Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-07246/USCOURTS-caDC-96-07246-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 5, 1997 Decided July 17, 1998

No. 96-7246

Caribbean Broadcasting System, Ltd. and

Alvin L. Korngold,

Appellants

v.

Cable & Wireless PLC, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 93cv02050)

Whitney L. Ellenby argued the cause for appellants, with

whom Robert A. Skitol and Philip J. Mause were on the

briefs.

Theodore Case Whitehouse argued the cause for appellees

and filed the brief for Cable & Wireless PLC, and Cable &

Wireless (West Indies) Ltd.

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Terrence J. Leahy filed the brief for appellee Caribbean

Communications Company Limited.

Before: Williams, Ginsburg, and Henderson, Circuit

Judges.

Opinion for the court filed by Circuit Judge Ginsburg.

Ginsburg, Circuit Judge: Caribbean Broadcasting System

appeals the judgment of the district court dismissing its

antitrust complaint against Cable & Wireless, Cable & Wireless (West Indies), and Caribbean Communications Company.

We reverse in part and affirm in part.

I. Background

Plaintiff CBS and defendant CCC own competing FM radio

stations located in the Eastern Caribbean, which includes

Puerto Rico and the Virgin Islands. Defendant C&W and its

subsidiary C&W (West Indies), hereinafter jointly C&W,

operate a worldwide telecommunications system and publish

the local telephone directory in the Caribbean. During the

mid-1980s C&W and CCC entered into a joint venture in

which CCC was to develop a Caribbean-wide FM broadcasting system that C&W would then use to offer an FM paging

service.

Beginning in 1984 CBS tried without success to sell advertising on its nascent FM broadcast station based in the

British Virgin Islands. Attributing its failure to deception

practiced by CCC and C&W as part of an attempt to gain and

keep a monopoly for CCC's "Radio GEM," CBS sued them

both in Florida state court. The defendants removed the

case to a federal court, which dismissed it without prejudice;

CBS appealed to the Eleventh Circuit, but later voluntarily

dismissed the appeal and refiled its complaint in the United

States District Court for the District of Columbia. CBS later

sought and was granted leave to file a First Amended Complaint in order to correct a technical error in its description of

the ownership of CBS.

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The eleven counts of CBS's complaint fall into three basic

categories. First, it charged that CCC, by falsely claiming

that Radio GEM's signal reached the entire Eastern Caribbean, had led advertisers to believe they could fulfill their

advertising needs by dealing only with Radio GEM, in violation of the prohibition of attempted and actual monopolization

in the Sherman Act, see 15 U.S.C. ss 1-2, and the prohibition

of false representations in the Lanham Act, see 15 U.S.C.

s 1125(a). Second, CBS charged that CCC had conspired

with C&W to maintain CCC's monopoly over radio broadcast

in the Eastern Caribbean, in violation of the Sherman Act. In

furtherance of the conspiracy (still according to CBS), C&W

had filed sham objections to CBS's application for a broadcast

license, thereby delaying CBS's entry into broadcasting for

more than two years. Third, CBS charged that C&W had

violated the Sherman Act by denying it access to essential

facilities; specifically, CBS alleged that C&W had persistently published an incorrect telephone listing for CBS and

denied CBS access to its microwave transmitters in order to

prevent CBS from reaching the entire Eastern Caribbean.

The district court dismissed the complaint in two stages.

In its first opinion, dealing only with the claims against C&W,

the court held that (1) it lacked subject matter jurisdiction

over the claims of monopolization (in counts II-X) because

"plaintiffs [did] not allege[ ] necessary facts to substantiate a

claim of adverse effect on U.S. commerce arising out of

Defendants' alleged misconduct"; and (2) CBS failed (in

Count XI) to state a claim upon which relief could be granted

because it did not "allege sufficient facts to establish that

Defendants denied [CBS] use of an essential facility." See

Caribbean Broadcast System Ltd. v. Cable & Wireless Plc,

1995 WL 767164 (D.D.C. 1995). The court explained that the

complaint "never identifies any facility to which CBS was

denied access nor a single instance in which access to a

facility was actually requested or denied," and fails to establish that C&W had ever been a competitor of CBS. CBS

sought reconsideration or, in the alternative, leave to file a

second amended complaint. The district court denied reconsideration, clarified that its dismissal of Counts II-XI was

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with prejudice, and denied as both "untimely" and "futile"

CBS's request to file a second amended complaint.

