Court Opinion

ID: 9496072
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:17:35.741901+00
Date Added: 2024-06-11T17:57:21.569780
License: Public Domain

GREENBERG, Senior Circuit Judge,
dissenting:
As I would find that Cavalier’s complaint adequately states a claim for relief under the essential facilities doctrine, I respectfully dissent.
As a preliminary matter, I point out that I agree wholeheartedly with the majority’s analysis of the relationship between the Sherman Act and the Telecommunications Act. In particular, I support its conclusion that “the provisions of the Telecommunications Act do not limit the applicability of the antitrust laws to Verizon.” Maj. Op. at 187. Furthermore, I agree both that “the special, indeed idiosyncratic, relationship between the Telecommunications Act and the Sherman Act prevents the Sherman Act from taking on the role of enforcing duties imposed for the first time by the Telecommunications Act,” id. at 189, and that “[i]n circumstances where facts state a claim under both statutes construed independently of each other, they may give rise to the relief under each act,” id. at 189.
I differ with the majority, therefore, only with regard to my understanding of how a complaint alleging violations of the Sherman Act under an essential facilities theory should be dealt with on a motion under Fed.R.Civ.P. 12(b)(6). I cannot agree with the assertion that “[a]ll of the untoward conduct attributed to Verizon in the complaint arises from duties imposed on Verizon by the Telecommunications Act.” Id. at 184 (emphasis in original); see also id. at 187 (“[W]e must still determine whether violations of §§ 251 and 252 of the Telecommunications Act as alleged in the complaint before us support a claim under the antitrust laws.”) (emphasis added). In my view, this reading of the complaint is too narrow given that a complaint should not be dismissed under Rule 12(b)(6) unless it appears certain that the plaintiff can prove no set of facts which would support its claim and entitle it to relief. See, e.g., Franks v. Ross, 313 F.3d 184, 192 (4th Cir.2002).
The essential facilities doctrine is a narrow exception to the rule that a monopolist has no duty to deal with its competitors. See Covad Communications Corp. v. Bell Atlantic Corp., 201 F.Supp.2d 123, 131 (D.D.C.2002) (citing Olympia Equip. Leasing Co. v. W. Union Telegraph Co., 797 F.2d 370, 376 (7th Cir.1986)). Although the doctrine certainly has its critics, see, e.g., 3A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 771c (2d ed.2002), there is no denying that it “has a long and respected history as part of U.S. antitrust law,” Robert Pitofsky et al., The Essential Facilities Doctrine Under U.S. Antitrust Law, 70 Antitrust L.J. 443, 445 (2002). To state an essential facilities claim, a plaintiff must allege: (1) control of the essential facility by a monopolist; (2) a competitor’s inability practically or reasonably to duplicate the essential facility; (3) the denial of the use of the facility to a competitor; and (4) the feasibility of providing the facility. Advanced Health-Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 150-51 (4th Cir.1990) (citing MCI Communications Corp. v. Am. Tel. & Telegraph Co., 708 F.2d 1081, 1132-33 (7th Cir.1983)). As the Court of Appeals for the Eleventh Circuit summarized the doctrine, “[t]he ‘applicable legal standard’ is that ‘[a]ny company which controls an “essential facility” or a “strategic bottleneck” in the market violates the antitrust laws if it fails to make access to that facility available to its competitors on fair and reasonable terms that do not disadvantage them.’ ” Covad Communications Co. v. *192BellSouth Corp., 299 F.3d 1272, 1287 (11th Cir.2002) (quoting United States v. AT&T, 524 F.Supp. 1336, 1352-53 (D.D.C.1981) (emphasis and second alteration in Co-vad)). This standard is necessarily fact-bound, and cases dismissing essential facilities claims accordingly have been more common in motions for summary judgment contexts rather than in motions to dismiss contexts. See id. at 1287 n. 13 (citing summary judgment cases); see also Laurel Sand & Gravel, Inc. v. CSX Transp., Inc., 924 F.2d 539, 545 (4th Cir.1991) (affirming summary judgment for defendant); Pitofsky et al., supra, at 450 (“Given the stringency of the widely-adopted requirements set forth in MCI Communications, U.S. courts rarely find liability under the essential facilities doctrine. But even courts rejecting application of the doctrine note that their analysis is highly fact-specific. .. .”).
