*1 County a cent. This moots not owe of the that its County’s appeal decision erroneously taxes pre-petition
lien for discharged.
deemed to have been Bankruptcy Appellate goes Panel judicata avoid the res im- length
some plan
pact of the confirmation bankruptcy. pro- This strikes me as
first
blematic, confirming order “[a]n because judicata
Chapter plan is res as to all
justiciable issues which were or could have the confirmation hear-
been decided ing.” judicata But I do not think the res reached,
issue need even be since the
County subsequently stipulated to the Bankruptcy
amount. The Pan- Appellate ought
el’s decision to be vacated because
the case was moot when was issued. COMMUNICATIONS, INC.;
LINKLINE LLC; Networks,
Inreach Internet Om Inc.; Technologies,
dba Omsoft Nite
log, Inc., dba Red Internet Shift Ser
vices, Plaintiffs-Appellees,
v. CALIFORNIA, INC., fka Pacific Telephone Company;
Bell Pacific Services;
Bell Internet Advanced
Solutions, Inc., Defendants-Appel
lants.
No. 05-56023. Appeals,
United States Court
Ninth Circuit.
Argued and 2007. Submitted June Sept.
Filed Wiese, (Multnomah Mortgage Ivory County Ivory), Lomas USA v. 980 F.2d (9th Cir.1992) (9th 1995)). (quoted re Cir. *2 E. violation of of the Sherman Antitrust Craig Mittelstaedt and Robert A. Francisco, CA, by alleged price squeeze virtue of an Stewart, Day, San Jones Inc., by competitor California, perpetrated who Pacific appellants SBC for plaintiffs supplier at the Services, serves as the Advanced and SBC Bell Internet duty has no but who Solutions, Inc. statutory plaintiff deal with the absent Gary Joye, M. Maxwell M. Blecher and not, that it compulsion. We conclude does Collins, P.C., CA, Angeles, Los Blecher & and affirm the order of the district court Communications, linkLine appellees denying judgment pleadings. LLC, Inc., Internet Om Net- In-Reach works, Technologies, Nitelog, dba Omsoft I Inc., Red Internet Services. dba Shift by This action was filed linkLine Com- Larkin, Jr., and Paul J. John Thorne munications, Inc., LLC, In-Reach Internet Inc., Arlington, Verizon Communications (collec- Networks, Nitelog, Om and Inc. Panner, Huber, VA; Kellogg, Aaron M. “linkLine”), tively who are Internet Ser- Todd, P.L.L.C., Hansen, Figel, & Evans (“ISPs”) vice Providers who sell DSL1 Taranto, DC; Washington, and Richard G. to the internet to retail customers.2 access DC, Taranto, Washington, for ami- Fan’ & some ISPs affiliated with local tele- While Communications, Inc. cus curiae Verizon phone companies own their own infrastruc- transmitting
ture
facilities for
data
consumers,
internet and
these
between the
variously from
four lease those facilities
California, Inc., Pacific
Bell Internet
Solutions,
Services, and SBC Advanced
THOMAS,
Before: SIDNEY R.
KIM
Entities”).
(collectively
Inc.
“SBC
WARDLAW, and
M.
McLANE
RONALD
in many regions,
As is true
because of
GOULD,
Judges.
Circuit
development
of the telecommunications
industry
building
the nec-
costs
THOMAS;
Opinion by Judge
Dissent
infrastructure,
essary
regional monopolies
Judge GOULD.
developed
have
that own and control the
THOMAS,
Judge:
Circuit
delivery
lines
for the
of telecom-
appeal presents
question
regional tele-
munication services.3 These
Supreme
whether the
Court’s decision
phone companies are known as incumbent
Communications,
(“ILECs”).
