Goldwasser, Richard v. Ameritech Corp

In the

United States Court of Appeals

For the Seventh Circuit

No. 98-1439

Richard Goldwasser, et al.,

individually and on behalf of

all others similarly situated,

Plaintiffs-Appellants,

v.

Ameritech Corporation,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 97 C 6788--Charles P. Kocoras, Judge.

Argued March 30, 1999--Decided July 25, 2000

Before Ripple, Diane P. Wood, and Evans, Circuit

Judges.

Diane P. Wood, Circuit Judge. The

Telecommunications Act of 1996, Pub. L. 104-104,

110 Stat. 56 (1996), codified at 47 U.S.C. sec.

151 et seq., represents a comprehensive effort by

Congress to bring the benefits of deregulation

and competition to all aspects of the

telecommunications market in the United States,

including especially local markets. But progress

and change in such a complex industry do not

occur overnight, and Congress accordingly

entrusted the Federal Communications Commission

(FCC) and the state public utility commissions

with the task of overseeing the transition from

the former regulatory regime to the Promised Land

where competition reigns, consumers have a wide

array of choice, and prices are low.

The antitrust laws for more than 110 years have

served much the same purpose for the entire

economy. The question that confronts us here is

how and where these two competition-friendly

regimes intersect. Consumers in most of the

states served by Ameritech Corporation brought

this suit under the monopolization provision of

the Sherman Act, 15 U.S.C. sec. 2 (1994),

claiming that Ameritech has been violating both

the antitrust laws, as it has moved through the

deregulation process mandated by the

Telecommunications Act (which we will usually

call "the 1996 Act" for short), and the 1996 Act

itself. The district court dismissed their case,

never reaching their effort to bring it as a

class action, on the ground that they lacked

standing to complain about Ameritech’s alleged

footdragging and obstructive behavior. We have

concluded that the district court was correct to

dismiss the plaintiffs’ suit. Our reasons,

however, differ in important respects from those

on which it relied, as we explain below.

I

Plaintiffs-appellants Richard Goldwasser,

Michael Cohn, Eric Carter, and Richard Lozon are

citizens of Illinois, Wisconsin, Indiana, and

Michigan, respectively. Those states, plus Ohio

(for which there mysteriously was no named class

representative) are the five states in which

defendant Ameritech provides local telephone

service. The Goldwasser plaintiffs (which is what

we will call them here) are consumers of local

telephone services in Ameritech’s area. When the

1996 Act was passed, they, like millions of other

telephone customers throughout the country,

looked forward to the same kind of development of

competitive local services that had occurred

several decades earlier in the telephone

equipment, long distance, and enhanced services

markets. When this did not occur as speedily as

they had hoped, they concluded that the fault lay

with Ameritech. Under the 1996 Act, Ameritech has

special responsibilities as the incumbent local

exchange carrier, or ILEC, to cooperate with

potential entrants as they seek to break into the

local services markets. Believing that Ameritech

was flouting its obligations under the 1996 Act

and unlawfully monopolizing under Section 2 of

the Sherman Act, they filed the present suit as

a class action on September 26, 1997.

A.

Before turning to the specifics of the

Goldwasser complaint, it is helpful to review

what the 1996 Act was designed to do and how it

went about that task.

Voice telephony itself was born with the famous

summons Alexander Graham Bell sent to his

assistant Thomas A. Watson, on March 10, 1876:

"Mr. Watson, come here; I want you." George P.

Oslin, The Story of Telecommunications 219

(1992). Just a few days earlier, on March 7,

1876, Bell became the owner of the first patent

for a recognizable telephone, Patent No. 174,465.

After a considerable amount of litigation,

certain patents for improvements to Bell’s

original invention were upheld by the Supreme

Court. See United States v. American Bell

Telephone Co., 167 U.S. 224 (1897). Bell and his

backers proved to be even more astute as

businesspeople than they had been as inventors.

They incorporated, and by 1886, a mere decade

after the issuance of Bell’s patent, the tree-

like shape of the world-famous Bell Telephone

company was beginning to be recognizable, with

the American Telephone and Telegraph Company

(AT&T) at its trunk. Oslin at 230.

Although the Bell company reigned supreme during

the life of the basic patents, when the patents

expired there was a burst of competition from

many independent telephone companies around the

country. This was, however, temporary: mergers

and acquisitions led to re-consolidation, and by

the time the Communications Act of 1934, ch. 652,

48 Stat. 1064 (1934) (codified as amended in

scattered sections of 47 U.S.C.) (the 1934 Act),

was passed, it was an article of faith that

telephone service, like services furnished by

other public utilities, was a natural monopoly.

Consumer protection was to be achieved by

regulation, which, insofar as it affected local

service, took place at the state level. The FCC

had responsibility for regulating interstate

telephone companies and services.

