Opposition Brief — AT&T Corp. v. RLH Industries, Inc. (No. 05-1493)

No. 05-1493 |

IN THE

Supreme Court of the United States

AT&T INC., fka SBC COMMUNICATIONS INC.,

Petitioner,

v.

RLH INDUSTRIES, INC.,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

CourRT OF APPEAL OF CALIFORNIA,

FOURTH APPELLATE DISTRICT,

DIVISION THREE

—

wetter

BRIEF IN OPPOSITION

H. KENNETH KUDON JAMES A. STEARMAN

Kupon Law Firm Counsel of Record

Two Old Creek Court RICHARD S. Price, II

Potomac, MD 20854 1235 N. Harbor Blvd.

(301) 279-5634 Suite 200

Fullerton, CA 92832

(714) 871-1132

Counsel for Respondent

201899 g

COUNSEL PRESS

(800) 274.3321 + (BOO) 359.6859

i

’

=

QUESTIONS PRESENTED

1. Whether the Court lacks jurisdiction to review the

interlocutory decision of the California Court of Appeal in

this case.

2. Whether application of California’s Competition

statutes to out-of-state anticompetitive conduct that

substantially affects California commerce is either beyond

the reach of the Commerce Clause or subject to the Pike

balancing analysis.

il

RULE 29.6 STATEMENT

Respondent RLH Industries, Inc., a California

corporation, does not have a parent company and no other

public company owns 10% or more of its stock.

iii

TABLE OF CONTENTS

Page

Caine PUOUNNNE 5 a ons she Oke Os Ree Ke i

HE 270 En Pica abn ec Chadkaeeeevann es il

ne SE CI ie i 5 ae a ee ili

Pauw OF CRG AOTIOTNNS oo gee eink vins vi

PIA, 8 ck i OE Ee es I

Countersiatement of the Case 2.6.5 icv ceerets 2

Reasons for [venying the Petition ............... 6

I. This Court Lacks Jurisdiction to Review The

Interlocutory Order of The California Court

OE RE oie ee a ees 6

I]. There is Not a Genuine Conflict in The Lower

Courts on Whether Direct Regulation

of Extraterritorial Commerce is Unconsti-

tutional Without Further Inquiry .......... |

A. The Critical Inquiry in Commerce

Clause Jurisprudence is Always The

Same; The Scope and Depth of The

Inquiry Vary Depending Upon The

Nature of The Statute and The Facts

OFT GONE sk Se cee ree eeees 11

Contents

B. The First and Eighth Circuits’ “First

Tier” Commerce Clause Analysis Does

Not Conflict With That of Other Circuits

C. The First Circuit’s Application of

Commerce Clause Precedents Recently

Has Been Approved by The Court .....

D. The Eighth Circuit’s Approach to

Commerce Clause Analysis is Not

Out-of-Line With its Sister Circuits ..

II. The California Court of Appeal’s Decision

Correctly Applied This Court’s Commerce

See PND Shiv sees Kons oo eke Pees

A. The California Court of Appeal Applied

the First Tier Commerce Clause Analysis ~

Insofar as The Record Permitted ......

B. The California Court’s Understanding of

Commerce Clause Jurisprudence Finds

Support in Decisions From Other

Jurisdictions That Have Applied State

Antitrust Statutes to Out-of-State

Anticompetitive Conduct ...........

Page

15

Conclusion

Contents

C. AT&T’s Contention That The Commerce

Clause Bars All Claims Under State

Statutes Based Upon Extraterritorial

Conduct is Overly Simplistic and

Re 6 OTR re LAER ae

AT&T’s Attempt to Draw a Commerce

Clause Distinction Between In-State

Impact on Consumers or Markets, on

One Side, And Manufacturers And

Vendors, on The Other, is a Distinction

Without a bitierence 24. 2. ceed.

AT&T’s Tariff Argument Presents Fact

Questions That Are Not Ripe For Review

("6 £6 @ 6..@°8:°.¢ 6/8 @ 8 £6 €.E € @ 68 O8-S €¢. P.O) 2. 8, 4-4. 6 BS

IV. This is The Wrong Case at The Wrong Time

For Further Review and Application of

Commerce Clause Principles ............

8 2°92 See 2 Se 8-4-6 2 6. 6-8 Se 2 10.8 Oe ei eS

Page

tw

to

24

25

vi

TABLE OF CITED AUTHORITIES

Page

CASES:

ACLU v. Johnson, 194 F.3d 1149 (10" Cir. 1999) .... 12

Alliant Energy Corp. v. Bie, 336 F.3d 545 (7® Cir.

BOE Ca Kee yeas Ca Che kee vee ee lake 1]

American Booksellers Foundation v. Dean, 342

Pia TOE Gs OD eb beware eee bees 12

American Libraries Ass'n v. Pataki, 969 F. Supp. 160

PRES SS. 5s ER pare poner e Meme ew Dr 12

Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935)

CuIK CUE READER As ee ae ee bie 26

Beretta, U.S.A., Corp v. District of Columbia, __ U.S.

__» 126 S. Ct. 399, 163 L. Ed. 2d 277 (20035) ... 2

BMW of North America, Inc. v. Gore, 517 U.S. 559

CEN See CUES en Cow aa Cabaedeene ds 19

Brown-Forman Distillers Corp. v. New York State

Liquor Authority, 476 U.S. 573 (1986) ....... 11, 16

C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S.

PRR a. aw eu wwe ae ee We a 26

C. Bennett Bldg. Supplies v. Jenn Air, 759 S.W.2d

ee A PU CSOD i oe ep CERES) CAWER VS Ee: 20

vil

Cited Authorities

Page

California v. ARC America Corp., 490 U.S. 93 (1989)

Pods eee OAD eee EON Re ee esos 18, 26

Certain Underwriters at Lloyd’s of London v.

Superior Court, 24 Cal. 4" 945, 103 Cal. Rptr.

TOT E CAGE uo RSA Se re re eS 4

Collins v. Miller, 252 U.S. 364 (1920) ........... 7

Cotto Waxo Co. v. Williams, 46 F.3d 790 (8" Cir.