Inc. v. Law
Verizon
exchange
carriers
local
Of-
Trinko, LLP,
Curtis V.
telephone
to own the local
ILECs tend
fices of
telephone
as the
lines—
S.Ct.
each individual services; viding retail any company seeking to connect Because at the end of these last mile (b) with users intentionally adopted anticompetitive interconnect connections must procedures processes handling ILEC, commonly facilities аre the ILEC’s ordering customer and installation to *3 (i) referred to as “bottleneck” facilities. that ISPs are calculated to cause ISP disruption customer interruption and filing At time of the of linkLine’s (ii) service, and create and extraordinary complaint, the relevant ILEC in amended delays a backlog serious and substantial California, Inc. case was SBC orders, hope of cus- ISP (“SBC”), subsidiary a of then SBC Com- defendants; tomers will revert back to filing munications.4 At the time of the of (c) purposefully imposed created and complaint the amended Pacific Bell Inter- procedures impeded, caused and/or (“PBIS”) subsidiary net was a of Services delays for, significant and costs end user internet SBC which sold DSL access switching customers of defendant to the using telеphone retail consumers SBC’s ISPs, independent including services lines. In SBC transferred June re- plaintiffs; sponsibility provisioning billing for the and (d) misled, harassed and exhibited hos- of DSL facilities to SBC Advanced Solu- tility ISPs, toward customers of includ- tions, (“SBC-ASI”), Inc. an affiliate of ing plaintiffs; subsidiary and a SBC’s SBC Communi- (e) Entities cations. The SBC were thus or- disparaged and created doubts about ganized ISPs, so sold both wholesale efficacy legality and includ- (“DSL services”) transport DSL access ing plaintiffs; and independent ISPs as well as retail DSL (f) purposefully properly failed to bill SBC-ASI) (through access PBIS and then for DSL services. to individual consumers. At the time the short, adopted procedures defendants filed, En- complaint amended SBC carefully deny calculated to ISPs access a supplier tities wеre both to the Plaintiffs facility preserve to an essential and to a competitor the wholesale monopoly and maintain its control the retail level. DSL access to the Internet. original complaint
Linkline filed its 6, 2004, July On the SBC Entities filed a 24, 2003, July alleging that the Enti- judgment motion for pleadings. ties, acting single entity, a monop- as have The district court read linkLine’s com- attempted monopolize olized and plaint alleging as categories three different regional § market in DSL violation of anticompetitive deal, conduct: refusal to support Act.5 In Sherman facility, denial of access to an essential claim, complaint alleged En- price squeezing. In an order dated Octo- tities: 20, 2004, ber the district court dismissed
(a)created
squeeze by charging
the first two as barred
the Supreme
high
ISP a
wholesale
in relation to Court’s decision in
respect
Trinko.6 With
4.Subsequent
filing
complaint
alleged
to the
of the instant ac-
5. The
two state law
tion, through
mergers
acquisi-
a series of
appeal.
claims that are not relevant to this
tions,
reorganized.
the SBC Entities have
predicate
finding,
6. As a
to so
Regulatory
the district
we
considerations
will discuss la-
dispute
court had to
opinion likely
changing
resolve
between the
ter in this
drove the
parties
dealings
opinion
as to whether their
structures.
in this
we ana-
been
lyze
through
voluntary
required by
facts
lens of linkLine's
law. The district
complaint.
court determined that the Defendants were
token,
claim,
(3)By
the same
defendants
price squeezing
ordered
to the
сharged their retail affiliates
an amended
themselves
Plaintiffs to file
the same wholesale costs for DSL trans-
squeeze claim that
“limited to the
port
they charged
their wholesale
beyond
requirements
the normal
details
(such
plaintiffs),
Plaintiffs’
ISP customers
de-
specific
supporting
facts
Rule 8
their
first amended
fendants could not cover
claim.” The
price-squeeze
ser-
allegation
profit
as fol-
costs
make
DSL
complaint described
low retail
for their
vice
their
lows:
DSL,
offering of
Internet
bundled
Ser-
above defendants unlaw-
As set forth
necessary equipment (e.g.,
vice and
free
their dual role as ver-
fully manipulated
installation),
modem and
that were
monopolists as both a
tically integrated
*4
cases,
period,
some
and for some
whоlesale-monopoly supplier and retail
transport
below the wholesale DSL
cost.
