Court Opinion

ID: 9470291
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:01:39.145451+00
Date Added: 2024-06-11T17:41:49.419478
License: Public Domain

CLARK, Chief Judge,
dissenting:
I respectfully dissent.
The majority presumes that cable television franchises are natural monopolies. Based on this assumption, it further presumes that competition is only possible before a franchise is granted. On these two presumptions, the court then erects a third — that the rule of reason would so certainly condemn an agreement to divide areas of cable television service in a single city that, for sake of efficiency, the agreement must be ruled invalid per se. These presumptions are not just unwarranted, they are contrary to proof in this record about the particular business of cable television franchising in Houston, Texas.
This case does not concern price fixing. Nor does it present a case of a group boycott, tying arrangement or a horizontal division of markets (though each of these categories has not invariably been held to be a naked restraint of trade). No applicant proposed to serve the whole city of Houston. The Council would not have accepted such an application. Therefore, the relevant geographic market for potential franchisees here is not the city of Houston, but some part or area thereof. No absolute per se category is presented. Absent the majority’s presumptions, there is no way for me to predict with confidence that the rule of reason will condemn the present boundary agreements between franchise applicants which this jury found reasonable. Thus, I cannot say that the conduct of the applicants for franchises in this case is manifestly anticompetitive.
Under the district court’s instructions, the jury was asked: Was the agreement of defendant, Gulf Coast, with other companies to allocate cable television franchise territories part of a conspiracy which constituted an unreasonable restraint of trade? The jury said no. The trial court who heard the witnesses and took the evidence found this answer was supported by the record. The majority does not controvert this. Rather, it acknowledges that the political history of cable television in Houston shows Houston voters rejected a single “monopoly” cable television franchising effort in 1972, and that the mayor’s anxiety to avoid a similar situation in 1978 led to the city’s demand for multiple franchises. Every applicant, including plaintiff, accepted this requirement.
Instead of analyzing the impact of these facts, the majority chooses to rely only on the theoretical testimony of the plaintiff’s aptly named expert to create a series of presumptions. From other proof, a reasonable jury could have found the mayor’s political concern, and a concomitant refusal by the Council to get into actually drawing boundary lines, dominated the actions of the applicants and produced a reasonable boundary agreement. Also, the jury could have found from the proof that a reasonable way to secure multiple franchises was to tell all prospective franchisees that applicants must define individual service areas without gaps and without overlaps.
There is no showing that plaintiff or any other potential applicant was limited as to formation of its own group of bidders. All those who wanted franchises were faced with the city’s ukases that no single citywide franchise would be granted and that the Council would not draw lines. There was an opportunity for competition in the pre-award area, even for those who started as late as plaintiff. They could have become members of a new group of bidders or tried to attract members of the existing group to go with them. Moreover, the proof shows the city could reject any part or all of any area sought when the matter came before the Council for approval. No testimony suggested that plaintiff did not have an opportunity to urge the city to require changed boundaries to make room for its tardy entry. Indeed, it did so and a request for accommodation was made. Thus, the mere fact that Gulf Coast refused Gold*239berg’s demand that it give up a substantial part of the area the agreement allowed it to request was not enough to require the jury to find the boundary agreement kept plaintiff from competing.
There is another pro-competitive aspect of the proof that even more clearly argues against the imposition of a per se rule to this particular territorial agreement. The statements of plaintiff’s president, Billy Goldberg, to the city Council told the jury how competition would work between franchised areas after they were awarded.
“In determining the geographical breakdown of cable TV franchise areas it is my judgment that this Council is wise awarding multiple franchises throughout the city. I will say a little bit more on that at a later time.
“Conceptually, the notion of a smaller, more responsive franchise is likely to be substantially more acceptable to this community. Careful thoughts should be given to the proposition that no one applicant should receive more area to serve than could be constructed and energized within a reasonable period of time.
“It seems to me that ... our application for this area is more in keeping with the wishes of the people of this community previously expressed, where they indicated to me, and I think to everyone, the desire not to have the vast territories of our city under one operation, and there’s a reason for it. There’s a reason of competition.
“... [L]et me tell you where the competition comes in.
“If this Council does as I think it will do, divide this city up into as small portions as possible, you will have various cable companies throughout the city, and everybody in the city knows what the other fellow is doing. He’s either got a friend or a relative over there, and they will be saying, ‘Well, why is it, Mr. Goldberg, that your system and Affiliated’s system doesn’t have so-and-so, and if you go to the other part of town they have that service,’ and that’s where the area of competition comes in, and I think it’s healthy.”
Franchise areas, levels of service, and fees were not immutable. If a franchisee’s level of performance did not keep pace with neighboring cable companies, all sorts of post-franchise problems could occur, up to and including another referendum to undo everything.
I do not understand how an appellate court can erect the majority’s pyramid of presumptions based on one expert’s opinion, contradicted by his.own employer, and allow it to overcome a factfinding by a jury that finds support in the record.
Because I believe that the jury validly found that the agreement to submit non-overlapping bids met the rule of reason, I am further compelled to agree with the district court that the finding that any later conspiracy to refuse plaintiff’s request to participate in the agreement could not have caused plaintiff harm. The interrogatories on separate conspiracies were put separately at plaintiff’s insistence to accord with its theory that separate conspiracies were proven. What turns out to have been a tactical mistake should not be allowed to bootstrap to credibility a verdict that the proof establishes was unwarranted. This is especially true where the appellate device for the levitation is supplied by unsupported presumptions of wrongdoing.
The proof tells me, just as it told the jury, that those who wanted to seek a cable television franchise in Houston in 1978 knew the only way to get one was to agree with others on boundaries for multiple service areas that would cover the city without overlaps. The jury found that after the group had validly made these agreements, plaintiff sought to have the group redo its plans and was improperly rebuffed. The district court reasoned that the failure to get a franchise was solely the result of the valid agreement, not the invalid rebuff. So do I.
At a time when the clear trend in antitrust law is away from the use of the “expedient” per se rule, except for price-fixing, and toward proving the truth of *240particular transactions, it seems altogether wrong to rely on speculative malarkey to assume that a conspiracy to restrain trade existed.
I would affirm the district court.1

. As an aside, and because the majority’s holding required that it address the Noerr-Pennington doctrine, I would briefly point out that the district court’s analysis of this issue (the only analysis on which the majority relies) necessarily depends on a fact determination that the city and mayor participated in a conspiracy to unreasonably restrain trade by requiring defendants to agree on territorial boundaries. In adopting this reasoning, the majority overlooks the same basic premise missed by the district court. This judicial fact-finding is antithetical to the district court’s determination that adequate proof supported the jury’s finding to the contrary. That the decision-makers may have been members of a later conspiracy to refuse to change boundary lines does not affect their administrative position vis-a-vis the initial agreement.