"Back to DOJ Antitrust Review of Thomson/West Merger Page"
Oral Argument Scheduled for May 19, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
________________
NO. 97-5183
________________
UNITED STATES OF AMERICA, et al.,
Plaintiffs-Appellees,
v.
THE THOMSON CORPORATION, et al.,
Defendants-Appellees,
HYPERLAW, INC.,
Intervenor-Appellant.
________________
On Appeal from a Judgment of the United States District Court
_________
BRIEF OF APPELLANT HYPERLAW, INC.
________________
Lorence L. Kessler
Suite 400
1825 I Street, NW
Washington, DC 20006
(202) 857-8067
Counsel for Appellant
Certificate as to Parties, Rulings, and Related Cases
A. Parties The parties appearing in the action before the District Court
were: Plaintiffs United States of America, the State of California, the
State of Connecticut, the State of Illinois, the Commonwealth of
Massachusetts, the State of New York, the State of Washington, and the
State of Wisconsin; Defendants Thomson Corporation and West Publishing
Company; and, Amici Lexis-Nexis and HyperLaw, Inc.
B. Rulings Under Review This appeal involves rulings by United States
District Judge Paul L. Friedman in Opinions and Orders dated December 23,
1996, February 27, 1997, and March 7, 1997.
C. Related Cases There are no pending cases before this Court involving
these same issues and parties. These same parties were before this Court in
No. 97-5063, which was dismissed, and in appeals filed by Lexis-Nexis (Nos.
96-5309 and 97-5070) and Thomson (No. 97-5062). These same parties are
involved in appeals now before the United States Court of Appeals for the
Second Circuit involving judgments by Judge John Martin of the Southern
District of New York in favor of Matthew Bender and HyperLaw declaring
certain of West's copyright claims to be invalid.
Table of Contents
Certificate 2
Statement of Issues Presented for Review 5
Statute 5
Summary of Argument 6
Statement of the Case 8
Argument 11
I. The District Court erred by approving the consent decree presented
by Appellees, even though the procedural requirements of the Tunney Act
had not been met. 11
II. The District Court erred in interpreting its role in the Tunney Act
process as being little more than a rubber stamp. 24
Conclusion 27
List of Appendix Exhibits 29
Addendum - Text of Tunney Act 31
Table of Authorities
Cases:
United States v. Alex Brown & Sons, Inc., 1996 WL 683608 (S.D.N.Y. 1996)……
20
*United States v. AT&T, 552 F. Supp. 131 (D.D.C. 1982)………………………… 20
*United States v. Central Contracting Co., 537 F. Supp. 571 (E.D. Va.
1983)……15, 27
*United States v. Microsoft , 56 F.3d 1448 (D.C.Cir. 1995) ……………………..25-28
Statute and Legislative History:
*Antitrust Procedures and Penalties Act, 15 U.S.C. Section 16 (Tunney Act)
…… passim
*House Judiciary Committee Report No. 93-1463 (Oct.11, 1974),
1974 U.S.C.C.A.N. 6535 ………………………………………………………… 23
*Testimony of Hon. J. Skelly Wright, before the Subcommittee on Antitrust
and Monopoly of the Committee on the Judiciary, April 5, 1973
…………………………………………………17,19
Other Materials:
Patterson & Joyce, Monopolizing the Law: The Scope of Copyright Protection
for Law Reports and Statutory Compilations, 36 UCLA Law Review 719 (1989)
……………………………..8
Statement of Issues Presented for Review
The following issues are presented for review in this appeal: Whether the
District Court erred with regard to the application of the Antitrust
Procedures and Penalties Act, 15 U.S.C. Section 16 ("Tunney Act") in that:
(a) there was insufficient disclosure as required by the statute; (b) there
was insufficient notice as required by the statute; © there was an
incorrect determination of the limits of the court's powers under the
statute; (d) the consent decree was insufficient as a matter of law and
contrary to public interest; and (e) there was insufficient evidence of
record to allow the court to make the public interest determination it made
under the Tunney Act.
Jurisdiction and Statute
This matter comes before this Court as an appeal from a judgment and order
of the United States District Court for District of Columbia. The pertinent
statutory provision, 15 U.S.C. Section 16, the Antitrust Procedures and
Penalties Act ("Tunney Act"), is set forth in an addendum at the
conclusion of this brief.
