on plaintiffs' submitted affidavits and an examination of the rate proceedings held by the respective state rate commissions, which "showed the extensiveness of these adversary proceedings and the amount of probing that went on." Id. at 16. An examination by the Court of these same documents leads it to the same conclusion.
There can be no reasonable doubt that plaintiffs presented the claims in question to the various state rate commissions before whom they appeared. How the commissions viewed those claims is not altogether apparent or perhaps relevant to this inquiry. What is apparent and relevant, however, is the fact that interested parties like plaintiffs had access to the decisional process, through, for example, participation in public hearings on the proposed rates, and that the commissions had ample opportunity, given the adversarial nature of the proceedings, to probe the veracity of the statements made by all persons involved. For a Federal court now to disregard the state action immunity doctrine and disturb those commissions' orders based on plaintiffs' representation that a different order was warranted does indeed prove too much given the facts presented in this case.
Accordingly, the Court holds that based on the facts presented in this case the state action immunity doctrine applies even in the light of plaintiffs' claims regarding defendants' alleged tactics of deceit and misrepresentation.
D. Applicability of State Action Immunity Doctrine Where Protected Anticompetitive Conduct is Part of Larger Monopolistic Scheme
Lastly, the Court must review the Special Master's determination that state action immunity should apply "where the claimed state action was procured as one facet of a broader plan of a larger monopolistic scheme that includes elements that are not subject to the immunity." Special Master's Recommendation at 18.
Plaintiffs argue that "it is a fundamental canon of antitrust law that otherwise innocent behavior may violate the Sherman Act when considered together with the remainder of the conduct." Plaintiffs' Opposition to Partial Summary Judgment at 32. Based on this proposition, plaintiffs conclude that "partial summary judgment must be denied with respect to defendants' private line pricing which was simply one episode forming part of defendants' anticompetitive course of conduct directed at the alarm market." Id. at 33.
Plaintiffs cited several cases in support of their argument but the Special Master found that "none of those cases involve protected activity. There is an obvious difference between otherwise innocent conduct that occurs as a part of a larger, nefarious scheme, on the one hand, and conduct that is protected even if it would be unlawful if not protected. Sonitrol makes no attempt to address this distinction." Special Master's Recommendation at 18-19 (emphasis added). A review of the cases cited by plaintiffs leads the Court to the same conclusion.
One of the cases cited by plaintiffs in support of their motion to set aside is the Seventh Circuit's opinion in City of Mishawaka v. Indiana & Michigan Electric Power Co., Inc., 560 F.2d 1314 (7th Cir. 1977), cert. denied, 436 U.S. 922, 98 S. Ct. 2274, 56 L. Ed. 2d 765 (1978). City of Mishawaka involved a "price squeeze" by a monopoly electric utility company which charged its wholesale customers, local municipalities which owned and operated transmission systems and depended on the utility for their wholesale supply, a wholesale rate high enough to impede the municipalities' competition in the retail market. The utility's wholesale rates were subject to regulation by the Federal Energy Regulatory Commission and its retail rates were subject to regulation by either State Public Service Commissions or directly by the State. The local municipalities, challenged this dual rate structure and the court held that,
the state utility commissions have only put the imprimatur of their sanction on the retail rates charged by the defendant. The price squeeze has not been blessed by Indiana or Michigan. The fact that the district court has no authority to maintain a direct attack on the defendant's retail rates does not alter the reality that the state commissions have in no way placed a badge of approval on the defendant's dual rate structure. Consequently, defendant's conduct is not immunized under Parker v. Brown.
Id. at 1320.
It appears to the Court that the holding in City of Mishawaka turns on the fact that the challenged anticompetitive conduct was not approved by the state regulatory commissions, thus removing any possible barrier of state action immunity. The situation is very different in the instant matter. Here, the challenged anticompetitive conduct is protected activity and not subject to antitrust liability. Plaintiffs' argument is weakened further, as noted by the Special Master, given the decisions in United Mine Workers v. Pennington, 381 U.S. 657, 670, 14 L. Ed. 2d 626, 85 S. Ct. 1585 (1965) ("Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition. Such conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act."), and Federal Prescription Service, Inc. v. American Pharmaceutical Ass'n, 214 U.S. App. D.C. 76, 663 F.2d 253 (D.C. Cir. 1981), which likewise rejected arguments similar to plaintiffs'.
The Court, therefore, concludes that protected anticompetitive conduct which derives its immunity under either the Parker state action immunity or the First Amendment right to petition, remains free from antitrust liability even if it is part and parcel of a larger monopolistic scheme. Accordingly, the Court affirms the Special Master's ruling on this issue.
Based on the foregoing, the Court holds that the Special Master's Recommendation granting defendants' motion for partial summary judgment is based on a sound reading of the applicable law. The Court hereby affirms his recommendation in its entirety. In so doing, the Court does not intend to condone the reprehensible tactics plaintiffs allege that AT&T used before the state rate commissions. The Court merely holds, as did the Special Master, that "these rates cannot themselves be used as bases of antitrust liability" given the application of the state action immunity doctrine to defendants' anticompetitive conduct, "nor can injuries resulting from the rates be considered as damages in the suit." Special Master's Recommendation at 20.
It would of course still be within the province of the [Court] to admit this evidence, if [it] deemed it probative and not unduly prejudicial, under the "established judicial rule of evidence that testimony of prior or subsequent transactions, which for some reason are barred from forming the basis for a suit, may nevertheless be introduced if it tends reasonably to show the purpose of the particular transactions under scrutiny."