By 1934, the Bell System included operating

companies, long distance services, equipment

manufacturing, and research facilities. AT&T

owned 80% of all the local telephone lines and

services in the United States, and it had a

monopoly lock on long distance service. There

matters stood for some four decades. But, even if

the regulatory picture was static, technology and

markets were not. The natural monopoly assumption

came under increasing attack, especially as it

pertained to long distance services and equipment

manufacturing.

In 1974, the United States, through the

Antitrust Division of the U.S. Department of

Justice, sent shock waves through the nation when

it instituted a massive antitrust case against

AT&T. The complaint alleged that AT&T and its

affiliates Western Electric Co. and Bell

Telephone Laboratories had maintained an unlawful

combination for many years among themselves and

with the 22 Bell Operating Companies, or BOCs in

telecom jargon; that they had restricted

competition from other telecommunications systems

and carriers, and from other manufacturers; and

that they had engaged in a host of monopolistic

practices. See [1970-1979 U.S. Antitrust Cases

Transfer Binder] Trade Reg. Rep. (CCH) para.

45,074. Rather early in the litigation, the

district judge who handled the proceedings from

the date of filing until the case was wrapped up

after the passage of the 1996 Act, the Honorable

Harold Greene, rejected the defendants’ argument

that the matters raised in the complaint fell

within the exclusive jurisdiction of the FCC and

were thus immune from antitrust scrutiny. See

United States v. American Tel. & Tel. Co., 461 F.

Supp. 1314, 1326-28 (D.D.C. 1978) (AT&T I). In

that opinion, Judge Greene considered the

question whether the communications statutes

conferred an implied immunity from antitrust

regulation on the defendants, and his answer was

no. Both his decision in that case, and the

eventual Modified Final Judgment (MFJ) that

reflected the consent decree reached among the

parties, rested on the simple notion that,

despite the existence of a substantial network of

regulation in the field, there was still plenty

of room for competition. See United States v.

American Tel. & Tel. Co., 552 F. Supp. 131

(D.D.C. 1982) (AT&T II), aff’d sub nom. Maryland

v. United States, 460 U.S. 1001 (1983). Where

competition was possible, the defendants had no

right to use their monopoly power to squelch it.

From the time when the consent decree was

approved until the 1996 Act took effect, the

process of opening up telecommunications markets

to competition took place under the supervision

of the district court, which had the task of

administering the MFJ. Apart from its provisions

requiring the break-up of the old Bell System,

which was perhaps the most newsworthy consequence

of the antitrust suit, the MFJ contained

behavioral restrictions on the newly independent

regional BOCs (including Ameritech) and on AT&T

itself. See AT&T II, 552 F. Supp. at 226-28.

These restrictions, which pertained to questions

like the provision of long distance services

outside local access and transport areas, the

furnishing of wireless telephony, and the

development of enhanced services, were designed

to ensure that the former system (under which

competition was distorted by leverage and cross-

subsidization between protected, regulated

markets and unregulated markets) did not

reappear.

Long before the 1996 Act was passed, however,

it had become clear that comprehensive regulation

of the rapidly advancing telecommunications

markets was not a task well suited to the federal

courts. Thus, one of the first things Congress

did in the 1996 Act was to shift the remaining

authority the district court was exercising under

the MFJ over to the FCC. The 1996 Act itself was

designed to "promote competition and reduce

regulation in order to secure lower prices and

higher quality services for American

telecommunications consumers and encourage the

rapid deployment of new telecommunications

technologies." Preamble to Telecommunications Act

of 1996. As the Supreme Court acknowledged in

AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371

(1999), and as we have already noted, the

eventual hope is to transform the

telecommunications market from a monopolistic,

regulated one to a vibrant, competitive one.

Two sections of the 1996 Act are of central

importance here: sec.sec. 251 and 252. They are

both contained in Part II of the statute, which

is entitled "Development of Competitive Markets."

Section 251 sets out detailed rules that

implement the general duty of telecommunications

carriers (as established in the statute) to

interconnect with one another’s facilities and

equipment. Each local exchange carrier, or LEC,

has the duty to resell on reasonable and

nondiscriminatory terms, to provide number

portability to the extent technically feasible,

to provide dialing parity to competing providers,

to afford access to rights-of-way, and to

establish reciprocal compensation arrangements

for the transport and termination of

telecommunications. 47 U.S.C. sec. 251(b).

Incumbent LECs, or ILECs, have additional duties

under the statute, which are spelled out in sec.

251(c): they must negotiate in good faith to

create the agreements necessary for fulfilling

the subpart (b) duties; they must provide for

"requesting telecommunications carriers"

appropriate interconnections; they must provide

unbundled access to network elements at any

technically feasible point on just, reasonable

and nondiscriminatory terms; they must offer to

aspiring competitors at wholesale rates any

services that they sell at retail; and they must

give reasonable public notice of changes in their

services that would affect others.

The 1996 Act contains specific language about

its relation to the federal antitrust laws.