Summary of Argument
This appeal challenges the rulings of the District Court which approved a
consent decree allowing the merger of Appellees West Publishing Company and
the Thomson Corporation, two of the nation's largest legal publishers. In
approving the merger, the District Court failed to require that the United
States Department of Justice provide proper notice and disclosure of
critical documents as required by the Tunney Act. Appellant HyperLaw, Inc.
argues below that the requirements of the Tunney Act are clear, and that
the legislative history of the Tunney Act demonstrates that the merger at
issue here is precisely the type of situation in which the Act's notice and
disclosure requirements are necessary in order to protect the public
interest. The United States has argued that the Department of Justice
adequately represents the public in such proceedings. But, the provisions
of the Tunney Act, supported by the testimony of Judge J. Skelly Wright to
the congressional committee that drafted the law, require that the process
of approving mergers must have "light from the public as well as from the
Attorney General" if the process is to function in the public interest. In
this case, the short-circuiting of the Act's notice and disclosure
requirements allowed secret agreements between West Publishing Company and
the next largest legal publisher, Lexis-Nexis, to escape scrutiny.
The public's protection from this sort of thing lies in the Tunney Act,
which embodies the concept of "meaningful public comment" and to allow such
comment to be meaningful, the Act anticipates public disclosure of the
central, industry controlling agreements between the major players.
HyperLaw submits that the District Court failed to address the failure of
the parties to satisfy mandatory statutory procedural requirements--which
the court could not waive. Thus, the court below erred in its narrow
interpretation of the Tunney Act and thereby impaired the public's rights
under the Act. Moreover, the court accepted the government's arguments on
limitations on the court's authority which were patently incorrect. The
statutory language and the legislative history demonstrate that this cause
must be returned to the lower court for additional consideration.
Statement of the Case
In 1988, prior to the merger between Appellee West and Appellee Thomson at
issue here, West and the next largest legal publisher, Lexis-Nexis,
entered into secret cross-licensing agreements--agreements which created
the copyright equivalent of a clandestine "patent pool".
These agreements apparently gave Lexis access to the West citations and
text of both case law and statutes, and (it appears) gave West similar
access to the Lexis database.. West and Lexis-Nexis are the only real
competitors in the on-line legal research market, and they apparently have
an entire series of secret deals. Together they control almost 100% of
that market, a market in which the prices charged for legal research are
more than quadruple the cost of other, similar proprietary databases.
The merger between West and Thomson has the undeniable result of expanding
this copyright cartel to include the other large legal publisher, Thomson,
an entity which had previously been critical of West's arrangements. The
result is that, in the post-merger period, West, Thomson, and Lexis are
able to use the intellectual property pool to the virtual exclusion of all
other legal publishers. The cost of this to the public is significant.
Yet, during the proceedings in the District Court, the Tunney Act
requirements of notice and disclosure that are essential to the public's
understanding of the relationships among these entities, were abandoned.
In its opinion of December 23, 1996, the District Court summarily rejected
HyperLaw's arguments with respect to the Tunney Act requirements.
Subsequently, the District Court approved the consent decree, and granted
HyperLaw the right to intervene in the case for purpose of appeal.
Argument
I. The District Court erred by approving the consent decree presented by
Appellees, even though the procedural requirements of the Tunney Act had
not been met.
The 1988 secret agreements are mentioned prominently in the papers filed
in the court below by the Appellees and by Amicus Curiae Lexis, and were
also mentioned in out-of-court statements made a part of the record.
Appellant HyperLaw believes that these references and statements establish
that the government relied on these documents in its investigation and in
framing the proposed relief. For example, the Lexis-Nexis' Motion to
Intervene and Opposition to the Entry of the Proposed Final Judgment
mentions the agreements several times. In an August 30, 1996 letter from
the General Counsel of The Thomson Corporation to the General Counsel of
Reed-Elsevier, the parent company of Lexis, Thomson states:
Contrary to your assertion that these paragraphs "merely change the
definitions in the existing agreements to reflect the technology changes
from 1988 to 1966," the definitions proposed for the first time in your
letter would amount to major substantive changes in provision that were, I
am told, hotly contested, negotiated and compromised in 1988. For
instance, your proposed new definition of "Online" would omit the
requirement that "long distance telecommunications resources" be the link
between "the system of computers of computer terminals" and the "central
processing unit or units." This is a huge change that would permit
multiple and local uses far beyond what is permissible under the present
agreement. Another example is your proposed deletion of the present
requirement that LEXIS "must include the ability to search for words
included in the database." This is another significant change that would
allow you to create and distribute a separate retrieval by citation only
service such a VERALEX, something not permitted under the present
agreement. (Emphasis added.)
