Verizon Communications, Inc. v. Law Offices of Curtis V. Trinco, LLP

PETITIONER: Verizon Communications Inc.
RESPONDENT: Law Offices of Curtis V. Trinko, LLP
LOCATION: Polk County Courthouse

DOCKET NO.: 02-682
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 540 US 398 (2004)
GRANTED: Mar 10, 2003
ARGUED: Oct 14, 2003
DECIDED: Jan 13, 2004

ADVOCATES:
Donald B. Verrilli, Jr. - argued the cause for Respondent
Robert H. Bork - for the Project to Promote Competition and Innovation in the Digital Age as amicus curiae
Richard G. Taranto - argued the cause for Petitioner
Theodore B. Olson - argued the cause for Petitioner, on behalf of the United States, as amicus curiae

Facts of the case

Curtis Trinko was an AT&T customer but received service on lines owned by Verizon, which AT&T was permitted to use for a fee under the anti-monopoly 1996 Telecommunications Act. Trinko claimed that Verizon discriminated against AT&T customers by providing them worse service than it provided to its own customers. He claimed that this violated both the Telecommunications Act and the Sherman Anti-Trust Act of 1890, which prohibits monopolies from aggressively defending their monopoly position in the market. A federal district court ruled that Trinko had no grounds to sue because he was not a direct customer of Verizon. A 2nd Circuit Court of Appeals panel, however, reinstated the charges leveled under the Sherman Act.

Question

When a company fails to meet its duty to share its network with competitors under the Telecommunications Act, can it be sued under the Sherman Act?

Media for Verizon Communications, Inc. v. Law Offices of Curtis V. Trinco, LLP

Audio Transcription for Oral Argument - October 14, 2003 in Verizon Communications, Inc. v. Law Offices of Curtis V. Trinco, LLP

Audio Transcription for Opinion Announcement - January 13, 2004 in Verizon Communications, Inc. v. Law Offices of Curtis V. Trinco, LLP

William H. Rehnquist:

The opinion of the Court in No. 02-682, Verizon Communications, Inc. versus the Law Offices of Curtis V. Trinko will be announced by Justice Scalia.

Antonin Scalia:

This case is here on writ of certiorari to the United States Court of Appeals for the Second Circuit.

The Telecommunications Act of 1996 imposes upon an incumbent local exchange carrier or LEC the obligation to share its telephone network with competitors.

Petitioner, Verizon Communication, Inc., is the incumbent LEC in New York State.

As it is obliged to do under the 1966 Act, Verizon has signed interconnection agreements detailing the terms of its network sharing with rivals such as AT&T, the so-called competitive LECs.

Part of its sharing obligation is the provision of access to certain operations support systems or OSSs.

Without which, a rival cannot fill its customers’ orders.

Verizon’s interconnection agreement was approved by the New York Public Service Commission and its authorization to provide long distance telephone service was approved by the Federal Communications Commission.

Each of those approvals specify the mechanics by which its OSS obligation will be met.

When competitive LECs complained that Verizon was violating that obligation, the State and federal agencies, the New York State PSC and the FCC, opened parallel investigations which led to the imposition of financial penalties and other requirements on Verizon.

The respondent in this case, a law firm that is a local telephone customer of AT&T then filed this class action alleging that Verizon had filled rival’s orders on a discriminatory basis as part of an anticompetitive scheme to discourage customers from becoming or remaining customers of competitive LECs in violation of Section 2 of the Sherman Act and of federal telecommunications law.

With respect to the antitrust claim, the District Court dismissed the complaint but the Court of Appeals reinstated it.

We granted certiorari limited to the question whether respondent’s alligations of an alleged breach of Verizon’s duty to share its network with competitors states a claim under Section 2 of the Sherman Act.

A Saving Clause in the 1996 Act provides that “nothing in this act shall be construed to modify, impair, or supersede the applicability of the antitrust laws.”

This preserves claims that satisfy established antitrust standards, but it also forbids the creation of new claims that go beyond those standards.

A few of our past cases have held a refusal to cooperate with rivals to be anticompetitive conduct cognizable under Section 2.

Thus, creating narrow exemptions to the general rule that there is no duty to aid competitors.

The question before us today is whether the alligations of respondent’s complaint fit within those existing exceptions or provide a basis under traditional antitrust principles for recognizing a new exception.

The activity that respondent complains of does not come within a rule of liabilities set forth in our prior cases.

It does not come within the prior exceptions.

Respondent understandably places heavy reliance upon Aspen Skiing Company versus Aspen Highland Skiing Corporation, a case in which the Court reasoned that the defendant’s termination of a voluntary agreement with the plaintiff.

They had an agreement to share lift tickets essentially and the defendant terminated that agreement, and the Court found that that termination suggested a willingness to forsake short term profits in order to achieve an anticompetitive end to wit monopolization.

Aspen however, is at or near the outer bound of Section 2 liability, and the present case does not fit within the limited exception that it recognized.

Because the complaint does not allege that Verizon ever engaged in a voluntary course of dealings with its rivals, with AT&T or anybody else, its prior conduct sheds no light upon whether its lapses from the legally compelled dealing were meant to destroy competition.

More fundamentally, the Aspen defendant refused to provide its competitor with a product it already sold at retail.

Whereas here, the unbundled elements offered pursuant to Section 251 of the 1996 Act are not available to the public, but are provided to rivals under compulsion and that considerable expense.

Our conclusion would not change even if we consider it to be established law the so-called essential facilities doctrine that has been adopted by some lower courts.

The indispensable requirement for the essential facilities doctrine is the unavailability of access to the essential facilities, where access is available or it exists like it does here, because of the 1996 Act the essential facilities doctrine serves no purpose.

Finally, we do also not think that traditional antitrust principle justify adding the present case to the few existing exceptions from the general rule of no duty to aid competition.

Antitrust analysis must always be attuned to the particular structure and circumstances of the industry at issue.