Section 601(b)(1), found at 47 U.S.C.A. sec. 152

Historical and Statutory Notes, provides that ".

. . nothing in this Act or the amendments made by

this Act shall be construed to modify, impair, or

supersede the applicability of any of the

antitrust laws." To similar effect, sec.

601(c)(1) states that "[t]his Act and the

amendments made by this Act shall not be

construed to modify, impair, or supersede

Federal, State, or local law unless expressly so

provided in such Act or amendments."

B.

This is the background against which the

Goldwasser plaintiffs filed their class action

complaint. The complaint focuses tightly on the

ILECs’ sec. 251 duties. It alleges that Ameritech

controls more than 90% of the markets for local

telephone service in the geographic territories

it covers (basically, the five state-area) and

that it has erected substantial barriers to entry

into those markets. It also alleges that

Ameritech controls a number of so-called

essential facilities, including its telephone

lines, equipment, transmission, and

interconnection stations in the relevant markets.

Ameritech’s competitors (i.e. the companies from

whom the plaintiff customers would like to

purchase) are unable to duplicate those

facilities. Ameritech, by engaging in a host of

exclusionary practices made possible by its

monopoly power, is preventing those competitors

from entering the market.

The complaint specifies 20 specific exclusionary

or monopolistic practices Ameritech has engaged

in or continues to commit. We detail them here,

because the nature of the complaint sheds

significant light on the extent to which it

implicates pure antitrust theory, the extent to

which it focuses on local markets, and the extent

to which it rests on the 1996 Act:

(1) Ameritech is not providing the same

quality of service to its competitors as it

provides to itself, in violation of sec. 251.

(2) Again in violation of sec. 251, Ameritech

has not given its competitors nondiscriminatory

access to its operational support systems, nor

has it given them access to unbundled elements of

its system on terms equivalent to those Ameritech

enjoys.

(3) Ameritech has failed to provide "dark

fiber" as an unbundled network element, in

violation of the 1996 Act.

(4) Ameritech has failed to provide its

competitors access to poles, ducts, conduits, and

rights-of-way on a nondiscriminatory basis, in

violation of sec.sec. 251 and 271.

(5) Ameritech has failed fully to unbundle

its network elements, including local loops,

local transport, and local switching, in

violation of sec. 251(c)(3).

(6) Ameritech’s competitors have experienced

undue delays (presumably caused by Ameritech) in

acquiring unbundled elements, and those delays

have precluded them from offering services as

attractive as Ameritech’s.

(7) The competitors have also experienced

delays and discrimination as they have sought to

gain access to unbundled loops, in violation of

sec. 251(c)(3).

(8) Ameritech has failed to provide unbundled

access to local transport interoffice

transmission facilities on a nondiscriminatory

basis, in violation of sec. 251(c)(3).

(9) Ameritech has failed to provide local

switching to competitors, in violation of sec.

271(c)(2)(B)(vi).

(10) Ameritech discriminates against

competitors by requiring competitive LECs and

competitors to pay originating and terminating

access charges, when it cannot collect interstate

access charges.

(11) Ameritech has failed to offer or provide

customized routing, which is required to be

provided as part of unbundled local switching.

(12) Ameritech has not provided dialing parity

to competitors for services such as operator

assistance ("0"), directory assistance ("411"),

and repairs ("611"), in violation of sec.

271(c)(2)(B)(xii).

(13) Ameritech has failed to provide access to

its own 911 and emergency services on a

nondiscriminatory basis, in violation of sec.

271(c)(2)(B)(vii)(I).

(14) Ameritech has continued to bill customers

of competitors who have converted from

Ameritech’s services, and hence some customers

are being double-billed, thereby harming the

competitors’ good will.

(15) Ameritech has failed to provide

interconnection between its network and those of

competitors that is equal to the interconnections

it gives itself, in violation of sec.sec.

251(c)(2) and 271(c)(2)(B)(i).

(16) Ameritech has not complied with sec.

272(b)(3) of the 1996 Act, which requires a BOC

and its interLATA affiliates to have separate

officers, directors, and employees.

(17) Ameritech has failed publicly to disclose

all transactions with sec. 272 affiliates, in

violation of sec. 272(b)(5).

(18) Ameritech has refused to sell to its

competitors, on just, reasonable, and

nondiscriminatory terms, access to components of

its network on an unbundled or individual basis.

(19) Ameritech has refused to sell to its

competitors local telephone services at wholesale

prices that are just, reasonable, and

nondiscriminatory, which prevents the competitors

in turn from offering attractive resale prices to

consumers.

(20) Ameritech has refused to allow its

competitors to connect with its local telephone

network on just, reasonable, and

nondiscriminatory terms.

All of these practices, the complaint alleges,

violate both sec. 2 of the Sherman Act, 15 U.S.C.

sec. 2, and the 1996 Act itself. The plaintiffs

sought treble damages for the antitrust

violations, as well as declaratory and injunctive

relief.