Letter, dated August 30, 1996, from Michael S. Harris to Louis Andreozzi,
Appendix Exhibit A-7. (The reference to the definition of online suggest
that Lexis cannot use star-pagination on the Internet, because the Internet
is not encompassed within the "on-line" definition in the original
agreement. The reference to VERALEX is interesting because VERALEX had
been a Lawyers Cooperative product, using data obtained from Lexis. This
sentence establishes the existence of at least one pre-existing connection
between Thomson and the 1988 secret agreements.)
The same Lexis-Nexis motion includes a letter dated August 8, 1996, from
Michael Jacobs, General Deputy Counsel of Lexis-Nexis to Edward A.
Freidland, Esq. of the Thomson Corporation:
I have not received any substantive comments from you regarding (i) the
amendment modifying the pagination license to, among other things,
effectuate the agreed upon royalty rate reduction that Lou Andreaozzi sent
to Michael Harris two weeks ago, or (ii) the Thomson/Folio agreement.
The August 29, 1996, comments of Lexis-Nexis to the Government state on
Page 10 "The Department claims that Lexis-Nexis' current license fee is 17
cents per thousand characters. That is not correct." The letter
continues:
In fact, the rates set forth in the Proposed Final Judgment are
approximately equal (but may under some circumstances exceed) the current
Lexis royalty rate. It is worth emphasizing that the Lexis license was
entered into only (i) after a Court of Appeal decision had been entered in
favor of West and against Lexis, but (ii) before the Supreme Court's 1991
decision in Feist Publications v. Rural Telephone, which rejected the
principal rationale underlying the Court of Appeals decision which found in
West's favor.
Id. at 11. Furthermore, the comment letter documents in its footnote
public discussion of the 1988 agreements by the Government and by Thomson
in various newspaper articles, and, provides those articles to this court.
Id. at 11, n. 10. These comments were made by not only the Government, but
by Thomson and West.
Likewise, West's chief lawyer on the deal, James Schatz--to whom Shearman &
Sterling deferred on pagination issues--says the new form agreement is "not
analogous at all" to the Lexis agreement with West--"[it is] different in
almost every way--and thus determining what LEXIS might or might not save
is "a very difficult calculation." Moreover, he says, there are drawbacks
to the mandatory licenses for LEXIS, which he would not specify. "But they
have to ask the whole; they cannot cherry-pick," he says. "it would be
something they'd have to look at carefully.
John E. Morris, How West Was Won, The American Lawyer, September 1996 at
81."
Michael S. Harris, General Counsel of Thomson, states in his September 23,
1996 Declaration filed with the court:
7. Second, Lexis-Nexis intends to use the threat of intervention to obtain
concessions in business dealings with Thomson/West unrelated to the
divestiture products. For example, it has already sought to reduce the
license rate on West's star pagination product, which Thomson/West licenses
to Lexis-Nexis. Until today, Lexis-Nexis has refused to discuss an
extension of the Thomson/West license for Shepard's legal citation service.
Not only did HyperLaw repeatedly bring the existence of the 1988 license
agreements to the attention of the Department of Justice from February 1996
on, but so did Lexis. Indeed, according to the Declaration of Michael A
Jacobs dated September 11, 1996, Lexis provided a copy of this agreement to
the Government during its investigation.
Yet, these agreements were never disclosed to the public for purposes of
public comment or for purposes of the court's review of the consent decree.
Moreover, the Department of Justice asserted to the district court that
its investigation had uncovered no documents that were required to be
disclosed. In this regard, the Department of Justice and subsequently the
district court, failed to properly follow the requirements of the Tunney
Act.
As part of the public's right to understand the "deal", the Tunney Act
requires that the DOJ provide access to critical documents.
