The opinion of the court was delivered by: Stein, District Judge.
Defendant Bell Atlantic Corp. has moved to dismiss the complaint
pursuant to Fed. R. Civ. P. 12(b)(6) on the grounds that plaintiff lacks
standing and that the complaint fails to state a claim. For the reasons
set forth below, that motion is granted, with leave to replead in part.
Pursuant to the Telecommunications Act of 1996, local telephone
companies may enter the market for long-distance telephone service
provided they face competition in the local telephone service market.
47 U.S.C. § 271(c). To promote development of competition in local
telephone service markets, the Act requires that incumbent local
telephone companies provide certain services to new entrants, including
permitting access to the incumbent local telephone company's network by
the new entrant - called "interconnection" - and providing retail
services to new entrants at wholesale rates. 47 U.S.C. § 251(c).
According to the complaint, Bell Atlantic, an incumbent local telephone
company, applied for and received regulatory approval to offer
long-distance telephone service in certain parts of the Northeast.
Compl. ¶ 11. Bell Atlantic has allegedly not, however, assisted its
local phone service competitors as required by the Telecommunications
Act. Id ¶ 12. Instead, Bell Atlantic is alleged to have:
fulfilled orders of other Local Phone Service
providers' customers [only] after fulfilling those for
its own Local Phone Service, has failed to fill a
substantial number of orders for other Local Phone
Service providers' customers substantially identical
in circumstances to its own Local Phone Service
customers for whom it has filled orders, and has
systematically failed to inform other Local Phone
Service providers of the status of their orders with
Bell Atlantic concerning [the Local Phone Service
On March 9, 2000, the Federal Communications Commission ("FCC") issued
a consent decree in which Bell Atlantic agreed to pay a $3 million fine
to end an investigation into its alleged failure to provide adequate
access to local phone service competitors in New York. Id. ¶ 32; Bell
Atlantic - New York Authorization Under Section 271 of the Communications
Act to Provide In-Region, InterLATA Service in the State of New York, 15
FCC Rec. 5413 (2000). Bell Atlantic also agreed to pay $10 million to
competing local telephone service providers for injuries resulting from
its misconduct in handling their orders. Compl. ¶ 32.
The next day, the Law Offices of Curtis V. Trinko, LLP, a law firm
organized as a limited liability partnership under New York law and a
customer of one of Bell Atlantic's competitors in the local telephone
service market, filed this action on behalf of itself and all others
similarly situated. The Trinko partnership alleges that the members of
the class have been damaged by Bell Atlantic's provision of "a level of
service that is materially below the level that is accorded customers of
Bell Atlantic's Local Phone Service in functionally identical
circumstances." Id. ¶ 12. The complaint asserts a claim for unlawful
monopolization in violation of section 2 of the Sherman Act, claims for
violations of section 251 and 202 of the Communications Act, and a claim
for tortious interference with contract. The complaint alleges that the
relevant market is the provision of local, non-wireless telephone service
in those areas in which Bell Atlantic is the "incumbent local exchange
carrier" within the meaning of the 1996 Telecommunications Act, and that
Bell Atlantic possesses monopoly power in that market. Id. ¶¶ 18-25.
Bell Atlantic now moves for dismissal of the complaint in its entirety
on the grounds that the Trinko partnership lacks standing to bring the
Sherman Act claim and the Communications Act claims, that plaintiffs
Communications Act claims are not cognizable, that plaintiff has failed
to state a claim for tortious interference with contract, that plaintiff
has not sufficiently pled damages, and that all of plaintiffs claims for
damages are barred by the filed tariff doctrine.
When deciding a motion to dismiss a claim pursuant to Fed. R. Civ. P.
12(b)(6), the Court must accept all of the well-pleaded facts as true and
draw all reasonable inferences from those allegations in favor of the
plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The complaint will
survive a motion to dismiss unless "it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which would
entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
Bell Atlantic contends that because its alleged anticompetitive conduct
is violating its duties to competing carriers under the
Telecommunications Act, any injury suffered by the alleged class, as
customers of those carriers, "is, by definition, indirect and derivative
of the competing carriers' alleged direct market injury." Def.'s Mem. at
12. Thus, according to defendant, the Trinko partnership lacks standing
to pursue its Sherman Act claim. Bell Atlantic also argues that to hold
otherwise would subject it to the risk of duplicative recovery, i.e.,
Bell Atlantic might have to compensate both the new entrants into the
local telephone service market and their customers for the same harm,
assuming liability exists in the first place.
Courts have consistently held that both competitors and consumers may
assert antitrust claims arising from harms that flow from anticompetitive
conduct., E.g., SAS of Puerto Rico, Inc. v. Puerto Rico Tel. Co.,
48 F.3d 39, 45 (1st Cir. 1995) ("[T]he presumptively `proper' [antitrust]
plaintiff is a customer who obtains services in the threatened market or a
competitor who seeks to serve that market."); Continental Orthopedic
Appliances. Inc. v.
Health Insurance Plan of Greater New York,
956 F. Supp. 367, 372 (E.D.N.Y. 1997) ("To have standing, a plaintiff
must be a competitor, participant, supplier or consumer in the relevant
market."). Indeed, in Associated General Contractors of California, Inc.
v. California State Council of Carpenters, 459 U.S. 519 (1982), upon
which Bell Atlantic itself relies, the United States Supreme Court found
that the plaintiff lacked ...