Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-03254/USCOURTS-ca10-90-03254-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

RURAL TELEPHONE SERVICE ) 

) 

) 

COMPANY, INC. , 

Plaintiff-Appellant, ) 

FIL _Cj lJ 

United Statf'..s Court or App~ls 

Tent., Circuit. 

FEB 19 1992 

ROBERT L. HOECKER 

Clerk 

v. 

) 

) No. 90-3254 

FEIST PUBLICATIONS, INC., 

Defendant-counterClaimant-Appellee. 

) 

) 

) 

) 

) 

Appeal from the United States District Court 

for the District of Kansas 

(D.C. No. 83-4086-R) 

Mark E. Weber, Gibson, Dunn & Crutcher, Los Angeles, California 

(James M. Caplinger, Jr., Topeka, Kansas, on the brief), for 

Plaintiff-Appellant. 

Kyler Knobbe, Ridenour & Knobbe, Cimarron, Kansas, for DefendantCounter-Claimant-Appellee. 

Before MOORE and SETH, Circuit Judges, and BRATTON,* District 

Judge. 

MOORE, Circuit Judge. 

*Honorable Howard c. Bratton, United States Senior District Judge 

for the District of New Mexico, sitting by designation. 

Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 1 
This is an appeal from an order of the district court finding 

defendant Rural Telephone Service Company's refusal to deal with 

plaintiff Feist Publications, Inc., violated§ 2 of the Sherman 

Act, 15 u.s.c. § 2. Rural Tel. Serv. Co. v. Feist Publications, 

Inc., 737 F. Supp. 610 (D. Kan. 1990). The district court found 

Rural Telephone possessed monopoly power in the yellow pages 

advertising market and Rural Telephone's decision not to license 

its white pages listings to Feist Publications was an act designed 

to maintain its monopoly position. Based on this finding, the 

district court awarded treble damages in the amount of $99,000 for 

the years 1978-1987 to Feist Publications and enjoined Rural 

Telephone from refusing to license its white pages listings to 

Feist Publications at a reasonable rate. It further awarded Feist 

Publications reasonable attorney fees. Rural Telephone assigns 

several errors to the district court's findings, including an 

under-inclusive definition of the relevant market, an erroneous 

finding of monopoly power, and a deficient determination of injury 

and damages. We need not deal with those issues because we 

conclude Feist Publications failed to prove Rural Telephone's 

refusal to deal was anti-competitive in effect. Therefore, we 

reverse the judgment of the district court. 

I. 

Rural Telephone is a nonprofit, cooperative telephone company 

granted monopolist status by the State of Kansas to 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 2 
provide telephone service to subscribers in designated areas of 

northwest Kansas . All of the telephone subscribers in the Rural 

Telephone service area are member owners. Under Rural Telephone's 

charter, all revenues exceeding its cost of doing business are 

returned to its members under a refund plan. 

As required by the Kansas Corporation Commission, Rural 

Telephone publishes and distributes an annual telephone directory. 

In addition to its white pages listings, Rural Telephone's 

directory also contains yellow pages advertising. 

Feist Publications is a private Kansas corporation that 

distributes a competing telephone directory in northwest Kansas. 

The directory includes communities outside of Rural Telephone's 

service area, and Feist Publications competes with Rural Telephone 

for yellow pages advertising. In compiling its area-wide 

directory, Feist Publications approached the eleven telephone 

companies covering northwest Kansas and offered to purchase their 

white pages listing information . 

In 1978, Feist Publications asked to purchase Rural 

Telephone's copyrighted1 listings at a price of ten cents per 

listing. Rural Telephone declined the offer, but Feist 

Publications copied the listings nonetheless and incorporated them 

in its own directory. When Rural Telephone sued Feist 

Publications for violation of its copyright, Feist Publications 

1 In Feist Publications, Inc. v . Rural Tel. Serv. Co., U.S. 

, 111 S . Ct. 1282 (1991), the Supreme Court held Rural's 

copyright did not extend to the information contained in its white 

pages listings. 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 3 
counterclaimed with a Sherman Act violation. 

forms the basis for this case. 

II. 

