essential facility claim by customers that defendant gas provider
denied them access to its pipeline); Bar Technologies Inc. v.
Conemaugh & Black Lick R.R. Co., 73 F. Supp.2d 512, 520 (W.D.Pa.
1999) ("BarTech is merely a customer of the CB & L, not its
competitor. As such, its essential facilities claim fails.").
Stein counters that the Goldwasser court "soundly rejected" a
similar standing challenge against consumer plaintiffs in that
case, who had also brought an essential facilities claim.
Opposition 14. Goldwasser did not involve the particular
question of a consumer plaintiff's standing to bring an essential
facilities claim. The Seventh Circuit in Goldwasser upheld the
lower court's finding that the consumer plaintiffs had satisfied
the "antitrust injury" requirement to assert a Sherman Act claim
on their own behalf.*fn2 Goldwasser, 222 F.3d at 398-99
(upholding Goldwasser v. Ameritech Corp., 1998 WL 60878, *6
(N.D.Ill. 1998), which rejected argument that "plaintiffs lack
standing to bring Sherman Act claim . . . because the causal link
between the alleged conduct and harm is too indirect, the injury
asserted by Plaintiffs is too speculative, and there is a risk of
duplicative recovery. . . ."). Goldwasser therefore did not
establish third-party standing for consumers (who are not
competitors of an ILEC) to bring an essential facilities claim.
Stein cannot rely on an essential facilities claim as an
independent basis of liability directly under the Sherman Act.
Count I alleging Pacific Bell denied access to its essential
facilities is DISMISSED without leave to amend.
b) Monopoly Leveraging Claims (Counts II and IV)
Count II of Stein's Sherman Act claims charges Pacific Bell
with unlawful monopoly leveraging. Stein alleged that Pacific
Bell had violated the Sherman Act by using its "monopoly power in
the local telephone network market, however lawfully acquired, to
foreclose competition and destroy competitors in the separate DSL
market." Compl. ¶ 61. In Count IV, relying on the same
allegations of monopoly leveraging conduct, Stein charges Pacific
Bell with attempted monopolizing, adding the allegation that
"[d]efendants have demonstrated a dangerous probability of
success in their efforts to gain, perpetuate or enhance a
monopoly in the DSL market." Id. at ¶¶ 69-70. Stein argues that
these allegations plead the elements of monopoly leveraging and
attempted monopolizing by engaging in monopoly leveraging, both
in violation of the Sherman Act. Opposition 15.
The Ninth Circuit does not recognize monopoly leveraging as an
independent theory of liability under section 2 of the Sherman
Act. Alaska Airlines, 948 F.2d at 546 (disagreeing with Berkey
Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 275 (2d Cir.
1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d
783 (1980)). Under Ninth Circuit law, however, a claim of
attempted monopolizing may include allegations of monopoly
leveraging conduct, "[i]f there is a dangerous probability that a
monopoly will be created by leveraging conduct, then the conduct
will be reached under the doctrine of attempted monopoly." Id.
Count II of Stein's complaint — stating a claim of monopoly
leveraging — is not recognized in this Circuit. Accordingly,
Count II is DISMISSED without leave to amend. Count IV involves
attempted monopolizing by monopoly leveraging. Stein has alleged
that there is a "dangerous probability" that Pacific Bell will or
has leveraged a monopoly in the DSL market which, under Alaska
Airlines, suffices to state a claim of antitrust liability under
the Sherman Act. Count IV of Stein's complaint therefore is
cognizable under Alaska Airlines.
c) Attempt to Monopolize Through Breach of the Interconnection
Agreement (Count III)
As an ILEC, Pacific Bell was required by the 1996 Act to
negotiate interconnection agreements in good-faith with
competitors who wished to enter the DSL market. See
47 U.S.C. § 252(a)(1). As a result of this duty, Pacific Bell entered into
interconnection agreements making its equipment and local
telephone network facilities available to competitors who wished
to enter the DSL market. See Compl. ¶ 15 and Ex. A. According
to Stein, Pacific Bell "entered into these optional and voluntary
agreements and then breached them or proceeded to engage in bad
faith conduct in carrying them out, without any business
justification and with the intent to destroy its competitors . .
. so as to unlawfully maintain its monopoly." Opposition 9. Stein
claims that such conduct violated section 2 of the Sherman Act
because Pacific Bell was "attempting to exclude rivals on some
basis other than efficiency," making its conduct "predatory."
Aspen Skiing, 472 U.S. at 605, 105 S.Ct. at 2859. Pacific Bell
argues that breach of a contract by itself does not give rise to
antitrust liability. Reply 4 (citing Vernon v. Southern
California Edison Co., 955 F.2d 1361 (9th Cir. 1992)).
