UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
September 4, 1996
ALPHA LYRACOM SPACE COMMUNICATIONS, INC., REYNOLD V. ANSELMO, PAN AMERICAN SATELLITE, and PANAMSAT, L.P., Plaintiffs,
COMSAT CORPORATION, Defendant.
The opinion of the court was delivered by: KEENAN
OPINION and ORDER
I. Factual background
B. Operation of Intelsat, immunity, & separate systems
C. United States' separate systems policy
D. Response to the U.S. separate systems policy
II. Procedural history
I. Plaintiffs' discovery motions
A. The July 20, 1994 order
B. The July 12, 1994 order
1. Intelsat's immunity
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
(1) Intent to conspire
(2) Interfirm communications
(3) Customary indications of conspiracy
(a) Innumerable meetings
(b) PAS, Codetel and Tricom
(c) Intelsat resolutions
(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)
B. Overt acts
1. Plaintiffs' pricing claims
2. Delaying PAS's entry into Great Britain, France, West Germany and Brazil
3. Comsat's FCC filing
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).
I. Factual background
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.
While Intelsat was created to establish a single global satellite system, the Definitive Agreement also provides for the creation of separate satellite systems. Article XIV of the Definitive Agreement sets out a "consultation process." See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *7, 1990-2 Trade Cas. (CCH) P69,188 at 64,581-82, 1990 WL 135637 at *3-4. For domestic satellite services, the party seeking to provide a separate system must consult the Board of Governor's regarding the technical compatibility of the proposed system with Intelsat. For international services, the party must also consult the Assembly of Parties for approval. See id. Thus a separate international system requires the home government to clear the nascent service with the entire Assembly.
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).
II. Procedural history
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..
If [Plaintiffs] can allege specific aspects of COMSAT's conduct as common carrier that are actionable under the antitrust laws, [they are] free to proceed. But the effort will require precise drafting and an avoidance of the scattershot approach evident in the current complaint. In particular, we caution [plaintiffs] not to assume, as [they appear] to do in some of [their] argument, that an allegation against COMSAT will survive dismissal as long as it is confined to unilateral rather than concerted action. The line to be drawn is not between concerted and unilateral action, since even COMSAT's unilateral action might have been undertaken in its role as signatory to INTELSAT, but between action taken as signatory and action taken as common carrier.
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 Intelsat signatory resolutions or the acts of Intelsat, Comsat, and the Intelsat signatory PTTs to implement those resolutions.
1. Intelsat's immunity
In 1977, President Ford designated Intelsat a "public international organization entitled to enjoy the privileges, exemptions and immunities conferred by the International Organizations Immunities Act." Weidner v. International Telecommunications Satellite Org., 392 A.2d 508, 510 (D.C. 1978) (citing Exec. Order No. 11966, Jan. 19, 1977, 42 F.R. 4331 (1977)). Those immunities include "the same immunity from suit and every form of judicial process as is enjoyed by foreign governments, except to the extent that [it] may expressly waive [its] immunity for the purpose of any proceedings or by the terms of any contract." 22 U.S.C. § 288a(b); Exec. Order No. 11966, Jan. 19, 1977, 42 Fed. Reg. 4331; Exec. Order No. 11718, May 14, 1973, 38 Fed. Reg. 12797. The officers, representatives and employees of public international organizations likewise have immunity from suit and legal process for acts performed in their official capacity and within their official functions, unless that immunity is expressly waived by the organization. See 22 U.S.C. § 288d(b); DeLuca v. The United Nations Org., 841 F. Supp. 531, 534-35 (S.D.N.Y. 1994). Magistrate Judge Gershon correctly found that Intelsat has not waived its immunity or Colino's in this proceeding. See Colino Order at 6.
Plaintiffs argue that on March 31, 1988, Intelsat's then Director General Dean Burch presented to the United States District Court in the District of Columbia a general waiver for any and all actions involving Colino. Magistrate Judge Gershon properly found to the contrary, ruling that the March 31, 1988 waiver was provided by Intelsat on Judge Royce Lamberth's direction and was limited in form and intent to the civil action then pending before Judge Lamberth, Intelsat V. Richard Colino, Civ. Action No. 87-2749 (D.D.C.) (Lamberth, J.). Written on Intelsat stationary, the letter reads in full:
31 March 1988
Judge Royce Lamberth
U.S. District Court for the District of Columbia
Washington, D.C. 20001
Dear Judge Lamberth:
Re: INTELSAT vs. Richard R. Colino
(Civil No. 87-2749)
Please be advised that in my capacity as Director General of INTELSAT, I hereby waive any and all privileges, exemptions and immunities of Mr. Richard R. Colino with respect to all actions performed by him while he was in the employment of INTELSAT. This waiver has no restrictions of any kind.
At its 69th meeting the INTELSAT Board of Governors unanimously decided to waive any and all privileges, exemptions and immunities of Mr. Colino in connection with the U.S. Department of Justice investigation, and at its 74th meeting the Board waived Mr. Colino's civil immunity for all of his actions while he was an INTELSAT employee.
App. to Pls.' Objs. to M.J. Gershon's Order Regarding the Dep. of Richard Colino, Ex. I (Letter of Dean Burch, Mar. 31, 1988).
In their memorandum in support of their objections Plaintiffs deleted the caption referencing the Intelsat v. Colino action. See Pls.' Objs. to M.J. Gershon's Order Regarding the Dep. of Richard Colino at 5 (hereinafter "Pls.' Colino Mem."). They also overlooked the specific salutation to Judge Lamberth, as opposed to a general salutation which would more definitively establish an express waiver for all actions. Nevertheless, Plaintiffs argue that the 1988 letter is an express waiver for any and all actions without restriction, see Pls.' Colino Mem. at 7-10 (citing In re Doe, 860 F.2d 40, 46 (2d Cir. 1988); In re Grand Jury Proceedings, Doe No. 700, 817 F.2d 1108, 1110-11 (4th Cir.), cert. denied, 484 U.S. 890 (1987); Proyecfin de Venezuela, S.A. v. Banco Industrial de Venezuela, S.A., 760 F.2d 390 (2d Cir. 1985); Paul v. Avril, 812 F. Supp. 207, 210 (S.D. Fla. 1993); Marlowe v. Argentine Naval Comm'n, 604 F. Supp. 703 (D.D.C. 1985)), such that the Magistrate Judge erred in reaching the issue of Intelsat's intent under the analysis in Mendaro v. World Bank, 230 U.S. App. D.C. 333, 717 F.2d 610, 617 (D.C. Cir. 1983) and United States v. James, 980 F.2d 1314 (9th Cir. 1992), cert. denied, 510 U.S. 838, 126 L. Ed. 2d 84, 114 S. Ct. 119 (1993).
The cases cited by Plaintiffs do not support their contention that the waiver in the 1988 civil action should be applied to the current action and all actions in futuro. Both In re Doe and In re Grand Jury Proceedings, Doe No. 700, involved grand jury investigations of former Philippine President Ferdinand Marcos and his wife Imelda Marcos. Both cases hold that the current government of a nation may expressly waive the head-of-state immunity of its former leaders and that other nations should give any such express waiver its full effect. See In re Doe, 860 F.2d at 46; In re Grand Jury, 817 F.2d at 1110-11. Notwithstanding the fact that the language of the waiver in those cases "could scarcely be stronger," In re Doe, 860 F.2d at 46, the effect of the waiver was properly limited by its terms to the action before the court. See id. ("'This waiver extends only to provision of evidence, [etc.] . . . in the above Grand Jury investigation.'").
Proyecfin de Venezuela, Marlowe, and Paul examine the validity and scope of waivers under the Foreign Sovereign Immunities Act. See 28 U.S.C. §§ 1330, 1602-11. In Proyecfin de Venezuela, the Second Circuit examined two contractual agreements and determined that an explicit waiver of sovereign immunity in the first agreement was incorporated into the second agreement. See Proyecfin de Venezuela, 760 F.2d at 392-93. In Marlowe, the district court held that "if the parties to a contract agree that the laws of one country will govern contractual interpretations, they have implicitly waived the defense of sovereign immunity." Marlowe, 604 F. Supp. at 709. In Paul, the district court held that an April 9, 1991 waiver by the Government of Haiti that stated that its former President Prosper Avril "enjoyed absolutely no form of immunity" should be given "its due weight." Paul, 812 F. Supp. at 210. (But unlike the Philippine waiver in In re Doe and In re Grand Jury Proceedings, Doe No. 700, the Haitian waiver was not limited to a particular action.). None of these cases support Plaintiffs' contention that the 1988 Intelsat waiver should be applied to this action and all actions in futuro.
On the other hand, the specific salutation and opening reference to the Intelsat v. Colino civil action in the March 31, 1988 waiver raise questions as to whether the waiver was limited to the action before Judge Lamberth. Therefore the Magistrate Judge was completely correct in examining Intelsat's intent under the Mendaro analysis. This Court agrees with the Magistrate Judge's conclusion that Intelsat issued the waiver in order to collect the damages it sustained as a result of Colino's fraudulent conduct against Intelsat, and not to waive irrevocably Colino's immunity in any and all proceedings. See Colino Order at 5.
The Court therefore overrules Plaintiffs' objections and affirms that portion of the Magistrate Judge's July 12, 1994 order finding that Intelsat has not waived its immunity with respect to Colino.
2. Plaintiffs' boycott claims
Plaintiffs also challenge as clearly erroneous the Magistrate Judge's finding that Plaintiffs may not inquire of Colino concerning either the Intelsat signatory resolutions or the acts of Intelsat, Comsat, or the signatory PTTs to implement those resolutions. Plaintiffs argue that the resolutions and their implementation are not privileged because they are not proper signatory functions. Plaintiffs further argue that even if the passage and implementation of the resolutions were proper signatory functions, they should be discoverable for the purpose of establishing a record for appeal and the motive behind Comsat's acts as a common-carrier.
The signatory resolutions are official Intelsat documents resulting from official sessions of the Meeting of Signatories. Comsat participates in those sessions as the signatory of the United States, not as a common-carrier. Although Plaintiffs' argue that the resolutions "could . . . have been agreed to anywhere," Reply Mem. of Pls.' in Supp. of Objs. to Mag.'s Order Regarding Dep. of Richard Colino at 25 (hereinafter "Pls.' Colino Reply Mem."), the fact remains that the resolutions resulted from official sessions of Intelsat signatories. It is not the function of this Court to inject itself into those sessions to determine whether Comsat is properly fulfilling its obligations as the United States' Signatory. Congress assigned that function to the Executive, as even Plaintiffs' acknowledge in their papers. See Pls.' Colino Reply Mem. at 21 (discussing a memorandum of understanding reached by Comsat, the FCC, the State Department, and the Department of Commerce after the 1984 Intelsat signatory resolution); see also Alpha Lyracom, 946 F.2d at 171 (discussing Executive Branch authority "to oversee and regulate COMSAT's management and operation of the system and its relations with foreign governments and their designated satellite management entities"). The Court's function is to uphold Congress's grant to signatory immunity to Comsat, as it has been explained in the prior orders of this Court and the Second Circuit. See Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, *17, 1990-2 Trade Cas. (CCH) P69,188 at 64,584, 1990 WL 135637 at *6-7; Alpha Lyracom, 946 F.2d at 174-75. Accordingly, discovery concerning the signatory resolutions and their implementation was properly barred.
Plaintiffs' argument that it should be permitted discovery concerning the resolutions in order to create a "factual record" for appeal is a mere attempt to subvert the Second Circuit's affirmance of this Court's findings on Comsat's immunity. Plaintiffs had the opportunity to appeal this issue, exhausted that opportunity, and now must conduct their discovery within the parameters set by the Second Circuit.
Plaintiffs' analogizing Comsat's signatory immunity to a duck blind or sanctuary "in which to plot illegal conduct" misses the mark. Congress exempted the Intelsat Signatories from suit and legal process in antitrust actions, not from criminal prosecution. In this antitrust action, therefore, the Court will not permit inquiry into Comsat's actions during signatory meetings or while it otherwise acted as a signatory. If, as per Plaintiffs' analogy, this were a criminal action charging Defendant with arson or conspiracy to commit murder, the scope of permissible inquiry obviously would differ.
Plaintiffs' argument that the resolutions and their implementation are discoverable to show intent or motive also fails to persuade the Court. Plaintiffs analogize to the Noerr-Pennington doctrine and the admissibility of evidence of acts which are themselves immune from antitrust liability. See Pls.' Colino Mem. at 17 (citing United States Football League v. NFL, 842 F.2d 1335, 1374 (2d Cir. 1988); Alexander v. National Farmers Org., 687 F.2d 1173, 1196 (8th Cir. 1982), cert. denied, 461 U.S. 937, 77 L. Ed. 2d 313, 103 S. Ct. 2108 (1983); Feminist Women's Health Center, Inc. v. Mohammad, 586 F.2d 530, 543 n.7 (5th Cir. 1978), cert. denied, 444 U.S. 924, 62 L. Ed. 2d 180, 100 S. Ct. 262 (1979)). But the Magistrate Judge correctly found that the immunity from suit and legal process enjoyed by Intelsat signatories is much broader that the exemption from antitrust liability at issue in the cases Plaintiffs cite. See Colino Order at 7-8. Those cases speak exemption or immunity from antitrust liability. They do not address the exemption from suit and legal process enjoyed by Intelsat signatories.
In sum, the Court finds that Comsat's signatory immunity has not been waived and therefore precludes Plaintiffs' from using Comsat's conduct as an Intelsat signatory to prove a conspiracy or boycott by Comsat as a common carrier. The Court overrules Plaintiffs' objections and affirms the Magistrate Judge's July 12, 1994 order in all respects.
3. Defendant's application for sanctions
Defendant Comsat moves for an award of its costs and expenses on the motion. The Court declines the application as to the July 12, 1994 order.
C. The September 27, 1994 order
Plaintiffs also object to those portions of the Magistrate Judge's September 27, 1994 order denying two of Plaintiffs' motions to compel answers to Plaintiffs' discovery requests and granting Defendant's motion for a protective order.
1. Plaintiffs' motion to compel responses
Plaintiffs's first motion to compel sought answers to Plaintiffs' Request for Admission No. 12 and Plaintiffs' Interrogatory No. 42. Plaintiffs' Request for Admission No. 12 and Defendant's response were as follows:
REQUEST NO. 12:
The statements contained in paragraph 28(d) of the complaint that you instigated, voted for, participated in, and caused to be adopted a resolution by Intelsat signatories "to refrain from entering into any arrangements which may lead to the establishment and subsequent use of" competing alternative satellite systems "to carry traffic to or from their respective countries," and on at least two occasions joined with Intelsat to ratify and reaffirm that resolution are true.
COMSAT objects to this request because it calls for information relating to COMSAT's role as the United States signatory to INTELSAT which is outside the permissible scope of this lawsuit.
App. to Objs. of Pls.' to Disc. Orders of M.J. Gershon of Sept. 27, 1994, Ex. C at 9 (Comsat's Resps. to Pls.' 1st & 2d Sets of Reqs. for Admiss.). Plaintiffs' Interrogatory No. 42 and Defendant's response are as follows:
INTERROGATORY NO. 42 : From 1984 to the present, have you had any understanding or agreement, express or implied, with any entity to refrain from entering into any arrangement which may lead to the establishment or subsequent use of a separate international satellite system to carry traffic to or from any country originating from or terminating in the United States?
RESPONSE : In addition to the General Objections set forth above, COMSAT objects to this interrogatory to the extent it calls for information pertaining to COMSAT's role as the United States signatory to Intelsat. COMSAT further objects to this interrogatory on the grounds that it is vague and unintelligible. Subject to these objections, COMSAT's answer is no.
