*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. 157 L.Ed.2d 823 network as well (“Trinko ”), connect plaintiff claiming a known as the “last-mile”—that bars line) story regional monopolies (digital three 3. The of how these 1. DSL subscriber is one of popular ways to connect to the monopoly for consumers held evolved out of the nationwide ways dial-up internet. The other two Telephone American and Tele for decades and cable modem service. Both DSL service (AT T) many graph told times. & has been existing phone dial-up use lines to service See, e.g., Joseph Kearney, the Fall D. From internet, while cable uses connect users to the System Bell to the Telecommunications the same cable lines used to transmit cable Regulation Act: Telecommunications Under signals. television Green, Hastings Judge L.J. 1403-18 (1999). history is collateral to appeal, purposes of this we assume For our review. pleaded as true the facts in linkLine’s amend- 12(c). complaint. ed See Fed.R.Civ.P. pro- consumer to the network. at which defendants were

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 are 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 telephone 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 were 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 charged 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 wholesale-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- particularly 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 portions and other of regulated); rates are City Groton v. of complaint. amended (2d Co., Light Conn. & Power 662 F.2d 921 granted part in The district court Cir.1981); City Mishawaka v. Am. Elec. of requested, relief but denied the motion to (7th Co., Power 616 F.2d 983-85 Cir. Acting dismiss for failure to state a claim. 1980) (antitrust liability can lie for Entities, request on the of the SBC squeezes regulated industry in a upon district court certified the order for inter- intent). showing specific anticompetitive of locutory appeal. joined We have our sister circuits in appeal to granted permission pursu We holding that of un- squeezing claims § ant to 28 U.S.C. We review the § 2 against der are viable monopolists judgment denial of a motion for regulated City industries. Anaheim v. States, pleadings de novo. Doe v. United Co., Southern Edison 955 F.2d California (9th Cir.2005). 1058, 1061 (1992). Anaheim, In 1373 we held that in a prices regu- II business where were lated at both the wholesale and the retail terms, In antitrust a price oc possible it was a price squeeze to vertically integrated curs a compa “when (“[I]t occur. Id. at 1377 possible (or ny sets its or rates at the first utility manipulate filings to and re- ‘upstream’) high level so that its customers a, quests in a manner that causes at least compete cannot -with it in the second-level (or temporary, squeeze ‘downstream’) might just be market.” Von Kalinow al., by 2 effective as one perpetrated unregu- ski et Laws and Trade Antitrust (2d actor.”). 27.04[1], Regulation § 27-40 Mat Ed. lated and, thereof, "[e]veiy person guilty felony, 7. Section 2 states that who of a on conviction monopolize, attempt monopolize, punished by shall exceeding or shall be fine not $100,000,000 or, any conspire person or combine or with corporation, any other if a other $1,000,000, persons, monopolize any or person, by imprisonment or not States, among exceeding trade years, punish- or commerce the several 10 or both said nations, ments, foreign or with shall be deemed in the discretion court.” de- Trinko, however, by the NYPSC and consent orders Supreme Court In by monopolist cree with the FCC. the failure held that certain service competitor on with a deal that Supreme Court held “Verizon’s under no monopolist was when that terms provi- assistance alleged insufficient plaintiff competitor deal with the duty to recognized not a of service to rivals is sion not state statutory compulsion, did absent existing antitrust claim under this Court’s Act. the Sherman under a claim Id. precedents.” refusal-to-deal question raised the wheth holding Trinko began from the 124 S.Ct. 872. merely another term squeeze is er a that the Telecommunications premise Supreme governed the deal added to nor subtracted of 1996 neither Trinko, it is or whether analysis Court’s punishable conduct the class The D.C. and Eleventh something else. 406, 124 laws. Id. traditional conflicting answers have offered Circuits note (quoting 47 U.S.C. S.Ct. 872 Covad Com question. Compare (“nothing in shall be [the Act] Corp., Co. v. BellSouth munications modify, impair, supersede strued Cir.2004) (“Bell (11th 1044, 1050 F.3d laws”)). any of the antitrust applicability of ”) claims South (holding Accordingly, the Court set out to deter- Trinko), Communica Covad survive made allegations mine Trinko’s whether Corp., v. Bell Atlantic F.3d tions Co. antitrust claim under the out an actionable (D.C.Cir.2005) (“Bell ”) Atlantic precedents, refusal-to-deal existing Court’s not). (holding do statutory require- of Verizon’s irrespective Trinko, a customer of one Veri- Act. ments under the 1996 Communications, rivals sued zon’s Verizon reiterated that “the Sherman The Court Inc., engaged in alleging Verizon *6 long recognized Act ‘does not restrict practices by discriminato- anticompetitive or manufacturer en- right of trader [a] by customers delaying placed orders rily business, free- entirely private in an gaged Verizon competitors of Verizon’s —orders independent own discre- ly to exercise his fill Telecommunica- required to was ” deal,’ will parties tion as to with whom he 404, 124 