RENFREW, District Judge:
Plaintiff-appellant Thornhill Publishing Company, Inc. ("Thornhill"), brought this antitrust suit against defendant-appellee General Telephone & Electronics Corporation ("GTE") and its wholly owned subsidiaries, General Telephone Company of the Northwest, Inc. ("Northwest"), and General Telephone Directory Company ("Directory"), alleging violations of Sections 1 and 2 of the Sherman Act and Section 7 of the Clayton Act. Thornhill, a publisher and distributor of telephone directories, alleged that appellees combined and conspired to unreasonably restrain and to monopolize trade in the publication and sale of telephone directories and in the sale of advertising space and linage in telephone directories. Thornhill claimed that appellees refused to sell, lease, or otherwise make available to Thornhill the names, addresses, and
Appellees moved for summary judgment under Rule 56 on two grounds. First, appellees argued that Thornhill's antitrust claims were barred by principles of res judicata because Thornhill should have raised them as compulsory counterclaims in the prior copyright infringement suit. Second, they contended that the acts complained of were outside the jurisdictional reach of the Sherman Act, as Thornhill's telephone directory business is not in and does not substantially affect interstate commerce. The district court ruled in favor of appellees on both grounds and dismissed the suit. This appeal followed. We affirm the district court's ruling on the interstate commerce issue and therefore do not reach the compulsory counterclaim issue.
I. PROCEDURAL POSTURE OF THE CASE
Appellees moved for summary judgment under Rule 56, asserting that "the alleged conduct claimed to have violated the antitrust laws affected (if at all) purely intrastate activities and is thus beyond the jurisdictional reach of the Sherman Act," and asked that the "motion for summary judgment be granted dismissing the complaint in all respects." The trial court granted the motion and dismissed the complaint with prejudice.
The Sherman Act prohibits every contract, combination or conspiracy "in restraint of trade or commerce among the several States," 15 U.S.C. § 1, and also prohibits monopolizing "any part of the trade or commerce among the several States." 15 U.S.C. § 2. The requirement that the restraint of trade be a restraint on interstate commerce is generally referred to as a prerequisite for federal jurisdiction. Many courts have dismissed Sherman Act claims for lack of subject matter jurisdiction where the required nexus with interstate commerce was lacking.
In this case appellees moved for summary judgment under Rule 56, thus seeking a judgment on the merits,
We affirm the trial court's ruling. We find that the material facts relating to the interstate commerce issue are not in dispute and that the undisputed facts establish that the nexus with interstate commerce required by the Sherman Act is not present in this case.
Since the material facts are not in dispute, we need not decide whether the trial court was required to apply summary judgment standards in ruling on appellees' motion or whether the court could properly have considered this a purely jurisdictional issue and therefore could have treated the motion as a motion to dismiss for lack of jurisdiction under Rule 12(b)(1). A motion to dismiss for lack of subject matter jurisdiction may either attack the allegations of the complaint or may be made as a "speaking motion" attacking the existence of subject matter jurisdiction in fact. Land v. Dollar, 330 U.S. 731, 735 & n.4, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 890-892 (3 Cir. 1977); Exchange Nat'l Bank v. Touche Ross & Co., 544 F.2d 1126, 1130-1131 (2 Cir. 1976). Where the jurisdictional issue is separable from the merits of the case, the judge may consider the evidence presented with respect to the jurisdictional issue and rule on that issue, resolving factual disputes if necessary. Berardinelli v. Castle & Cooke, Inc., 587 F.2d 37 (9 Cir. 1978); Mortensen v. First Fed. Sav. & Loan Ass'n, supra, 549 F.2d at 891; Sinclair v. Spatocco, 452 F.2d 1213 (9 Cir. 1971), cert. denied, 409 U.S. 886, 93 S.Ct. 102, 34 L.Ed.2d 142 (1972); Appelt v. Whitty, 286 F.2d 135 (7 Cir. 1961). The standards applicable to a Rule 12(b)(1) speaking motion differ greatly from the standards for ruling on a motion for summary judgment. Faced with a factual attack on subject matter jurisdiction,
If the interstate commerce requirement of the Sherman Act is an element of the substantive offense as well as a jurisdictional requirement, a motion directed to the interstate commerce issue should be accorded Rule 56 treatment, for a ruling on that issue would be a ruling on the merits. Although a court considering a motion relating
In Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 602 (9 Cir. 1976), we concluded that in a Sherman Act case a motion challenging the existence of a sufficient relationship with foreign commerce should be accorded Rule 56 treatment rather than being treated as a speaking motion under Rule 12(b)(1), because the existence of a sufficient relationship with foreign commerce relates to the merits of the claim as well as to subject matter jurisdiction. This conclusion was based on the Supreme Court's statement in Hospital Bldg. Co. v. Trustees of Rex Hospital, 425 U.S. 738, 742 n.1, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976), that the interstate commerce issue is identical whether a dismissal is sought under Rule 12(b)(1) or under Rule 12(b)(6). We reasoned that since the interstate commerce element went to the merits of the claim, a dismissal should be based on a Rule 12(b)(6) motion or a summary judgment motion, rather than a Rule 12(b)(1) motion:
Timberlane is consistent with language in several Supreme Court cases indicating that the interstate commerce requirement is tied to the merits as well as to the jurisdictional aspects of an antitrust case and therefore warrants Rule 56 treatment. In Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 203 n.19, 95 S.Ct. 392, 402, 42 L.Ed.2d 378 (1974), for example, the Supreme Court, discussing the interstate commerce requirement of the Clayton Act, stated:
Moreover, the Supreme Court has consistently considered the interstate commerce issue in terms of whether the complaint alleged a sufficient nexus with interstate commerce to state a claim for relief,
Although Timberlane apparently viewed the interstate commerce requirement as a substantive element of a Sherman Act violation, this Court has recently relied on Ninth Circuit opinions preceding Timberlane that distinguish the jurisdictional interstate commerce issue from the substantive
In Berardinelli we held that the trial court could properly resolve factual disputes related to the interstate commerce issue in ruling on a Rule 12(b)(1) speaking motion to dismiss for lack of subject matter jurisdiction.