That counterclaim 

Illegal monopolization under§ 2 of the Sherman Act has two 

distinct 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." United States v. Grinnell Corp., 384 U.S. 563, 570-71 

(1966); Aspen Highlands Skiing Corp. v. Aspen Skiing Co. (Aspen 

Highlands), 738 F.2d 1509, 1519 n.12 (10th Cir. 1984), aff'd, 472 

U.S. 585 (1985) (Aspen Skiing); Bright v. Moss Ambulance Serv. , 

Inc., 824 F.2d 819, 823 (10th Cir. 1987); Reazin v. Blue Cross & 

=B=l=u=e=--~S=h=i=·e=l=d-~o~f,__~K=a=n~·~«-=-I=n=c...a..., 899 F.2d 951, 973 (10th Cir.), cert. 

denied, __ U.S. __ , 110 S. Ct. 3241 (1990). 2 Additionally, 

plaintiff must show causal antitrust injury. 3 

2 In this circuit, monopoly power is defined as the ability to 

control prices and exclude competition. Shoppin' Bag of Pueblo, 

Inc. v. Dillon Companies, Inc., 783 F.2d 159, 164 (10th Cir. 

1986). In defining the relevant market, two aspects must be 

considered: the product market and the geographic market. See 

Cackling Acres, Inc. v. Olson Farms, Inc., 541 F.2d 242, 246 (10th 

Cir. 1976) (geographic area), cert. denied, 429 U.S. 1122 (1977), 

and Telex Corp. v. IBM, 510 F.2d 894, 914 (10th Cir.) (product 

area), cert. dismissed, 423 U.S. 802 (1975). For the purposes of 

this opinion, we assume the possession of monopoly power in the 

relevant market. 

311Of course, the fact of injury and damages suffered by reason of 

a violation of the antitrust laws must also be shown for a private 

litigant to recover on a claim of monopolization." Aspen 

Highlands, 738 F.2d at 1519 n.12; Reazin, 899 F.2d at 973. 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 4 
A refusal to deal may be one of the mechanisms by which a 

monopolist maintains its power. In determining whether a 

monopolist which has refused to deal with a competitor has acted 

lawfully or in violation of§ 2, we apply a two-part test. First, 

we look at the effects of the monopolist's conduct. Second, we 

look at its motivation. Aspen Highlands, 738 F.2d at 1519. 4 

Because we conclude Feist Publications failed to prove Rural 

Telephone's refusal to deal had anti-competitive effects, we do 

not reach the second stage of analysis. 

When examining the effects of Rural Telephone's conduct, we 

must determine whether its refusal to deal is likely to enable it 

to foreclose competition, to gain a competitive advantage, or to 

destroy competition. See United States v. Griffith, 334 U.S. 100, 

107 (1948); Westman Comm'n Co. v. Hobart Int'l, Inc., 796 F.2d 

1216, 1220 (10th Cir. 1986), cert. denied, 486 U.S. 1005 (1988). 5 

Feist Publications must demonstrate Rural Telephone's conduct was 

intended to or did have some anti-competitive effect beyond its 

own loss of business. California Computer Prods., Inc. v. IBM, 

613 F.2d 727, 732 (9th Cir. 1979). Accord Colorado Interstate Gas 

4 In Aspen Highlands, the court focused on the motivation and 

competitive effect of the refusal to deal. 738 F.2d at 1519. If 

the challenged activity is likely to have an anti-competitive 

effect, we must then examine whether the refusal to deal is fairly 

characterized as "exclusionary" or "anti-competitive." Asoen 

Skiing. 472 U.S. at 602. It is at this stage we consider the 

monopolist's asserted business justification. Id . at 608-11. 

511we adhere to the view that the antitrust laws should not 

restrict the autonomy of independent businessmen when their 

activities have no adverse impact on the price, quality, and 

quantity of goods and services offered to the consumer. Thus, we 

consider Hobart's refusal to deal in light of its effect on 

consumers, not on competitors." Westman v. Hobart, 796 F.2d at 

1220 (citation omitted). 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 5 
Co. v. Natural Gas Pipeline Co. of Am., 885 F.2d 683, 697 (10th 

Cir. 1989), cert. denied, U.S. __ , 111 S. Ct. 441 (1990); 

Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 894 

(10th Cir. 1991). 6 Additionally, Feist Publications must show the 

injury inflicted is the type the Sherman Act was intended to 

forestall. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 

477, 488-89 (1977). 

Feist Publications alleges Rural Telephone's refusal to 

license its white pages listings caused Feist Publications' white 

pages listings to be incomplete, which in turn caused Feist 

Publications' yellow pages advertising revenues to decline. 

However, the district court did not make a specific finding of 

h t t . . 7 

arm o compe ition. 