tions Act of 1996.8 540 U.S. United 408, id. (quoting 124 872 S.Ct. by rendering alleged Trinko S.Ct. 872. Co., 300, 307, Colgate v. & 250 U.S. States placed orders performance poor (1919)), 465, but 63 L.Ed. 992 39 S.Ct. competitors, it would through Verizon’s other refuse to deal with right “the relationships those customers’ sour un- right that the does not mean firms and drive them back Veri- their CLECs Skiing Co. (quoting Aspen id. qualified,” Id. Trinko sued Verizon after both zon. Skiing Corp., Aspen Highlands Commission the Federal Communications 585, 601, 86 L.Ed.2d 105 S.Ct. (“FCC”) and New York’s Public Services (1985).) it then stated that (“NYPSC”) The Court already had inves- Commission exeep- recognizing matter, “very cautious” when resulting in a series of tigated network provide must these unbundled of 1996 ILECs 8. The Telecommunications rates, terms, Act”) ("1996 ("UNEs”) requirement and con- "on established elements reasonable, provide access to their networks just, ILECs nondis- ditions that ser- competitors in the telecommunication regulatory- criminatory....” Id. As of this (who competi- became known as vices market required regime, as Verizon are ILECs such carriers, "CLECs”). exchange local tive when competitor's customers their to service 251(c). offer CLECs 47 U.S.C. ILECs must the infrastructure Verizon controls elements on access to each of their network provide services issue. individual basis. Id. an “unbundled” or right refusing tions to the to deal and The latter include the risk of “false Skiing “at Aspen or near the might demnations” that very “chill the boundary liability” outer for refus conduct the antitrust are designed laws 408-09, ing to deal. Id. at 124 S.Ct. 872.9 protect.” Id. at (quot- S.Ct. 872 In Aspen Skiing, strong the Court saw ing Matsushita Elec. Industrial Co. v. Ze- purpose evidence that the defendant’s sole 574, 594, nith Radio Corp., 475 U.S. in refusing attempt to deal was to to mo (1986)). S.Ct. 89 L.Ed.2d 538 Im- nopolize, by competitive “not zeal but by portantly, the say Court did not anticompetitive malice.” Id. at 124 existence of a regulatory scheme awas (1) S.Ct. 872. That evidence included that per judicial se bar to enforcement of the parties “voluntarily engaged laws, only antitrust that “the existence of course dealing” (proving that the defen a regulatory structure” is “[o]ne factor dant would have done so statutory absent particular 4Í2, importance.” Id. at (2) compulsion); the defendant refused added). (emphasis S.Ct. 872 Trinko nev- even to highlands passes sell ski at retail er addressed specifi- claims rates; it the services was withhold cally. Trinko significant is of ing were “otherwise marketed or available import. Indeed, already we have had oc- 409-10, public.” to the Id. at 124 S.Ct. apply casion to Trinko to bar antitrust lia- Having found no similar evidence in bility when the centered on al- Trinko, the Court held that al Verizon’s legedly anticompetitive terms, albeit leged insufficient service failed to state a not price squeezes. See MetroNet Servs. valid claim since Verizon’s refusal Qwest (9th Corp. v. Corp., 383 F.3d 1124 to deal with competitors at all could not Cir.2004). even be seen anticompetitive. Id. at 410, 124 S.Ct. 872. Given background, we must decide whether Trinko entitles the SBC

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 attempt by Highlands vented to sell four- being able to offer consumers a four- multi-packs (by, among mountain other 595, multi-pack. mountain 472 U.S. at 105 things, refusing Highlands passes to sell companies S.Ct. 2847. two years The had for rates), to its mountains at retail skiers forsook prior acted partnership to offer skiers a Highlands in favor of the three mountain multi-pack four-mountain until the owner of package. The Court held the owner of the the three mountains realized it could freeze three mountains liable under the antitrust independently-owned out the fourth mountain laws. by forcing consumers to choose between a

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 price 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 enforcement 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 rejected 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 context 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 theory” 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 unnecessarily 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- access, 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 Framework 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. & 2005 WL 2347773 Providers, ers and Service *9 Infonnation 25, 2005). however, (Sept. change, does Conspectus Comm. Law [hereinaf- apply not to the instant suit the details of Computer ter Inquiries”]. "Guide to the supporting change the rationale the are be- yond scope opinion. the of this GOULD, Judge, dissenting: Circuit prac- § In 47 U.S.C. appropriate. however, rely on tice, tends to the FCC dissent, that concluding respectfully I to its bringing complaints players market have been complaint should the amended Cannon, the Com- to Guide attention. See claim, in for failure to state a dismissed at 70. Inquires puter prece- Supreme Court light dispositive dent, permissive the stan- notwithstanding however, applies regulation, All of this complaint when by which we assess dard Enti- prices the SBC wholesale only to the the to dismiss on confronted motion with linkLine; compa- is no there ties charged pleadings. the re- paid to attention regulatory rable notes, correctly we assume the court As on Any restrictions market. tail