C.

The district court dismissed the entire case

under Rule 12(b)(6) for failure to state a claim.

It found first that the filed rate doctrine, as

developed in the line of cases beginning with

Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156

(1922), barred the claims for damages under

either the antitrust laws or the 1996 Act. The

remainder of its discussion therefore pertained

only to the plaintiffs’ requests for injunctive

relief. As to that, the court found that the

plaintiffs lacked standing to sue under the

antitrust laws, under the Supreme Court’s

decision in Block v. Community Nutrition

Institute, 467 U.S. 340, 351-52 (1984) (no

standing where a suit would severely disrupt a

complex regulatory scheme). Last, it found that

consumer plaintiffs were not entitled to sue to

enforce the duties on ILECs created by the 1996

Act.

II

A.

We consider first the propriety of dismissing

the Goldwasser plaintiffs’ antitrust claims on a

Rule 12(b)(6) motion. The plaintiffs see this as

a straightforward application of Section 2:

Ameritech is a monopolist; Ameritech is engaging

in conduct designed to maintain its monopoly

power, through a variety of exclusionary

practices; and plaintiffs as consumers are

harmed. See generally United States v. Grinnell

Corp., 384 U.S. 563, 570-71 (1966). As consumers

and direct purchasers from Ameritech, they argue,

they clearly have standing to bring this suit

under decisions such as Associated General

Contractors of California, Inc. v. California

State Council of Carpenters, 459 U.S. 519, 539-41

(1983) (general definition of "person injured"

within the meaning of Clayton Act sec. 4, 15

U.S.C. sec. 15) and Illinois Brick Co. v.

Illinois, 431 U.S. 720 (1977) (barring suits by

indirect purchasers). The 1996 Act contains an

antitrust savings provision, and that is the end

of the matter as far as they are concerned.

Neither the filed rate doctrine nor the fact that

the 1996 Act contains specific rules regulating

Ameritech should stand in their way of treble

damages and injunctive relief, on behalf of

themselves and the class they seek to represent.

We agree with the plaintiffs part of the way:

there is nothing in the rules of antitrust

standing that prevents them from suing. But, as

we will show, this case cannot survive as a pure

antitrust suit against Ameritech, freed from the

specific regulatory requirements Congress imposed

in the 1996 Act. Only if Section 2 somehow

incorporates the more particularized statutory

duties the 1996 Act has imposed on ILECs like

Ameritech would Ameritech’s alleged failure to

comply with the 1996 Act be, in itself, also an

antitrust violation. In considering whether this

is so, we necessarily make an inquiry similar to

the one in Silver v. New York Stock Exchange, 373

U.S. 341 (1963), about the extent to which

antitrust rules apply in this industry and the

extent to which a different federal statute--the

1996 Act--provides the governing rules of law. If

that inquiry reveals a conflict between the

antitrust laws and the 1996 Act, we would need to

reach the question of implied immunity; if it

shows instead that the two laws are reconcilable,

immunity is beside the point. (This, we believe,

is what the district court was getting at too,

when it turned to Block to justify its dismissal

of the case; its misstep was to use the rhetoric

of standing.)

We begin this part of our inquiry with a brief

review of Sherman Act sec. 2, which is the

statute that makes it unlawful to monopolize, to

attempt to monopolize, or to conspire to

monopolize. The Supreme Court has had a number of

occasions on which to address the elements of a

Section 2 monopolization case, most recently in

Eastman Kodak Co. v. Image Technical Services,

Inc., 504 U.S. 451 (1992). There, quoting from

Grinnell, supra, the Court reviewed what it takes

to prove monopolization:

The offense of monopoly under sec. 2 of the

Sherman Act has two elements: (1) the possession

of monopoly power in the relevant market and (2)

the willful acquisition or maintenance of that

power as distinguished from growth or development

as a consequence of a superior product, business

acumen, or historic accident.

504 U.S. at 481, quoting Grinnell, 384 U.S. at

570-71.

Few would say that the first element is easily

proved: it is exceedingly difficult to prove

market power, or monopoly power, directly, and

the conventional way of proving power by showing

a given share of a properly defined relevant

market can present vexing problems as well. But

the first element is a snap compared to the

second. To demonstrate unlawful acquisition of

monopoly power may not be terribly difficult,

especially if it was born from an unlawful merger

or acquisition, fraud on the Patent Office, or

some other visible misdeed. Proof of unlawful

maintenance of monopoly power, in contrast,

requires courts to make the most subtle of

economic judgments about particular business

practices. As the Supreme Court noted in

Copperweld Corp. v. Independence Tube Corp., 467

U.S. 752 (1984), unilateral conduct must be

approached with the utmost caution, lest the law

forbid desirable, robust competition:

It is not enough that a single firm appears to

"restrain trade" unreasonably, for even a

vigorous competitor may leave that impression.

