,184, 1993 WL 97313 (S.D.N.Y. 1993).
With regard to Plaintiffs' conspiracy and antitrust claims, the Court deferred to the liberal pleading requirements of Fed. R. Civ. P. 8(a) and accepted Plaintiffs' representations that the restated claims in the Second Amended Complaint did not implicate Defendant's role as a signatory. See id. at 69,861-62, 1993 U.S. Dist. LEXIS 3825, 1993 WL 97313 at *5-6. The Court did not endorse Plaintiffs' claims, as Plaintiffs' argue in support of their current motions, but merely noted that "any further distinguishing between Comsat's roles as common carrier and an Intelsat signatory at this time would inappropriately transform this motion to dismiss into a motion for summary judgment." Id. at 69,861, 1993 U.S. Dist. LEXIS 3825, 1993 WL 97313 at *4.
The Court denied Defendant's argument that the Noerr-Pennington doctrine barred Plaintiffs' claim that Comsat interfered with PAS's obtaining landing rights and operating agreements in several nations, finding that the question of the availability of landing rights and operating agreements went beyond the scope of the pleadings. Id. at 69,863, 1993 U.S. LEXIS 3825, 1993 WL 97313 at *8. The Court also denied Defendant's argument that the Noerr-Pennington doctrine--which states that concerted efforts to restrain trade by petitioning government officials are protected from antitrust liability--barred Plaintiffs' claim that Comsat interfered with Plaintiff Anselmo's application to the FCC for a tax deferral certificate. See id.
Finally, the Court denied Defendant's motion to dismiss Plaintiff's claim for injunctive relief under Fed. R. Civ. P. 12(b)(7), and accepted as pleaded Plaintiffs' claims for interference with prospective advantage under New York and Connecticut law. See id. at 69,863-64, 1993 U.S. Dist. LEXIS 3825, 1993 WL 97313 at *8.
Plaintiffs moved to file a Third Amended Complaint adding as a plaintiff PANAMSAT, L.P., a Delaware limited partnership formed after the commencement of this action, adding as defendants seventeen PTTs (including fifteen Intelsat signatories and two PTT parent companies), and adding new claims allegedly based on acts committed after the filing of the Second Amended Complaint. On June 7, 1994, the Court granted without objection leave to file a Third Amended Complaint adding PANAMSAT, L.P., but denied leave to add any new claims or defendants. See Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 1994 U.S. Dist. LEXIS 7464, 1994-2 Trade Cas. (CCH) P70,689, 1994 WL 256671 (S.D.N.Y. 1994). The Court found that adding new defendants and claims after significant discovery had been completed would result in prejudice and delay. See id. 1994 U.S. Dist. LEXIS 7464, *4, at 72,729-30, 1994 WL 256671 at *2. The Court also found that joinder of the foreign PTTs would be improper under the law of the case. See id. 1994 U.S. Dist. LEXIS 7464, *5, at 72,730, 1994 WL 256671 at *3.
The parties have concluded extensive discovery. They have taken depositions of more than thirty-five current and former Comsat employees and five third-party witnesses, and have produced well over 330,000 pages of documents among themselves and at least an additional 57,000 pages from nineteen third-parties. See Alpha Lyracom, 1994 U.S. Dist. LEXIS 7464, *2, 1994-2 Trade Cas. (CCH) P70,689, 1994 WL 256671 at *1; Def.'s S.J. Mem. at 2. The only outstanding discovery issues are presented by Plaintiffs' current motions objecting to various orders of the Magistrate Judge, principally concerning the discoverability of the Intelsat signatory resolutions of 1984, 1985, and 1986. The Court addresses those motions below, prior to its discussion of Defendant's motion for summary judgment.
I. Plaintiffs' discovery motions
Plaintiffs' object to various discovery orders of Magistrate Judge Nina Gershon. For the reasons discussed below, the Court overrules the objections and affirms the Magistrate Judge's orders.