Id., Ex. C at 6 (Comsat's Resps. to Pls.' 5th Set of Interrogs. & Reqs. for Production of Docs.). For the reasons set forth above in the Court's discussion of Plaintiffs' boycott claims, the Court finds Defendant's responses appropriate. The Court agrees that Plaintiffs' Request for Admission No. 12 rests on the Intelsat signatory resolutions and the signatory boycott claims. The Court dismissed those claims from the First Amended Complaint on the grounds that they were barred by Defendant's Intelsat signatory immunity. Plaintiffs subsequently represented they had dropped those claims from the current complaint. The Court also agrees that Plaintiffs' sole basis for challenging Comsat's response to Interrogatory No. 42 was Comsat's proper refusal to disclose information about the Intelsat signatory resolutions. The Court therefore overrules Plaintiffs' objections and affirms the Magistrate Judge's order as to the motion to compel responses.
2. Plaintiffs' motion to compel production
Plaintiffs' second motion sought to compel production of documents responsive to subparagraph 24 of Plaintiffs' Document Request No. 76. The request and Defendant's response were as follows:
DOCUMENT REQUEST NO. 76 : In relation to each meeting identified below, produce all documents referring thereto, and all documents used in conjunction with, or arising from, any such meeting:
Meetings between representatives from Comsat and representatives from each of the foreign PTTs set forth in Paragraph K of this Document Request, "to urge all Signatories to refrain from entering into any' arrangements which may lead to the establishment and subsequent use" of other satellite systems "to carry traffic to or from their respective countries" following the April 1984 meeting of signatories memorialized in the "Intelsat Meeting of Signatories Record of Decisions of the Fourteenth Meeting" at pp. 11-12. (Ex. 31, hereto).
COMSAT incorporates its General Objections and files the following specific objections to Document Request No. 76. . . . COMSAT objects to Request No. 76 to the extent it calls for documents relating to subjects deleted from the original complaint and not found in the Second Amended Complaint. . . . COMSAT objects to Request No. 76 to the extent it calls for information relating to COMSAT's role as the U.S. Signatory to INTELSAT (particularly subparagraph 24).
Id., Ex. C at 6, 11 (Comsat's Resps. to Pls.' 6th Set of Interrogs. & Reqs. for Production of Docs.). The Court agrees that Plaintiffs' sole basis for challenging Comsat's response to this request was Comsat's proper refusal to disclose information about the Intelsat signatory resolutions. For the reasons stated above, the Court overrules Plaintiffs' objections and affirms the order of the Magistrate Judge as to the motion to compel production.
3. Defendant's motion for a protective order
Plaintiffs also object to Magistrate Judge Gershon's granting Defendant's motion for a protective order precluding Plaintiffs from taking a Rule 30(b)(6) deposition that was directed solely at Intelsat and signatory conduct, particularly the Intelsat signatory resolutions and their implementation. For the reasons stated above, the Court overrules Plaintiffs' objections and affirms the order of the Magistrate Judge as to the granting of Defendant's motion for a protective order.
4. Defendant's application for sanctions
Defendant Comsat again moves for an award of its costs and expenses on the motion. This application presents an extremely close call, insofar as the Court agrees with the Magistrate Judge's assessment of Plaintiffs' intentions concerning the discovery motions directed at Defendant Comsat's immunity and the Intelsat signatory resolutions.
The plaintiff's position with regard to immunity is rejected. In my view, what the plaintiff's position on these motions amounts to is a last-ditch effort to completely change the parameters of this litigation as laid down by the Second Circuit and Judge Keenan. . . . Judge Keenan accepted plaintiff's representations that . . . plaintiff was alleging something different from what it alleged initially, in particular, as to the Intelsat boycott resolutions. Apparently now, from the oral argument, it appears that the boycott alleged in the second amended complaint is one and the same as the so-called Intelsat boycott, as reflected in the resolutions, and which was alleged as a principal focus of the initial complaint, and which was, so it was represented to Judge Keenan, dropped when the complaint was amended.
App. to Objs. of Pls.' to Disc. Orders of M.J. Gershon of Sept. 27, 1994, Ex. A at 1 (Order of Sept. 27, 1994), Ex. B at 26-27 (Hr'g Tr. (Sept. 21, 1994)).
In addition, Plaintiffs misrepresented the law of the case by asserting that this Court somehow validated Plaintiffs' boycott and conspiracy claims by denying Defendant's motion to dismiss those portions of the Second Amended Complaint. See Reply of Pls.' to Opp'n of Comsat to Objs. of Pls.' to Disc. Orders of M.J. Gershon of Sept. 27, 1994, at 12 (hereinafter "Pls.' Sept. 27, 1994 Reply"). On a motion to dismiss, the pleadings must be read in the light most favorable to the plaintiff. See Alpha Lyracom, 1993 U.S. Dist. LEXIS 3825, *10, 1993-1 Trade Cas. (CCH) P70,184 at 69,860, 1993 WL 97313 at *3 (citing Zinermon v. Burch, 494 U.S. 113, 118, 110 S. Ct. 975, 979, 108 L. Ed. 2d 100 (1990); Scheuer v. Rhodes, 416 U.S. 232, 237, 94 S. Ct. 1683, 1687, 40 L. Ed. 2d 90 (1974); Yoder v. Orthomolecular Nutrition Inst., Inc., 751 F.2d 555, 562 (2d Cir. 1985)). The Court therefore properly read Plaintiffs' claims in light of Plaintiffs' representations that they had dropped any claims based on Defendant's conduct as an Intelsat signatory, on Intelsat meetings or activities, and on the Intelsat signatory resolutions. 1993 U.S. Dist. LEXIS 3825, See id. at 69,861, 1993 WL 97313 at *3-4. The Court then denied Defendant's motion to dismiss on the grounds that a conspiracy to boycott proven without resort to the resolutions, Intelsat, or signatory conduct would not implicate the Defendant's immunity. See id. Plaintiffs' motions before the Magistrate Judge and this Court reveal that Plaintiffs' earlier representations to the Court were not in fact completely forthcoming. Had the Plaintiffs represented on the motion to dismiss that their alleged conspiracy and boycott claims rested on the Intelsat signatory resolutions those claims might not have survived that motion.
The Court nevertheless denies Defendant's application for costs and expenses. The Court has no desire to punish litigants for presenting arguably valid positions. Plaintiffs' objections to the Magistrate Judge's July 12, 1994 order were still pending when Plaintiffs filed this motion. Plaintiffs' might have expected a favorable ruling on those earlier filed objections, which would in turn have supported Plaintiffs' objections to the September 27, 1994 order. In light of this, Plaintiffs should not be sanctioned for filing the motion. The Court therefore exercises its discretion and declines to award costs and expenses.
For the reasons discussed above, the Court overrules Plaintiffs' objections and affirms the orders of the Magistrate Judge in all respects. Discovery is therefore complete. The Court addresses below Defendant's motion for summary judgment.
II. Defendant's motion for summary judgment
Defendant moves for summary judgment on all of the claims in Plaintiffs' Third Amended Complaint. The Court heard argument from the parties on the motion on August 3, 1995.
The central allegation in Plaintiffs' Third Amended Complaint is that Defendant Comsat entered into a conspiracy to prevent PAS's entry into the commercial communications satellite market and generally to prevent the development of satellite systems separate and apart from Intelsat. See 3d Am. Compl. P 27. Plaintiffs allege that Comsat was joined in the conspiracy by the PTTs in Chile, Argentina, Brazil, Venezuela, Colombia, Guatemala, Jamaica, Barbados, Trinidad & Tobago, the Dominican Republic, the United Kingdom, France, Germany, Italy, and Spain, all of which were also the Intelsat signatory for their respective nation, with the possible exception of the PTT in Guatemala. See 3d Am. Compl. P 26; Pls.' 3(g) Statement P 14 at 8. Plaintiffs claim that in furtherance of the conspiracy the PTTs refused to provide PAS with landing rights and operating agreements in their respective countries. Plaintiffs claim that Comsat furthered this conspiracy by refusing to purchase capacity from PAS, creating services and joint ventures which would directly compete with PAS, and disparaging PAS to prospective customers. See 3d Am. Compl. P 28.
Plaintiffs frame eleven claims from their core allegation of a conspiracy against PAS and from the conduct alleged in support of that conspiracy. Plaintiffs raise two claims under § 1 of the Sherman Act, consisting of one claim of conspiracy to boycott and to refuse to deal with PAS, and one claim of conspiring to restrain trade and commerce in the relevant market and the geographic submarkets. See 3d Am. Compl. P 33. Plaintiffs raise seven claims under § 2 of the Sherman Act, consisting of one claim of monopolization involving the United States market, three claims of attempted monopolization respectively involving the United States market, domestic and regional markets in Central and South America, and domestic and regional markets in Europe, and three claims of conspiracy to monopolize, again respectively involving the United States market, domestic and regional markets in Central and South America, and domestic and regional markets in Europe. See 3d Am. Compl. P 32. Plaintiffs also raise two claims of interference with prospective advantage respectively under the common law of New York and Connecticut. See 3d Am. Compl. P 34.
In opposition to the current motion, Plaintiffs argue that summary judgment is inappropriate because Defendant's intent is a material issue in dispute with regard to much of the evidence and several of the claims. See Pls.' Mem. in Opp'n to Def.'s Mot. for Summ. J. (hereinafter "Pls.' Opp'n Mem.") at 28 (claim for refusal to use PAS capacity), 31 (Latin American joint venture claims), & 32 (Atlantic Television claim). The Court disagrees.
Both the Supreme Court and the Court of Appeals for the Second Circuit have held, in antitrust cases involving allegations of conscious parallelism and concerted refusals to deal, that summary judgment may be granted in such cases if the moving party is able to show that the facts relied on by the plaintiff in support of its allegations are not susceptible of the interpretation the plaintiff seeks to give them and the plaintiff fails to respond to such a showing with 'significant probative evidence' in support of its theory of the case.
Harlem River Consumers Corp. v. Associated Grocers of Harlem, 1976 Trade Cas. (CCH) P60,820 at 68,575, 1976 WL 1238 at *4 (S.D.N.Y. Mar. 5, 1976); see also Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102, 110 (2d Cir. 1975) ("Under these circumstances, unless plaintiffs have thus far turned up evidence from the defendants or elsewhere supporting their conspiracy theory we do not see how, in the face of defendants' uncontradicted evidence negating it, trial would give them any greater opportunity to elicit from defendants and their employees evidence tending to prove it.").
Defendant's principal argument on the current motion is that Plaintiffs have failed to provide any evidence from which a reasonable jury could infer either the existence of the alleged conspiracy to boycott or to refuse to deal with PAS, or Comsat's membership in any such boycott or conspiracy. Comsat also argues that to the extent that Plaintiffs may have shown evidence of Comsat's opposition to separate satellite systems, such opposition is either immune conduct undertaken in Comsat's signatory role, or permissible competitive conduct undertaken in Comsat's common carrier role.
Comsat's secondary arguments are that Plaintiffs have failed to show that Comsat proximately caused any antitrust or other injury to PAS; that Plaintiffs have failed to provide a reasonable estimate of their alleged damages; and that Plaintiffs have failed to apportion their damage demand among the various claims alleged. Comsat also argues that Plaintiffs' failure to apportion damages is an admission that the many acts alleged in the Third Amended Complaint constitute a single boycott claim and do not allege independent antitrust violations. Comsat cites Plaintiffs' papers in opposition, wherein Plaintiffs admit that all of the acts alleged
including [Comsat's] Latin American ventures, Atlantic Television ("ATV"), COMSAT's refusal to accept PAS offers of satellite capacity, COMSAT's filing against PAS's tax deferral, and COMSAT's representations to customers that PAS would be unable to obtain landing rights . . . . were in furtherance of the overall conspiracy with the PTTs to boycott separate systems.
Pls.' Opp'n Mem. at 3.
At oral argument Plaintiffs disavowed any reading of their papers which would limit the Complaint to the boycott claim. See Alpha Lyracom Space Communications, Inc., et al. v. Comsat Corp., 89 Civ. 5021 (JFK), Hr'g Tr. at 17-18 (Aug. 3, 1995). Plaintiffs argued that although each act alleged in the Third Amended Complaint supports the alleged conspiracy to boycott or to refuse to deal with PAS, many of those acts are also pleaded as independent antitrust violations. See id. (referencing Pls.' Opp'n Mem. at 23 (arguing that Defendant's alleged refusal to deal with PAS constitutes a separate act of monopolization in violation of § 2), 28 (arguing that Defendant's Latin American joint ventures constitute separate acts of monopolization in violation of § 2 "if undertaken for an exclusionary purpose")). Reading the Third Amended Complaint favorably to Plaintiffs, the Court must examine the evidentiary support for each alleged act both as an act in furtherance of the alleged conspiracy and as an independent antitrust violation.
Finally, Comsat argues that the Court should dismiss Plaintiffs' claims under the act of state doctrine or for failure to join as indispensable parties the alleged conspirator PTTs. The Court addresses these arguments after examining the alleged conspiracy and Plaintiffs' claims for damages.
Fed. R. Civ. P. 56 "mandates the entry of summary judgment after adequate time for discovery and upon motion," Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986), if the entire record demonstrates that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). The burden of showing that no genuine issue of material fact exists rests on the movant. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970). The burden will be satisfied if the movant can point to an absence of evidence to support an essential element of the nonmoving party's claim. See Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). If the movant satisfies its burden, the nonmoving party must then "set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at 248-49, 106 S. Ct. at 2510 (requiring non-movant responding to a properly supported motion for summary judgment to adduce "significant probative supporting evidence" demonstrating that a factual dispute exists); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (requiring non-movant to present sufficient evidence to allow "a rational trier of fact to find for the non-moving party").
In viewing the evidence to determine whether there exists a genuine issue for trial, the Court must "assess the record in the light most favorable to the non-movant and . . . draw all reasonable inferences in its favor." Delaware & Hudson Railway Co. v. Consolidated Rail Corp., 902 F.2d 174, 177 (2d Cir. 1990), cert. denied, 500 U.S. 928, 114 L. Ed. 2d 125, 111 S. Ct. 2041 (1991); see Adickes, 398 U.S. at 157, 90 S. Ct. at 1608. The Court may not resolve issues of fact, it may only ascertain whether such issues are present. See Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 58 (2d Cir. 1987). In antitrust litigation, however, the non-moving party must set forth facts that tend to preclude an inference of permissible conduct. See Capital Imaging v. Mohawk Valley Medical Assoc., 996 F.2d 537, 542 (2d Cir.), cert. denied, 510 U.S. 947, 126 L. Ed. 2d 337, 114 S. Ct. 388 (1993) (citing Matsushita, 475 U.S. at 588, 106 S. Ct. at 1356).
Although difficult in factually complex cases, see Hayden Publishing Co. v. Cox Broadcasting Corp., 730 F.2d 64, 68 (2d Cir. 1984), summary judgment is not disfavored in antitrust actions. On the contrary, recognizing that summary judgment is not a substitute for trial, current Supreme Court and Second Circuit cases have "tended to encourage its use in complex cases such as this one." Apex Oil Co. v. DiMauro, 822 F.2d 246, 252 (2d Cir.), cert. denied, 484 U.S. 977, 108 S. Ct. 489, 98 L. Ed. 2d 487 (1987) (citing Celotex Corp., 477 U.S. at 327, 106 S. Ct. at 2555; Anderson, 477 U.S. at 242, 106 S. Ct. at 2505); Matsushita, 475 U.S. at 574, 106 S. Ct. at 1356; Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987); Eastway Construction Corp. v. City of New York, 762 F.2d 243, 250-51 (2d Cir. 1985)); see also Capital Imaging, 996 F.2d at 541 ("Summary judgment remains a vital procedural tool . . . and may be particularly important in antitrust litigation."). If no material fact is presented after years of discovery including dozens of depositions and the production of thousands of documents, and the "most that can be hoped for is the discrediting of [the] defendants' denials at trial," a court must grant summary judgment. Modern Home, 513 F.2d at 110; Perma Research & Development Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969) ("Summary judgment cannot be defeated by the vague hope that something may turn up at trial.").