For instance, an efficient firm may capture

unsatisfied customers from an inefficient rival,

whose own ability to compete may suffer as a

result. This is the rule of the marketplace and

is precisely the sort of competition that

promotes the consumer interests that the Sherman

Act aims to foster. In part because it is

sometimes difficult to distinguish robust

competition from conduct with long-run

anticompetitive effects, Congress authorized

Sherman Act scrutiny of single firms only when

they pose a danger of monopolization. Judging

unilateral conduct in this manner reduces the

risk that the antitrust laws will dampen the

competitive zeal of a single aggressive

competitor.

Id. at 767-68 (footnote omitted).

Thus, it is clear that merely being a

monopolist does not violate Section 2. United

States v. Aluminum Co. of America, 148 F.2d 416,

429 (2d Cir. 1945) ("size alone does not

determine guilt; . . . there must be some

’exclusion’ of competitors; . . . the growth must

be something else than ’natural’ or ’normal;’ .

. . there must be a ’wrongful intent,’ or some

other specific intent; or . . . some ’unduly’

coercive means must be used"). See also Berkey

Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263,

275 (2d Cir. 1979); United States v. New York

Great Atlantic & Pacific Tea Co., 173 F.2d 79, 87

(7th Cir. 1949). It follows from this, as our

court and others have pointed out from time to

time, that even a monopolist is entitled to

compete; it need not lie down and play dead, as

it watches the quality of its products

deteriorate and its customers become disaffected.

See, e.g., Olympia Equipment Leasing Co. v.

Western Union Telegraph Co., 797 F.2d 370, 375

(7th Cir. 1986); Telex Corp. v. IBM, 510 F.2d

894, 927-28 (10th Cir. 1975).

Part of competing like everyone else is the

ability to make decisions about with whom and on

what terms one will deal. When we are considering

distribution chains, or vertical relationships,

the doctrine of United States v. Colgate & Co.,

250 U.S. 300 (1919), comes into play, under which

the Court said (somewhat tautologically,

unfortunately), "[i]n the absence of any purpose

to create or maintain a monopoly, the [Sherman]

act does not restrict the long recognized right

of trader or manufacturer engaged in an entirely

private business, freely to exercise his own

independent discretion as to parties with whom he

will deal." Id. at 307. Tautologies or no, the

Colgate right has received consistent support

from the Supreme Court even for large firms, as

one can see from more recent decisions such as

NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998),

in which the Court rejected the application of

the per se rule against group boycotts to the

decision of one buyer to favor one supplier over

another, even if the decision was not for a

legitimate business reason. See also Monsanto Co.

v. Spray-Rite Service Corp., 465 U.S. 752, 761

(1984) (reaffirming Colgate in terms).

In general, then, even a firm with significant

market power has no duty to deal with certain

suppliers or distributors, unless it can be shown

that its decisions are part of a broader effort

to maintain its monopoly power. What about duties

to deal with competitors, either affirmatively or

by refraining from actions that will exclude them

from the market either by preventing entry or by

forcing incumbents out? The Supreme Court

encountered a competitor case in Aspen Skiing Co.

v. Aspen Highlands Skiing Corp., 472 U.S. 585

(1985). Although the Court ultimately found that

the decision of Ski Company (a firm with monopoly

power) actually to forgo cash revenues and

efficient methods of doing business for the sole

purpose of driving its rival out of the market

amounted to a violation of Section 2, it was

careful to explain the limits on its holding as

well. "Ski Co.," it wrote, "is surely correct in

submitting that even a firm with monopoly power

has no general duty to engage in a joint

marketing program with a competitor." 472 U.S. at

600. "The absence of a duty to transact business

with another firm is, in some respects, merely

the counterpart of the independent businessman’s

cherished right to select his customers and his

associates." Id. at 601.

This court’s decision in Olympia Equipment

Leasing is consistent with the recognition in

Aspen Skiing that monopolists normally do not

need affirmatively to help their competitors.

Monopolists are just as entitled as other firms

to choose efficient methods of doing business

(which is not, recall, what the Ski Company was

doing, and that was why the Court and the jury

were able to spot its conduct for the

exclusionary practice it was). See Olympia

Equipment Leasing, 797 F.2d at 375; Abcor Corp.

v. AM Int’l, Inc., 916 F.2d 924, 929 (4th Cir.

1990); United States Football League v. National

Football League, 842 F.2d 1335, 1360-61 (2d Cir.

1988).