competitor
plaintiffs
of
for DSL
en-
relationship be-
price margin
Given the
price squeeze by
in an unlawful
gaging
prices,
retail and wholesale
defen-
tween
intentionally
independent
charging
ISPs
clearly attempting
compen-
dants are
high
too
prices
were
deliberately sacrificing profits
sate for
at which
prices
relation to
defendants
operations
on the retail end of their
and
providing retail DSL services
were
(with offsetting margins on the whole-
to end-user
necessary equipment
cus-
side)
stifle, impede
sale
in order to
and
by charging
a period
tomers —and for
competition
independent
exclude
prices
competing
wholesale DSL
ISPs
that are
plaintiffs
ISPs such as
both
(such
actually
exceed-
plaintiffs)
as
and retail rivals.
wholesale customers
retail
prices
ed the
at which defendants
addition,
In
the amended
(PBI)
charging
affiliate
retail end-
alleged that the Defendants
for DSL services and
user customers
(1)
making
intentionally adopted anticompetitive
necessary equipment
thereby—
procedures
processes
handling
and
for
impossible
independent
for
ISP com-
and installation to
plaintiffs
compete
ordering
customer
petitors such as
(i) cause
set
defendants
ISPs that are calculated to
ISP
the low retail
disruption
interruption
and
customer
and
for combined DSL-Internet Service
(ii)
service,
extraordinary and
provided to end-
and
create
equipment
delays
backlog
serious
and substantial
user customers.
orders,
hope
that the ISP cus-
of
(2)
charged
If
retail DSL-In-
plaintiffs
defendants;
tomers will revert back to
ternet access customers the same retail
imposed
created and
purposefully
defendants’
retail
affiliate
as
procedures
impeded,
caused
charged, plaintiffs could not cover the
and/or
for,
service,
end
significant delays and costs
providing
cost of
DSL
switching
user
of defendant
necessarily includes the wholesale
‘customers
costs
ISPs, in-
independent
charged by
costs
defendants.
services
transport
Tele-
obligated
transport
ments
Incumbent LEC Broadband
by law to offer their DSL
for
¶
Servs.,
(2002),
under the
Tele-
facilities to the Plaintiffs
comm.
17 F.C.C.R.
("1934 Act”)
and the
communications
charges, practices,
and that
classifica
"[a]ll
Act,
implementing
as
FCC rules
it. The 1934
tions,
regulations
and in connection
for
amended, requires
provide
that Defendants
service, shall be
with such communication
transport
DSL
Plaintiffs with access to their
...,"
201(b).
just
and reasonable
U.S.C.
basis,
nondiscriminatory
see In
services on
disputed
appeal.
determination is not
Regulatory Require-
the Matter
Review
2007).
decades,
imposed
unrea-
thew Bender
For over
eluding plaintiffs,
six
anticompetitive costs of
sonable and
recognized price
federal
courts have
aggregation-backhaul circuits nec-
DSL
squeeze allegations
stating
valid claims
DSL service and
essary
providing
the Sherman Act.7 See United
delays
process-
pаrticularly given
Am.,
States v. Aluminum Co.
148 F.2d
orders, unfairly raised the
ing
per-cus-
(2d
(“ALCOA”)
Cir.1945)
416, 437-38
independent
trying
tomer costs of
ISPs
unlawful);
(holding price squeeze
see also
compete
with defendants.
Bonjorno v. Kaiser Aluminum & Chem.
(3) misled,
harassed
exhibited hos-
(3d Cir.1984)
Corp., 752 F.2d
809-11
ISPs,
tility
customers of
includ-
toward
(price squeeze
only
an antitrust violation
ing plaintiffs;
plaintiffs
can show that “the defendants
(4) disparaged and created doubts about
deliberately produced the effect” to “de
ISPs,
efficacy
legality
includ-
stroy
competition”); Borough
Lans
ing plaintiffs; and
Co.,
Philadelphia
dale v.
Elec.
692 F.2d
(5) purposefully
properly
failed to bill
(3d
Cir.1982);
309-10
City
Kirk
services.