III. Sherman Act § 1 conspiracies
Section 1 of the Sherman Act prohibits "every contract, combination . . . or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations." See 15 U.S.C. § 1. On a motion for summary judgment against a § 1 claim a court initially must determine whether a reasonable jury could find that there was some form of concerted action between two or more legally distinct entities. "Only after an illegal agreement is shown will a court consider whether the agreement constituted an unreasonable restraint of trade, whether per se or under the rule of reason." AD/SAT v. Associated Press, et al., 920 F. Supp. 1287, 1308 (S.D.N.Y. 1996) (Leisure, J.) (citing Capital Imaging, 996 F.2d at 542). In making this threshold determination, the Court must bear in mind that the "range of inferences" that a trier of fact may draw from ambiguous evidence in a § 1 case is limited, and the non-movant must "set forth facts that tend to preclude an inference of permissible conduct." Capital Imaging, 996 F.2d at 542.
But antitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case. Thus, in Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S. Ct. 1464, 79 L. Ed. 2d 775 (1984), we held that conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. Id. at 764, 104 S. Ct. at 1470. See also Cities Service, supra, 391 U.S. 253, 280, 88 S. Ct. at 1588. To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence "that tends to exclude the possibility" that the alleged conspirators acted independently. 465 U.S. at 764, 104 S. Ct. at 1471. Respondents in this case, in other words, must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed respondents. See Cities Service, supra, 391 U.S. at 280, 88 S. Ct. at 1588.
Matsushita, 475 U.S. at 587, 106 S. Ct. at 1356-57; see Apex Oil Co., 822 F.2d at 252; Minpeco, S.A. v. Conticommodity Services, Inc., 673 F. Supp. 684, 688 (S.D.N.Y. 1987). Plaintiffs, therefore, must present evidence which reasonably tends to prove that Comsat "'had a conscious commitment to a common scheme designed to achieve an unlawful objective.'" Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S. Ct. 1464, 1471, 79 L. Ed. 2d 775 (1984) (quoting Edward J. Sweeney & Sons v. Texaco, Inc., 637 F.2d 105, 111 (3d Cir. 1980), cert. denied, 451 U.S. 911, 68 L. Ed. 2d 300, 101 S. Ct. 1981 (1981)); Minpeco, 673 F. Supp. at 688; Harlem River, 1976-1 Trade Cas. (CCH) P60,820 at 68,575, 1976 WL 1238 at *4; see also Michelman v. Clark-Schwebel Fiber Glass Corp., 534 F.2d 1036, 1043 (2d Cir. 1976) (requiring a showing sufficient to warrant a jury in finding that the conspirators had a "'unity of purpose or a common design and understanding, or a meeting of the minds in an unlawful arrangement'") (quoting American Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S. Ct. 1125, 1139, 90 L. Ed. 1575 (1946)), cert. denied, 429 U.S. 885 (1979).
According to Plaintiffs, the common scheme to which Comsat consciously agreed was a conspiracy to boycott and to refuse to deal with PAS. See 3d Am. Compl. P 33. If true, the conspiracy constitutes a per se violation of the Sherman Act. "Some group boycotts involving concerted refusals to deal with a competitor" are per se violations. See Capital Imaging, 996 F.2d at 543 (citing Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 211-12, 79 S. Ct. 705, 708-09, 3 L. Ed. 2d 741 (1959)). Plaintiffs, therefore, need only to show the existence of the alleged conspiracy and Defendant's participation in it. See Capital Imaging, 996 F.2d at 542; International Distrib. Centers, Inc. v. Walsh Trucking Co., 812 F.2d 786, 793 (2d Cir.), cert. denied, 482 U.S. 915, 96 L. Ed. 2d 676, 107 S. Ct. 3188 (1987).
Plaintiffs also claim that Defendant violated § 1 by conspiring to restrain unreasonably trade and commerce in the relevant markets. See 3d Am. Compl. P 33. Like most § 1 claims, this claim must be analyzed under the rule of reason. The rule of reason requires the fact finder "to weigh all the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition." Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49, 97 S. Ct. 2549, 2557, 53 L. Ed. 2d 568 (1977). Plaintiffs must still show Defendant Comsat's participation in an illegal contract, combination or conspiracy. Plaintiffs must then prove an antitrust injury by showing that the illegal agreement caused an actual adverse effect on competition as a whole in a relevant market. Proof that Plaintiffs have been harmed as an individual market actor is not enough. See Capital Imaging, 996 F.2d at 542-43; International Distrib., 812 F.2d at 793 (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 488, 97 S. Ct. 690, 697, 50 L. Ed. 2d 701 (1977)). If Plaintiffs satisfy this threshold burden, Defendant Comsat must offer evidence of the pro-competitive virtues of the challenged combination. If Comsat presents such evidence, Plaintiffs must show that any legitimate objectives could have been achieved by less restrictive alternatives. See Capital Imaging, 996 F.2d at 543. In other words, Plaintiffs must show that the "anticompetitive effects of the alleged conspiracy outweigh its procompetitive effects." International Distrib., 812 F.2d at 793 (citing National Soc'y of Prof. Eng'rs v. United States, 435 U.S. 679, 691, 98 S. Ct. 1355, 1365, 55 L. Ed. 2d 637 (1978)).
A. Comsat's conscious participation in a common scheme
Plaintiffs argue that the existence of the alleged conspiracy and Comsat's conscious participation therein may be inferred from the record in three ways. Plaintiffs principally argue that the conspiracy and Comsat's participation may be inferred from an alleged pattern of refusals by the alleged PTT conspirators to grant PAS landing rights and operating agreements, coupled with additional considerations or "plus factors." Plaintiffs next argue that the conspiracy and Comsat's participation may be inferred from Comsat's alleged refusal to purchase space segment capacity from PAS. Plaintiffs then argue that the conspiracy and Comsat's participation may be inferred from Comsat's alleged "pattern and practice" of "tracking PAS throughout the world" and forming ventures in Europe and Latin America, allegedly for the exclusive purpose of preventing PAS's entry into those markets.
1. Parallel refusals and plus factors
Plaintiffs attempt to show the existence of the alleged conspiracy by showing allegedly parallel conduct among Comsat and various PTT co-conspirators. However "evidence of parallel conduct alone cannot suffice to prove an antitrust conspiracy." Apex Oil Co., 822 F.2d at 252 (citing Monsanto, 465 U.S. at 764, 104 S. Ct. at 1471 (quoting Edward J. Sweeney & Sons, 637 F.2d at 111)). More must be shown.
Since mere parallel behavior can be consistent with independent conduct, courts have held that a plaintiff must show the existence of additional circumstances, often referred to as "plus" factors, which, when viewed in conjunction with the parallel acts, can serve to allow a fact-finder to infer a conspiracy.
Apex Oil Co., 822 F.2d at 253 (citations omitted); Modern Home, 513 F.2d at 110 ("Additional facts or circumstances are needed to show that the decisions were interdependent and thus raise the inference of a tacit agreement to boycott."); Minpeco, 673 F. Supp. at 688; Harlem River, 1976-1 Trade Cas. (CCH) P60,820 at 68,575, 1976 WL 1238 at *4. Plus factors, however, "may not necessarily lead to an inference of conspiracy . . . . [and] could lead to an equally plausible inference of mere interdependent behavior." Apex Oil Co., 822 F.2d at 254.
Plaintiffs allege as plus factors a common motive to conspire, a high level of interfirm communications, "customary indications" of a traditional conspiracy, and evidence that the alleged parallel conduct was contrary to the alleged conspirators' economic interests. See id. ; Minpeco, 673 F. Supp. at 688. The Court necessarily examines each of these factors and the alleged refusals to deal individually. The Court, however, does not examine each piece of evidence in a vacuum, but considers the evidence as a whole to determine the reasonableness of inferences to be drawn by a jury. See Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S. Ct. 1404, 1405, 8 L. Ed. 2d 777 (1962); International Distrib., 812 F.2d at 793-94; Minpeco, 673 F. Supp. at 688.
Moreover, the alleged refusals to deal must be viewed in their factual context. See AD/SAT, 920 F. Supp. at 1308 (citing Matsushita, 475 U.S. at 587, 106 S. Ct. at 1356 (discussing First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S. Ct. 1575, 1592-93, 20 L. Ed. 2d 569 (1968))). When the factual context indicates that a defendant lacked a rational motivation to join the alleged conspiracy to boycott, the plaintiffs "must come forward with more persuasive evidence to support their claim than would otherwise be necessary." Matsushita 475 U.S. at 587, 106 S. Ct. at 1356 (citing Cities Serv., 391 U.S. at 278-79, 88 S. Ct. at 1587); see also Apex Oil Co., 822 F.2d at 253 ("If the scheme alleged is implausible, a conspiracy must be proved by strong direct or strong circumstantial evidence, and the implausibility of the scheme will reduce the range of inferences that may be permissibly drawn from ambiguous evidence."). Defendant argues that PAS's alleged conspiracy makes no economic sense and therefore is implausible. The Court disagrees. The alleged conspiracy, if true, would have served the conspirators' economic interests by preventing competition in an industry with high regulatory and financial barriers to entry. The Court therefore finds that no heightened showing is required.
(A) No reasonable inference of parallel refusals
Plaintiffs have failed to present evidence from which a trier of fact could find that the individual PTTs refused to deal or delayed their dealings with PAS, let alone that any such refusals or delays formed a pattern of conscious, parallel conduct involving Comsat. Instead Plaintiffs have presented only unsubstantiated argument that the PTTs had the ability to conspire against PAS, and conclusory assertions that they must have exercised that ability. This showing is insufficient.
Plaintiffs contend that Defendant Comsat and the PTTs conspired to prevent PAS from gaining access to commercial communications satellite markets by denying or delaying Plaintiffs' procurement of operating agreements. According to the record, operating agreements are one of the two prerequisites to market access.
An operating agreement is essentially regulatory authorization for a service provider's business proposal, generally negotiated, approved, or otherwise issued by a PTT signatory, defining the nature of the services that the provider is authorized to offer, to whom, and under what terms.
Plaintiffs argue the alleged conspiracy was made possible by the regulatory structure prevalent in Europe and Latin America until the early 1990s, which traditionally limited the provision of telecommunications services in each nation to a monopoly PTT. See Pls.' 3(g) Statement P 14. Plaintiffs argue that these legal monopolies collectively formed a "bottleneck" with "the power to exclude PAS" or any other competitor by denying or delaying requests for operating agreements. See id.6 From this proposition that the PTTs formed a "bottleneck" with the ability to conspire against PAS, Plaintiffs leap to the conclusion that Comsat and the PTTs did conspire to deny or to delay PAS's applications for operating agreements. See Pls.' Opp'n Mem. at 10 (alleging that "until at least 1991 for the most part, and in many instances . . . through [February 28, 1995]," the conspirators "uniformly refused to enter into operating agreements with PAS"). Plaintiffs claim that the PTTs in Chile, Colombia,
Argentina, Brazil, Venezuela, the Dominican Republic, Jamaica, Barbados, Trinidad & Tobago, Guatemala, Italy, Spain, Germany, France, and the United Kingdom either denied or delayed Plaintiffs' requests for operating agreements. See Pls.' Opp'n Mem. at 10. Plaintiffs, however, fail to substantiate these alleged denials and delays.
Plaintiffs might have presented evidence as to each country showing when PAS requested each type of Intelsat consultations; when the PTT submitted a formal request letter to Intelsat (if at all); when each type of consultation was obtained; when operating agreements for each type of service were available under the applicable regulatory structure of each nation (since a PTT cannot be charged with denying or delaying the issuance of an agreement which the PTT could not legally provide); when PAS initiated negotiations with the PTT over operating agreements for each type of service; and when any agreements were obtained or formally denied. Such information would have assisted the Court in determining whether a factfinder could reasonably draw an inference of refusals to deal or delays in dealing with PAS. Instead, Plaintiffs provided only lengthy string citations to testimony and exhibits: citations marked by scattershot page references and the absence of a single textual or parenthetical explanation. See, e.g., Pls.' 3(g) Statement P 36 (containing a three page string citation addressing without a single parenthetical explanation conduct in fourteen of the fifteen alleged PTT conspirator nations (inexplicably omitting Guatemala)).
Upon examination, Plaintiffs' references do not provide support for Plaintiffs' claims, and do not in the aggregate form a record from which a reasonable jury could infer that any PTT refused to deal with PAS, let alone that they collectively refused to deal.
Indeed, although it normally seeks to keep footnotes to a minimum in its decisions, the Court uses footnotes below to point up this absolute failure of Plaintiffs to support their claims. The Court's review of Plaintiffs' often useless citations to depositions and exhibits amply demonstrates the correctness of the Court's conclusion in this case.
Many of Plaintiffs' citations merely repeat without support the accusations stated in the Complaint, see, e.g., Pls.' 3(g) Statement P 36,
and many of those cite only to the testimony of Plaintiffs' own officers and employees. See id.10 Other citations refer only to unsubstantiated claims of business lost as a result of the alleged conspiracy. See id.11 Still other citations refer only to self-serving documents created by PAS, including letters from PAS complaining to various government ministries and agencies about PAS's difficulty in gaining access to some countries, see id.,
marketing letters from PAS urging prospective customers to lobby on PAS's behalf, see id.,
and letters from PAS discussing its negotiations with some of the alleged PTT conspirators. See id.14 The rest of Plaintiffs' citations reference hearsay statements, often without identifying the alleged declarant or the time, place and specific content of the alleged statement. See id.15
Defendant, on the other hand, has shown that Plaintiffs did in fact receive authorization to operate in many of the subject countries. See generally Comsat Ex. 924 at 2 (chart of PAS consultations worldwide); Def.'s Reply Mem. in Supp. of Mot. for Summ. J. at 8 n.15 (hereinafter "Def.'s Reply Summ. J. Mem.") (citing Landman Aff. P 13).
Moreover, Plaintiffs' own citations reveal that PAS did in fact obtain authorization to enter the markets of most of the alleged PTT conspirators' home countries. See, e.g., Pls.' 3(g) Statement P 36.
These citations also admit that the local PTT monopolies assisted PAS in gaining market access. See id.18 Defendant has also presented evidence that many of the alleged PTT conspirators could not grant landing rights, and that Plaintiffs could and did circumvent the PTT in other countries.
Defendant argues therefore that the alleged "bottleneck" did not exist, and that Plaintiffs cannot base a claim for refusal to deal on any PTTs' failure to provide agreements which were not necessary in the first place. In the face of Plaintiffs' failure to provide a reasonable estimate of any denials or delays of PAS requests for operating agreements, and to support such an estimate with evidence, Defendant's showing precludes a reasonable inference of a pattern of parallel refusals to deal with PAS.
Moreover, Plaintiffs have failed to refute Defendant's showing that any appearance of parallel conduct is attributable to other causes. For example, Defendant has shown that an historic wave of regulatory liberalization swept over the telecommunications industry between 1988 and 1992.
Plaintiffs' own citations acknowledge this wave of liberalization and recognize its effect on the industry and on Plaintiffs' ability to gain access to many markets. See Pls.' 3(g) Statement P 36.
Laws regulating access to satellite systems vary from country to country and, as a result, there is no single model which will work in all countries. Some countries have substantially deregulated satellite communications, making customer access to [PAS's] services a simple procedure, while other countries have maintained strict monopoly regimes, so that establishing a framework for accessing [PAS's] services is a time-consuming task.