A. The July 20, 1994 order
On July 20, 1994, Magistrate Judge Gershon entered an order granting Defendant's motion to enforce a prior protective order in this action and awarding Defendant $ 12,744.25 in fees and costs on the motion. Plaintiffs did not object to the fee award. The Magistrate Judge also required Plaintiff Reynold V. Anselmo to use agreed upon language to inform any non-party with whom he communicated concerning access to documents disclosed in this action that the protective order was sought by both parties in order to protect the documents of both parties. Plaintiffs' counsel consented to this sanction at the hearing on the motion on June 20, 1994. Plaintiffs only objection to the July 20, 1994 order is to its last sentence, which cautions Plaintiffs that future violations of the protective order or the orders of the Court would trigger far more serious sanctions.
In light of the undisputed, multiple violations of the protective order that have occurred in this case, plaintiffs are cautioned that any further violations, or any violations of the directives in the order being issued today, will result in the imposition of far more serious sanctions.
App. to Pls.' Objs. to Order of M.J. Nina Gershon, Ex. A (Order of July 20, 1994) (hereinafter "July 20, 1994 Order").
Pursuant to 28 U.S.C. § 636(b)(1)(A), Plaintiffs' objection is subject to a "clearly erroneous" standard, which Plaintiffs do not even attempt to argue. Plaintiffs argue only that the Magistrate Judge's warning "does not accurately reflect, and indeed overstates, the number, nature, and gravity of the violations of the protective order found by the Magistrate Judge," Pls.' Objs. to Order of M.J. Nina Gershon at 2, and that the warning "is inappropriate and unjustified, and should be reversed." Id. at 5.
After reviewing the Order, Plaintiffs' memorandum of objections with attachments, and Defendant's memorandum in opposition with attachments--including the transcript of the June 20, 1994 hearing on Defendant's motion to enforce the protective order--the Court finds that the warning was entirely appropriate. The Court therefore overrules Plaintiffs' objection and sustains the Magistrate Judge's order. Moreover, the Court agrees with Defendant that Plaintiffs' objection was "an unconscionable waste of judicial resources," "frivolous in the extreme," and "entirely without basis." See Def.'s Opp'n to Pls.' Objs. to Order of M.J. Nina Gershon at 1-2. The Court therefore grants Defendant's application for sanctions, and directs Plaintiffs to pay Defendant's costs and fees associated with the motion.
B. The July 12, 1994 order
Richard Colino was employed at Comsat from 1973 to 1979, served as a consultant to Comsat from 1979 to 1981, and was Director General of Intelsat from 1983 to 1986. Plaintiffs' object to that portion of Magistrate Judge Gershon's July 12, 1994 order which granted Defendant Comsat and non-party Intelsat's motions for an order under Fed. R. Civ. P. 26(c)(1) and 45(c)(3) quashing the deposition subpoena served by Plaintiffs on Richard Colino, and for a protective order precluding Plaintiffs from taking Colino's deposition with regard (a) to any information obtained by Colino as a result of his role as Director General of Intelsat (including information about the Intelsat signatory resolutions) and (b) to Colino's service at Comsat insofar as Comsat was a signatory to Intelsat (Magistrate Judge Gershon permitted inquiry of Colino regarding Comsat's non-immune, common-carrier role.). See App. to Pls.' Objs. to M.J. Gershon's Order Regarding the Dep. of Richard Colino, Ex. A (Order of July 12, 1994) (hereinafter "Colino Order").
Again, pursuant to 28 U.S.C. § 636(b)(1)(A), Plaintiffs' objections are subject to a "clearly erroneous" standard. Plaintiffs argue that two of the rulings in the Magistrate Judge's July 12, 1994 order are clearly erroneous. Plaintiffs argue that the Magistrate Judge erred in finding that Intelsat has not waived its immunity with respect to Colino. Plaintiffs also argue that the Magistrate Judge erred in finding that Plaintiffs may not inquire of Colino concerning the ...