SO io voce kk Oe ds caked ee Oe 15, 16

Cox Broad. Corp. v. Cohn, 420 U.S. 469 (1975) . . 2, 8,9, 10

CTS Corp. v. Dynamics Corp., 481 U.S. 69 (1987)

Cd wea hg DE Vd ae EE a Ee 19

District of Columbia v. Beretta, U.S.A., Corp.,

Bie Aire Oot Ua. Oe Silke ed hiw ences 21

Edgar v. MITE Corp., 457 U.S. 624 (1982) ....... 18

Fiyat v. Ohio, 451 U.S. GIS CI9G)) wee evn’ 10

Freeman Industries, LLC v. Eastman Chem. Co..,

7z S.W.356 Sia CHC DO? «kn k's cet wk cs eee

Grant's Dairy-Maine LLC v. Commissioner of Maine

Dept. of Agriculture, 232 F.3d 8 (1“ Cir. 2000)

vill

Cited Authorities

Page

Hampton Feedlot v. Nixon, 249 F.3d 814 (8 Cir.

WED bee ia Cow WEAE EROS ROO e 16

Healy v. Beer Inst., 491 U.S. 324 (1989) ..... 11, 19, 24

Heath Consultants v. Precision Instruments,

S27 TEAWAG SIG UNOO. AFGS) ica oie i cs 19, 20

In re Lorazepam & Clorazepate Antitrust Litigation,

295 F. Supp. 2d 30 (D.D.C. 2003) ........ 19, 20, 23

Instructional Sys. v. Computer Curriculum Corp.,

5S F356 SiS 90 CO. TOPS) is ho eae 21

Jefferson v. City of Tarrant, 522 U.S. 75 (1997) ..1,7,9

Johnson vy. California, 541 U.S. 428 (2004) ...... 10

_ Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d

FFD. FP CM. FE on bs CRONE eS 19, 23

Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

STSAUG: FIG CEH 65 ELS Ba ee ee 23

Mazurek v. Armstrong, 520 U.S. 968 (1997) ...... 10

National Solid Wastes Management Association v.

Meyer, 63 F.3d 652 (7" Cir. 1995) ........ $872,395

NCAA v. Miller, 10 F.3d 633 (9" Cir. 1993) ....... 12

ix

Cited Authorities

Page

Okla. Tax Comm’n v. Jefferson Lines, Inc., 514 U.S.

Ne ee 8 i ius ve wwaweeae 16

Olstad v. Microsoft Corp., 700 N.W.2d 139 (2005)

ee ed yeh wills cede sbivewewess 20

Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S.

ee a ae ku eo 0 A adie w sles 8 14

Pharm. Research & Mfrs. of Am. v. Concannon,

Se yo | a 14, 15

Phonetele, Inc. v. American Tel. & Tel. Co., 664

ee Oo, PE ic wine vceeyevccveeas

Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) ... 1,5,

6, 16, 20

Psinet, Inc. v. Chapman, 362 F.3d 227 (4" Cir. 2004)

ee os te a ew aweeec 12

Southern Union Co. v. Missouri Public Service

Commission, 289 F.3d 503 (8" Cir. 2002) ...... 15

State v. Coca Cola Bottling Co. of Southwest,

697 S.W.20 677 (Tex. App. 1985) ............ 20

x

Cited Authorities

Page

CONSTITUTION, STATUTES, AND RULES:

California Business & Professions Code

IN SR on ha A oe Keene tees Clee ie 3

OE DRT NE fis oS ba occ oe aS Oates sk 23

PE 05 6k kha a oe ee eae ce 3

NN TE a ic wh deeb whee ees 3

EO Ons B SAPO « ii 66 4 ine reed ven 1, 6, 26

OTHER MATERIALS:

Black’s Law Dictionary (7" Ed. 1999) ........... 22

Donald H. Regan, Siamese Essays: (1) CTS Corp. v.

Dynamics Corp. of America and Dormant

Commerce Clause Doctrine; (11) Extraterritorial

State Legislation, 85 Mich. L. Rev. 1865 (1987)

CREEK SER AED Cod kdRa 4k SR OR ae FI 21

Herbert Hovenkamp, State Antitrust in the Federal

Semen; SS 1G. 0.35: 579 CIF) i oe cs ec Re ees 19

JURISDICTION

This Court lacks jurisdiction to review the interlocutory

order of the California Court of Appeal in this case.

The California Court of Appeal rendered an “interim”

decision; not a final judgment. After the Supreme Court of

California denied review, the case was remanded to the trial

court. Trial is set for January 8, 2007. j

Under 28 O°S.C. § 1257(a), this Court’s review of state

court decisions is confined to “final judgments or decrees

rendered by the highest court of a State in which a decision

could be had.” To warrant review by this Court, a case must

be subject to no further review or correction in any other

state tribunal and must also be final as an effective

determination of the litigation and not of merely interlocutory

or intermediate steps therein. Jefferson v. City of Tarrant,

522 U.S. 75, 81 (1997).

The decision of the court below was not an effective

determination of the litigation. First, petitioner AT&T Inc.

(“AT&T”) may yet establish that the Commerce Clause bars

the antitrust and unfair competition claims of respondent

RLH Industries, Inc. (“RLH”’); and this showing may, indeed,

be bound together with RLH’s proofs of the effectsof AT&T's

conduct in California. Secondly, AT&T undoubtedly will

raise other federal issues including due process of law. Third,

not all of RLH’s claims involve federal issues. Fourth, the

‘ trial court's decision will be subject to further review by the

California appellate courts and also by this Court.

Moreover, the decision below does not fall within any

of the four categories of exceptional cases in which the Court

has treated state-court judgments as final even though further

2

proceedings were to take place in state court. See Cox Broad.

Corp. v. Cohn, 420 U.S. 469, 479-485 (1975). The first three

Cox categories are plainly inapplicable. The fourth Cox category,

too, is inapplicable. Delaying review of the decision below

cannot “seriously erode ... Constitutional policy” as no

immediate and systemic consequences will result from such a

delay.

COUNTERSTATEMENT OF THE CASE

RLH, a California company, is one of only four

manufacturers of high voltage protection (““H VP”) devices used

to prevent life and property threatening electrical surges.

P.A. 4.' The California Court of Appeal, reversing summary

judgment in favor of AT&T, determined that “triable issues

abound” on whether AT&T’s policy of forbidding its customers

from buying or installing their own high voltage protection

(“ri VP”) devices from RLH or anyone else, in AT&T’s five

state Midwestern territory where it dominates local t.uephone

service, is a tying arrangement. P.A. 19a-20a. The court below

also found evidence tending to show that this conduct injured

RLH (“Cynergy Corporation would prefer to use RLH devices

in its new facilities, but instead leases [AT&T] HVP services

due to its HVP policy”). P.A. 20a. In recent years, RLH lost

thousands of dollars in sales to AT&T at Cynergy alone.

Appellant's Opening Brief, pg. 36.