DSL
Co.,
wood v. Union Elec.
response,
the SBC Entities filed vari-
(8th Cir.1982) (antitrust
liability
1178-79
challenging
ous motions
price squeezes
can
lie for
even when
still
*5
allegations
portiоns
and other
of
regulated);
rates are
City
Groton v.
of
complaint.
amended
(2d
Co.,
Light
Conn.
& Power
The Court went on to reason that not
judgment
Entities to
pleadings,
only
allegations
did Trinko’s
not make out
which in turn requires us to decide wheth
claim,
a traditional antitrust
but that
er Anaheim remains viable after Trinko.
justified
would not be
in extending anti
court,
Normally, only
sitting
banc,
our
en
liability
trust
to include Trinko’s
case.
may overrule our precedent absent an in
conclusion,
reaching this
it emphasized
*7
tervening Supreme
“the
a
Court decision or act
regulatory
existence of
structure
designed
Congress.
remedy
to deter and
Cerrato v.
anticompet
San Francisco
harm,”
Dist.,
itive
dangers
judicial Cmty.
968,
and the
Coll.
26 F.3d
972 n. 15
412-14,
(9th Cir.1994).
intervention.
Id. at
124
S.Ct. 872.
“where the rea-
Aspen
discounted,
Skiing
a
involved claim the
week-long pass
owner
its three
of one
Aspen,
of the four ski mountains in
higher priced
mountains or
daily
individual
Highlands,
single
known as
owner of
permit
tickets that would
the consumer to ski
the other three ski
violating
mountains was
worked,
all four
plan
mountains. The
by refusing
antitrust
Highlands
laws
to sell
when
pre-
the owner of the three mountains
passes
prevent Highlands
to its mountains to
any attеmpt by Highlands
vented
to sell four-
being
able to offer consumers a four-
multi-packs
(by, among
mountain
other
595,
multi-pack.
mountain
883 not, Entities did as the SBC Trinko au prior circuit theory of our soning or the via- argue, completely the eliminate would irreconcilable with clearly thority is theory § 2 priсe squeeze intervening higher bility of reasoning theory case, the regulated con industries. Were three-judge panel should authority, a the have referred to not by the later control Trinko would sider itself bound regime only reject prior regulatory of a existence authority, should ling effectively determining having been factor” to consider in opinion as “one circuit Gammie, F.3d also lie. liability might v. 335 Miller whether antitrust overruled.” Cir.2003) (en banc). (9th Moreover, 412, 889, 124 893 540 U.S. S.Ct. 872. at always not regulation existence of does Here, of Anaheim reconsideration anticompetitive danger eliminate reasoning and required is not because Mishawaka, at 983- harm. See “clearly irrecon is not theory of Anaheim presence regulato- of a (noting that the 84 theory” of reasoning or with the cilable squeezers a ry price offers structure First, Circuit has as the Eleventh Trinko. a le- “ready illegal opportunity made with underscored, not Trinko did involve Trinko, key, gitimate gloss”). Indeed, theory. Trinko squeezing regulatory structure is the nature of explain great care to took As Justice Scalia observed: issue. context, “claims regulatory particular particular importance factor of One are antitrust standards” satisfy established regulatory of a structure the existence 406, 124 872 540 S.Ct. preserved. U.S. remedy anticom- designed to deter omitted). (citation Because a structure harm. such petitive Where of the fabric of theory squeeze formed exists, competi additional benefit Trinko, prior law traditional antitrust by antitrust enfоrcement provided tion viable remain notwith those claims should small, and it will be less will tend to be telecommunications either standing laws contem that the antitrust plausible BellSouth, 374 Trinko. See statutes or Where, scrutiny. additional plate such claim sur (“price squeezing F.3d at contrast, into nothing built “[t]here tra it is based on [Trinko ] vives because perform scheme regulatory doctrine”). ditional antitrust function,” antitrust Silver ances the Second, did not embrace Anaheim 341, Exchange, 373 U.S. New Stock York liabili- unlimited view of L.Ed.2d 389 S.Ct. To regulated industries. ty in (1963), of antitrust the benefits that, in rejected the idea trary, Anaheim considerable disad worth its sometimes industries, mere “a regulated case of vantages. developed showing that a Trinko, Thus, consistent liability.” to cause would suffice rejectеd the Anaheim S.Ct. recognized Anaheim F.2d at *8 theory of antitrust importation carefully” in im- that “courts should tread regulated industries. applicable as to on regulated standards posing hand, Anaheim industry at particular ultimately industries, re- id. at that, regulatory in recognized specific intent showing quired utility issue, possible “it for a scheme at to monopoly holder of the wholesale in a requests filings its manipulate purposes monopolistic [retail “serve a, temporary, that causes at least manner in order for competitors’] expense” just as effective might be Thus, rec- Anaheim liability to attach. Id. actor.” unregulated perpetrated one theory, but viability of the ognized the Thus, under- Anaheim it. carefully circumscribed Trinko-type analysis in took the сontext terms as unaffiliated ISPs. See 47 C.F.R. 64.702(c) industry particular § and factual set (codifying “Comput- the second ting. Significantly, examining after Inquiry”). Alternatively, er an ILEC particular pleadings, the panel Anaheim provide itself, could DSL internet access price squeeze theory concluded that but to do so must file what is known as course, was not in that case. viable Of in “Comparably Efficient Interconnection” Anaheim, any (“CEI”) application future we will plan with the FCC. See In re consistency have to ensure with Trinko. Computer III Further Remand Proceed- reading a careful ings: Anaheim Operating Company Bell Provision does not demonstrate that the holding Services, Order, Enhanced Report and “clearly reasoning (1999)[hereinafter irreconcilable with the 14 FCC Red. 4289 thеory” of Trinko. “Computer III” plans order]. These indi- cated how ILECs on planned providing apply
When we
Anaheim and Trinko to
competing
equal
ISPs with
access to all
case,
the soundness of the district
necessary
provide
elements
their
in denying judgment
court’s conclusion
own DSL internet access
Among
services.
Here,
the pleadings is clear.
unlike the
requirements
plans,
for CEI
ILECs
Tñnko,
circumstances Anaheim and
we
“provide
had to
competitors with intercon-
are confronted with a partially regulated
nection
transport
facilities
minimize
industry. At the wholesale
there are
costs.
provision
ensures
regulatory
a series of
reg
mechanisms and
require competitive
[ILECs] cannot
ISPs
ulatory agencies charged
assuring fair
purchase
unnеcessarily expensive meth-
play.
regulations grew
These
out of the
ods of interconnection with the [ILECs]
and have been considered in a
network.”
Id.11 The 1934 Act also re-
series of FCC decisions known as the
quired that
charges, practices,
“[a]ll
classi-
short,
“Computer Inquiries.”10 In
fications, and regulations for
place
FCC rules in
at the
filing
time of the
nection with
service,
such
communication
complaint,
the SBC Entities were
”
just
shall be
subject
reasonable....
regulatory
to certain
requirements
201(b).
§
U.S.C.
wished to enter the enhanced ser
(i.e.,
vices telecommunications market
offer
charged
The 1934 Act
the FCC with
access).
DSL internet
enforcing
regulations and,
these
in some
cases, parties
If an
can also bring complaints
ILEC wished to offer DSL inter-
accеss,
net
before
public utility
it could choose one
state
of two
commissions.
Aggrieved
routes.
It could
a separate
parties
form
subsid-
can either file a com-
iary through
plaint
which it
would offer DSL
federal district court or before the
access,
internet
but which had to obtain Commission.
47 U.S.C.
207. The FCC
provision may
infrastructure
also initiate its own
pro-
enforcement
such services from
ceedings
the ILEC on the same
and craft remedies as it deems
comprehensive
10. For a
explanation
decision,
of how 11.
intervening
Under an
FCC
in-
regulatory
operates,
longer
cumbent
required
structure
see
LECs are no
Robert
to al-
Cannon,
competitors
low their
interconnect. See In
Where
Internet Service Providers and
Appropriate
re
Frаmework
Broadband Ac-
Telephone Companies Compete: A Guide to the
Facilities,
cess to the Internet over Wireline
Computer Inquiries, Enhanced Service Provid-
(P
F) 944,
Reg.