Comsat Ex. 998 at 54 (PAS SEC Form S-1 (Oct. 6, 1994)); see id. at 24 (attributing 1992 increase in Latin American customers to "removal of regulatory restrictions in Venezuela and Colombia"), 32 (acknowledging that PAS faced "significant regulatory hurdles" when it started in 1988 and attributing PAS's success and growth to "continuing worldwide deregulation of telecommunications markets"). Since regulatory liberalization is clearly outside the common carrier role of Comsat and the alleged PTT conspirators, the burden is on Plaintiffs' to show that any apparent parallel conduct was not the result of this liberalization. Plaintiffs have not met this burden.
Defendant has also shown through the admissions of PAS officers and employees that PAS's novelty contributed to delays in its obtaining market access. See Def.'s Mem. in Supp. of Mot. for Summ. J. at 10 n.15 (hereinafter "Def.'s Summ. J. Mem."). For example, PAS officer Saralegui admitted that
[PAS] often was a strange animal in the sense that there may not have been a specific regulation as to who can or cannot access a satellite system separate from Intelsat, because when the regulations were drafted, I think sometime it was assumed it would always be Intelsat.
Saralegui Dep. Vol. 2 at 317; see id. Vol. 1 at 154-55 ("[PAS], as a separate satellite from Intelsat, often was something that had not even been contemplated when these regulations were drafted. So we often found ourselves in a nether world.").
Again, the burden is on Plaintiffs' to present evidence tending to show that any appearance of parallel conduct is not merely a reflection of PAS's role in the vanguard of liberalization. Plaintiffs have not met this burden.
Defendant has likewise shown that unique local factors in many of the alleged PTTs' nations belie any cosmetic appearance of parallel conduct.
For example, PAS's entry into the Brazilian market was delayed by PAS's intentional exclusion of Brazil from the primary coverage area of the PAS-1 satellite. See Anselmo Dep. at 451-52. In Trinidad & Tobago, on the other hand, "recent [political] disruptions" contributed to PAS's delays. See Comsat Ex. 462 at PAS 038860 (alleging that PAS entered a working arrangement without an operating agreement in Trinidad & Tobago despite serious military and political unrest during the negotiations).
In the United Kingdom, Plaintiffs lost an open competition with twenty-seven other companies for early authorization to enter the British market. See Def.'s Reply Summ. J. Mem. at 9 & App. B. at 9-10. Plaintiffs attributed a delay in Barbados to the PTT's "heavy workload rather than any planned obstruction of PAS-1 services." See PAS Ex. 2110 at PAS 017684 (January 11, 1991 PAS letter to C&W London). Moreover, Defendant cites Plaintiffs' admission that "there is no single model that will work in all countries." Comsat Ex. 998 at 54. Defendant argues, therefore, that Plaintiffs have failed to show a "uniform refusal," a "general similarity of action" or "parallel action" on the part of the alleged conspirators. See Def.'s Reply Summ. J. Mem. at 10 (citing at Harlem River, 1976-1 Trade Cas. (CCH) P60,820 at 68,575, 1976 WL 1238 at *4). The Court agrees.
(B) Insufficient evidence of plus factors
Rather than present evidence of the alleged refusals to deal or delays, Plaintiffs urge the Court to examine additional factors which allegedly establish that the still unsubstantiated parallel conduct resulted from the alleged conspiracy. See Pls.' S.J. Opp'n Mem. at 11. These factors include a common intent to conspire, a high level of interfirm communications, "customary indications" of a traditional conspiracy, and evidence that the alleged parallel conduct was contrary to the alleged conspirators' economic interests.
(1) Intent to conspire
Plaintiffs argue that the record contains evidence of an intent to conspire against PAS. See Pls.' Opp'n Mem. at 11-12. For the most part, however, Plaintiffs cite to testimony and exhibits which reveal only Comsat's intention to vie for business in an atmosphere of growing competition from various companies, including PAS.
Without more, a reasonable trier of fact cannot infer from this permissible intent to compete an impermissible intent to conspire against competition.
Plaintiffs claim that Comsat exceeded vigorous competition and engaged in anticompetitive initiatives from 1984 through 1986 by lowering prices and entering long-term contracts with common carriers. Plaintiffs argue that this conduct permits an inference of an intent to foreclose PAS from the business of these carriers. See Pls.' 3(g) Statement P 19 at 11. The Court disagrees. The record reflects that Comsat's rates are set according to Intelsat tariff schedules, therefore Plaintiffs' allegations concerning price amount to little. Moreover, although the record does reflect that Comsat entered long-term contracts with many common carriers, nothing in the record suggests that Comsat secured any of the contracts by means of any anticompetitive act against PAS. On the contrary, the record suggests that for their own reasons, the common carriers elected to secure long-term deals with Comsat only after considering and rejecting offers from PAS. See id.27
Plaintiffs also purport to offer "substantial testimony" from PAS customers--including IBM, DuPont, and Cargill--that these customers "were precluded from doing business with PAS because of the refusal of PTTs to enter into operating agreements or provide landing rights." See Pls.' S.J. Opp'n Mem. at 22-23 & n.5. This compound proposition misstates the testimony in the record. The record contains testimony that identifies PAS's lack of operating agreements as one reason, among many, that certain customers chose not to do business with PAS. Plaintiffs provide no testimony, however, of any intent to conspire to deny PAS any operating agreement. Defendant, on the other hand, cites testimony refuting this claim. See, e.g., Def.'s Summ. J. Mem. at 9 (citing Maull Dep. at 7, 101-02) (testimony of AT&T's international negotiations manager disputing any suggestion that PTTs in Latin America were operating in conjunction). Plaintiffs' attributing to the alleged conspiracy the fact that PAS may have lacked operating agreements at a particular time, in a particular nation, for a particular service is not supported by the record.
Ultimately, Plaintiffs resort to repeated, talismanic citation of a few items out of the thousands provided to the Court. This effort is unavailing. Plaintiffs repeatedly cite to the handwritten notes by a Comsat employee comparing PAS and Comsat. See PAS Ex. 82 (notes of Stephen Skjei).
Plaintiffs argue that a clause in the notes stating that Comsat should "contest every market" permits an inference of an intent to conspire. The Court disagrees. In context, the clause shows nothing more than an intent to compete. Although Plaintiffs contend that the clause indicates Comsat's decision to contest every market "regardless of business justifications," see Pls. 3(g) Statement P 21, nothing in either the document or the many pages of deposition testimony concerning the document warrants such an inference.
On the contrary, the deposition testimony indicates that the notes record only the author's opinions, see Skjei Dep. at 57-59 (stating that PAS Ex. 82 merely reflects opinion and does not suggest responses to PAS), and were never distributed to higher-ups. See id.
Plaintiffs also invoke a draft of a June 15, 1989 memorandum from a Comsat research analyst to Comsat's vice president of business development. See Pls.' 3(g) Statement P 35; PAS Ex. 108 (June 15, 1989 draft memorandum discussing Comsat "strategic business plan competitor issues"). The memorandum discusses competition not only from PAS but from the Orion and Astra satellite systems, from underseas fiber cable systems, and from common carriers such as US Sprint. Plaintiffs excerpt a single item from the draft memorandum:
. Several PTT's in Europe, e.g. France, Switzerland (?) and the UK have agreements with PANAMSAT to provide back-up capacity to INTELSAT. This is done in an effort to appear pro-competitive. However, no capital has been used to support these agreements, i.e. purchasing antennas as with INTELSAT.
PAS Ex. 108. Even if a reasonable trier of fact could find that this excerpt supports an inference of hostility toward PAS on the part of certain European PTTs, the excerpt does not support an inference that Comsat conspired against PAS. Moreover, the excerpt indicates that even these allegedly hostile PTTs entered agreements, and the full memorandum shows that other PTTs in Europe and Latin America also entered agreements with PAS. See id. at 1 (indicating that in addition to PTTs in France, the United Kingdom, and perhaps Switzerland, PAS reached agreements with PTTs in Brazil and Germany, and received FCC authorizations for five customers to operate United States earth stations to provide services to "the UK, Ireland, FRG, Luxembourg and Sweden"). At least some of these agreements were initiated by the PTT signatories themselves. See id. (stating that PAS had two or three new leases in the Atlantic Ocean Region "which were initiated by signatories"). Again, Plaintiffs cite to nothing in the many pages of deposition testimony that supports their reading of the document. On the contrary, the record disfavors Plaintiffs' reading, see, e.g., Johnson Dep. at 10-12 (discussing PAS Ex. 108 as not final and subject to having been changed), 12-30 (discussing publicly available sources for data in PAS Ex. 108 and defining PTT efforts to "appear pro-competitive" as "not wanting to have a bad relationship with PANAMSAT"), and suggests that the document was never circulated. See Vargo Dep. at 132 (disavowing knowledge of PAS Ex. 108); Alewine Dep. at 201 (same); Alper Dep. at 146 (same); Carroll Dep. at 50 (same); Flower Dep. at 151-52 (same); Shubilla Dep. at 147-48 (same); Crockett Dep. at 328-29 (disavowing knowledge of PAS Ex. 108 and disagreeing with its content).
Plaintiffs also quote Comsat's president stating that "in telecommunications as in love, it takes two to tango." See Pls.' 3(g) Statement P 22; Goldstein Dep. at 40-44. This comment merely states a fact which the parties accept: under the Intelsat system, a United States space segment provider such as Comsat or PAS must have a correspondent provider in each target nation. See Def.'s Reply Summ. J. Mem. at 14. No inference of an intent to conspire may be drawn from Comsat's acknowledgment of this undisputed fact.
Plaintiffs have failed to present evidence tending to show an intent by Comsat and any PTT to conspire against PAS.
(2) Interfirm communications
Plaintiffs also allege that support for the alleged conspiracy can be inferred from the "literally hundreds" of meetings between Comsat and PTT co-conspirators "in addition to and wholly separate from Intelsat business." See Pls.' 3(g) Statement P 24. Plaintiffs claim that many of these meetings and communications between Comsat and the PTTs directly arose from, related to, or referenced competition from PAS. See Pls.' 3(g) Statement P 25.
An examination of Plaintiffs' proffered evidence does not bear this claim out.
Many of the citations in Plaintiffs' 3(g) Statement PP 24 and 25 reference meetings between Comsat and various PTTs, but do not identify whether Comsat participated in those meetings in its common carrier capacity, or as an Intelsat signatory.
Other citations in PP 24 and 25 identify meetings undertaken in Comsat's common carrier role, but do not mention PAS.
Still other citations in PP 24 and 25 specifically deny that PAS was a factor or was even discussed at Comsat's meetings with various PTTs.
Indeed, only isolated references to competition from PAS can be found anywhere in the lengthy string citations in PP 24 and 25,
and of these isolated references, one actually describes an effort by Comsat to assist PAS. See Schnicke Dep. at 26-30 (referring to "hundreds" of meetings with PTTs, and stating that PAS was discussed one time in the context of a Comsat effort to gain support for PAS coordination and thereby promote competition).
As Defendant correctly notes, contacts among alleged conspirators cannot alone support an inference of conspiracy. See Def.'s Summ. J. Mem. at 32-33 n.42 (citing H.L. Hayden Co. v. Siemens Medical Systems, Inc., 879 F.2d 1005, 1012 (2d Cir. 1989) (recognizing that manufacturers and distributors must coordinate their activities); Venture Technology Inc. v. National Fuel Gas Co., 685 F.2d 41, 44 (2d Cir.) (evidence of close relations or frequent meetings insufficient absent evidence of an illegal agreement), cert. denied, 459 U.S. 1007, 74 L. Ed. 2d 398, 103 S. Ct. 362 (1982)). In light of the fact that Comsat must deal with the PTT signatories in order to complete its common carrier functions, Plaintiffs have failed to present evidence tending to show as a factor in support of the alleged conspiracy an unusual incidence of communications between Comsat and the alleged PTT conspirators.
(3) Customary indications of conspiracy
Plaintiffs also allege that support for the alleged conspiracy can be inferred from "customary indications" of traditional conspiracy. These indications allegedly include innumerable meetings between Comsat and the alleged co-conspirators involving specific attempts to block PAS, Defendant's dealings with Codetel in the Dominican Republic, and the Intelsat signatory resolutions regarding separate satellite systems.
(a) Innumerable meetings
In addition to citing meetings between Comsat and various PTTs as evidence of interfirm communications, Plaintiffs very loosely cite these meetings as evidence of an effort to block PAS from obtaining CNN's business, of a conspiracy behind ATV, the Intelsat-K satellite and Latin American joint ventures, and of an effort to block PAS from getting business from AT&T for Mastercard's VSAT network in Latin America. See Pls. Opp'n Mem. at 12; Pls.' 3(g) Statement PP 24-37. Plaintiffs claim that at these meetings and in meetings with customers, Comsat and its co-conspirators expressly discussed means of hindering PAS's efforts. The materials cited by Plaintiffs, however, do not support these claims.
With regard to the CNN business, Plaintiffs claim that after PAS met with CNN in late 1988 and early 1989, Comsat met with the European and South American PTTs to "formulate strategy and proposals to prevent PAS from obtaining this business." Pls.' 3(g) Statement P 32.
In support of this claim, Plaintiffs cite many meetings and communications between Comsat and the PTTs which Plaintiffs claim directly arose from, related to, or referenced competition from PAS for CNN's business. See Pls.' 3(g) Statement P 25. The majority of Plaintiffs' citations, however, make no mention of PAS, see id.,
and those that do mention PAS include only benign acknowledgments that both Comsat and PAS sought the CNN business for Latin America. See id.37 These acknowledgments do not support an inference of conspiracy or other anticompetitive conduct. Ultimately, Comsat retained CNN's business between the United States and Europe, but lost it to PAS in South America. See Def.'s Reply Summ. J. Mem. at 15.
With regard to the Atlantic Television Service (ATV)
and the Intelsat-K satellite,
Plaintiffs claim that these services were "directly targeted at PAS." Pls.' 3(g) Statement P 31. In support of this claim, Plaintiffs cite many meetings and communications between Comsat and the participating PTTs which Plaintiffs claim directly arose from, related to, or referenced competition with PAS. See Pls.' 3(g) Statement P 25. Plaintiffs' own citations, however, reveal that PAS was merely one of several entities with which ATV and Intelsat-K were designed to compete. See id. P 25,
Moreover, many of the cited communications make no reference to PAS. See Pls.' 3(g) Statement P 31.
Those that do reference PAS do so only in the context of permissible competition, see id.,
and indicate that PAS often prevailed in that competition. See id.45 These citations do nothing to refute Defendant Comsat's showing that ATV and Intelsat-K were not responses to PAS but merely efforts to provide services not readily available from any one PTT. See Def.'s Reply Summ. J. Mem. at 16.
Indeed, Plaintiffs cite numerous sources which support Defendant's claim that ATV and Intelsat-K were not specific responses to PAS, see Pls.' 3(g) Statement P 31,
but merely attempts at developing new customer services. See id. P 25.
In addition to ATV and Intelsat-K, Plaintiffs claim that Comsat entered joint ventures in Latin America which were undertaken "to reinforce the PTTs in their commitment to a separate system boycott, ensuring that they would not provide correspondent arrangements, operating agreements, or landing rights to PAS." See Pls.' 3(g) Statement P 26. Plaintiffs, however, fail again to provide any evidence of a conspiracy or other anticompetitive conduct among Comsat and the PTTs. Plaintiffs merely provide numerous citations in support of the undisputed fact that Comsat negotiated ventures in Latin America. See id.49 These include specific citations for Argentina,
Plaintiffs argue that a conspiracy may be inferred from the many meetings and communications between Comsat and each PTT in negotiating these ventures. See Pls.' 3(g) Statement P 25. An examination of Plaintiffs' citations, however, shows that no such inference may reasonably be drawn. Many of Plaintiffs' citations make no mention of PAS at all, see id.,
while the remainder contain either benign acknowledgments that Comsat competed with PAS in Latin America, one of the most rapidly developing markets in the world at the time, see id.,
or contain explicit denials that Comsat intended to hinder PAS's entry into any market. See id.57 These citations do not support an inference of conspiracy or other anticompetitive conduct.