AT&T, until recently known as SBC Communications

Corp., conceded personal jurisdiction in California.* PA. 18a.

1. The Appendix to the Petition for Certiorari is cited as

“P.A. |[page].”

2. SBC asserts that the court erroneously found personal

jurisdiction over it. But the record clearly shows that SBC not only

(Cont'd)

3

RLH brought its second amended complaint against AT&T in

California state court consisting of four causes of action, the

first and second for unlawful tying arrangements in violation of

California’s Cartwright Antitrust Act, Cal. Bus. & Prof. Code,

§§ 16720, 16726 et seq., the third under California’s Unfair

Competition Act, Cal. Bus. & Prof. Code, §§ 17200 et seq., and

the fourth for common law intentional interference with

prospective advantage. The third and fourth causes of action

are based primarily, but not entirely, on the tying arrangements.

P.A. 25a-42a. Although AT&T glosses over it [Cert. Pet., pp. 4,

11, 21], only the unfair competition cause of action seeks

affirmative injunctive relief. P.A. 38a, 40a (Prayer for Relief).

AT&T incorrectly asserts that RLH’s second amended

complaint did not allege claims against AT&T’s out-of-state

subsidiaries based on RLH’s efforts to sell its products in

California. Cert. Pet., pg. 4. This statement creates the

misconception that RLH does not manufacture and sell its HVP

devices in California. To the contrary, as AT&T acknowledges,

RLH has its headquarters and principal place of business in

California; it manufactures and sells its HVP devices there.

P.A. 26a, ¥ 4. So, RLH’s claims are, in fact, based on its efforts

to sell HVP devices in California.

(Cont'd)

conceded the Court’s personal jurisdiction over SBC but also the

Court's power to award damages or injunctive relief as to

extraterritorial conduct that impacts California, as follows:

“[w]e don’t dispute at all that we are properly here and that this

court has the power to issue an award ... of damages or injunctive

relief with respect to conduct that impacts the state of California”

and, moments later, “[t]his is not about jurisdiction. We'll concede

jurisdiction.” Appellant's Reply Brief, p. 14 (citing August 26, 2003

Hearing Transcript, pp. 7:18-24, 13:22-24)

4

AT&T also claims that RLH’s pleading does not allege that

AT&T’s out-of-state tying arrangements impacted the California

market for HVP devices or California consumers of HVP

devices. Cert. Pet., pg. 4. AT&T’s statement again creates the

misconception that AT&T’s allegedly unlawful conduct is

disconnected from California. AT&T not only fails to

acknowledge that its conduct has caused injury to California

commerce but also ignores RLH’s allegation that California was

the locus of part of the allegedly wrongful conduct. P.A. 32a,

q 24.

Further, AT&T asserts that every state in which it

operates has its own regulatory body and tariffs and some of

these tariffs embody the conduct comprising the alleged tying

arrangements. Cert. Pet., pg. 5-6. AT&T, however, has

overlooked relevant fact-intensive questions: whether these

tariffs are proper subjects of regulation that are mandated by

State law and closely supervised or are, as the evidence would

suggest, unilaterally written and imposed by AT&T.

Appellant’s Reply Brief, pp. 24-25; P.A. 19a. These questions

can only be answered through trial on the merits.

In response to a summary judgment motion in California,

the nonmovant must demonstrate (i) that the movant failed

to produce admissible evidence showing that an element of

the cause of action cannot be established or (ii) if necessary,

the existence of a triable issue of material fact as to the

element at issue. Certain Underwriters at Lloyd’s of London

v. Superior Court, 24 Cal. 4" 945, 103 Cal. Rptr. 2d 672

(2001). Thus, while RLH produced sufficient evidence to

defeat AT&T’s summary judgment motion, RLH did not have

to show, for example, the full extent of its injuries attributable

to AT&T's allegedly anticompetitive conduct or the total

effect of AT&T’s out-of-state conduct upon California

2

commerce. Again, development of a complete factual record

on this issue must await trial.

The California Court of Appeal also denied summary

judgment to AT&T on its contention that it was not liable for its

subsidiaries’ HVP policies, holding that “[w]hether AT&T is

liable under either an agency or alter ego theory is a question of

fact.” As the court below found, this is a fact-laden question.

P.A. lla. It is inextricably intertwined with the merits of the

case. Accordingly, determination of this issue, too, awaits trial.

Finally, in finding that AT&T “failed to meet its summary

judgment burden” on the Commerce Clause defense (P.A. 18a),*

the court below allowed AT&T the opportunity to establish in

the trial court that the Commerce Clause, in fact, bars RLH’s

state antitrust and unfair competition claims. P.A. 19a. The court

explained that whether the state law unduly burdens interstate

commerce when all is taken into account requires an analysis

which AT&T did not present on summary judgment: a “fact

intensive” balancing of the “benefits of applying California law

to [AT&T’s] alleged tying arrangements against the burden

condemning the tying arrangements under California law .. .

would impose on interstate commerce (citing Pike v. Bruce

Church, Inc., 397 U.S. 137, 142 (1970)).” P.A. 15a.

3. At trial RLH expects to show the full extent of the harm to

RLH’s production, sales and earnings in California resulting from

AT&T's alleged conduct and, beyond that, the “ripple” effects of AT&T's

conduct upon, among other things, salaries and employment of California

residents, purchases from California suppliers and the like.

4. The specific statutes which AT&T contends are barred by

the Commerce Clause are the Cartwright Act and the Unfair

Competition Act. Brief for Respondents, p. 30.

6

The California Court of Appeal found that AT&T not

only came up short on its Commerce Clause analysis but

also neglected to raise and, therefore, waived for summary

judgment purposes other potentially relevant issues including

legislative intent, due process of law and conflict of laws

(“[t]he conflict of laws or due process issues may. . . require

an in-depth analysis of the legal effect of the tariffs that AT&T

has filed with various state agencies”). P.A. 18a-19a.

Accordingly, the California Court of Appeal remanded the

case for trial, “express[ing] no opinion on potentially relevant

issues not yet litigated, including a rigorous Pike analysis.”

P.A. 19a. Reflecting the “interim” nature of the proceedings,

the court granted the trial court discretion to award appeal

costs to “the party ultimately prevailing.” P.A. 21a.

REASONS FOR DENYING THE PETITION

I. This Court Lacks Jurisdiction to Review The

Interlocutory Order of The California Court of Appeal.

Palpably, this Court lacks jurisdiction to review the

interlocutory order of the California Court of Appeal in this

case. This Court’s review of state court decisions is confined

to “final judgments or decrees rendered by the highest court

of a State in which a decision could be had.” 28 U.S.C.