In its second opinion the district court dismissed the Lanham Act claim (in Count I) for lack of personal jurisdiction

over CCC. The court stated that because CBS

fails to allege any connection whatsoever between CCC

and the District of Columbia.... [it appears that] CCC

does not possess sufficient, minimum contacts with [the

District] to satisfy the due process requirements of the

Constitution and comport with 'traditional notions of fair

play and substantial justice.'

Caribbean Broadcast System v. Cable and Wireless PLC,

C.A. No. 93-2050, slip op. at 4-5 (D.D.C. Oct. 17, 1996). The

district court also denied CBS's request for jurisdictional

discovery, for three reasons: CBS had "not offered a scintilla

of evidence to suggest that CCC has even the slightest

connection with the District of Columbia"; CBS "well kn[ew]

that CCC has contacts with, and therefore could appropriately be sued in ... Wisconsin or the Virgin Islands"; and "it is

simply too late ... in the history of th[is] litigation ... to

now allow Plaintiff to conduct the investigation."

CBS now argues that the district court erred in dismissing

its complaint for lack of subject matter jurisdiction and

failure to state a claim, in denying jurisdictional discovery

against CCC, and in dismissing its Lanham Act claim against

CCC with, rather than without, prejudice.

II. Discussion

We hold first that the district court erred in denying CBS

leave to file its proposed Second Amended Complaint, which

properly alleged subject matter jurisdiction over the claims of

monopolization. We agree with the district court, however,

that CBS's complaint failed to allege that CCC and C&W had

denied CBS the use of an essential facility. Finally, we hold

that the district court did not abuse its discretion in denying

jurisdictional discovery and did not dismiss the complaint

against CCC with prejudice.

A. Denial of Leave to Amend the Complaint

As noted, the district court early on granted CBS leave to

file a First Amended Complaint correcting the description of

CBS's ownership. After the district court dismissed Counts

II-XI for lack of subject matter jurisdiction, CBS sought to

make a second amendment--in order to clarify the jurisdictional allegations in its complaint--but the district court

denied leave to amend on the grounds that such an amendment would be both untimely and futile. CBS contests both

points. For its part, C&W argues that the district court

ruled correctly because CBS had already failed "in five

attempts encompassing this case and others" to file a proper

complaint.

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Federal Rule of Civil Procedure 15(a) provides that a party

may amend its pleading once as a matter of course and

thereafter by leave of court, which "leave shall be freely given

when justice so requires." We have recently had occasion to

point out that "it is an abuse of discretion to deny leave to

amend [without giving a] sufficient reason." Firestone v.

Firestone, 76 F.3d 1205, 1208 (1996) (citing Foman v. Davis,

371 U.S. 178, 182 (1962)); see also Bank v. Pitt, 928 F.2d

1108, 1112 (11th Cir. 1991) (noting that district court's discretion to dismiss without leave to amend is "severely restricted"

by command of Rule 15(a) that such leave be "freely given").

In this case we conclude that neither of the reasons given by

the district court is sufficient.

First, the amendment would not have been "futile" because,

as explained below, the allegations of the second amended

complaint support subject matter jurisdiction. Second, there

is no indication that the amendment was in any cognizable

way "untimely." The statute of limitations had not run, nor

was there any prejudice to the defendants by reason of the

timing. See, e.g., Confederate Memorial Ass'n v. Hines, 995

F.2d 295, 299 (D.C. Cir. 1993) (noting that Fed.R.Civ.P. 15(a)

gives court power to grant leave to amend complaint even

after case is dismissed); Wright & Miller, Federal Practice &

Procedure: Civil 2d s 1488, at 652, 659, 662-69 (1990 & Supp.

1997) ("Rule 15(a) does not prescribe any time limit within

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which a party may apply to the court for leave to amend....

In most cases delay alone is not a sufficient reason for

denying leave.... If no prejudice [to the non-moving party]

is found, the amendment will be allowed").

C&W makes much of the district court's statement that it

was denying CBS leave to amend in view of the "entire

lengthy record herein," but C&W's argument is not entirely

clear. C&W could be arguing that the district court's mention of having considered the "entire lengthy record" indicates that the court, in concluding that amendment would be

both untimely and futile, relied in part upon the overall

history of the dispute, including the case CBS had previously

initiated in Florida. Whether the court meant to encompass

that history within the reason for its decision is not clear,

however; the "lengthy record" in question may well refer

only to the present litigation, which alone had been going on

for more than three years at the time. In either event, the

district court erred; the prolonged nature of a case does not

itself affect whether the plaintiff may amend its complaint.