(b) Consent judgments and competitive impact statements; publication in
Federal Register; availability of copies to the public. Any proposal for a
consent judgment submitted by the United States for entry in any civil
proceeding brought by or on behalf of the United States under the antitrust
laws shall be filed with the district court before which such proceeding is
pending and published by the United States in the Federal Register at least
60 days prior to the effective date of such judgment. Any written comments
relating to such proposal and any responses by the United States thereto,
shall also be filed with such district court and published by the United
States in the Federal Register within such sixty-day period. Copies of such
proposal and any other materials and documents which the United States
considered determinative in formulating such proposal, shall also be made
available to the public at the district court and in such other districts
as the court may subsequently direct. . . .
And it must publish notice of the deal in the Federal Register as well.
. . . .Simultaneously with the filing of such proposal, unless otherwise
instructed by the court, the United States shall file with the district
court, publish in the Federal Register, and thereafter furnish to any
person upon request, a competitive impact statement which shall recite--
(1) the nature and purpose of the proceeding;
(2) a description of the practices or events giving rise to the alleged
violation of the antitrust laws;
(3) an explanation of the proposal for a consent judgment, including an
explanation of any unusual circumstances giving rise to such proposal or
any provision contained therein, relief to be obtained thereby, and the
anticipated effects on competition of such relief;
(4) the remedies available to potential private plaintiffs damaged by
the alleged violation in the event that such proposal for the consent
judgment is entered in such proceeding;
(5) a description of the procedures available for modification of such
proposal; and
(6) a description and evaluation of alternatives to such proposal
actually considered by the United States.
And, in addition, the DOJ must provide newspaper publication.
(c) Publication of summaries in newspapers. The United States shall also
cause to be published, commencing at least 60 days prior to the effective
date of the judgment described in subsection (b) of this section, for 7
days over a period of 2 weeks in newspapers of general circulation of the
district in which the case has been filed, in the District of Columbia, and
in such other districts as the court may direct--
(i) a summary of the terms of the proposal for the consent judgment,
(ii) a summary of the competitive impact statement filed under subsec.
(b),
(iii) and a list of the materials and documents under subsection (b)
which the United States shall make available for purposes of meaningful
public comment, and the place where such materials and documents are
available for public inspection. (Emphasis added.)
Thus, there must be publication of a "summary of the terms of the proposal
for the consent judgment" as they actually are.
Here there were significant changes to the original proposals.. The
assertion by DOJ that since these several changes had "been in the favor of
the public" it did not need to publish as required, simply evaded the
statutory purpose of the publication requirement: DOJ does not get to
decide arbitrarily and exclusively for us what is "good for the public".
The law was written to avoid just this attitude.
In addition, there must be access to the "subsection b" documents before
there can be any informed judgment as to whether the proposed consent
decree is in the public interest. (This should include, but certainly not
be limited to: (a) the 1988 agreements between West and Lexis, and, (b) a
readable copy of the March 1996 agreement and accompanying letters between
Thomson and Lexis-- instead of the unsigned version filed in this action in
illegible form by Thomson, as part of the Harris Affidavit.)
The 1988 secret license agreements between West and Lexis are the central
agreements in an interlocking structure that binds together the legal
information alliance that stood before the district court on September 30,
1996. These 1988 agreements were apparently provided to the Government
during its investigation. According to the Government's own papers, these
documents were used in its negotiation of the License Agreement, and thus
had to have been central to their considerations. To make any real sense
out of the proposed Consent Decree, these 1988 agreements must be made
available for review by the public.
The district court was not without authority to take actions to assure
that the proposed consent decree was in the public interest. It did not
have to depend solely on the representations of the Appellees.
First, the district court can investigate (and allow participation
including discovery) to any extent necessary to determine what the new
agreement actually says or means. It cannot rule on something it does not
understand. Microsoft clearly does not limit this.
Second, the district court can determine whether Justice has any knowledge
of (or any degree of certainty about) the potential effects of the consent
decree. The Court is not stopped in this inquiry.
Defendants will no doubt argue once again, as they did below, that this
will take time. They argued below that district court was duty bound to
issue a quick decision in this case. One need only turn again to the
legislative history to know that the exact opposite was contemplated in
just this type of nationally important, contested situation.
In the routine antitrust settlement situation, there really won't be a lot
of expertise required to approve or disapprove intelligently the proposed
consent decree.