§ 1257(a). From the face of the California Court of Appeal’s

decision, it is readily apparent that, in the court’s own words,

it is an “interim proceeding”; the court did not render a “final

judgment.” The court referred specifically to AT&T's failure

to meet its summary judgment burden and “express[ed] no

opinion on potentially relevant issues not yet litigated,

including a rigorous Pike analysis.”

7

There are indeed further proceedings yet to come in the

case. The trier-of-fact has not heard RLH’s antitrust and

unfair competition claims or AT&T’s state and federal

defenses including that (i) AT&T is not liable for the acts of

its local telephone subsidiaries (ii) the tying claims are barred

by the Commerce Clause and (iii) the tying claims are barred

by other Constitutional infirmities such as due process of

law. Apart from that, the trier-of-fact has yet to hear RLH’s

tortious interference with prospective advantage claim which

is unaffected by federal issues.* After the trial court renders

judgment on all of RLH’s claims, either party may appeal as

of right to the California Court of Appeal. That court’s

decision is in turn subject to discretionary review by the

Supreme Court of California and by this Court.

The finality requirement “is not one of those

technicalities to be easily scorned. It is an important factor

in the smooth working of our federal system.” Jefferson v.

City of Tarrant, 522 U.S. 75, 81 (citation omitted). To warrant

review by this Court, a case must be final in two senses:

‘it must be subject to no further review or correction in any

other state tribunal; it must also be final as an effective

determination of the litigation and not of merely interlocutory

or intermediate steps therein. It must be the final word of a

final court.” /d. (citation omitted).

The Court has expressly held that the judgment “should

be final not only as to all the parties, but as to the whole

subject-matter and as to all the causes of action involved.”

Collins v. Miller, 252 U.S. 364, 370 (1920). The decision

below plainly does not meet this standard. To begin with,

5. AT&T did not argue whether RLH'’s intentional interference

cause of action is barred by the Commerce Clause. Therefore, the

Court of Appeal did not address this question.

8

the court below ruled that AT&T may yet establish that

the Commerce Clause bars RLH’s antitrust and unfair

competition claims as a matter of fact. This showing may,

indeed, be bound together with RLH’s proofs on the merits,

i.e. substantial impact upon California commerce.

Secondly, AT&T undoubtedly will raise due process of

law and other federal issues. Third, some but not all of RLH’s

claims involve federal issues. RLH’s tortious interference

claim remains unaffected. Finally, the trial court’s decision

is subject to review by the California appellate courts. Even

assuming the Court of Appeal adheres to its interim

Commerce Clause ruling as “law of the case,” that decision

will not bind the California Supreme Court, should it grant

discretionary review. And, the decision surely will not be

binding upon this Court.

Nor does, the decision below fall within any of the four

categories of cases in which the Court has treated state-court

judgments as final even though further proceedings were to

take place in state court. See Cox Broad. Corp. v. Cohn,

420 U.S. 469, 479-485.° The first three Cox categories are

6. Cox holds that the finality requirement may be satisfied

despite the pendency of further proceedings when (1) “there are

further proceedings * * * yet to occur in the state courts but where

for one reason or another the federal issue is conclusive or the

outcome of further proceedings preordained,” (2) “the federal issue

* * * will survive and require decision regardless of the outcome of

future state-court proceedings,” (3) “the federal claim has been finally

decided, with further proceedings on the merits in the state courts to

come, but in which later review of the federal issue cannot be had,

whatever the ultimate outcome of the case,” or (4) “the federal issue

has been finally decided in the state courts with further proceedings

(Cont'd)

9

plainly inapplicable. The federal issue is not conclusive or

preordained. Indeed, the California Court of Appeal identified

potential Constitutional issues, e.g. due process, that AT&T has

not yet raised. See Cox, 420 U.S. at 477 (exceptional situations

typically “would not require the decision of other federal

questions that might also require review by the Court at a later

date”).

The federal issues will not necessarily “survive and require

decision regardless of the outcome of future state-court

proceedings.” Cox, 420 U.S. at 480. Should AT&T prevail on

any of its state law defenses, the federal issues could be mooted.

Jefferson, 522 U.S. at 82. On the other hand, if AT&T does not

prevail, it may appeal all issues as of right to the California

Court of Appeal followed by discretionary review in the

California Supreme Court. Thus, the California courts’ ultimate

“determination will in no way limit [this Court’s] ability to

review the issue on final judgment.” Jefferson, 522 U.S. at 82-

83.

The fourth Cox category involves cases in which

the federal issue has been finally decided in the state

courts with further proceedings pending in which

the party seeking review here might prevail on the

merits on nonfederal grounds, * * *-and where

reversal of the state court on the federal issue would

be preclusive of any further litigation on the relevant

cause of action.

This category is also inapplicable.

(Cont'd)

pending in which the party secking review here might prevail on the

merits on nonfederal grounds, * * * and where reversal of the state

court on the federal issue would be preclusive of any further litigation

on the relevant cause of action.” 420 U.S. at 479-483.

10

Although AT&T could arguably prevail on the merits on

nonfederal grounds and prevail on federal grounds on the

antitrust and unfair competition claims if this Court reversed

the lower court’s Commerce Clause ruling, the fourth Cox

exception is only available when delaying review would

“seriously erode . . . Constitutional policy.” Cox, 420 U.S.

at 483. In the Constitutional realm, the fourth Cox exception

has been limited, as a rule, to First Amendment cases,

id. at 484-85 (citing cases), and, as a rare exception, to other

Constitutional issues in which the impact of delaying review

has immediate and potentially systemic consequences.

E.g. Mazurek v. Armstrong, 520 U.S. 968 (1997).

Delaying review would not seriously erode

Constitutional policy in the circumstances of this case. The

question raised by AT&T does not raise First Amendment

questions. Nor does it have imminent and potentially

systemic consequences. It is, therefore, comparable to such

cases as Flynt v. Ohio, 451 U.S. 619, 622-23 (1981)

(resolution of equal protection clause issue could await final

judgment without “adverse effect upon important Federal

interests; a contrary conclusion would permit the fourth

exception to swallow the rule”) and Johnson v. California,

541 U.S. 428, 430 (2004) (“no convincing claim of erosion

of federal policy that is not common to all decisions rejecting

a defendant's [Constitutional] claim’).

Accordingly, the Court lacks jurisdiction to review the

interlocutory decision of the California Court of Appeal in

this case.

