Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: Conspiracy to divide market for FCC-issued AMTS licenses not shown, (Sep 3, 2014)

By Jeffrey May, J.D.

Following a nine-day bench trial, the federal district court in Newark, New Jersey, has rejected a claim that Maritime Communications/Land Mobile, LLC (MCLM) conspired with others to exclude a rival from the market for a certain type of radio license issued by the Federal Communications Commission (FCC). Final judgment was granted in MCLM’s favor, and the claim against two other defunct companies that had defaulted was dismissed (Havens v. Maritime Communications/Land Mobile, LLC, September 2, 2014, Hayden, K.).

The matter arose from disputes over FCC-issued licenses that afford the right to use a particular type of radio frequency: the so-called Automated Maritime Telecommunications System, or AMTS. AMTS was developed for ship-to-shore communications but has since expanded into land-based uses or potential uses.

Plaintiff Warren Havens believed that AMTS-allocated spectrum had a variety of applications in fields, such as intelligent transportation systems, and planned to lease or sell portions of his companies’ AMTS licenses to railroads and utility or energy companies for their infrastructure and communications needs. According to Havens, MCLM, two defunct companies, and two firms that have since settled the allegations were involved in a long-running scheme that had the effect of precluding Havens and his companies—Skybridge Spectrum Foundation; Telesaurus VPC, LLC; AMTS Consortium, LLC; Intelligent Transportation & Monitoring, LLC; and Telesaurus GB, LLC—from using AMTS spectrum licensed to them in the ways they had envisioned.

Havens alleged an agreement between Robert Cooper—settled defendant Touch Tel Corporation’s president—and non-party Regionet’s principal Fred Daniel to divide up the market for AMTS licenses. The evidence purportedly supporting this agreement was Cooper’s deposition testimony, detailing a conversation 25 years earlier in which Daniel told Cooper about AMTS licenses and said that he was pursuing only A-block licenses and Cooper could pursue B-block licenses if he wanted to.

The conversation between Daniel and Cooper did not amount to direct evidence of a market-allocation agreement, the court ruled. Daniel’s statements, as relayed by Cooper, arguably warned Cooper off of pursuing A-block licenses. However, the statements failed to reflect a unity of purpose or meeting of minds to undertake an unlawful arrangement. The plaintiffs failed to establish that Cooper agreed to proceed as Daniel proposed.

Even if an agreement had been established, the plaintiffs failed to show that the so-called “block-splitting” agreement “migrated” from Regionet to MCLM and the defunct defendants—Mobex Communications, Inc. and Mobex Network Services, LLC—as successors in interest to Regionet. Because Regionet was not a defendant in the action, the plaintiffs’ case depended upon the agreement's survival through the years so that ultimately it included MCLM. The plaintiffs unsuccessfully contended that the agreement “traveled through time” as employees, along with the licenses, moved from Regionet to these defendants. The court concluded that the plaintiffs had “hinted at, though not developed, an argument that the alleged conspiracy traveled to Mobex Network Services and MCLM as successors in interest to Regionet.”

Conscious parallelism. The plaintiffs also failed to convince the court that the defendants’ parallel conduct, when combined with various “plus” factors, permitted an inference of conspiracy. An agreement was not shown through what the plaintiffs identified as parallel instances of regulatory non-compliance, identical refusals to provide information to the plaintiffs, and behavior that was economically irrational unless there was a conspiracy afoot.

“Plaintiffs characterize, arrange, and interpret events surrounding the acquisition of AMTS licenses by them and by the defendants to illustrate and perhaps justify that they have not been able to move ahead with their vision for AMTS,” the court explained. “But building that case does not prove a case of a conspiracy to restrain trade, and accepting it risks squelching legitimate business conduct by labeling it conspiratorial.”

The case is Civ. Action No. 11-993 (KSH) (CLW).

Attorneys: Marianne R. Mele for Warren Havens, Skybridge Spectrum Foundation, Telesaurus VPC, LLC, AMTS Consortium, LLC, Intelligent Transportation & Monitoring, LLC, and Telesaurus GB, LLC. Christine M. Gurry (Traflet & Fabian) for Mobex Communications, Inc. Kelley Jane Hastie (Graham Curtin) for Maritime Communications/Land Mobile, LLC.

Companies: Skybridge Spectrum Foundation; Telesaurus VPC, LLC; AMTS Consortium, LLC; Intelligent Transportation & Monitoring, LLC; Telesaurus GB, LLC; Mobex Communications, Inc.; Maritime Communications/Land Mobile, LLC; Touch Tel Corp.

Cases: Antitrust NewJerseyNews