Indeed, in many cases, I would think, and have seen, no opposition filed,
where the case is of great national importance, then time should be
taken--court's time and counsel's time should be taken to study the decree,
to get information from the public concerning the ramifications of the
decree, the anticipated results of the decree and, in my judgment this time
is well spent, even though it might take days, even though it might take
weeks; it could have a trial that would last months and months.
So to suggest that S.782 will not require judicial time and counsel time
would be misleading. In important cases, S.782 would require judicial
time, necessarily so, and I believe rightfully so.
Testimony of Hon. J. Skelly Wright, before the Subcommittee on Antitrust
and Monopoly of the Committee on the Judiciary, April 5, 1973. (In making
these comments, Judge Wright carefully delimited later, personal, comments
from these remarks--which were a direct expression of the views of the
Judicial Conference, which had proposed the changes.) Judge wright was
expressing the intent as directly as possible. The complaint by Judge
Wright, and the intent of the Congress was to avoid the fact that "it was
fair to say that courts 'rubber stamped' proposed consent decrees." Id.
And because the powerful influence of antitrust defendants and the
complexity and importance of antitrust litigation, the public reasonably
asks in many instances whether, in reaching a settlement the government
gave up more than it should have or need have.
Id.
The 1988 agreements were anti-competitive from their inception; the
West-Thomson merger only made this worse by orders of magnitude. The secret
1988 agreements between West and Lexis, the documents which reflect how and
where those control agreements have been administered (and subsequent
modifications) are a sine qua non to even the most basic understanding of
the effects of the proposed consent decree.
By failing to require disclosure of the industry controlling documents as
specifically mandated in the Tunney Act, the Court seriously compromised
the ability of anyone to intelligently understand the situation. There
could be no effective review or opposition to the matters before the
Court--as the Act's disclosure provisions were effectively negated.
The statute not only allows the Court to require disclosure, it mandates
such a disclosure. The parties themselves made constant reference before
this Court--to these as critical, central documents. HyperLaw described
the many references to these 1988 agreements made in connection to the
proposed consent decree--and provides (below) an analysis of the probable
contents of these agreements.
The lower court was presented with two very different views of the meaning
and importance of the Tunney Act procedures. HyperLaw believes that the
legislative history reflects a congressional intent regarding the Tunney
Act procedures that is very much at odds with the narrow view of those
requirements taken by DOJ in this case. Both the District Court and the
DOJ took the position that "this is how we do it now." But their views are
inconsistent with the statute. The intent of the legislature is clear as
well.
The rationale behind the legislation is quite simple. the [Judicial]
Conference [of the United States, Committee on Revision of the Laws] felt
that it would be helpful if the district court could obtain the views of
all persons who might be affected by the proposed decree before it was
finally formulated and ordered.
* * * *
antitrust litigation is very complex litigation. . . .unless they [federal
judges] have the light from outside, the light from the public as well as
from the Attorney General who also, of course represents the public, and
the defendants in interest in the case, there is always the possibility
that a judge, through his inability to grasp the issues and the importance
of concessions being made by both sides in the consent decree, will sign a
decree that is not in the public interest. (Emphasis added.)
Testimony of Hon. J. Skelly Wright, before the Subcommittee on Antitrust
and Monopoly of the Committee on the Judiciary, April 5, 1973.
The statements to Congress by Judge J. Skelly Wright as well as the
language of the relevant committee reports make it clear that the Tunney
Act reforms were intended to bring "sunlight" to a consent decree process
that operated in the "twilight." Yet, DOJ has managed to minimize those
procedures to such an extent that much about this case remains in the
shadows.
How many secret agreements between the new largest legal publisher and the
new second largest legal publisher does it take for the DOJ to regard an
open discussion of such agreements to be an appropriate part of the Tunney
Act procedures?
Clearly, DOJ has become very comfortable treating disclosure of
"determinative" documents as required by the Tunney Act as an exceptional
event rather than the rule. Indeed, DOJ asserts that it has provided
courts with "determinative" documents in only 20 of the last 150 cases
involving such consent decrees. That history surely serves to highlight
how far DOJ's practices have strayed from the reforms intended by the
drafters and primary supporters of the Tunney Act.