11

II. There is Not a Genuine Conflict in The Lower Courts

on Whether Direct Regulation of Extraterritorial

Commerce is Unconstitutional Without Further Inquiry

AT&T argues that the Court should grant certiorari because

there is a division in the Circuits on whether direct regulation

of extraterritorial commerce is unconstitutional without further

inquiry. Cert. Pet., pg. 16. No genuine conflict exists. It is simply

the case that no court has adopted AT&T’s view that “regardless

of the beneficial effects a statute has on local activity it should

be declared invalid if it has any extraterritorial effects.”

See Alliant Energy Corp. v. Bie, 336 F.3d 545, 547 (7" Cir.

2003) (rejecting such an argument in denying petition for

rehearing en banc). Rather, lower courts have applied this

Court’s precedents requiring courts to strike down “a state law

shown to have extraterritorial scope and an adverse impact on

commerce occurring wholly outside the state.” National Solid

Wastes Management Association v. Meyer, 63 F.3d 652, 659

(7" Cir. 1995) (emphasis added).

A. The Critical Inquiry in Commerce Clause

Jurisprudence is Always The Same; The Scope and

Depth of The Inquiry Vary Depending Upon The

Nature of The Statute and The Facts of The Case.

In all cases addressing Commerce Clause questions, the

critical inquiry remains the same: “[T]he overall effect of the

statute on both local and interstate commerce.” Healy v. Beer

Inst., 491 U.S. 324, 337 n.14 (1989) (citing Brown-Forman

Distillers Corp. v. New York State Liquor Authority, 476 U.S.

573, 579 (1986)).’ The scope and depth of the inquiry needed

7. The Healy Court also noted that its “distillation of principles

from prior cases involving extraterritoriality [including the principle

upon which AT&T relies] is meant as nothing more than a restatement

of those specific concerns that have shaped this inquiry.” Healy v.

Beer Inst., 491 U.S. at 337 n.14 (emphasis added).

12

to determine whether a state law unduly burdens interstate

commerce and, therefore, transgresses the Commerce Clause

vary depending upon the nature of the statute at issue and

the facts of the particular case. AT&T’s review of the lower

court cases overlooks this important point. As a consequence,

AT&T sees division and confusion that on closer scrutiny

does not necessarily exist.

In American Booksellers Foundation v. Dean, 342 F.3d

96 (2d Cir. 2003), as one example, the court reviewed a

Vermont criminal statute intended to protect minors living

in Vermont from internet obscenity. The court observed that

the internet is a unique phenomenon that does not recognize

geographic boundaries. /d. at 103. As a result, website

operators operating lawfully in State A were subject to

criminal penalties in Vermont. /d. While acknowledging

Vermont’s interest in protecting minors against such out-of-

state websites (id. at 104), the court nevertheless found an

undue burden on out-of-state commerce resulting from

inconsistent state legislation in this sphere. /d. (citing e.g.

American Libraries Ass'n v. Pataki, 969 F. Supp. 160, 182

(S.D.N.Y. 1997)).

Accordingly, in striking down state internet legislation,

lower courts have relied upon analysis of its practical

effects and found adverse impact upon interstate commerce.

Accord: Psinet, Inc. v. Chapman, 362 F.3d 227, 240 (4" Cir.

2004) (adopting Pataki analysis regarding “haphazard,

uncoordinated, and even out-right inconsistent regulation by

states”) and ACLU v. Johnson, 194 F.3d 1149 (10" Cir. 1999)

(also relying upon the Pataki analysis).

Similarly, in NCAA y. Miller, 10 F.3d 633 (9" Cir. 1993),

the court analyzed a Nevada statute providing certain due

13

process protections during enforcement proceedings that the

NCAA, the national intercollegiate athletic regulatory

organization, did not provide. The statute was apparently

aimed exclusively at the NCAA, whose goal is to create a

uniform nationwide collegiate athletic “product” through

enforcement procedures applied uniformly and even-

handedly nationwide. /d. at 638.

The court clearly found that Nevada’s statute was per

se invalid because it unduly burdened out-of-state commerce.

Nevada’s statute forced the NCAA either to adopt non-

uniform standards which could lead to college athletic non-

uniformity or, alternatively, to compromise the integrity of

its produet in every state by adopting Nevada’s procedures

nationwide. /d. at 639. Beyond that, other states also had

enacted or were about to enact their own due process statutes,

creating “the serious risk of inconsistent obligations .. .”

Id. at 640.

In National Solid Wastes Management Association v.

Meyer, 63 F.3d 652 (7" Cir. 1995), the court analyzed a

Wisconsin statute that prohibited waste generators from using

Wisconsin landfills unless they generated waste in a

community that adopted the law’s “effective recycling

program.” The court struck down the statute after finding an

adverse impact on out-of-state commerce. The law worked a

practical “embargo” on out-of-state communities that refused

to comply with the Wisconsin law and had the practical effect

of inflicting a higher cost burden on some out-of-state

competitors than on others wholly based on whether their

communities adhered or refused to adhere to Wisconsin's

statute. /d. at 660-61.

14

B. The First and Eighth Circuits’ “First Tier”

Commerce Clause Analysis Does Not Conflict

With That of Other Circuits.

Although AT&T argues otherwise [Cert. Pet. Pg. 18],

the First and Eighth Circuits have not rejected the view that

direct regulation of interstate commerce is per se invalid.

Rather, these courts, too, have looked beyond the mere

extraterritorial effect of the statute and have analyzed whether

in “practical effect” it unduly burdens interstate commerce

and, therefore, violates the Commerce Clause.

C. The First Circuit’s Application of Commerce

Clause Precedents Recently Has Been Approved

by The Court.

The First Circuit’s decision in Pharm. Research & Mfrs.

of Am. v. Concannon, 249 F.3d 66 (Ist Cir. 2001), aff’d sub

nom. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S.

644 (2003), illustrates the proper application of Tier One

analysis more adequately than Grant’s Dairy-Maine LLC v.

Commissioner of Maine Dept. of Agriculture, 232 F.3d 8

(1* Cir. 2000), and also carries the advantage of this Court’s

review and imprimatur of its Commerce Clause analysis.

Walsh, 538 U.S. at 669-70 (“Maine Act does not regulate the

price of any out-of-state transaction” and the “Program will

not impese a disparate burden on any competitors.”)

In Concannon, the court reviewed a Maine statute

intended to obtain lower prescription drug prices for Maine’s

citizens. The program subsidized drug prices by collecting

rebate payments from participating drug manufacturers.