With these principles in mind, we turn to the

question whether the Goldwasser plaintiffs had

standing under the antitrust laws to bring their

suit. We conclude that the answer is yes, no

matter which branch of antitrust standing

doctrine one considers. First, as we noted above,

the plaintiffs were direct purchasers from

Ameritech, and their complaint asserts that a

variety of practices in which Ameritech has

engaged and is engaging in have led prices for

those services to be anticompetitively high, in

violation of Section 2. As direct purchasers,

they have no Illinois Brick problem. As people

forced to pay an alleged monopolistic overcharge,

they have described the kind of injury the

antitrust laws are designed to redress, which is

to say they have satisfied the "antitrust injury"

requirement of Brunswick Corp. v. Pueblo Bowl-O-

Mat, Inc., 429 U.S. 477 (1977). They are

consumers, not shareholders, or unions, or others

whose injury is too remote to satisfy Clayton Act

sec. 4; thus, they have standing as the term is

defined in Associated General Contractors, supra.

Finally, we think Ameritech is wrong to claim

that the plaintiffs lack standing because they

are attempting to raise third-party rights--the

rights of the competitors. It is true that the

reason the plaintiffs have been injured

(allegedly, of course) implicates the rights of

the competitors not to be excluded from the local

markets through anticompetitive actions of

Ameritech, but that does not make this a jus

tertii case. These plaintiffs want lower prices

and more choice, and they claim that Ameritech (a

monopolist) is doing things to prevent that from

happening. Their theory is a classic exclusionary

acts theory, and in all such cases, the

monopolist’s alleged sin is the exclusion of

other competitors from the market. One assumes

that those other competitors are grateful for the

help from the consumer litigation, but that is

incidental. The Goldwasser plaintiffs do not care

in principle which competitors enter their

markets; they just want a competitively

structured local telephone market that will

prevent Ameritech from inflicting antitrust

injury on them. We are satisfied that they are

asserting their own rights, and thus that they

have standing.

Block, on which the district court relied, does

not require a contrary conclusion. Indeed, Block

did not even involve antitrust standing. The

question there was instead whether ultimate

consumers of dairy products were entitled to

obtain judicial review of milk market orders

issued by the Secretary of Agriculture under the

Agricultural Marketing Agreement Act of 1937, 7

U.S.C. sec. 601 et seq. The consumer plaintiffs

brought their suit under the Administrative

Procedure Act, 5 U.S.C. sec. 701 et seq., but the

Court found that Congress had created a different

scheme for judicial review of marketing orders in

the agricultural marketing legislation, which

excluded the kind of consumer suit the plaintiffs

wanted to bring.

Block may offer useful insight into the

Goldwasser plaintiffs’ case insofar as they are

trying to assert rights directly under the 1996

Act, but we do not find it helpful for their

antitrust case. Their problem in the antitrust

case is not standing. It is the more fundamental

question whether they have stated a Section 2

claim at all against Ameritech when they accuse

it of failing to comply with its myriad duties

under sec.sec. 251, 252, and 271 of the

telecommunications law.

The fundamental fallacy in the plaintiffs’

theory is that the duties the 1996 Act imposes on

ILECs are coterminous with the duty of a

monopolist to refrain from exclusionary

practices. They are not. It would have been

possible for Congress to have passed a statute

that simply lifted the regulatory prohibitions

found in sources such as the Telecommunications

Act of 1934, the MFJ, and other sources, that

barred companies in different parts of the

telecommunications market (i.e. long distance and

local markets, generally speaking) from entering

one another’s domains. Anyone who wanted to

compete with an ILEC would have had the burden of

duplicating its physical infrastructure or of

persuading the ILEC to contract with it on

mutually satisfactory terms, but this is the

normal way in which competitive markets work. It

obviously takes much longer to enter a market

that requires huge sunk cost investments before

business is possible, but the success of the

companies that challenged AT&T’s hegemony over

long distance shows that it can be done. We might

think of this hypothetical legislative approach

as one involving passive restrictions on the

ILECs, under which they would have been permitted

to compete, but they would have been prohibited

from engaging in affirmatively exclusionary acts

like the efforts of the Ski Company in Aspen

Skiing, or the newspaper company in Lorain

Journal Co. v. United States, 342 U.S. 143

(1951), or the shoe company in both United Shoe

Machinery Corp. v. United States, 258 U.S. 451

(1922), and United States v. United Shoe

Machinery Corp., 110 F. Supp. 295 (D. Mass.

1953), aff’d per curiam, 347 U.S. 521 (1954).

In other words, Congress could have chosen a

simple antitrust solution to the problem of

restricted competition in local telephone

markets. It did not. Instead, in an effort to

jump-start the development of competitive local

markets, it imposed a host of special duties on

the ILECs; it entrusted supervision of those

duties to the FCC and the state public utility

commissions; and it created a system of

negotiated agreements through which this would be

accomplished. These are precisely the kinds of

affirmative duties to help one’s competitors that

we have already noted do not exist under the

unadorned antitrust laws. See Olympia Equipment

Leasing Co., 797 F.2d at 375; MCI Communications

Corp. v. AT & T, 708 F.2d 1081, 1149 (7th Cir.