Finally, nothing in Plaintiffs' citations would permit a reasonable trier of fact to infer the existence of a conspiracy or other anticompetitive conduct arising from COMSAT's dealings with AT&T on the Mastercard VSAT network for Latin America. Plaintiffs claim that AT&T had selected PAS, subject to confirmation of PAS's landing rights. Plaintiffs further claim that while confirmation was pending, Comsat combined with unspecified Latin American PTTs to interfere with PAS's agreement by providing AT&T with written commitments of pricing and landing rights if AT&T used Comsat/Intelsat space segment. See Pls.' 3(g) Statement P 33; Pls.' Opp'n Mem. at 13-14. Plaintiffs claim that many meetings and communications between Comsat and the Latin American PTTs directly arose from, related to, or referenced this allegedly improper competition for the Mastercard VSAT network. See Pls.' 3(g) Statement P 25.
Plaintiffs' citations, however, reveal only permissible competition for the AT&T/Mastercard VSAT business. See id. PP 25 & 33.
Moreover, Plaintiffs' citations support Comsat's assertions that Comsat was at a disadvantage during the competition for the AT&T/Mastercard VSAT business, see id.,
that AT&T initiated the discussions with Comsat, and that ultimately AT&T awarded the business to Comsat after developing misgivings about PAS. See id.61 Indeed, the record before the Court sustains Defendant's assertions that PAS had misrepresented its authorizations to AT&T, which AT&T discovered, see Maull Dep. at 68 (stating that PAS had represented to AT&T that all in-country arrangements had been made), 96-97 (expressing AT&T's doubts that PAS, despite its representations to the contrary, had in fact been granted in-country authorizations), that thereafter AT&T invited Comsat's bid, see Maull Dep. at 67-69 (AT&T informed Comsat of the existence of PAS's proposal and challenged Comsat to make its own proposal to AT&T), and that AT&T awarded the business to Comsat because Comsat's bid was technically superior to that of PAS. See, e.g., Nolting Dep. at 128-29 (stating that Comsat proposal showed that AT&T would need to use less space segment on Intelsat than PAS). Nothing in the record would permit a reasonable trier of fact to infer the existence of a conspiracy or other anticompetitive conduct.
Although Plaintiffs have shown that Comsat met with various PTTs concerning the CNN business, ATV, Intelsat-K, joint ventures in Latin America and AT&T's Mastercard VSAT network, Plaintiffs have failed to show that any reasonable inference of a conspiracy may be drawn from those meetings.
(b) PAS, Codetel and Tricom
Plaintiffs claim that a further customary indication of traditional conspiracy is "the evidence surrounding Codetel, the PTT for the Dominican Republic." See Pls.' Opp'n Mem. at 14. Plaintiffs rely on the testimony of Richard Burleson, an executive who left Codetel and went to non-party Tricom. Plaintiffs claim that when Burleson was acting for Tricom, Codetel demanded that Tricom sever its relationship with PAS. Plaintiffs cite as evidence of Comsat's involvement in this conduct a Codetel report about PAS, a copy of which was found in files at Comsat. See PAS Ex. 1046 (June 13, 1988 Codetel document entitled "Preliminary Report on PANAMSAT," signed by Dugan). Upon review of Plaintiffs' citations, however, it is clear that Burleson himself never alleged any agreement between Comsat and Codetel with respect to Tricom.
Moreover Burleson, in portions of his testimony cited by Defendant, admits that he has no personal knowledge of any agreement between Comsat and Codetel to impede PAS.
The Court finds, therefore, that nothing in the record would permit drawing from Codetel's dealings with PAS a reasonable inference of a conspiracy involving Comsat.
(c) Intelsat resolutions
Plaintiffs also cite as "customary indication[s] of traditional conspiracy" the Intelsat separate systems resolutions. See Pls.' Opp'n Mem. at 15-18.
Plaintiffs claim to offer the resolutions as evidence of an intent to boycott PAS. See Pls.' Opp'n Mem. at 18-19. The Court rejected this argument in its earlier opinion, see Alpha Lyracom, 1993 U.S. Dist. LEXIS 3825, 1993-1 Trade Cas. (CCH) P70,184 at 69,860-61, 1993 WL 97313 at *3-4, and above in its discussion of the decisions of Magistrate Judge Gershon. See supra at 21-30. The Court declines to reexamine Plaintiffs argument here and finds that no inference may be drawn from the Intelsat resolutions.
The Court finds, therefore, that the record does not provide sufficient "customary indications" of traditional conspiracy to sustain an inference of a conspiracy or other anticompetitive conduct among Comsat and the PTTs.
(4) Contrary to self-interest
Plaintiffs claim as a final plus factor that Comsat and the PTTs acted against their self-interest by refusing to purchase capacity from PAS. "Actions against the apparent individual economic self-interest of the alleged conspirators may raise an inference of interdependent action." Modern Home, 513 F.2d at 111; see Apex Oil Co., 822 F.2d at 254-55. The question, therefore, is whether a rational entity would have engaged in the alleged parallel behavior individually.
Plaintiffs claim that Comsat and Intelsat experienced capacity shortages in some markets. See Pls.' Opp'n Mem. at 19; Pls.' 3(g) Statement P 17.
Plaintiffs further claim that one of PAS's advantages over Comsat and Intelsat was PAS's ability to provide capacity to those markets. See Pls.' 3(g) Statement P 17.
Defendant admits in response that both PAS and Intelsat experienced capacity constraints for some services in some markets. Defendant argues, however, that Plaintiffs can point to no evidence either that Intelsat ever shut down for lack of capacity or that any PTT ever lacked capacity. See Def.'s Reply Summ. J. Mem. at 18 n.30.
Defendant argues, therefore, that even if Comsat and the PTTs experienced capacity constraints, and even if they refused to deal with PAS, the PTTs--most of whom were legal monopolies--would have been acting in their independent self-interest. Defendant argues that by using Intelsat, the PTTs would avoid (a) reducing their market share to PAS (insofar as the PTTs were often also signatories and part owners of Intelsat), (b) providing exposure for a competitor and (c) diverting revenues to that competitor. See Def.'s Reply Summ. J. Mem. at 18 n.30. Plaintiffs failed to address this argument. Plaintiffs wholly failed to show that any individual PTT's decision not to use PAS capacity was against its self-interest in view of that PTT's capacity needs.
Plaintiffs' only attempt at such a showing centers on what Plaintiffs refer to as "the $ 1 transponder." Plaintiffs assert that in order to be operative upon the launch of PAS-1, Plaintiffs had to obtain Intelsat consultations and landing rights from at least one country. Plaintiffs argue that because of the alleged conspiracy, PAS was forced to obtain initial landing rights in Latin America by offering a transponder worth approximately $ 6 million for only $ 1. Plaintiffs offered the transponder first to Colombia and Ecuador in exchange for landing rights. See Pls.' Opp'n Mem. at 19-20; Pls.' 3(g) Statement P 39. Plaintiffs allege that each country refused, and that their refusals prove the existence of the alleged conspiracy, since the transaction was clearly in the best interest of each country. Plaintiffs state that the third time the offer was made, Peru accepted and PAS got its landing rights, allowing it to launch PAS-1. See Pls.' Opp'n Mem. at 20.
Comsat responds that the transponder was offered not for landing rights, but for Article XIV consultations which are the province of the Intelsat parties not the signatories and definitely not the common carrier PTTs. See Def.'s Reply Summ. J. Mem. at 18 (citing Anselmo Dep. Vol. 3 at 466-68 (discussing the transponder offer in the context of Intelsat coordination); Saralegui Dep. at 219-21 (same)). This dispute is not material. The record is clear that PAS offered the transponder to all three nations, and that only Peru accepted. The record also reflects, however, that PAS offered the transponder directly to senior government officials, not to the PTTs. See, e.g., Anselmo Dep. Vol. 3 at 464-68 (explaining that offer to Peru was communicated directly to President Garcia through Delgado Parker, a close personal friend of both President Garcia and Anselmo). Insofar as the officials represented either Intelsat parties or signatories, no inference may be drawn from their conduct. Moreover, even if one were to drawn inferences, the record reflects that neither Ecuador nor Colombia actually rejected the offer: PAS placed a time limit on its offer which expired in a relatively short time. Only Peru was able to accept in what PAS considered a timely fashion: about half a day. See Landman Dep. Vol. 4 at 819-26 (acknowledging restrictions on transponder offer, including limitation on its use to non-commercial, educational, medical or social services); Saralegui Dep. Vol. 2 at 219-22 (stating that neither Colombia nor Ecuador rejected the offer, they just did not act quickly enough, whereas Peru accepted in about half a day); Comsat Ex. 31 (September 3, 1986 memorandum summarizing PAS/State Dept. tour of South America).
PAS does not even claim that the PTTs in Ecuador and Peru are part of the alleged conspiracy. Therefore, even if those PTTs had acted against their self-interest, their conduct does not support an inference of the conspiracy alleged to exist among Comsat and other PTTs. See Anselmo Dep. Vol. 3 at 466-68 (discussing the transponder offer in the context of Intelsat coordination); Comsat Ex. 924 at 2 (showing that PAS secured Intelsat consultations from Ecuador on October 20, 1989); Comsat Ex. 925 at 5 (indicating that PAS never received an operating agreement in Peru).
The Court finds no evidence in the record which would allow a reasonable trier of fact to infer that Comsat or the alleged PTT conspirators engaged in conduct contrary to their self-interests.
(C) No inference of Comsat participation
Even if Plaintiffs had provided evidence of parallel refusals to deal and plus factors from which a reasonable trier of fact could infer an agreement among the PTTs, Plaintiffs have failed to provide evidence of Comsat's participation in any agreement. Indeed, the only allegations of Comsat's involvement in refusals to deal involve Comsat's alleged rejection of PAS's offer of capacity. Those allegations are addressed separately below. See infra at 112-117.
The record clearly reflects that consultations, landing rights and operating agreements are matters outside of Comsat's control and squarely within the control of foreign Intelsat parties, signatories, or PTTs. Plaintiffs have not provided any evidence that Comsat had a role in the procurement of operating agreements in any other country; that Comsat and any PTT conspired in any way to deny or delay PAS's application for an operating agreement; that Comsat in any way impeded the liberalization of telecommunications laws in any country so as to deny or delay an operating agreement to PAS; or that PAS's success after that liberalization resulted from the breakdown of the alleged "artificially imposed" conspiracy involving Comsat and not merely from the liberalization of regulatory restrictions. Absent such evidence, any factual disputes about the alleged denial or delay of a PAS request for an operating agreement in a given country is not sufficient to survive the current motion: Even if the trier of fact were to accept Plaintiffs' allegations that the PTTs formed a "bottleneck" and denied PAS operating agreements, Plaintiffs have failed to offer any evidence showing that Comsat created, maintained or otherwise participated in that conduct.
Plaintiffs did designate four witnesses who allegedly could testify about Comsat's participation in the alleged conspiracy. See Def.'s Summ. J. Mem. at 7 (citing Comsat Ex. 47, Interrogs. Nos. 4, 19, 23, & 24; Comsat Ex. 729, Interrog. No. 4). Plaintiffs designated Reynold Anselmo, Landman, Saralegui and Goldschmidt as witnesses who could testify about Comsat's involvement. In their deposition testimony, however, each admitted having no personal knowledge of any facts showing Comsat's involvement. See Def.'s Summ. J. Mem. at 7 n.9.
In addition, Defendant cites to the deposition transcripts of thirteen other current and former PAS employees. None of them testified to having personal knowledge of any facts showing Comsat's involvement. See Def.'s Summ. J. Mem. at 7-8 n.11.
Nor did any of the many Comsat employees deposed by the parties testify to the existence of a conspiracy.
The Court finds that even if Plaintiffs had shown a pattern of refusals by the PTT conspirators to grant PAS landing rights and operating agreements, coupled with additional considerations or "plus factors," Plaintiffs have failed to provide evidence from which Comsat's conscious participation in that conduct reasonably may be inferred.
2. Refusal to purchase PAS capacity
Plaintiffs argue that the existence of the alleged conspiracy and Comsat's conscious participation therein may also be inferred from Comsat's alleged refusal to purchase space segment capacity from PAS. See Pls.' S.J. Opp'n Mem. at 11, 19; Pls.' 3(g) Statement P 38.
On or about February 1989, PAS lawyer Philip Spector called Comsat lawyer Maury Mechanick and ostensibly offered trans-Atlantic Ku-band capacity on PAS-1. See Def.'s Summ. J. Mem. at 19-20.
Mechanick conferred with counsel and Comsat's senior management. Senior management allegedly thought that Comsat World Systems was barred by law from "independently buying capacity from PAS," Def.'s Summ. J. Mem. at 20, 22-23,
although Plaintiffs claim that Comsat could have purchased capacity directly from PAS. See Pls.' Opp'n Mem. at 26.
Senior management then referred the matter to Intelsat. See Crockett Dep. at 63-65 (acknowledging consulting counsel then referring the offer to Dean Birch of Intelsat), 73-74 (discussing referral to Dean Birch of Intelsat). Intelsat declined to act on the alleged offer. Mechanick then advised Spector that Comsat was not interested.
Plaintiffs claim that PAS's offer and Comsat's rejection occurred at a time when Comsat had a capacity shortage. Plaintiffs argue, therefore, that it was contrary to Comsat's self-interest to reject to offer, and therefore that the rejection is evidence of the alleged conspiracy.
As an initial matter of law, no contractually sufficient offer was made. Spector provided no terms for price, duration, payment, or quantity of the capacity, nor did Spector provide any written proposal. See Spector Dep. 25-27 (failing to remember substance of the alleged offer, acknowledging having never made any other offers for PAS, and acknowledging that Mechanick, to whom the offer was made, worked primarily on Intelsat matters). Plaintiffs' admit as much. See Goldberg Dep. 27-28 (specifically denying that Spector's phone call constituted a formal offer of PAS capacity to Comsat). Plaintiffs claim, however, that the alleged offer was sufficient for antitrust demand purposes, even if not contractually significant. See Pls.' Opp'n Mem. at 25-26 (citing Continental Ore Co., 370 U.S. at 699, 82 S. Ct. at 1410 (on facts showing that demands had been made, rejecting mechanical requirement that antitrust plaintiff show contemporaneous demand on defendant plus exhaustion of all other sources); Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 487 n.5, 88 S. Ct. 2224, 2228 n.5, 20 L. Ed. 2d 1231 (1968) (finding an explicit demand to deal unnecessary under the circumstances)). Plaintiffs also argue that no demand is required where such demand would be futile. See Pls.' Opp'n Mem. at 25-26 (citing Hanover Shoe, Inc. v. United Shoe Machinery Corp., 377 F.2d 776, 781 (3d Cir. 1967) (finding demand unnecessary where defendant's policy would render demand futile), aff'd, 392 U.S. 481, 487 n.5, 20 L. Ed. 2d 1231, 88 S. Ct. 2224); Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 120 n.15, 89 S. Ct. 1562, 1575 n.15, 23 L. Ed. 2d 129 (1969) (noting that where a demand would have been futile under defendant's policy, absence of a formal request is not fatal to plaintiff's claim).
Plaintiffs are correct that there is no general requirement that an antitrust plaintiff prove a formal demand. See, e.g., Out Front Productions, Inc. v. Magid, 748 F.2d 166, 169-70 (3d Cir. 1984) (finding that antitrust suits are not subject to the type of demand prerequisite in shareholder derivative suits). In this instance, however, Plaintiffs seek to prove a specific refusal to purchase capacity. Since the record does not support a finding that a specific offer or demand was ever presented to Comsat, Comsat cannot be found to have refused to purchase PAS capacity based on Spector's communications with Mechanick.