The primary incentive for manufacturers to enter rebate

agreements with the state was a rule that drugs of all

15

noncompliant manufacturers could lose their Medicaid

authorization. Concannon, 249 F.3d at 71-72.

The court rejected an argument that the law constituted

per se invalid extraterritorial regulation as it necessarily

regulated drug manufacturer and distributor transactions

outside the borders of Maine and reduced rmanufacturers’

profits. /d. at 80, 82. Because Maine did not insist that

manufacturers sell their drugs to a wholesaler for a certain

price nor tie the price of its in-state products to out-of-state

prices, it was not regulating their out-of-state conduct.

Id. at 81-82. Rather, the Act simply regulated in-state activity.

Id. at 82. Moreover, it did not appear that adverse effects on

commerce would occur if similar legislation were enacted

in other states. /d. at 82-83.

D. The Eighth Circuit’s Approach to Commerce

Clause Analysis is Not Out-of-Line With its Sister

Circuits. -

Finally, AT&T has cited Southern Union Co. v. Missouri

Public Service Commission, 289 F.3d-503 (8" Cir. 2002), as

evidence that the Eighth Circuit has rejected the principle

that direct regulation of interstate commerce is per se invalid.

The Eighth Circuit, however, has not rejected that principle.

Instead, like her sister Circuits and this Court, the Eighth

Circuit has analyzed whether the law has “extraterritorial

scope and an adverse impact on commerce occurring wholly

outside the state.” See Meyer, supra, 63 F.3d 652, 659.

Cotto Waxo Co. v. Williams, 46 F.3d 790 (8" Cir. 1995),

applied this type of analysis to a Minnesota law_prohibiting

the sale of petroleum-based sweeping compounds. As a result

of the law’s passage, Minnesota wholesalers and distributors

16

refused to purchase or sell these petroleum-based sweeping

compounds from the plaintiff who lost not only its Minnesota

customers but also most of its sales in surrounding states.

Id. at 793-94,

Mindful that a statute could have per se unconstitutional

extraterritorial reach under this Court’s precedents “when it

necessarily requires out-of-state commerce to be conducted

according to in-state terms,” the court did not find that to be

the case. Although the law “affected [the plaintiff's]

participation in interstate commerce,” it did not “necessarily

affect out-of-state commerce” — the plaintiff was still “able

to sell to out-of-state purchasers regardless of [its]

relationship to Minnesota.” Jd. at 794. Therefore, the court

ruled out per se invalidity and applied the balancing analysis

approved in Pike, supra, 397 U.S. 137, 142. Accord: Hampton

Feedlot v. Nixon, 249 F.3d 814, 818 (8 Cir. 2001)

(determining that state statute was not per se invalid direct

regulation of or discrimination against interstate commerce).

Cotto Waxo underscores that, though the scope and depth

of the inquiry needed to determine whether a state law unduly

burdens interstate commerce may vary depending upon the

nature of the statute at issue and the facts of the particular

case, there is no genuine conflict among the Circuits

regarding proper application of the Court’s Commerce Clause

precedents.

17

Ill. The California Court of Appeal’s Decision Correctly

Applied This Court’s Commerce Clause Precedents.

The California Court of Appeal’s analysis of AT&T's

Commerce Clause argument is incorporated herein by reference.

PA | la-19a. Contrary to the argument advanced by AT&T [Cert.

Pet., p. 12], the court below correctly applied the first tier of

this Court’s two-tier Commerce Clause analysis®, insofar as the

summary judgment record would permit.

A. The California Court of Appeal Applied the First

Tier Commerce Clause Analysis Insofar as The

Record Permitted.

In determining whether a statute unreasonably burdens

interstate commerce, the Court repeatedly has deemed it

appropriate to consider how a statute such as California’s

Cartwright Act operates in the context of other states’ laws.

E.g., Okla. Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175,

185 (1995) (applying “internal consistency” test and inquiring

8. The two-tier analysis reads as follows:

When a state statute directly regulates or discriminates

against interstate commerce, or when its effect is to favor

in-state cconomic interests Over out-of-state interests,

we have generally struck down the statute without further

inquiry. When, however, a statute has only indirect

effects on interstate commerce and regulates

evenhandedly, we have examined whether the State's

interest is legitimate and whether the burden on interstate

commerce clearly exceeds the local benefits.

Brown-Forman Distillers Corp. v. New York State Liquor Authority,

476 U.S. at 579.

18

whether “imposition of a tax identical to the one in question by

every other State would add no burden to interstate commerce

that intrastate commerce would not also bear”).

The California Court of Appeal properly applied the

“internal consistency” test and found no inconsistency.’

Observing that Healy’s “understanding of the commerce

clause’s purpose and scope may be consistent with giving

extraterritorial effect to [state antitrust] laws,” the court

determined that projecting California’s prohibition of tying

arrangements into other states would not create internal

inconsistency as “the Sherman Act already bars tying

arrangements throughout the land.” P.A. 14a.'°

Implicit in the California Court of Appeal’s Commerce

Clause analysis is the recognition that, unlike the statutes in

cases such as Edgar v. MITE Corp., 457 U.S. 624 (1982),

where extraterritorial transactions were regulated in some

instances for no reason while providing no protection for

any legitimate state interest, application of the California

statutes in this case never affects extraterritorial conduct

9. The court below pointedly observed that AT&T “notes no

inconsistency” between condemnation of the tying arrangements

under California or federal law. P.A. 15a.

10. Additionally, practically every state has enacted “little

Sherman” statutes which are generally governed or guided by federal

antitrust precedents. This Court has recognized in connection with

the settlement of a case brought by various states challenging an

extraterritorial price fixing conspiracy under both state and federal

antitrust laws that the former are not preempted by federal antitrust

laws and, indeed, are “consistent with the broad purposes of the

federal antitrust laws: deterring anticompetitive conduct and ensuring

the compensation of victims of that conduct.” See California v. ARC

America Corp. 490 U.S. 93, 101-102 (1989),

19

without providing corresponding protection for California’s

significant interests. See CTS Corp. v. Dynamics Corp., 481

U.S. 69 (1987). Thus, the California Court of Appeal

reasoned without finally deciding the issue — that

California’s antitrust and unfair competition statutes could

reach out-of-state anticompetitive practices that cause harm

in California.

B. The California Court’s Understanding of

Commerce Clause Jurisprudence Finds Support

in Decisions From Other Jurisdictions That Have

Applied State Antitrust Statutes to Out-of-State

Anticompetitive Conduct.