1983); United States Football League, 842 F.2d at

1360-61; Catlin v. Washington Energy Co., 791

F.2d 1343, 1348-49 (9th Cir. 1986).

It is not our task to assess the wisdom of the

particular measures Congress thought would be

helpful in that process. We have only to

recognize that the duties to which plaintiffs

refer in paragraphs (1) through (20) of their

complaint, which we have set out earlier, go well

beyond anything the antitrust laws would mandate

on their own. A complaint like this one, which

takes the form "X is a monopolist; X didn’t help

its competitors enter the market so that they

could challenge its monopoly; the prices I must

pay X are therefore still too high" does not

state a claim under Section 2. The reason is

because the antitrust laws do not impose that

kind of affirmative duty, even on monopolists.

To the extent such a duty exists, as the

complaint itself makes clear, it comes from the

1996 Act. We think it both illogical and

undesirable to equate a failure to comply with

the 1996 Act with a failure to comply with the

antitrust laws. It is illogical because there are

countless laws that a firm with market power

might violate that have little or nothing to do

with its position in the market: an agricultural

firm might fail to comply with safety or

cleanliness standards applicable to food

processing; a computer processor firm might

violate employment discrimination laws; a

pharmaceutical firm might run afoul of the Food

and Drug Administration’s rules for approval of

new drugs. Even if, in some indirect way, those

defalcations helped the firm to maintain its

monopoly, the link is too indirect to support an

antitrust claim. Those other statutory regimes

contain their own penalty structures, and that is

the proper way to address any violations.

That leads to our other point, which is that it

would be undesirable here to assume that a

violation of a 1996 Act requirement automatically

counts as exclusionary behavior for purposes of

Sherman Act sec. 2. The 1996 Act in fact has an

elaborate enforcement structure that Congress

created for purposes of managing the transition

from the former regulated world to the hoped-for

competitive markets of the future. Questions

concerning the duties of the ILECs, the state

commissions, and competitors have been coming

before the courts with regularity. See, e.g., MCI

Telecommunications Corp. v. U.S. West

Communications, 204 F.3d 1262 (9th Cir. 2000)

(review of arbitrated agreement, including topics

such as unbundling, co-location of remote

switching units, and cost arrangements); AT&T

Communications Systems v. Pacific Bell, 203 F.3d

1183 (9th Cir. 2000) (reviewing arbitrated

agreement under which competitor sought entry

into ILEC market); Alenco Communications, Inc. v.

FCC, 201 F.3d 608 (5th Cir. 2000) (denying a host

of petitions from local exchange carriers

challenging FCC universal service obligation

rules); GTE South, Inc. v. Morrison, 199 F.3d 733

(4th Cir. 1999) (upholding FCC’s rules under the

1996 Act for setting prices for unbundled network

elements and state commission’s decision in an

arbitration); Puerto Rico Telephone Co. v.

Telecommunications Regulatory Board of Puerto

Rico, 189 F.3d 1, 12-13 (1st Cir. 1999) (deciding

among other things that review of state

commission’s actions under state law relating to

interconnection was not possible under the 1996

Act); Texas Office of Public Utility Counsel v.

FCC, 183 F.3d 393 (5th Cir. 1999) (evaluating

claims pertaining to the universal service

obligation that exists under the 1996 Act,

upholding some parts of the FCC’s orders and

striking down others); BellSouth Corp. v. FCC,

162 F.3d 678 (D.C. Cir. 1998) (upholding 1996 Act

restrictions on the BOCs’ ability immediately to

provide in-region long distance service); SBC

Communications, Inc. v. FCC, 154 F.3d 226 (5th

Cir. 1998) (upholding the special provisions of

the 1996 Act directed toward the BOCs, relating

to in-region long distance service, equipment

manufacturing, and electronic publishing); and

BellSouth Corp. v. FCC, 144 F.3d 58 (D.C. Cir.

1998) (upholding provisions of 1996 Act that

limit the ability of the BOCs to provide

electronic publishing services). The antitrust

laws would add nothing to the oversight already

available under the 1996 law.

Our principal holding is thus not that the 1996

Act confers implied immunity on behavior that

would otherwise violate the antitrust law. Such

a conclusion would be troublesome at best given

the antitrust savings clause in the statute. It

is that the 1996 Act imposes duties on the ILECs

that are not found in the antitrust laws. Those

duties do not conflict with the antitrust laws

either; they are simply more specific and far-

reaching obligations that Congress believed would

accelerate the development of competitive

markets, consistently with universal service

(which, we note, competitive markets would not

necessarily assure).

The only question that remains under the

antitrust part of the case is whether anything

the plaintiffs have alleged can be divorced from

its 1996 Act context such that it states a free-

standing antitrust claim for Rule 12(b)(6)

purposes. The plaintiffs have argued that they

have such claims: they point to their allegations

that Ameritech (a monopolist) controlled certain

essential facilities and refused unreasonably to

provide access for others to those facilities.