See, e.g., Security Ins. Co. of Hartford v. Kevin Tucker &

Assoc., Inc., 64 F.3d 1001 (6th Cir. 1995) (holding district

court abused discretion in denying leave to amend complaint

to add claim when party opposing motion made no showing of

prejudice from delay); Buder v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 644 F.2d 690 (8th Cir. 1981) (holding

district court abused discretion in denying leave to amend

complaint to add count when no prejudice resulted from two

and one-half year delay and facts underlying new and old

counts were similar). The length of a litigation is relevant

only insofar as it suggests either bad faith on the part of the

moving party or potential prejudice to the non-moving party

should an amendment be allowed, see Wright & Miller,

s 1487 (1990 & Supp. 1997); here the district court never

intimated a concern either with bad faith or with prejudice.

Alternatively, C&W might be arguing that the district

court's reference to the "entire lengthy record" is an allusion

to our suggestion in Firestone, following Foman, 371 U.S. at

182, that a plaintiff's failure to cure a defect in its complaint

after repeated amendments is at some point sufficient to

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warrant denying it leave to amend yet again. But we will not

infer such an acute point from such an oblique reference--if it

is a reference at all--particularly in light of the policy in favor

of hearing cases on their merits. See, e.g., Poloron Prods.,

Inc. v. Lybrand Ross Bros. & Montgomery, 72 F.R.D. 556,

561 (S.D.N.Y. 1976) (holding plaintiff's five previous attempts

to state cognizable claim did not preclude amendment, because Federal Rules suggest "artless drafting of a complaint

should not allow for the artful dodging of a claim"); Rosen v.

TRW, Inc., 979 F.2d 191, 194 (11th Cir. 1992) (citing doctrine

that "leave to amend is particularly appropriate following

dismissal of a complaint for failure to state a claim"); see also

Conley v. Gibson, 355 U.S. 41, 48 (1957) ("The Federal Rules

... accept the principle that the purpose of pleading is to

facilitate a proper decision on the merits").

Because the reasons given by the district court did not

justify denying the plaintiff leave to amend its complaint, we

reverse the district court. To remand this case for the

district court to consider the Second Amended Complaint

would be a waste of judicial resources, however. In deciding

that to amend the complaint would be futile, the district court

acted in the belief that the fault it found with the First

Amended Complaint--namely, that it did not allege an adverse effect upon the commerce of the United States sufficient to support subject matter jurisdiction over Counts II-XI

[see JA at 129-131]--was not addressed by anything in the

Second Amended Complaint, which more clearly alleged an

effect upon U.S. commerce. In effect, then, the district court

has already expressed its view that the Second Amended

Complaint fails to show that it has subject matter jurisdiction

(although it erred in so doing, as the next section explains).

B. Subject Matter Jurisdiction over Counts II-XI

With the Second Amended Complaint before us, then, we

turn to CBS's argument that it made allegations sufficient to

support subject matter jurisdiction. C&W argues in response that the complaint does not adequately allege either a

harmful effect upon U.S. commerce or a relevant market, and

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that in any event it does not provide facts to support the

allegations made. In our review of the complaint, which is de

novo, we assume the truth of the allegations made and

construe them favorably to the plaintiff. See Scheuer v.

Rhodes, 416 U.S. 232, 236 (1974).

CBS asserts that the district court has jurisdiction under

the Sherman Act, see 15 U.S.C. s 1-2, and the Foreign Trade

Antitrust Improvements Act of 1982, see 15 U.S.C. s 6a.

Although the Sherman Act prohibits monopolization and attempted monopolization of any line of interstate or foreign

commerce, section 1 of the FTAIA makes the Sherman Act

inapplicable to

conduct involving trade or commerce (other than import

trade or import commerce) with foreign nations unless--

(1) such conduct has a direct, substantial, and reasonably

foreseeable effect--

(A) on trade or commerce which is not trade or commerce with foreign nations, or on import trade or

import commerce with foreign nations; or

(B) on export trade or export commerce with foreign

nations, of a person engaged in such trade or commerce in the United States.

15 U.S.C. s 6a. A proviso establishes that if the FTAIA

applies to conduct involving foreign trade based solely upon

clause (B) quoted above, then the offender is subject to the

Sherman Act "only for injury to export business in the United

States." Id.