The California Court of Appeal’s understanding of the

Court’s Commerce Clause jurisprudence also finds support

in decisions from other jurisdictions that have applied state

antitrust statutes to out-of-state anticompetitive conduct

causing in-state harm, and also in authoritative commentary.

P.A. 16a-18a (citing In re Lorazepam & Clorazepate Antitrust

Litigation, 295 F. Supp. 2d 30 (D.D.C. 2003); Knevelbaard

Dairies v. Kraft Foods, Inc., 232 F.3d 979, 993-994 (9th Cir.

2000); and Heath Consultants v. Precision Instruments,

527 N.W.2d 596 (Neb. 1995); Herbert Hovenkamp,

State Antitrust in the Federal Scheme, 58 Ind. L.J. 375,

376(1983)."!

11. The Court’s approach in BMW of North America, Inc. v.

Gore, 517 U.S. 559, 572-73 (1996) also offers support. The Court

found that the punitive damages award under Alabama’s statute could

violate Healy's state sovereignty and comity principles only

if (a) the conduct “had no impact on Alabama or its residents” or

(b) Alabama's intent was to punish the defendant or to deter its lawful

conduct in other states rather than to protect Alabama's own

consumers and economy from harm.

20

Significantly, leading antitrust decisions from other

jurisdictions disagree with AT &T’s contention that application

of a state’s antitrust statute to out-of-state anticompetitive

conduct is per se invalid direct regulation of interstate

commerce. Cert. Pet., p. 11, et seg. These decisions regard the

state’s antitrust statute as having “incidental effects” on interstate

commerce subject to the Pike balancing analysis'* — an analysis

the court below found appropriate for the present case but

declined to undertake for AT&T. P.A. 16a-17a."°

C. AT&T’s Contention That The Commerce Clause

Bars All Claims Under State Statutes Based Upon

Extraterritorial Conduct is Overly Simplistic and

Unavailing. -

AT&T persists in maintaining — somewhat awkwardly

as will be shown in the next section — that the Commerce

Clause bars all claims under state statutes based upon

extraterritorial conduct (even when the conduct has in-state

12. Heath Consultants and Lorazepam Antitrust Litigation,

supra, cited by the court below, reached this conclusion. Other

decisions that were not cited by the court also have determined that

the state antitrust statute in question had “incidental effects” on

interstate commerce and, therefore, employed or would employ the

Pike balancing analysis in determining whether such statutes can be

applied to out-of-state anticompetitive conduct harmful to state

interests. See, e.g., Freeman Industries, LLC v. Eastman Chem. Co.,

172 S.W. 3d 512 (Tenn. 2005); Olstad v. Microsoft Corp., 700 N.W.

2d 139 (2005); C. Bennett Bldg. Supplies v. Jenn Air, 759 S.W. 2d

883 (Mo. App. 1988); State v. Coca Cola Bottling Co. of Southwest,

697 S.W. 2d 677 (Tex. App. 1985).

13. The court noted that “[e]ven if we wanted to conduct a

Pike balancing analysis for [AT&T], the record [AT&T] developed

for summary judgment would not allow us to do so at this time.”

P.A. 16a n.5.

21

effects). Cert. Pet., pp. 12-13. AT&T’s overly simplistic

argument is flawed. This Court “has never suggested that

the dormant Commerce Clause requires Balkanization, with

each state’s law stopping at the border.” /nstructional Sys. v.

Computer Curriculum Corp., 35 F.3d 813, 825 (3d Cir. 1994)

(citing Donald H. Regan, Siamese Essays: (1) CTS Corp. v.

Dynamics Corp. of America and Dormant Commerce Clause

Doctrine; (II) Extraterritorial State Legislation, 85 Mich.

L. Rev. 1865, 1878 (1987) (“prohibition [of all state laws

that have substantial extraterritorial effects] would invalidate

much too much legislation.”)).

That AT&T’s overly simplistic argument is at odds with

this Court’s Commerce Clause jurisprudence is also

suggested by the recent denial of a writ of certiorari to Beretta,

U.S.A., Corp. (joined by the Chamber of Commerce of the

United States, among others, as amici curiae), whose

argument to the Court was strikingly similar to that of

AT&T.'* Beretta, U.S.A., Corp. v. District of Columbia, __

U.S. __; 126 S. Ct. 399; 163 L. Ed. 2d 277 (2005).

14. Beretta sought review of District of Columbia v. Beretta,

U.S.A., Corp., 872 A.2d 633 (D.C. 2005) (en banc), which rejected

a contention that the Commerce Clause, inter alia, barred application

of a District of Columbia statute holding out-of-state weapons

manufacturers strictly liable in tort for injuries arising from the

discharge of certain weapons in the District of Columbia.

22

D. AT&T’s Attempt to Draw a Commerce Clause

Distinction Between In-State Impact on

Consumers or Markets, on One Side, And

Manufacturers And Vendors, on The Other, is a

Distinction Without a Difference.

While, on the one hand, AT&T contends that the

Commerce Clause bars all claims under state statutes based

upon extraterritorial conduct (even when the conduct has in-

state effects), on the other, the Petitioner strongly implies

that a nexus between out-of-state anticompetitive conduct

and in-state impact upon consumers or markets would

withstand Commerce Clause scrutiny. As just one example,

and there are others, AT&T states that “no benefits on the

side of regulation can justify California in controlling [out-

of-state] conduct. . . that does not impact California markets

or consumers.”'> Cert. Pet., pp. 13, 23. While in-state

competitive injury to consumers or markets would withstand

such scrutiny, such injury to California manufacturers or

vendors of goods; that is, RLH, would not.

AT&T has merely created a distinction without a

difference in either law or economics. Commerce, by

definition, is “the exchange of goods and services, esp. on a

large scale involving transportation between cities, states and

nations.” Black’s Law Dictionary (7" Ed. 1999). In seeking

to limit its definition of commerce to consumers or markets,

AT&T is perforce excluding manufacturers and vendors, one-

half of the commerce equation. AT&T’s “distinction” of

15. AT&T effectively concedes this point in its Question

Presented: “Whether a State’s direct regulation of commercial [out-

of-state}] conduct ... that has no effect on consumers or markets

within that State is a per se violation ...” (emphasis added).

23

convenience is out-of-touch not only with economic and

business reality but also with the sound objectives of antitrust

law.