They refer to the antitrust theory that began

with United States v. Terminal Railroad Ass’n,

224 U.S. 383 (1912), and that the Supreme Court

developed further in Associated Press v. United

States, 326 U.S. 1 (1945).

It is true that paragraph 37 of the complaint

asserts that Ameritech "dominates and controls an

essential facility, which consists of its

telephone lines, equipment, and transmission and

interconnection stations in the relevant market,"

and paragraph 38 asserts that Ameritech’s

competitors are practically and reasonably unable

to duplicate those essential facilities. The

complaint also alleges that Ameritech has refused

to deal with its competitors on just, reasonable,

and nondiscriminatory terms. Nevertheless, when

one reads the complaint as a whole these

allegations appear to be inextricably linked to

the claims under the 1996 Act. Even if they were

not, such a conclusion would then force us to

confront the question whether the procedures

established under the 1996 Act for achieving

competitive markets are compatible with the

procedures that would be used to accomplish the

same result under the antitrust laws. In our

view, they are not. The elaborate system of

negotiated agreements and enforcement established

by the 1996 Act could be brushed aside by any

unsatisfied party with the simple act of filing

an antitrust action. Court orders in those cases

could easily conflict with the obligations the

state commissions or the FCC imposes under the

sec. 252 agreements. The 1996 Act is, in short,

more specific legislation that must take

precedence over the general antitrust laws, where

the two are covering precisely the same field.

This is not the kind of question that requires

further development of a factual record, either

on summary judgment or at a trial. We therefore

agree with the district court that it was proper

for resolution under Rule 12(b)(6). There are

many markets within the telecommunications

industry that are already open to competition and

that are not subject to the detailed regulatory

regime we have been discussing; as to those, the

antitrust savings clause makes it clear that

antitrust suits may be brought today. At some

appropriate point down the road, the FCC will

undoubtedly find that local markets have also

become sufficiently competitive that the

transitional regulatory regime can be dismantled

and the background antitrust laws can move to the

fore. Our holding here is simply that this is not

what Congress has mandated at this time for the

ILEC duties that are the subject of the

Goldwasser complaint. The district court thus

correctly rejected the plaintiffs’ antitrust

theory.

B.

Plaintiffs still have another arrow in their

quiver, which is their claim under the 1996 Act

itself. No one ever suggested that they lacked

standing to bring that action, and it obviously

does not raise the problems of conflicting

statutory schemes that the antitrust theory does.

But they face a different problem here. The 1934

Act permits a lawsuit for damages to be brought

by "[a]ny person claiming to be damaged by any

common carrier subject to the provisions of this

chapter," 47 U.S.C. sec. 207, and it makes

carriers liable to such plaintiffs for "the full

amount of damages sustained in consequence of any

such violation," together with attorney’s fees,

47 U.S.C. sec. 206. As consumers, however, their

lawsuit for damages boils down to a claim for

overcharges Ameritech has been able to impose

upon them, as a result of its failure to carry

out its responsibilities under the 1996 Act.

The district court concluded that the filed

rate doctrine, which bars courts from re-

examining the reasonableness of rates that have

been filed with regulatory commissions, precluded

this kind of consumer action. In Keogh, supra,

the Supreme Court explained that the courts’

ability to determine the reasonableness of rates

is limited; that awarding damages to plaintiffs

while leaving less litigious customers paying the

filed rates would be discriminatory; and that a

damages assessment would necessarily require an

independent rate-setting proceeding in which the

court would have to guess what lower rate the

agency should have chosen. 260 U.S. at 163-64.

Although the doctrine had come under some

criticism, the Supreme Court reaffirmed it in

Square D Co. v. Niagara Frontier Tariff Bureau,

Inc., 476 U.S. 409, 424 (1986), and we are bound

to follow it.

The Goldwasser plaintiffs argue that Ameritech’s

rates should not be shielded by the doctrine

because, although the state public utility

commissions nominally oversee its rate-setting,

they rarely exercise their muscle and thus give

no meaningful review to the rate structure. The

Supreme Court rejected precisely this argument in

Square D, 476 U.S. at 417 n.19, and this court

did the same in In re Wheat Rail Freight Rate

Antitrust Litigation, 759 F.2d 1305, 1313 (7th

Cir. 1985). We reject it here again, but with the

additional comment that the process established

in sec. 252 of the 1996 Act for review of

negotiated agreements, both for substance and for

implementation, provides an extra safeguard

against indolent agencies. Furthermore, the

record thus far is one of active use of these

review procedures; there would be no basis at all

to find that they are illusory.

We thus agree with the district court that the

plaintiffs cannot pursue their damages claim

under the 1996 Act, because the monopoly claim

these plaintiffs are trying to assert necessarily

implicates the rates Ameritech is charging. To

the extent they are seeking damages under the

Sherman Act, the same analysis applies.

III

The judgment of the district court is AFFIRMED.