Plaintiffs also suggest that other offers were made, including one oral offer by Plaintiffs' president Frederick Landman, and another unspecified offer to Satel, Comsat's joint venture in Chile. See Pls.' Opp'n Mem. at 25; but see Spector Dep. at 49 (disavowing any knowledge of anyone else offering PAS capacity to Comsat). As to Satel, the limited evidence in the record suggests only that Satel considered using PAS capacity. See Cummings Dep. at 146-48 (stating that in 1992, Comsat's joint venture with Entel Chile, Satel, began looking for additional capacity and considered PAS). This fact, if true, does not support any inference that Comsat refused to deal with PAS. As to Landman, at his deposition he was unable to recall a single detail of the offer of capacity he allegedly made to Comsat. He could not recall the year of the offer, the amount of capacity offered, the price, the duration, the individual at Comsat to whom the offer was made, the individual who responded to the offer or whether the response was oral or written. See Def.'s Summ. J. Mem. at 20 n.27 (citing Landman Dep. at 650-58 (alleging to have personally communicated an offer of PAS trans-Atlantic Ku-band capacity to Comsat, but failing to recall the date or even the year and any terms)); Def.'s Reply Summ. J. Mem. at 20 n.37 (same). No reasonable trier of fact could draw any inference against Comsat from Landman's alleged offer.
On the current record, the Court finds that no inference of a conspiracy or Comsat's conscious participation therein may reasonably be drawn from the alleged refusals of Comsat to purchase PAS capacity.
3. Tracking PAS throughout the world
Finally, Plaintiffs argue that the conspiracy and Comsat's participation therein may be inferred from Comsat's alleged "pattern and practice" of "tracking PAS throughout the world" and forming ventures in Latin America and Europe for the exclusive purpose of preventing PAS's entry into those markets. These ventures were discussed briefly above. See supra at 90-102. In Latin America, Plaintiffs claim that Comsat entered or negotiated ventures in Argentina, Venezuela, Colombia and Chile in order to frustrate PAS marketing efforts.
In Europe, Plaintiffs claim that Comsat devised ATV just to impede PAS's growth.
(A) Latin American ventures
Plaintiffs claim that each of Comsat's Latin American ventures, whether consummated or merely discussed, "was part and furtherance of the separate systems boycott." Pls.' Opp'n Mem. at 28. Plaintiffs claim that Comsat initiated negotiations for the ventures only after PAS sought entry into each market, and that "part of the understanding" was that the PTT would use the pending venture as a pretext to "refuse to enter into an operating agreement with PAS." Pls.' Opp'n Mem. at 28. Plaintiffs claim that such ventures were therefore "incident to the boycott" in violation of § 1.
Plaintiffs alleged evidence in support of this claim, however, consists only of general testimony about various venture negotiations which either do not reference PAS, see Pls.' Opp'n Mem. at 30,
or which contain explicit denials of Plaintiffs' claim. See id..
Even if these citations could be read to infer that certain PTTs refused to deal with PAS during negotiations with Comsat, nothing in the record supports an inference that Comsat encouraged or even had knowledge of any such refusals.
The existence of the proposed ventures in and of themselves cannot support an inference of conspiracy because Comsat has provided ample evidence that the ventures developed for business reasons independent of PAS. Comsat has shown that it pursued growth strategies all over the world, including places where PAS was not doing business like Kuwait, Saudi Arabia, Jordan, Israel, Singapore, Philippines, Thailand, Turkey, Russia, and Australia.
Plaintiffs have failed to rebut this evidence.
Comsat has also shown that its presence in Latin America predated PAS with Comsat ventures in the 1970s in Panama (Intercomsa) and Nicaragua (Nicatelsat). See Def.'s Summ. J. Mem. at 25 n.34.
Although it is true that those ventures were remote in time and wholly unrelated to the recent ventures, see Pls.' Opp'n Mem. at 28-29,
they nevertheless indicate that Comsat had previous experience in the region and support testimony claiming that Latin America was a natural and attractive market for Intelsat satellite services. See, e.g., Saralegui Dep. at 668 (citing country size, topography, underdeveloped infrastructure and general neglect of the market by PTTs as features which made Latin America an attractive market).
In Chile, Comsat joined with the Chilean telephone company Entel to form a joint venture called Satel. Plaintiffs argue that Satel competed directly with PAS in Chile, see Pls.' Opp'n Mem. at 30-31,
and that Satel "was in fact directed by Comsat not to deal with PAS." Pls.' Opp'n Mem. at 31 (citing Cummings Dep. 146-48 (stating that in 1992, Comsat's joint venture with Entel Chile, Satel, began looking for additional capacity and considered PAS)). The record does not support these claims.
The record reflects that by 1988 Chile was among the first Latin American nations to have privatized its telecommunications markets, see Def.'s Summ. J. Mem. at 27-29,
and that in November of 1988, Comsat entered a MOU with Entel Chile concerning a possible IBS ("international business data services") venture. See PAS Ex. 305 (Comsat November 2, 1988 memorandum with Entel Chile). In 1989, Comsat and Entel Chile formed Satel. See Skjei Tr. 112-18 (discussing reasoning behind Satel, including diversification of Comsat and expansion into South America), 127 (acknowledging approval of the Chilean venture); PAS Ex. 2679 (excerpts of March 28, 1989 corporate proprietary agreement between Comsat and Entel Chile for IBS service in Chile). The record further reflects that at that time, Satel faced competition from four companies, but that PAS was not one of them, see Def.'s Summ. J. Mem. at 29,
because at the time PAS concentrated on video transmission in Chile, and therefore did not directly compete with Satel's IBS service. See Saralegui Dep. at 26 (stating that in 1984 and 1985, there was no full-time, commercial television distribution to South America), 62 (stating that initially PAS marketed primarily television services), 66 (considering PAS-1 the premiere satellite for video in South America); Shubilla Dep. at 87 (stating awareness that PAS was attempting to establish video market in Santiago, Chile, but not IBS services). Plaintiffs have offered no evidence to show that Satel was not a legitimate business enterprise which did not interfere with PAS.
The same is true for Argentina. Plaintiffs claim that Comsat negotiated a joint venture with Entel Argentina in order to thwart PAS's efforts to get landing rights, but nothing in the record supports this claim. The record reflects that Argentina, unlike Chile, remained a highly regulated market until 1990 or 1991, with restrictions on Entel Argentina's authority to enter agreements with foreign parties. See, e.g., Belmar Tr. at 210-11 (stating that Argentine government official could not legally provide a franchise or other agreement). The record also reflects that in April 1989, Comsat and Entel Argentina signed a non-binding Memorandum of Understanding ("MOU") to study business opportunities. See PAS Ex. 267 at 21420 (April 19, 1989 MOU explicitly stating that it "does not establish any business association between the parties"). Ultimately, Comsat formed a venture in 1990 called Satelital with IATA-Alcatel, a private Argentine company. Satelital competed with at least two companies other than PAS: Impsat and Satelnet. See Def.'s Summ. J. Mem. at 26 n.35.
Plaintiffs again have offered no evidence to show that the formation of Satelital and Comsat's negotiations with Entel Argentina were not legitimate business enterprises which did not interfere with PAS.
Similarly, nothing in the record suggests any inference of Comsat's interfering with PAS in Venezuela or Colombia. The record reflects that in Venezuela Comsat negotiated a joint venture with C.A.N.T.V., a local service provider, but due to restrictions in the Venezuelan market the venture was never formed. See, e.g., Belmar Dep. at 415-16 (stating that ownership of any venture in Venezuela had to rest with C.A.N.T.V.). Comsat then pursued a venture with AT&T, but that venture did not operate until after the 1991 liberalization of Venezuela's market, by which time Comsat had already sold its interest, see Belmar Dep. at 421 (discussing AT&T/Comsat sale of IBS terminal back to C.A.N.T.V., which at that point was partially owned by AT&T); Crockett Dep. at 94-95 (Comsat sold its interest to AT&T and other owners), and even then the venture faced heavy competition from multiple companies, including PAS. See Def.'s Summ. J. Mem. at 26.
The record further reflects that Comsat entered the Colombian market after PAS filed this action and that Comsat then only offered of competing services. Nothing in the record suggests any inference of Comsat's hindering PAS in Colombia. See, e.g., Marco Northland Dep. at 159 (disavowing any personal knowledge of any facts supporting allegations concerning ventures in Colombia).
The Court finds that Plaintiffs have failed to present evidence which would support a reasonable inference that Comsat entered or negotiated ventures in Chile, Argentina, Venezuela or Colombia in order to frustrate PAS marketing efforts.
(B) Atlantic Television Service (ATV)
ATV was an "end-to-end" service provided by Comsat and the PTTs in Italy, Britain, Spain and Portugal. ATV offered discounted rates, flexible volume-based contracts, one-stop booking for space segment and connectivity to and from Europe, Africa, and Central and South America.
Plaintiffs claim that ATV was designed for the sole purpose of putting PAS at a competitive disadvantage, insofar as the PTTs used ATV as a pretext for not dealing with PAS. See 3d Am. Compl. P 28(e); Pls.' Opp'n Mem. at 31, 34.
Plaintiffs therefore claim that ATV was an act in furtherance of the boycott in violation of § 1.
The record does not support these claims.
The record reflects that Comsat formed ATV in order to provide cost-effective service to large, occasional-use video customers and to generate economic utility from unused Intelsat satellite capacity. See, e.g., Carroll Dep. at 95 (stating that the only reason for developing ATV was to be more customer responsive); Crockett Dep. at 132-34 (discussing double-preemptible nature of ATV service)). Plaintiffs have not refuted this evidence.
Moreover, Plaintiffs' own citations recognize the value of an end-to-end service such as ATV. See Comsat Ex. 998 at 29 (SEC registration statement Form S-1 for PAS referencing end-to-end service as a customer-driven service); Albert Dep. at 83-85 (discussing as a significant advantage PAS's ability to offer end-to-end service). Although Plaintiffs claim that PAS was denied access to the markets serviced by ATV's end-to-end service option, Plaintiffs' do not offer a single citation in support of this claim. See Pls.' Opp'n Mem. at 32-33 (without citation). Plaintiffs offer only conclusory assertions that the purpose of ATV was to support the alleged conspiracy. See Pls.' Opp'n Mem. at 32 (citing Pls.' 3(g) Statement at P 31, supra nn.45-55); Pls.' Resp. to Comsat Statements Nos. 75-88). These assertions are insufficient to support an inference of a conspiracy.
Plaintiffs next resort to circular logic, claiming that the failure of ATV within one year is proof that it was developed not for any legitimate business purpose but rather to impede PAS's negotiations in the ATV nations. Again, however, Plaintiffs offer no support for this claim. See Pls.' Opp'n Mem. at 33 (without citation). Defendant, on the other hand, has provided evidence that ATV was discontinued only after market and FCC regulatory changes eliminated its market. See Def.'s Summ. J. Mem. at 31-32.
Therefore no inference adverse to Defendant may be drawn from ATV's discontinuance.
Finally, Plaintiffs half-heartedly allege that part of ATV was an express price fixing agreement. See Pls.' Opp'n Mem. at 33.
Plaintiffs, however, rather than alleging how a pricing agreement among the parties to a joint venture is impermissible, assert only that "when price fixing and a boycott coincide, per se illegality is the rule." Pls.' Opp'n Mem. at 33. This assertion begs the question, insofar as Plaintiffs' have not shown either price fixing or the existence of the alleged boycott, let alone Comsat's participation therein.
The Court finds that Plaintiffs have failed to present evidence which would support a reasonable inference that Comsat formed and participated in ATV for the purpose of furthering the alleged conspiracy. The Court finds, therefore, that Plaintiffs have failed to provide sufficient evidence to permit a reasonable trier of fact to infer the existence of the alleged conspiracy or Comsat's conscious participation therein. Plaintiffs have failed to provide sufficient evidence of an alleged pattern of refusals by the PTT co-conspirators to grant PAS landing rights and operating agreements, coupled with additional considerations or "plus factors." Plaintiffs have failed to provide sufficient evidence of Comsat's alleged refusal to purchase space segment capacity from PAS. Plaintiffs have failed to provide sufficient evidence of Comsat's alleged "pattern and practice" of "tracking PAS throughout the world" and forming ventures in Europe and Latin America for the exclusive purpose of preventing PAS's entry into those markets. The Court therefore grants Defendant's motion for summary judgement as to Plaintiffs' claims under § 1 of conspiracy to boycott and conspiracy to restrain trade.
B. Overt acts
Even if Plaintiffs had provided sufficient evidence of the alleged conspiracy and Comsat's participation therein, Plaintiffs have failed to provide sufficient evidence of any of the four acts alleged in the Complaint,
either as overt acts or as independent violations of the Sherman Act.
The four overt acts alleged are pricing without regard to cost or at a predatory level; delaying PAS's entry into Great Britain, France, West Germany and Brazil; filing a sham objection with the FCC; and making disparaging representations to specified PAS customers. Defendant argues that even if the Court finds that Plaintiffs have shown questions of fact as to any of these acts, Plaintiffs have not shown that any of the acts was undertaken in furtherance of a conspiracy to deny PAS operating agreements. See Def.'s Reply Summ. J. Mem. at 19 (citing United States v. Castellano, 610 F. Supp. 1359, 1390 (S.D.N.Y. 1985) (discussing overt acts in context of venue)). Defendant also argues that these acts cannot survive as independent claims because Plaintiffs have not specified the damages arising from each act. See Def.'s Reply Summ. J. Mem. at 19 (citing J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 568, 101 S. Ct. 1923, 1927-28, 68 L. Ed. 2d 442 (1981) (requiring proof of actual injury caused by something the antitrust laws were designed to prevent); Henry Schwabe, Inc. v. United Shoe Mach. Corp., 297 F.2d 906, 909-10 (2d Cir. 1961) (requiring proof of damages in some amount "reasonably susceptible of expression in figures"), cert. denied, 369 U.S. 865, 8 L. Ed. 2d 85, 82 S. Ct. 1031 (1962)). The Court reaches Defendant's argument with respect to the pleading of damages after examining the factual support for each of the acts alleged.
1. Plaintiffs' pricing claims
Plaintiffs claim that Comsat engaged in pricing of preemptible video and IBS services "without regard to cost" or at "a predatory level." 3d Am. Compl. P 28(d).
This claim presumptively refers to the agreements between Comsat and several European PTTs on the pricing of ATV services. Plaintiffs, however, provide no argument or citations in support of this claim. Plaintiffs offer no showing of Defendant's costs at all. Absent some such showing, no reasonable inference of the alleged conspiracy or other anticompetitive conduct may be drawn. See, e.g., Matsushita 475 U.S. at 594, 106 S. Ct. at 1360 ("Cutting prices in order to increase business often is the very essence of competition. Thus, mistaken inferences in cases such as this one are especially costly, because they chill the very conduct the antitrust laws are designed to protect."). Nor have Plaintiffs made out any showing of predatory pricing. This claim therefore fails both as an act in furtherance of the alleged conspiracy and as an independent claim.
2. Delaying PAS's entry into Great Britain, France, West Germany and Brazil
In P 28(l) of the Complaint, Plaintiffs allege that
in other countries of the world, such as Great Britain, France, West Germany, and Brazil, the combination and conspiracy to boycott PAS described above prevented PAS from obtaining a timely commercial operating agreement in these countries, and has thereby delayed and hindered the entry of PAS into such markets.