When a plaintiff brings a claim of attempted monopolization

or conspiracy to monopolize in a market involving foreign

trade, therefore, a court has subject matter jurisdiction only

to the extent that the complaint alleges that the challenged

conduct had a " 'direct, substantial, and reasonably foreseeable effect' on domestic or import commerce, or the export

opportunities of a domestic person" (as required by the

FTAIA). H.R. Rep. No. 97-686, at 3 (1982). The precise

effect of the FTAIA is yet to be determined. See Hartford

Fire Insurance Co. v. California, 509 U.S. 764, 797 & n.23

(1993) (It is "unclear ... whether the [FTAIA's] 'direct,

substantial, and reasonably foreseeable effect' standard

amends ... or merely codifies ... [caselaw holding that the

Sherman Act] applies to foreign conduct that was meant to

produce and did in fact produce some substantial effect in the

Unted States"). It does seem clear, however, that we should

use the standard set forth in the FTAIA to analyze whether

conduct related to international trade has had an effect of the

nature and magnitude necessary to provide us with subject

matter jurisdiction. See H.R. Rep. No. 97-686, at 5. The

complaint meets this standard.

For convenience we discuss first C&W's argument that

CBS failed to allege specific facts to support the court's

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jurisdiction over CBS's claims. In the notice pleading system

established by Federal Rule of Civil Procedure 8, all that is

required is a " 'short and plain statement of the claim' that

will give the defendant fair notice of the plaintiff's claim and

the grounds upon which it rests." Sinclair v. Kleindienst,

711 F.2d 291, 293 (D.C. Cir. 1983). A complaint satisfies this

criterion if it is not "so vague or ambiguous that a party

cannot reasonably be expected to frame a responsive pleading." F.R.Civ.P. 12(e). In other words, a plaintiff need not

allege all the facts necessary to prove its claim so long as it

provides enough factual information to make clear the substance of that claim. See Atchinson v. District of Columbia,

73 F.3d 418, 421-22 (1996).

Because a plaintiff is not required to plead facts sufficient

to prove its allegations, a federal court should not dismiss a

complaint either for lack of subject matter jurisdiction or for

failure to state a claim "unless it appears beyond doubt that

the plaintiff can prove no set of facts in support of his claim

which would entitle him to relief." Kleindienst, 711 F.2d at

293 (quoting Conley v. Gibson, 355 U.S. at 45-46). After all,

the issue presented by a motion to dismiss is "not whether a

plaintiff will ultimately prevail but whether the claimant is

entitled to offer evidence to support the claims." Scheuer v.

Rhodes, 416 U.S. at 236.

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The complaint filed by CBS is sufficient to survive a motion

to dismiss, therefore, so long as it makes allegations that, if

proven, would show that the challenged conduct had a "direct,

substantial, and reasonably foreseeable effect" upon an aspect

of commerce to which the Sherman Act, as qualified by the

FTAIA, applies. The complaint does make such allegations.

First, CBS alleges (pp 9-14) that there is a significant market

for the sale of English-language radio advertising in the

Eastern Caribbean, which includes Puerto Rico and the U.S.

Virgin Islands. CBS also alleges (pp 9, 15-19, 48A) that

many companies based in the United States are customers,

and that CCC and CBS are competing sellers, in that market.

Finally, CBS alleges (pp 20-26) that there are substantial

barriers to entry into the market: both a broadcast license

and a large capital investment are necessary; in addition,

CCC has "locked up" the available advertising contracts.

Under the circumstances it is quite plausible that the plaintiffs' alleged conduct would have a significant effect upon U.S.

commerce.

CCC argues that because CBS is "merely [a] foreign

supplier[ ]" it cannot establish the court's jurisdiction by

" 'piggy-back[ing]' on the alleged injury to U.S. purchasers of

media advertising." CCC relies upon a district court holding

that a foreign company had to show injury within the United

States before the court would have subject matter jurisdiction

under the Sherman Act, and that such a company could not

do so merely by showing injury to an unrelated American

firm. See The 'In' Porters, S.A. v. Hanes Printables, Inc.,

663 F. Supp. 494 (M.D.N.C. 1987). Even if we were bound by

that court's holding, we would not think the case pertinent

here because the foreign firm in that case did not sell to

American consumers; rather, it attempted to show that the

injury it incurred abroad ultimately injured American exporters, from which it purchased fewer goods for resale overseas.

The district court held that, because the plaintiff's claimed

injury was not an "injury to export business in the United

States" within the meaning of the proviso to the FTAIA, the

foreign firm did not have standing. Here, however, the

alleged injury is to advertisers in the United States. ConseUSCA Case #96-7246 Document #367533 Filed: 07/17/1998 Page 10 of 20
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quently, clause 1(A) rather than clause 1(B) of the FTAIA

governs, and the location of the suppliers is not relevant to

whether the plaintiff has alleged an effect upon U.S. domestic

or import commerce. See Hartford, 509 U.S. at 796 (holding

court had subject matter jurisdiction where plaintiff alleged

conspiracy among foreign reinsurance companies had affected

U.S. purchasers of reinsurance).