Furthermore, Pacific Bell argues that the interconnection
agreements "were imposed by a statutory mandate, . . . . and any
alleged failure by Pacific to adhere to them, do not give rise to
any refusal to deal liability under Aspen." Id. at 5.
It is well established that a firm with monopoly power has no
general duty to cooperate or deal with its competitors. Aspen
Skiing, 472 U.S. at 600, 105 S.Ct. at 2856; United States
Football League v. National Football League, 842 F.2d 1335,
1360-61 (2d Cir. 1988) ("[A] firm with a lawful monopoly has no
general duty to help its competitors.") SmileCare Dental Group,
88 F.3d at 786 ("[I]t is well established that competitors do not
have a general duty to deal with one another."). In Aspen
Skiing, the Supreme Court held that the absence of a duty to
deal with competitors was not unqualified and described the type
of exclusionary conduct that can violate the Sherman Act. See
Aspen Skiing, 472 U.S. at 602, 105 S.Ct. at 2857 (general right
not to deal with competitors cannot be exercised for a "purpose
to create or maintain a monopoly"). A distinction must be drawn
"between practices which tend to exclude or restrict competition,
and the success of a business which reflects only a superior
product, a well-run business, or luck." Aspen Skiing, 472 U.S.
at 604, 105 S.Ct. at 2858. In this context, a defendant's intent
is "relevant to the question whether the challenged conduct is
fairly characterized as `exclusionary' or `anticompetitive' . . .
[or] `predatory.'" Id. at 472 U.S. at 602, 105 S.Ct. at 2857.
Goldwasser did not consider whether violations of the 1996
Act, if done in a "predatory" manner as defined in Aspen
Skiing, can make up an independent basis for liability under the
Sherman Act. The plaintiffs in Goldwasser did not allege, as
Stein alleges here, that the defendant breached interconnection
agreements in bad faith
and engaged in other exclusionary practices. Compare Goldwasser
v. Ameritech Corp., 1998 WL 60878, *11 (N.D.Ill. 1998)
(plaintiffs relied solely on allegations that Ameritech violated
provisions of 1996 Act to support their Sherman Act claims)
with Compl. ¶ 39 (the alleged misconduct by Pacific Bell,
"contrary to Pacific Bell's obligations under its interconnection
agreements with CLECs, was designed to, and did, increase
competitor costs and delay or prevent competitor DSL providers
from effectively competing with Pacific. . . ."). Although the
interconnection agreements were statutorily mandated, see
47 U.S.C. § 252(a), Stein claims that Pacific Bell's alleged refusal
to abide by the agreements constituted "predatory" behavior that
"not only (1) tends to impair the opportunities of rivals, but
also (2) either does not further competition on the merits or
does so in an unnecessarily restrictive way." Aspen Skiing, 472
U.S. at 605 and n. 32, 105 S.Ct. at 2859 and n. 32. Aspen
Skiing, held that "`the long recognized right . . . [to] freely
 exercise [one's] own independent discretion as to parties with
whom he will deal' does not violate the Sherman Act `[i]n the
absence of any purpose to create or maintain a monopoly.'" Image
Tech. Services. Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1211
(9th Cir. 1997), cert. denied, 523 U.S. 1094, 118 S.Ct. 1560,
140 L.Ed.2d 792 (1998) (citing Aspen Skiing, 472 U.S. at 602,
105 S.Ct, at 2857) (emphasis and alterations in original). Stein
has alleged the type of conduct that exceeds a monopolist's right
to deal or not to deal with competitors, in violation of section
2 of the Sherman Act.
Count III of the Complaint, charging Pacific Bell with
attempting to monopolize in violation of the Sherman Act, as
alleged, is cognizable under Aspen Skiing.
2. The Filed Rate Doctrine
In his Complaint, Stein alleged that defendants'
anti-competitive conduct has resulted "in consumers like
Plaintiff and the Class paying supra-competitive prices for DSL
service." Compl. ¶ 39. Pacific Bell argues that the filed rate
doctrine applies to bar Stein's federal and state antitrust
claims. Section 203(a) of the 1996 Act requires local exchange
carriers to file with the Federal Communications Commission
("FCC") tariffs "showing all charges" and "showing the
classifications, practices, and regulations affecting such
charges." 47 U.S.C. § 203(a). Under the filed rate doctrine,
"once a carrier's rate is approved by the FCC, the terms of the
federal tariff are considered to be `the law' and to therefore
`conclusively and exclusively enumerate the rights and
liabilities' as between the carrier and the customer." Evanns v.
AT & T Corp., 229 F.3d 837, 840 (9th Cir. 2000) (citation
omitted). "[T]he filed rate doctrine precludes the plaintiff in
an antitrust suit from claiming speculative damages. . . .