I believe that the complaint alleges facts that, when all inferences are drawn in favor of Cavalier, state a viable claim of monopolization under the essential facilities doctrine. In particular, I would follow the lead of the Courts of Appeals for the Second and Eleventh Circuits, which have held that essential facilities claims similar to those here should survive a motion to dismiss. In so holding, the Court of Appeals for the Second Circuit stated:
[T]he amended complaint may state a claim under the “essential facilities” doctrine. The plaintiff alleges that access to the local loop is essential to competing in the local phone service market, and that creating independent facilities would be prohibitively expensive. The defendant allegedly has failed to provide its competitor ... reasonable access to these facilities.... Although the defendant may ultimately be able to show that the local loop is not an essential facility, or that it provided the plaintiff with reasonable access to the local loop, these are issues that the district court should consider in the first instance.
Law Offices of Curtis V. Trinko, LLP v. Bell Atlantic Corp., 305 F.3d 89, 108 (2d Cir.2002) (emphasis omitted), cert. granted, — U.S. -, 123 S.Ct. 1480, 155 L.Ed.2d 224 (Mar. 10, 2003) (No. 02-682). The separate opinion in Trinko specifically emphasized “the extent to which ... the procedural posture of the case may influence the outcome of this appeal.” Trinko, 309 F.3d 71, 72 (2d Cir.2002) (Sack, J., concurring in part and dissenting in part). The Court of Appeals for the Eleventh Circuit was even more explicit in rejecting an incumbent local exchange carrier’s (“ILEC”) factbound arguments for dismissal; indeed, it rejected arguments by the ILEC parallel to those advanced by Verizon here, noting that “these are arguments that must be addressed at a later stage of the proceedings, such as summary judgment or trial.” Covad, 299 F.3d at 1286.1 I believe that, in holding that the conduct alleged does not violate duties imposed under the Sherman Act, independent of those under the Telecommunications Act, because Verizon has no antitrust duty to rent facilities to its competitors, the majority has resolved questions of fact adversely to Cavalier. In particular, the *193majority’s implicit holding is that because Verizon traditionally has been in the business of providing telecommunications services to consumers and not of renting facilities to competitors, it would have to alter the nature of its business to make its essential facilities available to Cavalier and that any degree of transformation of one’s business is per se not feasible under the fourth prong of the MCI test.
I note that this is not a case like that posited in Verizon’s brief, see Br. of Appel-lee at 32, or the identical argument made by BellSouth (and rejected by the court) in Covad, see Covad, 299 F.3d at 1286, however, where a competitor seeks to require the monopolist to “build new capacity to satisfy a would-be sharer,” 3A Areeda & Hovenkamp, Antitrust Law ¶ 773e, at 210. In such a case, I would, perhaps, be more willing to say that, as a matter of law, providing access to the essential facility would not be feasible. Here, however, Cavalier alleges that Verizon refused to provide Cavalier access to existing essential facilities, namely, “last-mile” facilities like the local loop connecting individual homes and businesses to Verizon’s central office, when it could have done so. Compl. at ¶¶ 21, 92, 93. Construing these allegations liberally in favor of Cavalier, we should assume that Verizon need do little more than sign leasing agreements covering those last-mile facilities implicated when Cavalier woos a new customer. If more burdensome steps are required, Verizon should proffer evidence to that effect, but it should do so as an aspect of the development of a factual record. Furthermore, Cavalier alleges that, where access to those facilities nominally was granted, Verizon intentionally provided the access in a discriminatory way, for example, by providing a disproportionate number of non-functioning last-mile facilities to Cavalier customers, resulting in service interruptions that damaged Cavalier. Id. at ¶¶ 102-05. It alleges that Verizon knowingly took all of these steps with the intent to maintain its monopoly. Cavalier therefore has alleged a relatively straightforward violation of the essential facilities doctrine. It does not seek preferential access or ask that Verizon build new capacity, but rather asks that Verizon make available on reasonable terms the facilities Cavalier requires to be able to compete.