We now turn to C&W's primary argument, namely, that

the complaint fails to allege either harm to U.S. commerce or

a relevant market. We find neither part of this argument

persuasive. The complaint both describes a relevant market--the market for English-language radio broadcast advertising in the Eastern Caribbean--and alleges that CCC and

C&W engaged in intentional conduct that gave them "monopoly power" and injured consumers in this market. (pp 12-14)

According to CBS, CCC and C&W misrepresented to advertisers that they could reach the "entire Caribbean" over

CCC's station--which in fact reached only a fraction of that

area--and therefore that they did not need to advertise with

CBS as well. (pp 30-34) The complaint also alleges that CCC

and C&W made sham technical objections to CBS's application for a broadcast license for the purpose of defeating that

application and thereby ensuring that CCC would continue to

enjoy a monopoly. (pp 35-40)

Contrary to the arguments of C&W, such allegations do

support the district court's subject matter jurisdiction. A

would-be monopolist or member of a conspiracy to monopolize

comes within the condemnation of the Sherman Act when it

engages in "anticompetitive conduct." See, e.g., Spectrum

Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993) (holding

elements of attempted monopolization claim under s 2 of

Sherman Act are intent, anticompetitive conduct, and dangerous probability of success in a relevant market). "Anticompetitive conduct" can come in too many different forms, and is

too dependent upon context, for any court or commentator

ever to have enumerated all the varieties. It is a fair

inference from the case law, however, that the allegations

made here--namely, that the defendants made fraudulent

misrepresentations to advertisers and sham objections to a

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government licensing agency in order to protect their monopoly--bring the defendants' conduct well within that concept.

See, e.g., California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972) (holding that complaint alleging

conspiracy to misuse state legal and regulatory processes in

order to deprive competitors of meaningful access stated

claim under Clayton Act); Walker Process Equipment, Inc. v.

Food Machinery & Chemical Corp., 382 U.S. 172, (1965)

(holding that complaint alleging defendant attempted to monopolize by threatening to and pursuing legal enforcement of

patent procured by fraud on Patent Office stated claim under

s 2 of Sherman Act).

Moreover, the complaint alleges specifically that U.S. customers in the relevant market suffered antitrust injury, to

wit, they paid excessive prices for advertising because of the

unlawful actions of CCC and C&W. (p 48A) It also alleges

that CBS was and remains foreclosed from selling advertising

to many of those U.S. companies that had purchased advertising time from CCC. (p 47)

Paying higher prices is certainly a direct harm to customers. The allegations that CBS was delayed in obtaining its

broadcast license and was foreclosed from soliciting many

potential advertisers also describe actual, albeit indirect,

harms to customers. In this context it appears that antitrust

injury to CBS is ultimately a harm to U.S. purchasers of

radio advertising. By keeping CBS out of the market, CCC

and C&W denied such purchasers the benefit of competition.

Construing the complaint liberally, then, we understand it

to say that CCC and C&W intentionally and successfully, by

means of fraud and deceit, secured monopoly power in the

relevant market, used this power to raise prices, and thereby

hurt U.S. advertisers. Indeed, C&W virtually admits that

CBS's complaint alleges antitrust injury when it argues that

"CBS described markets so narrowly configured that any

commercial harm to CBS [is], ipso facto, harm to competition" in those markets and hence has a substantial effect upon

U.S. commerce. Be that as it may, we hold that CBS made

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sufficient allegations to support the subject matter jurisdiction of the district court.

C. The Essential Facilities Claim: Count XI

C&W owned microwave facilities described by CBS as

"unique" in the Eastern Caribbean (p 42) and published the

only telephone directory in the British Virgin Islands. (p 41)

C&W also owned a 27% stake in CCC's radio station and was

planning a joint venture with CCC to provide paging services.

CBS alleged that C & W denied CBS access to its microwave

facilities and directory, and that both such facilities were

essential for it to compete with CCC's Radio GEM.

A monopolist has no general duty to share his essential

facility, although there are certain circumstances in which he

must do so. See Philip E. Areeda & Herbert Hovenkamp,

Antitrust Law 815-864 (1992 Supp.) (proposing narrow interpretation of essential facilities doctrine). In the special circumstances where there may be such an obligation, the

elements of an antitrust claim for denial of access to an

essential facility are (1) a monopolist who competes with the

plaintiff controls an essential facility, (2) the plaintiff cannot

duplicate that facility, (3) the monopolist denied the plaintiffs

use of the facility, and (4) the monopolist could feasibly have

granted the plaintiff use of the facility. See MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1132-33 (7th Cir.