[involving] a hypothetical lower rate that would have been
charged in the absence of the [anticompetitive conduct] and the
acceptability of those rates to the appropriate regulatory
agency." Stanislaus, 1995 WL 819150, * 10 (citing Keogh v.
Chicago & N.R. Co., 260 U.S. 156, 164, 43 S.Ct. 47, 67 L.Ed. 183
(1922)). However, the filed rate doctrine does not apply to cases
not involving rates or rate setting. See Central Office
Telephone, Inc. v. AT & T, 108 F.3d 981 (9th Cir. 1997) (filed
rate doctrine inapplicable in breach of contract dispute);
Columbia Steel Casting Co. v. Portland General Elec. Co.,
103 F.3d 1446 (9th Cir. 1996).
Stein argues that his claims are not "price fixing claims," but
instead "[s]ince the gravamen of Plaintiff's complaint is that he
and the other Class members are locked into paying Defendants'
tariffed rate due to anti-competitive conduct, and are precluded
from paying the tariffed rates of competitors, the filed-rate
does not bar Plaintiff's damage claims." Opposition 17. In his
complaint, Stein alleged that "a competitor of Defendants offers
DSL service that is less expensive and has an adequate tariff on
file, consumers such as Plaintiff and the Class cannot avail
themselves of these more beneficial tariff rates because
Defendants use their monopoly power . . . to inhibit access by
Plaintiff and the Class to such competing DSL service." Compl. ¶
76. Thus alleged, Stein argues that this case is similar to
Columbia Steel Casting Co. and In re Lower Lake Erie Iron Ore
Antitrust Litigation, 998 F.2d 1144 (3d Cir. 1993), which found
that the filed rate doctrine did not apply.
In Lower Lake Erie, steel companies, trucking companies and
dock companies filed suit against railroad companies alleging
that the defendants "conspired . . . to preclude potential
competitors from entering the market." Lower Lake Erie, 998
F.2d at 1151. The railroad companies' rates were "only
coincidentally implicated" because "if the anticompetitive
conduct had not occurred, an entirely new alternative — shipping
by truck as opposed to rail — would have been available" to the
plaintiffs. Stanislaus, 114 F.3d at 864. Thus, Lower Lake
Erie did not involve rates or rate setting and the filed rate
doctrine did not apply.
In Columbia Steel Casting Co., two power companies, Portland
General Electric ("PGE") and Pacific Power & Light ("PPL") had
entered into a non-competition agreement that divided the area
into two exclusive service territories. Columbia Steel, 103
F.3d at 1453. The plaintiff was located in the PGE's service
area, which charged a higher rate than PPL. Id. at 1454. The
Ninth Circuit held that the filed rate doctrine did not apply
because "the conduct challenged in this case is not [PPL's]
refusal to sell electricity to Columbia Steel at a lower rate.
Rather, the challenged conduct is the non-competition agreement
[between PGE and PPL] that prevented Columbia Steel from buying
electricity at PPL's lower rate." Id. at 1446. Columbia Steel
had been prevented from using "a less expensive, equivalent
In Goldwasser, 1998 WL 60878, *5 (N.D.Ill. 1998), plaintiffs
alleged that Ameritech had "effectively fenced-out competitors
from the local telephone service market, thus preserving
Ameritech's monopoly power and its ability to extract
supracompetitive prices from consumers." The district court
distinguished this situation from Lower Lake Erie, reasoning:
Unlike the steel companies in Lower Lake Erie,
consumers in the local telephone market are captive
to rates approved by the state PUCs. Any measure of
damages in this case would necessarily involve the
Court's determination of a hypothetical lower rate
that would have been approved by the various state
PUCs — exactly the messy task which the filed rate
doctrine seeks to avert.
Id. at *6.
This Court finds the instant case closer to Lower Lake Erie
and Columbia Steel than to Goldwasser. Like Columbia Steel
and Lower Lake Erie, it appears that Stein has alleged denial
of access to already existing services that are less expensive
than Pacific Bell's DSL service. In his complaint, Stein alleges
having to pay higher prices for DSL service because Pacific
Bell's anti-competitive actions "(1) . . . have increased the
cost to the industry players of providing DSL service to
consumers like Plaintiff and the Class; and/or (2) even where a
competitor of Defendants offers DSL service that is less
expensive and has an adequate tariff on file, consumers . . .
cannot avail themselves of these more beneficial tariff rates
because of Defendants' use of their monopoly power. . . ."
Compl. ¶ 76 (emphasis added); see also id. at ¶¶ 57, 66, 71
("[C]onsumers have been damaged in that they have been denied
free choice in the DSL market, they have paid higher prices for
DSL service and have been forced to use inferior DSL service.").