Antitrust laws generally and California’s Cartwright Act,

in particular, outlaw combinations to “prevent competition in

manufacturing ... transportation ... [or] sale ... of

merchandise.” See Cal. Bus. & Prof. Code § 16720 (c). In

Commerce Clause challenges to state antitrust law enforcement,

courts have never recognized any distinction based on which

side of the commerce equation the victim falls. See, e.g.,

Knevelbaard Dairies v. Kraft Foods, Inc., supra, 232 F.3d at

993-994 (milk producers adversely affected by out-of-state

conspiracy) and Lorazepam Antitrust Litigation, supra. (Illinois

insurance company responsible for paying its out-of-state

subscribers’ price-fixed prescription drug costs).

AT&T’s citation to Matsushita Elec. indus. Co. v. Zenith

Radio Corp., 475 U.S. 574 (1986), as support for its strained

distinction, is far off the mark. Indeed, the Court noted in

Matsushita that the Sherman Act reaches conduct outside United

States borders “when the conduct has an effect on American

commerce.” /d. at 582 n.6. The Matsushita language recited by

AT&T simply pertains to conduct in Japan having no impact on

American commerce. /d. at 583.'° That language is manifestly

inapposite to the present case. The court below found that RLH

demonstrated sufficient injury attributable to AT&T’s out-of-

state tying arrangements to meet its summary judgment burden.

P.A. 20a.

16. In Matsushita, the Court found that, although a below-cost

(predatory) pricing conspiracy by Japanese television producers

could have injured the plaintiff manufacturers, they were unable to

establish such a conspiracy. Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 596-97 (1986).

24

If AT&T were to concede, as it should, that there is no

legitimate distinction in this context between consumers,

manufacturers and vendors, it would be left with the argument

that the nexus between AT&T’s out-of-state anticompetitive

conduct and RLH’s in-state injury could withstand Commerce

Clause scrutiny under other circumstances but does not on the

facts of this case because the commerce is quantitatively

insufficient.

Such an argument, of course, presents a paradigm fact

question that is entirely inappropriate for review on an

incomplete summary judgment record. See n.3, supra. But

wholly apart from it being a paradigm fact issue, it is not the

proper analysis of substantiality in any event. See Freeman

Industries, LLC v. Eastman Chem. Co., 172 S.W. 3d 512, 523-

24 (Tenn. 2005) (under federal antitrust precedents, whether

effect is substantial does not involve “mathematical nicety”;

“test is pragmatic, turning on facts ...”; “anticompetitive

conduct need not threaten demise of [state’s] business’’).

E. AT&T’s Tariff Argument Presents Fact Questions

That Are Not Ripe For Review.

Finally, AT&T argues that RLH “seeks to use California

law to make AT&T’s subsidiaries change their filed tariffs” in

other states. Cert. Pet., pg. 15. The California Court of Appeal

refused to entertain this argument on its merits because AT&T

“mentioned the tariff issue only in a footnote with a single

citation to Healy, and thus failed to offer the comprehensive

legal analysis needed to affirm summary judgment on this

ground (citations omitted).” P.A. 19a. The court, however, added

that this was one of the “potentially relevant issues” that could

be litigated after the case was remanded to the trial court.

P.A. 18a-19a.

25

AT&T’s tariff argument is not yet ripe for review by this

Court for the reasons stated by the court below, among others.

First, RLH seeks affirmative injunctive relief only under the

California Unfair Competition statute, not under the Cartwright

Act. Secondly, injunctive relief has not been granted in this case

so there has been no judgment requiring AT&T to modify its

conduct and, therefore, no review of such relief by California’ s

appellate court system. Most importantly, and finally, the

factual record has not been sufficiently developed to

determine whether the tariffs embodying the HVP tying

arrangements at issue are immune from antitrust scrutiny.

See P.A. 19a (citing Phonetele, Inc. v. American Tel. & Tel.

Co., 664 F. 2d 716, 733-37 (9" Cir. 1981)).

IV. This is The Wrong Case at The Wrong Time For

Further Review and Application of Commerce Clause

Principles.

The California Competition statutes reviewed in the court

below apply only to anticompetitive conduct having

substantial effects on California commerce. AT&T’s

speculation concerning other states following the lead of the

California Court of Appeal in this case, risks of inconsistent

legislation, and interstate economic battles, can readily be

put to rest.

All companies transacting business in the United States

must comply with federal antitrust laws. Federal antitrust

laws proscribe certain unlawful tying arrangements. The same

tying arrangements fall within the purview of the antitrust

laws of California and other states based on federal antitrust

precedents. This Court unanimously has determined that state

antitrust laws are “consistent with the broad purposes of the

federal antitrust laws: deterring anticompetitive conduct and

26

ensuring the compensation of victims of that conduct.”

See California v. ARC America Corp. 490 U.S. 93, 101-102

(1989). If any state were to enact antitrust legislation that

“actually conflicts” with federal antitrust law, the legislation

would be subject to federal preemption. /d. at 100-101.

Nothing in the record reviewed by the California Court of

Appeal would suggest that AT&T or any other company is

required by California’s Competition statutes to do anything

beyond complying with federal antitrust law. Each and all are

able to sell their products and services and compete on equal

terms throughout the Union, and that has remained the case,

not despite, but rather because of state (and federal) antitrust

enforcement of out-of-state anticompetitive conduct on behalf

of its citizens over many, many years.

Anticompetitive conduct imposes a significant burden on

commerce. Thus, the chief concerns of state antitrust law

enforcement and the Commerce Clause are complementary: both

protect against actions “with the aim and effect of establishing

an economic barrier against competition ...,” the former

through the use of private anticompetitive conduct and the latter

through the use of state authority. See Baldwin v. G.A.F. Seelig,

Inc., 294 U.S. 511, 527 (1935); see, e.g., C& A Carbone, Inc. v.

Town of Clarkstown, 511 U.S. 383, 390 (1994).

So, for reasons going beyond the palpable absence of

jurisdiction under 28 U.S.C. § 1257(a), this antitrust case —

which challenges the Petitioner’s alleged anticompetitive

conduct under state laws intended to protect and maintain the

flow of commerce — is not certworthy. It is simply the wrong

case at the wrong time for a further review and application of

this Court’s Commerce Clause principles, one that could have

far reaching and uncharted consequences for the rapidly

changing face of American business.

27

CONCLUSION

The Petition for a Writ of Certiorari should be denied.

Respectfully submitted,

JAMES A. STEARMAN

Counsel of Record

RICHARD S. Price, Il

1235 N. Harbor Blvd.

Suite 200

Fullerton, CA 92832

(714) 871-1132

H. KENNETH KUDON

KupDON Law FirM

Two Old Creek Court

Potomac, MD 20854

(301) 279-5634

Counsel for Respondent