In the present case we need not decide the many complex procedural issues that arise in the context of motions concerning the interstate commerce requirement of the Sherman Act. Under the standards governing a motion for summary judgment under Rule 56, the trial court's ruling on the interstate commerce issue should be affirmed. Thus, it is unnecessary to consider whether the less rigorous standards applicable to a Rule 12(b)(1) speaking motion could properly have been applied in this case.
II. SUMMARY JUDGMENT ON THE INTERSTATE COMMERCE ISSUE
A. Appellees' Motion
Appellees moved for summary judgment contending that no genuine issues of material fact existed with respect to the issue of interstate commerce and that on the basis of the undisputed facts the motion should be granted. The district court ruled in favor of appellees on the ground that the acts complained of were entirely intrastate and clearly did not have a substantial effect on interstate commerce. We affirm the district court's ruling.
Appellees based their motion for summary judgment on the deposition testimony of Mr. Thornhill, president and sole stockholder of the appellant corporation, and on appellant's answers to interrogatories. That testimony fully supports appellees' contention that the product market at issue in this case is a purely local market and that appellant's business was solely intrastate.
Since the telephone directories were distributed free of charge, appellant's revenues were generated through the sale of advertising space and linage. Mr. Thornhill testified at his deposition that the company solicited advertisements exclusively from local businesses and professional concerns. Appellant's directories were printed within the State of Washington and virtually all the supplies were purchased within the state. The directories were then distributed within the State of Washington in the communities they served.
These undisputed facts all support the conclusion that the alleged restraints of commerce were directed at a wholly intrastate market and that the alleged restraints did not have a substantial effect on interstate commerce. Appellant has not contested the facts set forth above, but has advanced a number of possible bases for a finding that the required nexus with interstate commerce exists in this case. However, appellant's factual and legal assertions are inadequate to avoid summary judgment on the interstate commerce issue.
B. The Interstate Commerce Requirement of the Sherman Act
In enacting the Sherman Act, Congress intended to exercise its power under the Commerce Clause to the maximum possible extent. United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 558, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944); Rasmussen v. American Dairy Ass'n, 472 F.2d 517, 521 (9 Cir. 1972), cert. denied, 412 U.S. 950, 93 S.Ct. 3014, 37 L.Ed.2d 1003 (1973). The scope of the Act must be determined by the courts on a case-by-case basis:
Accord, Gulf Oil Corp. v. Copp Paving Co., supra, 419 U.S. at 197 n.12, 95 S.Ct. 392.
The test for determining whether an alleged restraint of trade is sufficiently related to interstate commerce to come within the scope of the Sherman Act was set forth in our opinion in Las Vegas Merchant Plumbers Ass'n v. United States, 210 F.2d 732, 739 n.3 (9 Cir. 1954), cert. denied, 348 U.S. 817, 75 S.Ct. 29, 99 L.Ed. 645 (1954):
Accord, e. g., Rasmussen, supra, 472 F.2d at 526; Sun Valley Disposal Co. v. Silver State Disposal Co., 420 F.2d 341, 343 (9 Cir. 1969). Furthermore, we held in Page v. Work, 290 F.2d 323, 330 (9 Cir. 1961):
C. The "In Commerce Test"
In this case, undisputed facts establish that appellant is not engaged in interstate commerce and that its local telephone directories, produced and distributed within the state of Washington, were not a part of the flow of interstate commerce. Appellant's argument that the directories must be regarded as "in commerce" is based on our decision in Copp Paving Co. v. Gulf Oil Co., supra, 487 F.2d 202, cert. denied on the Sherman Act issue, 415 U.S. 988, 94 S.Ct. 1586, 39 L.Ed.2d 885 (1974). In Copp Paving we held that
Appellant asserts that the rationale employed in Copp Paving is applicable here because a user of one of appellant's local telephone directories would consult the directory before making a telephone call, and the telephone network is a instrumentality of interstate commerce. Unlike the plaintiff in Copp Paving, however, Thornhill does not actually produce instrumentalities of interstate commerce. Copp Paving would be far more analogous if Thornhill manufactured telephones or telephone equipment rather than a directory designed to facilitate local communication. Furthermore, we are reluctant to extend the reach of the Copp Paving decision in light of the Supreme Court's disposition of the Clayton Act interstate commerce question presented in that case. Although the Supreme Court denied certiorari on the Sherman Act interstate commerce issue, and thus did not review our holding that the producers of asphaltic concrete were "in commerce" for purposes of the Sherman Act, the Court did reject our "in commerce" theory in reviewing the Clayton Act claim. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974).