Unlike cases applying the filed rate doctrine, Stein's theory of
damages need not rely on a hypothetical lower rate or, as Pacific
Bell argues, that "had Pacific Bell better fulfilled its alleged
duties to assist [competitors], they would have passed the
benefits of the lower costs and better service from Pacific along
to plaintiff in the form of lower rates."*fn3 Reply 13; see,
e.g., Management Servs. v. Washington Natural Gas Co.,
99 F.3d 937, 944 (9th Cir. 1996) (damages too speculative because it
"would require a showing that a hypothetical lower rate should
and would have been adopted"); Stanislaus, 114 F.3d at 865 ("In
the instant case . . . no matter what the reality of the alleged
anticompetitive behavior, plaintiffs here would still be paying
PG & E's rates. That those rates could theoretically be lower is
precisely what compels application of the filed rate doctrine.").
Stein's complaint, however, does not clearly state that his
damages are attributable to denial of access to existing lower
filed rates, instead pleading this theory in the alternative.
See Compl. ¶ 76. As alleged, Stein's remaining Sherman Act
claims — Counts III and IV — are insufficiently plead to avoid
the filed rate doctrine, and are DISMISSED with leave to amend.
If he so wishes, Stein should amend these counts to clearly and
specifically rely on already existing lowered tariff rates for
B. Telecommunications Act Cause of Action (Count V)
Stein relies on the same factual allegations that support his
antitrust claims to support a cause of action under the 1996 Act.
Opposition 1-2. According to Stein, the anticompetitive conduct
alleged throughout the Complaint "has injured consumers . . . in
that they have been denied free choice in the DSL market, they
have paid higher prices for DSL service and have been forced to
use inferior DSL service." Compl. ¶ 75. Pacific Bell argues that
the filed rate doctrine bars Stein's claim for damages under the
1996 Act. Motion 16-17.
Sections 206 and 207 provide individuals a private right of
action for injuries resulting out of violations of the 1996 Act.
Both sections contemplate suit only for recovery of damages, not
for injunctive relief. Section 206 states: "In case any common
carrier [commits] any act, matter, or thing . . . prohibited or
declared to be unlawful, . . . such common carrier shall be
liable to the person or persons injured thereby for the full
amount of damages sustained in consequence of any such violation.
. . ." 47 U.S.C. § 206. Similarly, section 207 allows "[a]ny
person claiming to be damaged by any common carrier . . . [to]
bring suit for the recovery of the damages for which such common
carrier may be liable. . . ." 47 U.S.C. § 207. Thus, unlike his
Sherman Act claims, Stein can only seek damages for Pacific
Bell's alleged violations of the 1996 Act.
The Seventh Circuit in Goldwasser found that the plaintiffs'
allegations of violations of the 1996 Act "boil down to a claim
for overcharges Ameritech has been able to impose upon" them.
222 F.3d at 402. Although plaintiffs tried to assert monopoly
claims, the court found that the claims "necessarily implicate
the rates Ameritech is charging." Id. at 402. Thus, the
plaintiffs' 1996 Act claims were barred by the filed rate
Stein's 1996 Act claim suffers from the same problem. In
addition to having alleged that he paid higher prices, Stein
alleged that Pacific Bell's violations of the 1996 Act denied him
a free choice in the DSL market and forced him to use inferior
DSL service. These injuries arise because Pacific Bell's alleged
anticompetitive conduct precluded competitors actually offering
lower rates from entering the market. However, the 1996 Act
permits Stein to recover only damages for the alleged violations.
The measure of recoverable damages "necessarily implicates"
Pacific Bell's filed rates and "boils down" to a claim that
Pacific Bell is overcharging its DSL subscribers. The filed rate
doctrine bars such claims.
Count V of the Complaint is DISMISSED without leave to amend.
C. State Law Causes of Action (Counts VI and VII)
Pacific Bell argues that the state law claims "are predicated
on the same alleged conduct as the federal claims." Reply 14.
According to Pacific Bell, the state law claims should be
dismissed for the same reasons that the federal claims should be
dismissed. Motion 19. For the same reasons that the Sherman Act
claims, Counts III and IV, are being dismissed, the Court
DISMISSES Counts VI and VII with leave to amend.
For the foregoing reasons, the Court GRANTS Pacific Bell's
motion to dismiss for failure to state a claim upon which relief
can be granted. Counts I, II, and V of the Complaint are
DISMISSED without leave to amend. Counts III, IV, VI and VII
are DISMISSED with leave to amend. If he so wishes, Stein must
file a First Amended Complaint on or before March 2, 2001.
IT IS SO ORDERED.