In reaching its conclusions, the district court focused 

considerably on Rural Telephone's alleged anti-competitive intent. 

Assuming Rural Telephone's refusal to deal was motivated by an 

intent to exclude Feist Publications from the yellow pages 

advertising market, anti-competitive intent alone is insufficient 

to establish a violation of§ 2. Aspen Skiing, 472 U.S. at 602, 

6It is important to remember "the antitrust laws, however, were 

enacted for the protection of competition, not competitors," and 

courts must always be mindful lest these laws be invoked 

perversely in favor of those who seek protection against the 

rigors of competition. Brunswick Corp . v. Pueblo Bowl-O-Mat, 

Inc., 429 U.S. 477, 488 (1977). 

7

The district court found Rural Telephone's refusal to deal "did 

not further competition on the merits." Rural, 737 F. Supp. at 

622. This is insufficient to constitute actual or threatened harm 

to competition. Although the court did find Feist Publications' 

opportunities had been impaired, the antitrust laws were enacted 

for the protection of competition, not individual competitors. 

Brunswick, 429 U.S. at 488. 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 6 
611 n.44. See also Pacific Eng'g & Prod. Co. of Nev. v. KerrMcGee Corp., 551 F.2d 790, 795 (10th Cir.) ("To prove that a 

person has that type of exclusionary intent which is condemned in 

anti-trust cases there must be evidence that the person who 

foresees a fight to the death intends to use or actually does use 

unfair weapons. Putting the same idea in another way, we may say 

that there is no sharp distinction between (a) the existence of an 

intent to exclude and (b) the use of unfair means."), cert. 

denied, 434 U.S. 879 (1977); Bright v. Moss Ambulance Serv., 824 

F.2d at 824; Ocean State Physicians Health Plan, Inc. v. Blue 

Cross & Blue Shield of Rhode Island, 883 F.2d 1101, 1113 (1st Cir. 

1989) ("[T]he desire to crush a competitor, standing alone, is 

insufficient to make out a violation of the antitrust laws ... 

As long as Blue Cross's course of conduct was itself legitimate, 

the fact that some of its executives hoped to see Ocean State 

disappear is irrelevant."), cert. denied, __ U.S. , 110 S. Ct. 

1473 (1990); Olympia Equip. Leasing Co. v. Western Union Tel. Co., 

797 F.2d 370, 379 (7th Cir. 1986) ("We add, what has become an 

antitrust commonplace, that if conduct is not objectively anticompetitive the fact that it was motivated by hostility to 

competitors ('these turkeys') is irrelevant."), cert. denied, 480 

U.S. 934 (1987); Oahu Gas Serv., Inc. v. Pacific Resources, Inc., 

838 F.2d 360, 370 (9th Cir.) (a finding of anti-competitive intent 

will not sustain a § 2 claim in the face of evidence of procompetitive effects), cert. denied, 488 U.S. 870 (1988). 

Moreover, Feist Publications was unable to identify anyone 

who had refused to purchase yellow pages advertising in its 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 7 
directory because the Feist Publications northwest directory did 

not contain complete listings from the Rural Telephone service 

area. Feist Publications was also unable to identify anyone who 

had complained that the Feist Publications northwest directory was 

incomplete. This is a fatal failure of proof. 

Additionally, Feist Publications offered no proof competition 

in the yellow pages advertising market was reduced as a result of 

Rural Telephone's actions. Between 1978 and 1987, Feist 

Publications' market share rose from zero to twenty percent. 

Further, during the same years, the price for a quarter column ad 

remained competitive, with Feist Publications generally charging 

substantially more than Rural Telephone. Finally, due to 

different publication dates, Feist Publications' directory often 

contained listings not available in Rural Telephone's directory. 

Because Feist Publications has failed to prove harm to 

competition, its antitrust claim must fail. 8 

REVERSED. 

8Although not argued by the parties, we note the provision in 

Rural Telephone's charter requiring all revenues in excess of the 

cost of doing business to be returned to the subscribers raises an 

interesting question. Feist Publication's argument seems to be 

that Rural Telephone was monopolizing on behalf of its 

subscribers. As we noted in Colorado Interstate Gas, the Sherman 

Act is not aimed at those who monopolize or attempt to monopoli ze 

on behalf of another party. Colorado Interstate Gas v. Natural 

Gas Pipeline, 885 F.2d at 692 n.15. 

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Appellate Case: 90-3254 Document: 010110226126 Date Filed: 02/19/1992 Page: 8