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Mobilfone of Northeastern Pennsylvania Inc. v. Commonwealth Telephone Co.

filed: February 8, 1978.



Aldisert and Weis, Circuit Judges, and Christensen, District Judge.*fn* Christensen, Senior District Judge, Dissenting.

Author: Aldisert


ALDISERT, Circuit Judge.

This appeal requires us to decide if the rule of Parker v. Brown, 317 U.S. 341, 87 L. Ed. 315, 63 S. Ct. 307 (1942), can be invoked to deny relief sought under the federal antitrust laws by one radio-telephone paging common carrier, certified by the Pennsylvania Public Utilities Commission [PUC], against another PUC-certified carrier. Appellant, Mobilfone of North-eastern Pennsylvania, Inc., sought a permanent injunction to restrain Commonwealth Telephone Company from establishing a one-way radio-telephone paging service in the greater Wilkes-Barre area. It alleged that Commonwealth violated sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2, and the Clayton Act, 15 U.S.C. § 26. Determining that the Parker rule barred relief, the district court entered summary judgment in favor of Commonwealth. Mobilfone has appealed. We affirm.


Mobilfone currently furnishes a one-way radio-telephone paging service in the Wilkes-Barre area. It describes its service as follows:

Telephone users merely dial an ordinary telephone number terminating in Mobilfone's automatic radio signaling system, wait for the beep tone and then dial [Mobilfone's] subscriber's assigned number. This number activates the subscriber's receiver to sound an alerting tone.

(Brief for Appellant at 3.)

Mobilfone owns no telephone lines; it must rent its interconnecting lines from the Bell Telephone System. Commonwealth, on the other hand, as the sole telephone franchise in the Wilkes-Barre area serving approximately 100,000 customers, has its own wire transmission lines and has refused to make them available to Mobilfone.

In order to engage in radio-telephone paging service in Pennsylvania, Commonwealth was required to obtain a certificate of public convenience from the Pennsylvania PUC. It was successful in its application, notwithstanding a protest filed by Mobilfone. Before the state PUC, Mobilfone unsuccessfully raised the same contentions it presented to the district court: that Commonwealth's greater resources would allow it to use revenues derived from its telephone service to subsidize non-compensatory rates in its paging service, and that this situation will destroy Mobilfone as a competitor in the one-way signaling business. In its opinion accompanying the order granting Commonwealth's application, the PUC explained:

The Commission is not convinced that a reasonable measure of competition between radio-telephone common carriers is undesirable, particularly in a metropolitan district such as the Scranton, Wilkes-Barre area; that the number of subscribers served by protestant [Mobilfone] after furnishing radio-telephone paging service for approximately 16 years (the record indicates that paging service was initiated in 1957) is indicative of the existing needs for such service in the area; or that a reasonable competitive situation in this instance would not be of public benefit. Furthermore, although the financial resources of applicant [Commonwealth] are unquestionably of much greater magnitude than protestant's, the furnishing of one-way radio-telephone paging service by an established operating telephone utility is a logical extension of its general telephone service clearly in the public interest, and should be encouraged rather than denied.

In Re Application of Commonwealth Telephone Co., No. 97564 (Pa. PUC, July 9, 1974).

Mobilfone unsuccessfully appealed the PUC's decision through Pennsylvania's appellate courts, and also took an active role as a protestant before the Federal Communications Commission in Commonwealth's subsequent successful application for the necessary construction permit to operate the signaling facility. See In Re Commonwealth Telephone Co., No. 21513-CD-P-75 (FCC, May 24, 1976); id., (FCC, September 20, 1976). Mobilfone filed its complaint in the federal district court on June 2, 1976, seeking a permanent injunction against future competition from Commonwealth.


The Parker rule holds that certain state action is immune from the Sherman Act's proscriptions. In Parker, a raisin producer-packer brought suit against California officials to challenge a state program designed to restrict competition among raisin growers and thereby to maintain prices in the raisin market. The Supreme Court determined that the state "as sovereign, [had] imposed the restraint as an act of government which the Sherman Act did not undertake to prohibit." 317 U.S. at 352. See also Olsen v. Smith, 195 U.S. 332, 344-45, 49 L. Ed. 224, 25 S. Ct. 52 (1904).

We do not write on an empty slate in deciding the applicability of Parker to the facts before us. Three recent decisions of the Supreme Court provide guidance and direction: Bates v. State Bar of Arizona, 433 U.S. 350, 97 S. Ct. 2691, 53 L. Ed. 2d 810, 45 U.S.L.W. 4895 (1977); Cantor v. Detroit Edison Co., 428 U.S. 579, 49 L. Ed. 2d 1141, 96 S. Ct. 3110 (1976); and Goldfarb v. Virginia State Bar, 421 U.S. 773, 44 L. Ed. 2d 572, 95 S. Ct. 2004 (1975).


Mobilfone relies primarily upon Cantor, which also involved a utility company. There, the company was a sole supplier of electricity in southeast Michigan, and had a practice of distributing light bulbs to its customers. The distribution program had been approved as part of the company's rate structure by the state Public Service Commission. In holding that Parker did not apply as a defense in an antitrust challenge to the distribution program, the Court determined that the mere reception and approval of a state tariff was not sufficient to invoke the Parker rule when the challenged activity (distribution of light bulbs) was unrelated to any articulated state objective. The obvious and presumably valid state interest -- the regulation of electric utilities -- would not be affected by a ...

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