We find that Copp Paving Co. is distinguishable from the instant case and that the facts presented here would not support a jury finding that the alleged restraints were directed at a product in the flow of interstate commerce.
D. The "Affecting Commerce" Test
Alternatively, appellant contends that the appellees' alleged acts substantially affected interstate commerce. Even a wholly local business restraint is covered by the Sherman Act if the restraint substantially and adversely affects interstate commerce. Hospital Bldg. Co. v. Trustees of Rex Hospital, supra, 425 U.S. at 743, 96 S.Ct. 1848.
Appellant has not met the burden imposed by Rule 56(e). In an attempt to avoid summary judgment, appellant submitted conclusory and speculative affidavits that fail to set forth specific facts in support of appellant's "substantial effect on interstate commerce" theory. Appellant relies on an affidavit submitted by Mr. Thornhill, in which Mr. Thornhill states that although appellant's directories carried local advertising, "it was common knowledge throughout the directory industry that local dealers in many instances received advertising subsidies from national manufacturers." However, Mr. Thornhill failed to set forth any specific facts within his personal knowledge in support of this assertion. As the Court of Appeals for the Second Circuit has stated:
Mr. Thornhill's affidavit also states that the Seattle mail order firm that supplied listings for the directories "to the best of my knowledge" is engaged in interstate business. Appellant argues that this interstate business could have been affected by the appellees' acts. No specific facts are presented in support of this theory, however. Mr. Thornhill also alleges that appellant purchased some manila folders and format sheets out of state, yet he stated at his deposition that he did not have "the remotest idea" of the cost of these supplies. His deposition testimony establishes that most of the company's supplies were purchased in the state of Washington.
Appellant clearly has not met the burden of opposing the factual showing made by appellees in support of their motion for
On these facts, summary judgment for appellees was proper, as the facts are insufficient to support a jury finding that the activities complained of were either in the flow of interstate commerce or substantially affected interstate commerce. Although the Constitutional reach of the Commerce Clause is extremely broad, it is not limitless.
The limits are evident in those cases holding that a Sherman Act complaint failed to state a cause of action because the facts alleged did not satisfy the interstate commerce requirement,
A determination of whether the interstate commerce requirement of the Sherman Act has been met requires an evaluation of the particular facts presented in each case. The cases do not provide easily applicable standards for determining whether the necessary relationship with interstate commerce exists. See Rasmussen, supra, 472 F.2d at 527, n.20. We note, however, that the required nexus with interstate commerce has been found lacking in similar cases involving an intrastate market. In Page v. Work, supra, 290 F.2d 323, for example, we held that the alleged restraint of the sale of legal advertising in Los Angeles County was directed solely at a local market and that the alleged monopoly of this market had no substantial effect on interstate commerce. Similarly, in Yellow Cab Co. v. Cab Employers, Local 881, supra, 457 F.2d 1032, we found that a cab company's business was almost wholly intrastate and that a motion for summary judgment on the interstate commerce issue had been properly granted, as the company was not "in commerce" and there was no factual basis to support an "affecting commerce" theory.
We find it unnecessary to catalog the facts of each case cited by the parties, as there emerges no "bright line" dividing the cases in which the required nexus with interstate commerce has been found and those in which it has not. In Rasmussen, supra, 472 F.2d at 526, we noted this difficulty yet emphasized that some line must be drawn "or federal regulation is boundless." To find on the facts presented in this case that the interstate commerce requirement of the Sherman Act has been met would effectively eliminate that requirement from the Act.
Accordingly, we affirm the district court's grant of summary judgment on the ground that the conduct complained of is beyond the scope of the Sherman Act.
McBeath was cited approvingly by Justice Douglas in his dissent in Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, at 212-214 n.9, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974). The majority agreed with Justice Douglas that there is "an identity between the `jurisdictional' issues and certain issues on the merits," if in fact the interstate commerce requirements of Clayton §§ 3 and 7 "are properly deemed issues of subject-matter jurisdiction, rather than simply necessary elements of the federal claims." 419 U.S. at 203 n.19, 95 S.Ct. at 402.
As discussed below, the affidavit included an assertion that it was "common knowledge" that local businesses often receive advertising subsidies from national manufacturers. Appellant therefore argues that this case is indistinguishable from Greenville Publishing Co. v. Daily Reflector, Inc., 496 F.2d 391 (4 Cir. 1974). In that case, however, the "in commerce" theory was based on the uncontroverted fact that the defendant newspaper did carry national advertising.