1983); Philip Areeda, Essential Facilities: An Epithet in

Need of Limiting Principles, 58 Antitrust L.J. 841, 853 n.21

(1989) (noting that "MCI Communications ... is probably

correct [in holding that] a monopolist must, when feasible,

make its essential facility available to a competitor who is

unable to duplicate it"). Because the appellees have not

argued to the contrary, we assume that the essential facilities

doctrine is applicable to their circumstances.

The district court held that CBS had failed adequately to

allege an essential facilities claim for two reasons: first, CBS

did not allege that it competed with C&W, and second, CBS

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did not allege any specific instance in which C&W had denied

CBS access to a particular facility. We uphold the district

court on the former ground and therefore do not reach the

latter.

CCC does not dispute that it competed with CBS, but

because--as the district court held and we affirm--the court

does not have personal jurisdiction over CCC, see Part II.D

below, the allegations against that company cannot support

the essential facilities claim. As for C&W, the district court

held that its 27% ownership interest in CCC did not make

C&W itself a competitor of CBS. CBS argues that whether

the parties are "in fact" competitors should not have been

resolved on a motion to dismiss the complaint, which "alleged

that C&W acted for the benefit of CCC in denying plaintiffs

access to their microwave and long-distance facilities." According to CBS, "C&W's equity interest in CCC and its

corresponding financial stake in the exclusive provision of

broadcasting services by CCC .... raise a factual issue as to

whether C&W and plaintiffs [are] competitors." C&W counters that CBS alleges no facts even hinting that C&W might

itself be a competitor of CBS except for C&W's 27% investment in CCC, and that as a matter of law such an investment

alone cannot vicariously make C&W a competitor of CBS's.

As the district court recognized, one company's minority

ownership interest in another company is not sufficient by

itself to make the owner a competitor, for purposes of the

antitrust laws, of the subsidiary's rivals. To be a competitor

at the level of the subsidiary, the parent must have substantial control over the affairs and policies of the subsidiary.

See, e.g., Kennecott Copper Corp. v. Curtiss-Wright Corp.,

584 F.2d 1195, 1205 (2d Cir. 1978) (finding no violation of s 8

of Clayton Act where interlocked parent corporations had

competing subsidiaries, but reserving issue whether statute

would cover "parent corporation that closely controls and

dictates the policies of its subsidiary"); Phoenix Canada Oil

Co. Ltd. v. Texaco, Inc., 658 F. Supp. 1061, 1084-85 (D.Del.

1987) (holding that parent is liable for acts of subsidiary

under agency theory only if parent "dominates" subsidiary;

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parent of wholly-owned subsidiary that had seats on board,

took part in financing, and approved major policy decisions

was not liable because parent did not have day-to-day control); J.E. Rhoads & Sons, Inc. v. Ammeraal, Inc., 1988 WL

32012 (Del. Super. 1988) (citing cases holding day-to-day

control required before court will pierce corporate veil or find

parent liable); Outokumpu Engineering Enterprises, Inc. v.

Kvaerner Enviropower, Inc., 685 A.2d 724, 729 n.21 (Del.

Super. 1996) (noting test for parent's liability for act of

subsidiary is whether parent had "exclusive domination and

control to the point that the subsidiary no longer has legal or

independent significance of its own"); cf. Tiger Trash v.

Browning Ferris Indus., Inc., 560 F.2d 818 (7th Cir. 1977)

(holding that in order to prevent parent from carrying out

anticompetitive activity through subsidiary, test for venue is

whether parent's control over subsidiary caused parent to

"transact business" in state within venue provision of Clayton

Act); Phone Directories Co. v. Contel Corp., 786 F. Supp. 930

(D.Utah 1992) (test for venue under Clayton Act is whether

parent had sufficient control to influence and control acts of

subsidiary of type that might violate antitrust laws); cf. also

United States v. USX Corp., 68 F.3d 811, 823 n.23 (3d Cir.

1995) (citing cases holding, variously, that parent is liable

under CERCLA for actions of a subsidiary or controlled

company when parent has actual and pervasive control or, at

least, authority to control subsidiary's decisions leading to

CERCLA violation.)

CBS does not allege that C&W had such control. The

complaint states only that C&W and CCC were involved in a

"joint project"; they had "engaged in discussions and negotiations regarding their planned relationship"; and "a C&W

representative was a member of CCC's Board of Directors."