Admittedly, by reason of the historical fortuity that it until recently enjoyed a state-sponsored monopoly in the local services market, Verizon and its predecessors ’ never have had occasion to get into the business of leasing access to such facilities.2 In the majority’s view, this point is conclusive. Under my understanding of the essential facilities doctrine, this fact is just one factor to consider in determining whether Verizon feasibly could have provided such access. Verizon very well may prove that it could not feasibly have provided the access sought by Cavalier without truly altering the nature of its business. Cf. Hecht v. Pro-Football, Inc., 570 F.2d 982, 992-93 (D.C.Cir.1977) (“[The essential facilities doctrine] must be carefully delimited: the antitrust laws do not require that an essential facility be shared if such sharing would be impractical or would inhibit the defendant’s ability to serve its customers adequately.”). On the other hand, Cavalier may be able to show that, although Verizon has not been in the habit of leasing access to such facilities, *194the burden on Verizon of doing so would be so slight that it could not be said to be transforming its business by making those facilities available. In other words, Cavalier may be able to’prove that Verizon failed to make last-mile facilities available to it on fair and reasonable terms even though doing so would have been perfectly feasible and would not have required Verizon to alter the nature of its business in any meaningful way.
Although competition now has replaced sanctioned monopoly in the industry, Verizon continues to have exclusive control of a facility crucial to such competition and, taking Cavalier’s allegations as true and drawing all inferences in its favor, refuses to make those facilities available on fair and reasonable terms even though doing so would not be burdensome and would not require Verizon to transform its existing business in any meaningful way. I find no support in the caselaw for the conclusion that Cavalier could prove no set of facts consistent with its complaint to demonstrate that Verizon unreasonably denied access to such facilities where it feasibly could have provided it, even if Verizon never has leased such facilities in the past. Indeed, one of the leading essential facilities cases upheld a jury finding that AT&T, which was also, of course, in the business of providing telecommunications services, not of leasing facilities, denied MCI access to essential facilities (in fact, at least in part the same type of essential facilities involved here, namely the interconnections between customers’ residences and the monopolist’s central facilities) where such access reasonably could have been provided. MCI, 708 F.2d at 1131-33. More importantly, when this court has held that an essential facilities claim could not succeed because providing access to the essential facility would have required the monopolist to alter its business, it has done so on summary judgment proceedings, after development of a factual record, considering the history of the business as part of the feasibility element. See, e.g., Laurel Sand, 924 F.2d at 545.
For these reasons, even though I largely agree with the majority opinion, I respectfully dissent as I would reverse the district court’s judgment and remand this case to that court for further proceedings.

. The ILEC in Covad advanced three main arguments: (1) that the competing local exchange carrier ("CLEC”) complained only about the terms or quality of access, but did not allege an actual denial of access to the essential facility; (2) that the CLEC sought “preferential access” to the local loop, which would require the ILEC to "abandon its facilities”; and (3) that the CLEC was attempting to force the ILEC to construct new facilities or alter the nature of its business and become a renter of facilities. Covad, 299 F.3d at 1286. Verizon makes precisely these same three arguments in this case, and the majority accepts the third as a basis for affirming the dismissal. Maj. Op. at 186.

. I note that this "fact” has been discussed in the parties’ briefs and effectively has been judicially noticed by the majority, despite the fact that it is not a part of the complaint or any other part of the record. That some evidence should be introduced to support the proposition that Verizon has never leased such facilities, at least since 1996, further justifies letting this case go forward so that a factual record may be developed.