Comm.
&
get out of the (D.C.Cir. antitrust lаw starting blocks Bell Atl. Corp., 398 F.3d if plaintiffs 2005) allegations cannot make show- (quoting 3A Areeda & Hovenkamp, ing that the retail prices charged by (2d P767c3, Antitrust Law at 129-30 ed.2002)). SBC Entities were predatory a sense I am agreement with this forbidden the antitrust laws. reasoning goes: so far as it Trinko insu might fact, It summary then be resolved of material but it would warrant trial if judgment stage genuine were any there no issue disputed there were material fact issues. *11 does not satis- pricing if the retail violation setting of review the antitrust lates Group, Brooke requirements of fy the price. upstream the on what can unmistakable limits set Circuit the D.C. although within the predatory to be considered be alle- “price squeeze” that from this cluded that laws. the antitrust meaning of dismissed, respect in this should be gations a preda- that Supreme the Court held I case allegations key if the disagree I would only if made, proceed claim could tory pricing be because could identified have (1) allegation prices that the squeeze” allegations “price of the there were in “down- set the price the retail measure of appropriate based an set were below Thus, here linkLine is market. stream” costs; the seller that the seller’s buy use inability about complaining or, prospect, had a reasonable price at the set lines service of wholesale Act, probability, a dangerous the Sherman the compete with by when cannot SBC 222-24, Id. recouping losses. of later DSL itself sells at which SBC price retail Here, in their plaintiffs 113 S.Ct. to consumers. connections internet in the amend- contentions “price squeeze” use of its sale setting SBC’s that the seller allege did not complaint ed by in a wholesale lines ISPs of its land prices to set power had the market of an anti- cannot be the basis transaction market, in retail connection internet That, how- of Trinko. light claim in trust contributing to the price, that retail SBC’s ever, scrutiny SBC’s dispose not does cost, that loss- was set squeeze, below market, for it is in the retail conduct recouped. es could later be to its sells DSL service at which SBC heretofore held have not Because we squeezes linkLine’s customers that retail market showing a at a there must be connections ability to resell internet market, conten- nor held “price squeeze” retail Thus in the profit. power predatory a claim of down to must be Group boils Brooke tion the standards by of internet connections on sales pricing in the retail assessing predation in applied re- If all that in retail market. think it I do not squeeze,” “price side is a claim “price squeeze” mains complaint to dismiss correct would be prices set to the challenge retail Instead, prejudice. pleadings on the service, connection of DSL internet on sale dismissal, have been should plaintiffs after essentially predatory it seems to then me could complaint their free to amend in claim, only be viable and it can pricing allegations faith the good in assert Entities have the SBC first instance if Trinko, here, for antitrust аfter requisite to set or power market sufficient real some liability.2 in retail market. influence dissent, believing respectfully I Thus for al- Moreover, beyond the need precedents Supreme Court’s degree of market proving some leging and so Group have Brooke Trinko and market, if that is the in the retail power “price potential hemmed after of the antitrust true locus allega- specific liability squeeze” Trinko, of a the retail side I have identified are tions create an antitrust be considered cannot granted a mo- court should have injury the district possibility of just enough There district pleadings, the tion to dismiss anti- culpable under the occurring for reasons permitted amendment laws, have court should Corp. v. Pueblo see trust Brunswick allegations can be made Bowl-O-Mat, case the critical 97 S.Ct. view, plaintiffs. (1977), my while so that L.Ed.2d 701 state an claim in the context of *12 “price squeeze” alleged.
Craig Anthony CARRINGTON,
Petitioner-Appellant,
v. America,
UNITED STATES of
Respondent-Appellee. Tillitz,
Robert Charles Petitioner-
Appellant, America,
United States of
Respondent-Appellee. 05-36143,
Nos. 05-36144. Appeals,
United States Court of
Ninth Circuit.
Argued Aug. and Submitted Sept.
Filed