3d Am. Compl. P 28(l). Plaintiffs, however, do not develop this claim in their opposition papers as either an independent act in furtherance of the alleged conspiracy, or as the basis of an independent claim. The claim therefore fails for the reasons discussed above, see supra at 45-112, principally Plaintiffs' failure to present sufficient evidence from which a reasonable trier of fact could infer the existence of the alleged conspiracy and Comsat's participation therein.
3. Comsat's FCC filing
In 1987 and 1988, in transactions unrelated to this action, Plaintiff Reynold Anselmo sold several broadcast stations, incurring approximately $ 83 million in personal income capital gains. On March 22, 1988, Anselmo filed a request for a tax deferral certificate with the FCC seeking to defer income tax payments of approximately $ 20 million.
The FCC may grant certificates where the gain is incurred while attempting to advance a change in government policy, see 26 U.S.C. § 1071(a), and Anselmo argued that he sold the stations to raise funds to finance PAS and thereby to advance the United States' separate systems policy. On August 5, 1988, Comsat filed opposition with the FCC, claiming that Anselmo had no choice but to sell the stations because his majority partner was a Mexican national, in violation of federal regulations governing foreign ownership of broadcast stations. Comsat argued, therefore, that the gain did not result from any effort to change policy.
In P 28(m) of the Complaint, Plaintiffs argue that Defendant's professed reason for its FCC filing was a sham and that Defendant intended only to interfere with PAS's financing and thereby to hinder PAS's ability to obtaining landing rights and to fund new initiatives and new satellite launches. See 3d Am. Compl. P 28(m); Pls.' 3(g) Statement P 41.
Defendant moved to dismiss the claim under the Noerr-Pennington doctrine, which states that "concerted efforts to restrain or monopolize trade by petitioning government officials are protected from antitrust liability." Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 499, 108 S. Ct. 1931, 1936, 100 L. Ed. 2d 497 (1988). This Court denied the motion, however, because Plaintiffs had framed the claim within the "sham filing exception." To violate antitrust laws in and of itself, a filing must have been objectively baseless and pursued for the purpose of interfering directly with PAS in the marketplace. See Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 59, 113 S. Ct. 1920, 1928, 123 L. Ed. 2d 611 (1993). On the current motion, the Court finds that Plaintiffs have not adduced sufficient evidence of objective baselessness or improper motive.
On the evidence in the record, Plaintiffs cannot show that Defendant's filing was objectively baseless. Plaintiffs principally argue that objective baselessness can be shown procedurally by a clear lack of standing. See Pls.' Opp'n Mem. at 37 (citing In re Burlington Northern, Inc., 822 F.2d 518, 529-32 (5th Cir. 1987) (no Noerr-Pennington protection if filer knows he has no standing or has no reasonable basis for asserting standing), cert. denied 484 U.S. 1007 (1988)). Plaintiffs claim that § 1071(a) of the Communications Act does not convey standing to Comsat and, moreover, that Comsat was aware at the time of it FCC filing that it lacked standing. See Pls.' Opp'n Mem. at 38. This issue was fully briefed before the FCC.
Without resolving the issue before the FCC, the Court finds that Defendant had a "sufficient personal stake in the outcome" of the FCC proceedings, see, e.g., Marsh Media, Ltd., 67 F.C.C.2d 1516, 1522-23 (citing Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 703, 7 L. Ed. 2d 663 (1962)), aff'd, 68 F.C.C.2d 712 (1978), insofar as a deferral would assist PAS in its competition with Comsat. See Def.'s Reply Summ. J. Mem. at 23; Comsat Ex. 1007 at 5 (PAS letter acknowledging that the tax deferral will "directly and substantially assist" PAS in competition with Comsat). The issue of Defendant's standing, therefore, was at least open to serious consideration. Plaintiff therefore cannot show that Defendant's filing was objectively baseless on procedural grounds.
Neither can Plaintiff show that Defendant's filing was objectively baseless on the merits. The record reflects that Plaintiff Anselmo's own advisers clearly understood that a deferral was unlikely. See Def.'s Summ. J. Mem. at 16-18.
Plaintiff Anselmo even undertook efforts to amend the law itself in order to assist his deferral application. See Def.'s Summ. J. Mem. at 17-18.
Defendant's filing therefore cannot be found objectively baseless.
Moreover, even if Plaintiffs' had shown that the filing was objectively baseless because Comsat lacked standing before the FCC, Plaintiffs have failed to show any improper motive behind the filing. No improper motive may be inferred where the goal of the filing was to win the ultimate product of the FCC process, in this case a denial of Plaintiff Anselmo's deferral request. See Def.'s Summ. J. Mem. at 18-19 (citing Professional Real Estate Investors, 508 U.S. at 59, 113 S. Ct. at 1928; Illinois ex rel. Hartigan v. Panhandle Eastern Pipe Line Co., 730 F. Supp. 826, 937 (C.D. Ill. 1990), aff'd, 935 F.2d 1469 (7th Cir. 1991), cert. denied, 502 U.S. 1094, 117 L. Ed. 2d 415, 112 S. Ct. 1169 (1992); Independence Public Media of Philadelphia, Inc. v. Pennsylvania Public Television Network Comm'n, 808 F. Supp. 416, 435-36 (E.D. Pa. 1992) (granting summary judgment on "sham" claim). Plaintiffs claim that Comsat knew that the mere filing of their opposition would "hinder PAS in obtaining operating agreements." See Pls.' Opp'n Mem. at 36-37. Plaintiffs, however, not only fail to provide a single citation in support of this claim, Plaintiffs fail even to explain how any delay before the FCC would hinder Plaintiffs' negotiations with PTTs throughout the world.
Plaintiffs have failed to show that Defendant's FCC filing was a sham. Plaintiffs' therefore cannot rely on the claim in P 28(m) of their Complaint, either as act in furtherance of the alleged conspiracy, or as the basis of an independent claim.
4. Commercial disparagement
Plaintiffs allege that Comsat disrupted deals PAS had been negotiating with the United States Air Force, Cargill, CNN, AT&T, IBM and DuPont by representing that PAS did not have and could not get necessary landing rights, and that PAS lacked sufficient capacity and back-up capacity to effectively serve those clients. See 3d Am. Compl. PP 28(c) & (o). The record, however, completely fails to support Plaintiffs' claims.
To state a commercial disparagement claim a plaintiff must show a knowing publication of material derogatory to the plaintiff's business; that the material is false; that it is of a nature calculated to prevent others from dealing with the plaintiff or to interfere with the plaintiff's relations with others to its disadvantage; and that in material and substantial part induces others not to do business with the plaintiff with the result that special damages in the form of lost business are incurred. See Def.'s Summ. J. Mem. at 33-34 (citing Kirby v. Wildenstein, 784 F. Supp. 1112, 1115 (S.D.N.Y. 1992); USFL, 634 F. Supp. 1155 (dismissing disparagement claims in antitrust action). Plaintiffs have failed to show evidence of a single disparaging statement, let alone one which was false and which may reasonably be attributed to Defendant Comsat.
With respect to the United States Air Force, Plaintiff had alleged that at some unspecified time in 1989, an unidentified party at Comsat made a remark to an unspecified person in the United States Air Force that PAS "lacked landing rights in Norway, Portugal, Turkey, the [United Kingdom,] Italy and Germany, with the further implication that PAS could not obtain landing rights in these countries." See Comsat Ex. 620 at 9 (Pls.' Suppl. Resp. to Def.'s 2d Set of Interrogs., Interrog. No. 12 & Resp.). Putting aside the fatal lack of specificity in the claim, the record reflects that the statement would have been true if made. See Goldschmidt Dep. Vol. 1 at 188-89 (admitting that the statement that PAS did not have landing rights was true "if construed narrowly").
As to Cargill's business, Plaintiffs claim that in early 1991, Comsat employees Cummings and Torrico told Reuben Lantto of Cargill that PAS "could not obtain operating agreements and other approvals necessary to handle Cargill business in Latin America." Comsat Ex. 620 at 11 (Pls.' Suppl. Resp. to Def.'s 2d Set of Interrogs., Interrog. No. 12 & Resp.). In deposition testimony, however, Torrico denied making the alleged remark to Cargill, see Torrico Dep. at 116 (denying ever having told Cargill anything about PAS), 160-61 (denying having discussed PAS with Cargill or any other client), and Cummings not only denied making the remark but testified that Cargill raised the issue, not Comsat, because Cargill had suspicions about PAS's representations that it possessed landing rights.
In an attempt to rebut these denials, Plaintiffs offer only the third-hand hearsay statements of their own employee, Alvaro Gazzolo. Although Plaintiffs submit an affidavit from Lantto, that affidavit does not contain a single reference to the alleged statements. See Lantto Aff. (Aug. 7, 1994). Instead, Plaintiffs cite to Gazzolo's claims that Lantto had been told by unidentified persons in Argentina that they in turn had been told by an unidentified representative of Comsat in Argentina that PAS's concessions from the Argentine ministry were not valid. See Gazzolo Dep. at 21, 66-67. This chain of unidentified declarants does not state an actionable disparagement claim.
Concerning CNN, Plaintiffs claim that sometime in 1987 or 1988 an unidentified source at Comsat told an unidentified source at CNN that PAS "would be unable to obtain all operating agreements and/or Intelsat consultations to handle the Turner/CNN business." Comsat Ex. 620 at 11 (Pls.' Suppl. Resp. to Def.'s 2d Set of Interrogs., Interrog. No. 12 & Resp.). Plaintiffs cite in support of this claim a July 29, 1988 meeting, but the notes of that meeting do not indicate any disparagement of PAS. See PAS Ex. 2556 (Hannon notes of July 29, 1988 meeting with CNN listing Comsat and PAS strengths and weakness, but not identifying any disparagement of PAS); Hannon Dep. at 80-105 (discussing PAS Ex. 2556).
Plaintiffs also identify Comsat employees Joanne Tanner and Stephen Carroll as allegedly having personal knowledge of the alleged disparaging remark. But both denied having such knowledge. See Tanner Dep. at 302-08 (denying having made any such remarks or having any knowledge that anyone else at Comsat made such remarks); Carroll Dep. at 392-93 (same). Plaintiffs have failed to show that the remark was ever made. Moreover, even if Plaintiffs had provided testimony substantiating the remark, the record indicates that the remark was true at the time, insofar as PAS did not have such the necessary authorizations.
With respect to AT&T, Plaintiffs claim that in 1992 Comsat employee Tom Barr represented to AT&T employees Whitney Maull and Denise Palaia that PAS "lacked relationships, both formal and informal, with foreign PTTs sufficient to serve AT&T as a space segment supplier for VSATs in Latin America." Comsat Ex. 620 at 11-12 (Pls.' Suppl. Resp. to Def.'s 2d Set of Interrogs., Interrog. No. 12 & Resp.). Plaintiffs again fail to provide any evidence that the statement was ever made. Although Plaintiffs cite to the deposition testimony of Maull, that testimony does not mention any representations by Comsat. See Maull Dep. at 7 (describing Maull as AT&T officer), 97-99 (denying that any Comsat employee ever made a disparaging remark about PAS in his presence, and describing AT&T's own investigation of PAS claims to have ability to provide service in many countries, resulting in AT&T uncertainty about PAS), 101-02 (stating that AT&T observed no collaboration among PTTs in its negotiations in each country, and observed lack of familiarity with PAS, rather than opposition or hostility to PAS).
Similarly, although Plaintiffs argue that Comsat also made disparaging representations about PAS to potential customers IBM and DuPont, nothing in the record supports such claims. On the contrary, portions of the record specifically deny that such representations were ever made. See, e.g., Harris Dep. at 23 (IBM representative denying having discussed PAS with anyone from Comsat from 1987 through 1993); Toone Dep. at 23 (DuPont representative stating that DuPont conducted its own investigation of PAS representations in Brazil, and denying any reason to believe that Comsat had any role in PAS's inability to obtain the necessary authorizations).
Acknowledging that they have not shown evidence showing that Comsat made any disparaging remarks about PAS, Plaintiffs urge the Court to draw "at least the inference that such representations were made to Cargill, CNN, and AT&T." Pls.' Opp'n Mem. at 35. Plaintiffs asks the Court to draw this inference from evidence which shows that each of these customers raised their own independent concerns about PAS. See Pls.' Opp'n Mem. at 35; Pls.' 3(g) Statement P 40.
Nothing in these citations permits an inference of disparagement. Indeed, many of them clearly deny that Comsat ever raised the issue of PAS with these customers. See, e.g., Cummings Dep. at 75-76 (denying that anyone from Comsat ever told anyone that PAS could not get landing rights); Hannon Dep. at 80-105 (indicating that CNN, not Comsat, raised and discussed issue of PAS bid for CNN business); Lantto Aff. (not alleging any misconduct by Comsat).
Even if Plaintiffs had shown evidence showing the alleged disparaging statements or at least permitting an inference of disparagement, Plaintiffs have failed to show that the statements were false or that any injury resulted from the alleged statements. The record reflects that PAS was approved for the United States Air Force contract, see, e.g., Goldschmidt Dep. Vol. 1 at 186-87 (indicating that even after the alleged disparagement by Comsat, PAS was approved as a possible system), and ultimately secured CNN's business. See Comsat Ex. 620 at 11 (Pls.' Suppl. Resp. to Def.'s 2d Set of Interrogs., Interrog. No. 12 & Resp.). As for Cargill, Gazzolo testified that Lantto informed him that Cargill would not rely on the alleged statement but instead would conduct its own investigation of PAS's landing rights. See Gazzolo Dep. at 68; Landman Dep. at 558. Therefore no injury could be attributed to the alleged statement: if PAS's representation that it had landing rights was true, Cargill's investigation would only strengthen PAS's marketing. AT&T similarly conducted its own investigation of PAS's claims concerning landing rights, see Maull Dep. at 97-99 (AT&T officer denying that any Comsat employee ever made a disparaging remark about PAS in his presence, and describing AT&T's own investigation of PAS claims to have ability to provide service in many countries, resulting in AT&T uncertainty about PAS), 101-02 (stating that AT&T observed no collaboration among PTTs in its negotiations in each country, and observed lack of familiarity with PAS, rather than opposition or hostility to PAS), and ultimately decided to use Comsat capacity because Comsat was technically superior for AT&T's needs. See id. at 49-52 (stating that PAS represented to AT&T that PAS had obtained landing rights in many Latin American countries; indicating that AT&T wanted to deal with the PTTs regardless of which space capacity it used; and not implicating any conduct by Comsat), 53-54 (stating that technical limits of PAS footprint in the United States and South America was the deciding factor in choosing Comsat over PAS), 59-74 (discussing AT&T's decision to reject PAS and accept Comsat proposal for VSAT services to Latin America, naming Comsat's deployment of additional capacity as the most important issue).
Because Plaintiffs have failed to present evidence that Comsat published any false, derogatory statements to PAS's potential customers, the Court does not reach Defendant's assertion that the alleged statements were not harmful to competition. The Court finds that no inference of commercial disparagement, either as an act in furtherance of the alleged conspiracy or as an independent cause of action, may be drawn against Defendant Comsat. The Court therefore grants Comsat's motion for summary judgment as to Plaintiffs' disparagement claims.
C. Anticompetitive effects
Because Plaintiffs have failed to show evidence from which a reasonable trier of fact could infer that Defendant Comsat participated in an illegal contract, combination or conspiracy, the Court need not examine whether Plaintiff has shown antitrust injury in the form of an actual adverse effect on competition as a whole in the relevant market or submarkets. See Capital Imaging, 996 F.2d at 542-43; International Distrib., 812 F.2d at 793. Had the Court reached this issue, however, Plaintiffs would have been required to show more than harm to PAS as an individual market actor.
After the plaintiff satisfies its threshold burden of proof under the rule of reason, the burden shifts to the defendant to offer evidence of the pro-competitive "redeeming virtues" of their combination. Assuming defendant comes forward with such proof, the burden shifts back to plaintiff for it to demonstrate that any legitimate collaborative objectives proffered by defendant could have been achieved by less restrictive alternatives, that is, those that would be less prejudicial to competition as a whole.
