The opinion of the court was delivered by: Illston, District Judge.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH LEAVE TO
On January 5, 2001, the Court heard argument on defendants'
motion to dismiss plaintiff's complaint for failure to state a
claim upon which relief can be granted. Having carefully
considered the arguments of the parties and the papers submitted,
the Court GRANTS defendants' motion with leave to amend as set
DSL is a service that provides consumers with dedicated,
high-speed access to the Internet. Compl. ¶ 13. Utilizing new
technology that permits simultaneous data exchange over voice
service, DSL service is provided through already existing
telephone lines and facilities, thus allowing users to have
concurrent access to the Internet and traditional telephone
service. See id.; Deft's Req. for Judicial Notice, Ex. A
(Tariff F.C.C. No. 128), at rev. p. 13. According to Stein,
Pacific Bell has a market share in excess of 85% of the DSL
market, and controls the existing local telephone network and the
supporting physical facilities through which DSL service is
provided. Compl. ¶ 18. Competitors must rely directly on Pacific
Bell's telephone lines and physical facilities for delivery of
DSL service and to collocate the competitors' equipment with
Pacific Bell's equipment. Id. at ¶ 26. Thus, Pacific Bell's
existing local telephone network and facilities are "essential to
competitors who wish to enter the DSL market," Id. at ¶ 19.
Pacific Bell is an incumbent local exchange carrier ("ILEC"),
as defined by the Telecommunications Act of 1996 ("1996 Act"). As
an ILEC, Pacific Bell was required to negotiate in good-faith and
to enter into interconnection agreements with competitors to make
available its local telephone network. Compl. ¶ 15. As a result,
Pacific Bell entered into several interconnection agreements with
DSL competitors. See Compl. Ex. A. Stein claims that, in
violation of these interconnection agreements, Pacific Bell has
"engaged in a pattern of anticompetitive conduct . . . generally
designed to leverage Pacific's monopoly power obtained through
its ubiquitous local telecommunications network. . . . with the
intent and inevitable effect of injuring, thwarting or
eliminating actual or potential [DSL service provider]
competitors." Id. at ¶ 25.
According to Stein, Pacific Bell has "routinely and
arbitrarily" denied physical collocation with its equipment and
misrepresented the availability of space for collocation. Id.
at ¶¶ 28-30. Pacific Bell has allegedly also stifled competition
by requiring and charging unreasonable prices for collocation
cages.*fn1 Id. at ¶¶ 31-32. Furthermore, Pacific Bell
allegedly has discriminated against and imposed "hindrances and
delays" on competitors trying to enter the DSL market by refusing
to timely deliver collocation cages, dedicated unbundled
transport lines and installed unbundled loops. Id. at ¶¶ 35-37.
Based on such alleged anticompetitive behavior, Stein charged
Pacific Bell with violating section 2 of the Sherman Act,
15 U.S.C. § 2 et seq., and its state law equivalent the Cartwright
Act, California Business and Professions Code §§ 16700 et seq.;
the Telecommunications Act of 1996, 47 U.S.C. § 151 et seq.; and
California Business and Professions Code § 17200. Pacific Bell
now moves the Court to dismiss Stein's complaint under Federal
Rule of Civil Procedure 12(b)(6), for failure to state a claim
upon which relief can be granted.
Under Federal Rule of Civil Procedure 12(b)(6), a district
court must dismiss a complaint if it fails to state a claim upon
which relief can be granted. The question presented by a motion
to dismiss is not
whether the plaintiff will prevail in the action, but whether the
plaintiff is entitled to offer evidence in support of the claim.
See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40
L.Ed.2d 90 (1974), overruled on other grounds by Davis v.
Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984).
In answering this question, the Court must assume that the
plaintiff's allegations are true and must draw all reasonable
inferences in the plaintiff's favor. See Usher v. City of Los
Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even if the face of
the pleadings suggests that the chance of recovery is remote, the
Court must allow the plaintiff to develop the case at this stage
of the proceedings. See United States v. City of Redwood City,
640 F.2d 963, 966 (9th Cir. 1981).
If the Court dismisses the complaint, it must then decide
whether to grant leave to amend. The Ninth Circuit has
"repeatedly held that a district court should grant leave to
amend even if no request to amend the pleading was made, unless
it determines that the pleading could not possibly be cured by
the allegation of other facts." Lopez v. Smith, 203 F.3d 1122,
1130 (9th Cir. 2000) (citations and internal quotation marks
Pacific Bell makes several arguments in support of its motion
to dismiss. Pacific Bell argues that the unlawful conduct it is
alleged to have committed derives exclusively from duties imposed
by the 1996 Act. According to Pacific Bell, these duties go
beyond any duties imposed by the Sherman Act, and thus there is
no antitrust violation by the mere violation of the 1996 Act.
Furthermore, Pacific Bell argues that the filed rate doctrine
bars both the Sherman Act claims and the 1996 Act claim. Pacific
Bell also argues that the state law claims are counterparts to
the federal claims and rely on the same factual allegations.
Thus, Pacific Bell argues that the state law claims fail for the
same reasons that the federal claims fail.
A. Sherman Act Causes of Action (Counts I through IV)
In Counts I through IV of the Complaint, Stein alleged that
Pacific Bell has engaged in a variety of anticompetitive conduct
that violates section 2 of the Sherman Act. Placing heavy
reliance on Goldwasser v. Ameritech Corp., 222 F.3d 390 (7th
Cir. 2000), Pacific Bell argues that although the conduct Stein
alleged may contravene duties imposed by the 1996 Act, such
conduct does not violate the Sherman Act. Alternatively, Pacific
Bell argues that the filed rate doctrine applies to bar Stein's
complaint, which seeks damages for Pacific Bell's alleged
1. Application of Goldwasser v. Ameritech Corp.