DSL in linkLine’s amended pleaded the facts primarily the retail level derive pricing matter general true. As a complaint be to It is unclear antitrust laws. from the if to the complaint it is not correct dismiss linkLine extent to which juncture the the might proved be under which any facts theory squeezing basing its However, the complaint be valid. would or both. pricing, retail pricing, only alleges “price generally facts, prove could linkLine since exclusionary conduct. related squeeze” and involve complaint, that with its consistent allege the complaint does not at the retail lev- unregulated behavior only to set any power had market SBC Entities a motion el, lawsuit survives or action the retail internet or influence not do judgment pleadings. We quite say odd to So it seems service. court, however, from the district preclude laws in the antitrust have violated could viability this claim on re-examining the if has pricing; retail because after the record summary judgment above the prices set its retail power no it is clear wheth- developed and fully more it has sold its wholesale at which place at of behavior took complained the er connection, sense to con- it does not make level, unregu- the regulated wholesale the “price illegal squeeze” an pricing sider its level, or some combination lated retail antitrust laws. Given under the extent, any, the two, and to what the compete connections internet SBC’s DSL atten- agencies have devoted responsible satellite, by cable and with connections in the com- had involvement tion to or has the means clear that SBC it is no record Based on the plained of conduct.12 mar- to influence retail power market time, we able at this before us price. ket was correct that the district court conclude Moreover, not al- complaint does judg- Entities’ motion for deny at which the SBC lege linkLine’s because pleadings ment on internet sold retail “DSL” Entities scheme created pricing allegation cost, any under below nections were states a anticompetitive cost; yet to the extent measure of valid claim potentially retail predation concern is Act. Sherman that, in current then it would seem be theory, sales must below-cost AFFIRMED. regula- MetroNet, anticompetitive Where the conduct. we found relevant 12. In remedy prevent the al- agencies’ tory agencies have failed responsible “attentiveness conduct, may F.3d leged anticompetitive conduct." tilt the balance anticompetitive well, both FCC and Trinko as judicial intervention. in favor already Verizon's addressed the NYPSC *10 complaint allege shown. The does not The district court dismissed most of the Entities, that the SBC to the extent allegations of the complaint, but let stand by selling had losses below in “price cost the the squeeze” allegation. As the ma market, any prospect retail realistic jority notes, opinion “At the time the losses; yet of recouping again, pros- complaint filed, amended the En pect recoupment of is an integral element tities were both a supplier to the Plaintiffs a predation under current analysis Su- at the wholesale competitor and a at preme Court doctrine. the retail level.” majority opinion correctly “In explains: expense Because the and burden of terms, a price squeeze occurs ‘when a ver in proceeding litigation, the antitrust tically integrated company sets its would be inefficient permit and unwise to (or rates the first ‘upstream’) level so proceed on the general high that its compete customers cannot allegations price squeeze, allega absent (or with it in the second-level ‘down my tion of critical facts that in view are ” stream’) Yet, market.’ the notion of a liability. needed for put To the matter “price squeeze” is itself in a be practically, it to me that the Su seems e tween two recent Suprem prece Court preme in Court’s Verizon decision Com dents. munications, Inc. v. Law Curtis Offices of Trinko, LLP, 398, V. 124 S.Ct. Let us look first “price (2004) (“Trinko ”) 157 L.Ed.2d in squeeze” represented by setting essence takes the pric of wholesale issues upstream price at it would sell use ing case, out of the and thus transforms of its land lines to linkLine and the other what is left any “price squeeze.” claim ISPs here suing. The Supreme Court’s so, If and if plaintiffs good in faith cannot Trinko, in decision upholding ability allege power, market below cost sales and regulated monopolist to deal with a com probable potential recoupment petitor terms, on certain service means market, retail then the case should not if price, SBC set proceed. plaintiffs if Conversely, are able upstream price, high, that too cannot be allege that the SBC Entities had market challenged under the antitrust laws by power in the retail market to set or influ analogy permissible refusals to deal. I price, ence the and that their retail sales of substantially substantively agree with internet connection predatory in were position taken the D.C. Circuit sense of being pros below cost with a real Covad Communications Co. v. Bell Atlan pect recoupment, then the case should Corp., tic adopted wherein the court proceed for development.1 factual reasoning of major treatise on antitrust “ After Trinko and Group Brooke law that ‘it makes no sense to prohibit a Brown & Williamson Tobacco Corp., 509 predatory price squeeze in circumstances U.S. 113 S.Ct. 125 L.Ed.2d 168 where the integrated monopolist is free to ” (1993) (“Brooke ”), Group the case doesn’t refuse to deal.’ Covad Commc’ns Co. v.

get out of the (D.C.Cir. antitrust law 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 after 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