Capital Imaging, 996 F.2d at 543 (citations omitted). In other words, Plaintiffs would have to have shown that the "anticompetitive effects of the alleged conspiracy outweighed its procompetitive effects." International Distrib., 812 F.2d at 793 (citing National Soc'y of Prof. Eng'rs, 435 U.S. at 691, 98 S. Ct. at 1365)).
IV. Sherman Act § 2
Section 2 of the Sherman Act prohibits attempts "to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states; or with foreign Nations." 15 U.S.C. § 2. Plaintiffs assert seven claims in violation of § 2, including one claim of monopolization, three claims of attempted monopolization and three claims of conspiracy to monopolize. See 3d Am. Compl. P 32.
A. Conspiracy to monopolize
Plaintiff alleges three claims of conspiring to monopolize in violation of § 2 respectively involving the United States market, domestic and regional markets in Central and South America, and domestic and regional markets in Europe. See 3d Am. Compl. P 32. To sustain a claim under § 2 for conspiracy to monopolize, Plaintiffs must show "'(1) proof of a concerted action deliberately entered into with the specific intent to achieve an unlawful monopoly, and (2) the commission of an overt act in furtherance of the conspiracy.'" International Distrib., 812 F.2d at 795 (quoting Paralegal Inst., Inc. v. American Bar Ass'n, 475 F. Supp. 1123, 1132 (E.D.N.Y. 1979), aff'd, 622 F.2d 575 (2d Cir. 1980)). "Unlike the elements required to establish an attempt to monopolize, however, proof of a conspiracy to monopolize does not require a dangerous probability of success." International Distrib., 812 F.2d at 795 n.8 (citing American Tobacco Co. v. United States, 328 U.S. 781, 789, 66 S. Ct. 1125, 1129, 90 L. Ed. 1575 (1946)).
For the reasons discussed above with respect to Plaintiffs' § 1 claims, the Court finds that Plaintiffs have failed to present evidence from which a reasonable trier of fact could infer concerted action among the alleged conspirators or Defendant Comsat's participation in any such concerted action. See supra at 41-130. The Court therefore need not examine whether Plaintiffs have shown evidence of any shared intent to monopolize among Comsat and the alleged conspirators. Also for the reasons discussed with respect to Plaintiffs' § 1 claims, the Court finds that Plaintiffs have failed to present sufficient evidence of the commission of any overt act in furtherance of the alleged conspiracy. See supra at 130-146. The Court therefore grants Defendant's motion for summary judgment as to Plaintiffs' § 2 conspiracy to monopolize claims.
Plaintiff alleges that Defendant Comsat monopolized the market "for international satellite telecommunications services, including the transmission of audio, video, and data signals to and from the United States." 3d Am. Compl. P 32. To sustain a claim under § 2 for monopolization, Plaintiffs must show that Defendant Comsat had the power to monopolize the relevant market, and that it willfully acquired or maintained that power, causing unreasonable exclusionary or anticompetitive effects. See Alpha Lyracom, 1993 U.S. Dist. LEXIS 3825, *21, 1993-1 Trade Cas. (CCH) P70,184 at 69,860-61, 1993 WL 97313 at *5; see also Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186, 188-89 (2d Cir. 1992); AD/SAT, 920 F. Supp. at 1306 (citing Ortho Diagnostic Sys., Inc. v. Abbott Lab., Inc., 822 F. Supp. 145, 153 (S.D.N.Y. 1993) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S. Ct. 1698, 1703-04, 16 L. Ed. 2d 778 (1966)).
For the reasons discussed above with respect to Plaintiffs' § 1 claims, the Court finds that Plaintiffs have failed to present evidence from which a reasonable trier of fact could infer any conduct by Comsat intended to acquire or to maintain monopoly power. See supra at 70-78. Neither have Plaintiffs shown that Comsat possessed monopoly power in any of the relevant markets outside of the United States.
Rather, the record reflects that Comsat's market share has declined in all markets since the period of liberalization began in the 1980s.
Although Plaintiffs are correct in noting that entry barriers to the relevant markets were high, see Pls.' 3(g) Statement P 13, the evidence of Comsat's declining market share shows that these barriers were not insurmountable. Plaintiffs' reliance on the testimony of their expert, Bruce M. Owen, does not alter this conclusion. See Pls.' Opp'n Mem. at p.24 n.6 (citing Owen Dep., Vol. 1, at 80-82, 92-108; Comsat Ex. 726 (report of expected testimony of Bruce M. Owen, revised June 2, 1994)). Finally, even if Defendant's formerly dominant market shares did constitute monopoly power, Plaintiffs have failed to show that Defendants market share is more likely than not the result of anticompetitive conduct and not merely an "historic accident" resulting from the pre-liberalization history of the Intelsat system. See Ortho Diagnostic, 822 F. Supp. at 153 (quoting Grinnell, 384 U.S. at 570-71, 86 S. Ct. at 1703-04). The Court therefore grants Defendant Comsat's motion for summary judgment as to Plaintiffs' P 2 monopolization claim.
C. Attempted monopolization
Plaintiff raises three claims of attempting to monopolize the United States market, domestic and regional markets in Central and South America, and domestic and regional markets in Europe, respectively. See 3d Am. Compl. P 32. To sustain a claim under § 2 for attempted monopolization, Plaintiffs must show Defendant's anticompetitive or exclusionary conduct, a specific intent to monopolize, and a dangerous probability that monopoly will be achieved. See Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S. Ct. 884, 890-91, 122 L. Ed. 2d 247 (1993); International Distrib., 812 F.2d at 791; AD/SAT, 920 F. Supp. at 1296. As with Plaintiffs' monopolization claim, Plaintiffs' attempted monopolization claim requires some measure of market or monopoly power, defined as the power to control prices or to exclude competition in the relevant market. See International Distrib., 812 F.2d at 791 & n.3.
For the reasons discussed above with respect to Plaintiffs' § 1 claims, the Court finds that Plaintiffs have failed to present evidence from which a reasonable trier of fact could infer any conspiracy, see supra at 41-130, anticompetitive or exclusionary conduct by Comsat, see supra at 130-146, or any intent to monopolize. See supra at 70-78. Moreover, for the reasons discussed above with respect to Plaintiffs' § 2 monopolization claim, the Court finds that Plaintiffs have failed to show that Defendant exercised monopoly power in the any of the relevant markets. See supra 150-152. The Court therefore grants Defendant's motion for summary judgment as to Plaintiffs' § 2 attempted monopolization claims.
Defendant Comsat argues that Plaintiffs have also failed to show evidence of antitrust injury, failed to show evidence that Comsat caused any such injury, failed to plead damages resulting from each alleged injurious act, and failed to provide anything but the most speculative estimate of damages. Having already found that Plaintiffs' claims fail for lack of evidence, the Court need not address these arguments with specificity, but examines them briefly inasmuch as they relate to the Court's earlier examination of Plaintiffs' claims.
Defendants argue that Plaintiffs have failed to show evidence of antitrust injury, insofar as the injuries alleged in the record amount only to harm to PAS, a single competitor, and not to competition as a whole. Antitrust injury is injury to competition, not merely to a competitor. See Brunswick Corp., 429 U.S. at 488, 97 S. Ct. at 697; Capital Imaging, 996 F.2d at 542-43; International Distrib., 812 F.2d at 793. Given the limited number of competitors in the relevant markets, however, as well as the barriers to market entry, had Plaintiffs shown the existence and operation of the conspiracy as alleged, an inference of antitrust injury could have been reasonably drawn from the record.
Defendant argues that Plaintiffs have failed to show evidence that Comsat caused any injury to PAS. Specifically, Defendant argues that Plaintiffs have failed to account for other possible causes of PAS's injury, such as regulatory barriers, the Intelsat signatory resolution, unrelated delays in obtaining Intelsat consultations, and the alleged boycott resolution of the European Conference of Postal and Telecommunications Administrations ("CEPT"). The Court agrees, and notes in particular that Plaintiffs have failed to show that any injury to PAS was caused by the alleged conspiracy and not by regulatory barriers that existed before liberalization. Although Plaintiffs claim that the alleged conspirators caused Plaintiffs' pre-liberalization injuries, Plaintiffs readily admit that PAS's success was triggered by the liberalization and deregulation that swept the relevant markets after PAS's launch of its PAS-1 satellite:
Beginning in 1990 and continuing in 1991 and 1992, countries around the world began to liberalize and deregulate telecommunications . . . . [and with] liberalization and deregulation, PAS was able to . . . either obtain licenses directly from governments, or operate without the necessity of government licensing. Once this occurred, PAS revenues and profits burgeoned, and PAS went from operating at a loss to becoming highly profitable. In addition, PAS substantially increased its market share in areas it had been previously unable to penetrate.
Pls.' 3(g) Statement P 46 (internal citations omitted).
Defendant also argues that even if Plaintiffs had shown causation, Plaintiffs have failed to plead damages resulting from each alleged injurious act. Specifically, Comsat challenges Plaintiffs' damage claims for failing to discount for actions undertaken in Comsat's immune signatory role; failing to discount for acts of alleged co-conspirators in their immune signatory roles (including the Intelsat signatory resolutions and the alleged CEPT boycott); failing to discount for the claims in PP 28(d), (j) and (k) of the Complaint which Plaintiffs withdrew; and failing to break out damages relative to the specific acts alleged in P 28 of the Complaint. In this regard, Plaintiffs adopted contradictory positions as to whether they intended to plead any of the many acts alleged in the Complaint as an independent cause of action as well as an act in furtherance of the alleged conspiracy. In their papers in opposition to Defendants' motion, Plaintiffs argued that a break out of damages was not necessary
because the underlying boycott was the cause of PAS's injury, and the other acts were incidental to and in furtherance of the boycott, PAS has not attempted to attribute damages to each of those subsidiary actions. Nor would such an exercise be particularly meaningful, if possible.
Pls.' Opp'n Mem. at 47. At oral argument, however, Plaintiffs argued that each of the acts alleged should be treated as an independent claim, and the Court treated them as such in its examination of the motion. The Court agrees with Defendant, however, that even if Plaintiff had shown evidence to support those independent claims, they would have been dismissed for Plaintiffs' failure to attribute damages to each of the remaining acts alleged in P 28 of the Complaint.
Finally, Defendant argues that Plaintiffs have failed to provide anything but the most speculative estimate of damages. Essentially, Plaintiffs' claim is that PAS would have been successful two years earlier if not for Comsat's efforts to exclude PAS from various markets. See Pls.' 3(g) Statement PP 53-56. Plaintiffs therefore assert that PAS is entitled to the amount it would have made during the two years of exclusion, calculated as the amount it made in the two subsequent years, plus an amount on top of its actual earnings during the two years after the exclusion, representing the growth it would have experienced.
Although the Court agrees that Plaintiffs' damage claims are largely speculative, the claims would have sufficed. In exclusion cases, damage claims are rarely susceptible to concrete, detailed proof. See Zenith, 395 U.S. at 123-24, 89 S. Ct. at 1576-77. That is not to say that Defendant could not have refuted Plaintiffs' claims before a trier of fact by showing that Plaintiffs' claims were largely speculative and not the result of Comsat's conduct.
In sum, the Court finds that Plaintiffs have failed to plead sufficiently damages resulting from the individual acts alleged in the Complaint. None of those acts could survive Defendant's motion as an independent cause of action. The Court also finds, however, that Plaintiffs pleaded sufficient damages resulting from the alleged conspiracy. If Plaintiffs had presented evidence of that conspiracy, Comsat's participation in it and acts in furtherance of it, that cause of action would have survived.
VI. State law claims
The Complaint also contains two claims for interference with prospective advantage under the laws of New York and Connecticut, respectively. See 3d Am. Compl. PP 28(f) & (k). Under New York law, PAS must establish that Comsat "interfered with a prospective contractual advantage through fraudulent, criminal or otherwise improper conduct." Def.'s Summ. J. Mem. at 48 n.69 (citing Nifty Foods Corp. v. Great Atlantic & Pacific Tea Co., 614 F.2d 832, 838 (2d Cir. 1980)); see PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 269 (2d Cir. 1987). Under Connecticut law, PAS must establish that Comsat "interfered with a prospective business relationships using improper means that amount to an independent tort." Def.'s Summ. J. Mem. at 48 n.69 (citing AroChem Int'l, Inc. v. Buirkle, 968 F.2d 266, 272 (2d Cir. 1992)); see Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 474 A.2d 780, 785 (1984). Plaintiffs have failed to present sufficient evidence to permit a trier of fact to find in their favor under either of these standards.
In addition, Plaintiffs acknowledge in their opposition to the current motion that their state law claims are entirely derivative of Plaintiffs' federal antitrust claims. See Pls.' Opp'n Mem. at 49-50 ("Inasmuch as the evidence fully supports the federal antitrust claims of PAS, it also fully supports PAS's state law claim[s]."). Having found that Plaintiffs showing in support of its federal claims lacking, in particular Plaintiffs failure to show Comsat's alleged disparagement of PAS, see supra at 138-146, the Court grants Defendant's motion to dismiss Plaintiffs' state law claims.
VII. Act of state doctrine and indispensable parties
Defendant also moved for summary judgment under the act of state doctrine and for failure to join the PTTs as indispensable parties. The Court does not need to reach these arguments. The Court notes, however, that neither argument is likely to have prevailed.
Contrary to Comsat's assertion, the alleged PTT conspirators need not be joined in order for the Court to grant injunctive relief. While it is true that in their absence the Court could not direct the PTTs to provide PAS with operating agreements, it is questionable whether such relief would still be required and, even if it were, whether the Court could order it even if the PTTs were parties. Nevertheless, in their absence the Court could still have enjoined Defendant Comsat in its role as a common carrier from engaging in any conduct which violates federal antitrust laws. See Alpha Lyracom, 1993 U.S. Dist. LEXIS 3825, *23, 1993-1 Trade Cas. P70,184 at 69,863, 1993 WL 97313 at *8; accord Alpha Lyracom, 946 F.2d at 175 (finding that any allegations against Comsat in its role as a common carrier are unlikely to encounter indispensable party concerns); cf. Alpha Lyracom, 1990 U.S. Dist. LEXIS 11964, 1990-2 Trade Cas. (CCH) P69,188 at 64,584-85, 1990 WL 135637 at *9-10 (finding that Intelsat and the alleged PTT conspirators were indispensable to claims implicating signatory functions).
The act of state doctrine is not implicated here because the effect of a government action is not at issue. See W.S. Kirkpatrick & Co. v. Environmental Tectonics Corp., Int'l, 493 U.S. 400, 406, 110 S. Ct. 701, 705, 107 L. Ed. 2d 816 (1990) (stating that act of state issues only arise "when a court must decide --that is, when the outcome of the case turns upon--the effect of official action by a foreign sovereign"). The issue before the Court in this action is not the effect of any governmental action, but whether any denial of access resulted from government action or from the conduct of nongovernmental entities conspiring with Defendant Comsat. See Alpha Lyracom, 1993 U.S. Dist. LEXIS 3825, 1993-1 Trade Cas. P70,184 at 69,863, 1993 WL 97313 at *7.
For the reasons discussed above, Plaintiffs's discovery motions are denied and the orders of the Magistrate Judge are affirmed in all respects. The Court directs Plaintiffs to pay Defendant's costs and fees incurred in opposing Plaintiffs' objections to the Magistrate Judge's order of July 20, 1994.
Defendant's motion for summary judgment is granted as to all claims.
There being no other claims before it, the Court directs the Clerk of the Court to close this action and remove it from the Court's active calendar.
Dated: New York, New York
September 4, 1996
JOHN F. KEENAN
UNITED STATES DISTRICT JUDGE