(p 44) Only the last point indicates that C&W had any influence in the affairs of CCC, and even it does not suggest the

type of day-to-day control we think necessary to identify an

investor so closely with the company in which it has invested

as to make it a competitor of that company's rivals.

In sum, CBS does not allege that C&W had substantial

control over CCC. Therefore, Count XI of the complaint fails

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to state a claim against C&W for denial of access to an

essential facility.

D. Jurisdictional Discovery and Dismissal with Prejudice

CBS's last two points on appeal go to rulings of the district

court relevant only to CBS's action against CCC. CBS

asserts that the district court erroneously denied CBS's request for jurisdictional discovery and dismissed its claim with

rather than without prejudice.

1. Jurisdictional discovery

CBS argues that the district court abused its discretion in

dismissing its case against CCC for lack of personal jurisdiction without giving CBS an opportunity to discover evidence

that would support such jurisdiction. See, e.g., El-Fadl v.

Central Bank of Jordan, 75 F.3d 668, 675-76 (D.C. Cir. 1996).

CCC defends the district court's denial of discovery on the

ground that CBS had failed to dispute CCC's affidavit that it

did not solicit business in the District of Columbia and had

never made any telephone calls into the District. Because

there was no indication before the court that CCC had any

contacts at all with the District of Columbia, let alone the

minimum contacts necessary for the court, consonant with

due process, to exercise personal jurisdiction over it, CCC

argues that any discovery would have been inappropriate.

We hold that the district court did not abuse its discretion

in denying CBS jurisdictional discovery. The District's longarm statute is as far-reaching as due process allows, see

Hummel v. Koehler, 458 A.2d 1187, 1190 (D.C. App. 1983),

meaning that only minimum contacts with the District are

necessary to sustain jurisdiction here. See International

Shoe Co. v. State of Washington, 326 U.S. 310 (1945); Wright

& Miller, s 1067-1067.1 (1988 & Supp. 1997). CBS, however,

has alleged absolutely nothing, upon either information or

belief, to indicate that a court in the District of Columbia

might constitutionally assert jurisdiction over CCC, which is

incorporated in Montserrat, British West Indies, and has its

U.S. operations in Wisconsin. The closest the complaint

comes is to say that "CCC sells ... advertising time, primarily to U.S. companies," and that CCC "made sales calls to U.S.

companies nationally" and "disseminated ... brochures by

hand and by the U.S. mail." (pp 8, 33) At the oral argument of

this appeal counsel for CBS represented that CCC sold

advertising to more than 500 companies and argued that the

odds were therefore good that it had solicited at least one

company located in the District; but CBS did not make even

this cursory (and by no means self-evident) allegation before

the district court. These statements are too bare to support

even the inference that CCC solicited any companies located

in the District of Columbia, much less that it actually

did any business in the District--and minimal solicitation

does not generally support jurisdiction anyway. See

Volkswagen de Mexico v. Germanischer Lloyd, 768

F. Supp. 1023 (S.D.N.Y. 1991) (solicitation of business

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through advertisements in publications distributed in district

does not support jurisdiction under N.Y. long-arm statute);

see also Gatewood v. Fiat, S.p.A., 617 F.2d 820 (D.C. Cir.

1980) (solicitation of business must be "regular" in order to

support jurisdiction); McFarlane v. Esquire Magazine, 74

F.3d 1296 (D.C. Cir. 1996) (writing article for national publication obtainable in D.C. did not subject writer to personal

jurisdiction in District). But see United States Golf Ass'n v.

U.S. Amateur Golf Ass'n, 690 F. Supp. 317 (D.C.N.J. 1988)

(direct mail solicitation in New Jersey confers personal jurisdiction). In light of CCC's uncontested affidavit, therefore,

the court was justified in denying further discovery.

CBS argues that it could not have made more specific

allegations without jurisdictional discovery and that it never

had the opportunity to take such discovery. Further, CBS

points to cases in this circuit suggesting that a district court

abuses its discretion when it dismisses a case for lack of

personal jurisdiction before the plaintiff has had an opportunity for jurisdictional discovery. See, e.g., Edmond v. United

States Postal Serv. Gen. Counsel, 949 F.2d 415 (D.C. Cir.

1991). As CCC rejoins, however, in order to get jurisdictional discovery a plaintiff must have at least a good faith belief

that such discovery will enable it to show that the court has

personal jurisdiction over the defendant. See, e.g., Hansen v.

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Neumueller GmbH, 163 F.R.D. 471, 476 (D.Del. 1995) (concluding, after analysis of Rules 26 and 8, that plaintiff who

responded to defendant's affidavit with "a complete absence

of jurisdictional facts" had not made threshold showing necessary to get jurisdictional discovery); Poe v. Babcock Int'l, plc,

662 F. Supp. 4, 7 (M.D. Pa. 1985) (holding that because

"plaintiff has met defendants' affidavit evidence with mere

speculation, plaintiff's request for ... [jurisdictional] discovery ... must be denied"); see also Ellis v. Fortune Seas, Ltd,

175 F.R.D. 308, 312 (S.D. Ind. 1997) (citing cases and holding

"it is reasonable for a court ... to expect the plaintiff to show

a colorable basis for jurisdiction before subjecting the defendant to intrusive and burdensome discovery"); International

Terminal Operating Co., Inc., v. Skibs A/S Hidlefjord, 63

F.R.D. 85 (S.D.N.Y. 1973) (holding jurisdictional discovery

not appropriate when plaintiff merely hopes to find statements in defendant's affidavit not accurate but has not made

counter-allegations in its own affidavit).

To be sure, CBS had no obligation to make specific allegations relevant to personal jurisdiction in its complaint because

lack of personal jurisdiction is an affirmative defense and so

must be raised by the defendant. See Insurance Corp. of

Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S.

694, 704 (1982); Fed. R. Civ. P. 12(b)(2). CBS's obligation to

make some allegations relating to personal jurisdiction arose,

therefore, only after CCC had filed its motion to dismiss and

supporting affidavit. Even in its response to that motion,

however, CBS did not allege any facts remotely suggesting

that CCC had any connection to the District of Columbia.

On appeal CBS belatedly offers two facts that it claims

support the inference that the district court has personal

jurisdiction over the defendant: CCC advertises in Caribbean

Week, "a publication which has Washington, D.C. subscribers," and maintains a Web site accessible to residents of the

District (as well as the rest of the world, we assume).

Although these facts were not timely pled, CBS argues that

the court should take cognizance of them precisely because

CBS did not have the benefit of jurisdictional discovery. To

do so, however, would be to retry the case upon appeal and

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then to fault the district court for reaching a different result

based upon the different allegations before it. Good order

and common sense protest. Therefore, without intimating

anything about the legal significance, if any, of CBS's belated

factual proffer, we conclude that the district court did not

abuse its discretion when it dismissed CBS's claim against

CCC without first granting CBS's request for jurisdictional

discovery.

2.Dismissal of Count I with prejudice

Although the district court did not state whether its dismissal of Count I (for lack of personal jurisdiction over CCC)

was with or without prejudice, both parties assume on appeal

that, like the court's earlier dismissal of Counts II-XI, it was

with prejudice. CBS sees this as an abuse of discretion;

CCC denies the same. Neither party is correct because their

shared assumption is mistaken.

While an involuntary dismissal ordinarily "operates as an

adjudication upon the merits" unless the court "otherwise

specifies," a dismissal for lack of jurisdiction is specifically

exempted from this general rule. Fed.R.Civ.P. 41(b); see

also Wright & Miller, s 2373 at 406 (1995) (noting that

"dismissals that do not reach the merits because of a lack of

jurisdiction ... must be considered to be without prejudice");

Costello v. United States, 365 U.S. 265, 285 (1961) (noting that

Rule 41(b) provides that dismissal is adjudication on merits

unless for lack of personal jurisdiction, among other reasons).

In rare circumstances, a district court may use its inherent

power to dismiss with prejudice (as a sanction for misconduct)

even a case over which it lacks jurisdiction, and its decision to

do so is reviewed for abuse of discretion. See Wright &

Miller, s 2369 (1995 & Supp. 1997). We cannot infer from

the district court's mere silence, however, that it intended to

impose such a drastic sanction; nor did the district court

advert to any misconduct for which it might have intended

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such a sanction. We therefore conclude that dismissal of

Count I of the complaint was without prejudice.

III. Conclusion

The district court erred in dismissing Counts II-XI (the

attempted monopolization claims) for lack of subject matter

jurisdiction, but correctly dismissed Count XI (the essential

facilities claim) for failure to state a claim and Count I (the

Lanham Act claim) for lack of personal jurisdiction over CCC.

The district court did not abuse its discretion in denying

jurisdictional discovery before dismissing Count I, which it

did without prejudice. The case is remanded to the district

court for further proceedings consistent with this opinion.

So ordered.

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