DOJ argued below that significant modification can be made in an antitrust
consent decree without triggering any requirement for re-publication or
additional opportunity for public comment under the Tunney Act.
Interestingly, and somewhat surprisinginly, Plaintiffs on the decision in
United States v. AT&T, 552 F. Supp. 131 (D.D.C. 1982). While it is true
that -- prior to the Tunney Act -- decrees in that case were re-written
after publication, a reading of the full 150-page opinion reveals that the
matter was eventually the subject of an unparalleled level of disclosure
despite DOJ's efforts. The AT&T court noted the following about pre-Tunney
Act activities by DOJ--before going on to the really harsh comments about
failure to comply with the Act:
Periodic negotiations between AT&T and the government continued through
1954 and 1955, and by early December, 1955, the government and AT&T had
reached an agreement. 13
Footnote 13 to that decision is quite revealing:
13 The Subcommittee described in some detail how it uncovered evidence of
the negotiating process between AT&T, the Department of Defense, and the
Department of Justice. It appears that, as part of an attempt to
investigate the Justice Department's policies and practices regarding
antitrust consent decrees, the Subcommittee requested the Attorney General
make available the files relating to the negotiation and signing of the
Western Electric consent decree. Subcommittee Report at X-XI. The
Department refused to produce the files, and it also declined to supply
answers to specific questions. According to the Subcommittee (Report at
XIII), "the extent to which the Department of Justice went to withhold
information from the committee in this investigation is unparalleled in the
committee's experience." In its view, the Department's reluctance to
provide information "resulted from a desire to cover up those facts which
the Department considered to be embarrassing." Subcommittee Report at XIII,
42.
In the post-Tunney Act period, this issue of disclosure and comment was
squarely before the Court--and what Judge Greene said is as true today as
in 1980-83.
When they filed the present proposed decree, the government and AT&T took
the position that the Tunney Act did not apply because (1) their submission
in the District Court for the District of New Jersey was merely a
"modification" of an existing consent judgment, as distinguished from the
entry of a judgment, 51 and (2) no consent judgment at all was filed in
this Court, but only a dismissal of the pending action.52
- - - - - - - - - - - - - - - - - -Footnotes
51 The theory apparently was that the Tunney Act does not apply to such
modifications of existing decrees because most modifications are relatively
minor and of interest only to the parties involved. There appears to be
conflicting law on this subject. Compare United States v. Motor Vehicle
Manufacturers Ass'n., 1981-2 Trade Cas. para. 64,370 (C.D. Cal. 1981) with
United States v. Swift & Co., 1975-1 Trade Cas. para. 60,201 (N.D. Ill.
1975). Nevertheless, the government recognizes that when a major
modification of an existing decree is proposed, the Tunney Act procedures
"help facilitate thorough exposition and review." See Letter of Assistant
Attorney General William F. Baxter to the Court (January 18, 1982). To this
end, Tunney Act or comparable procedures have been followed at least in
cases where major modifications of decrees have been made. See note 67
infra.
- - - - - - - - - - - - - - - - -End Footnotes
In the opinion of this Court, that reasoning may most charitably be
described as disingenuous. If that reasoning were deemed acceptable, the
parties here -- and in similar antitrust actions -- could subvert the
clearly expressed will of Congress by a mere act of labeling. The Tunney
Act was designed to expose to public scrutiny and to a judicial public
interest determination the settlements negotiated between the Department of
Justice and the various antitrust defendants. The instant agreement,
whatever the label the parties chose to affix, settled two such lawsuits.
That settlement, moreover, not only disposed of what is the largest and
most complex antitrust action brought since the enactment of the Tunney Act
but the settlement itself raises what may well be an unprecedented number
of public interest questions of concern to a very large number of
interested persons and organizations. See note 60 infra. As the Court made
clear from the very day the settlement was announced, it was not and is not
prepared to allow this circumvention of the congressional purpose..[n53
omitted.]
Id. at 144-145. HyperLaw believes this statement is a full and complete
elucidation of the concept. The decision in AT&T surely does not support
Plaintiffs' arguments for limited disclosure.
HyperLaw believes that the district court's failure to require revised
notice and disclosure of documents, as required by the Tunney Act, impairs
the public's rights under the Act. This has been exacerbated by the
position of the Justice Department that the controlling documents are
likewise unimportant to an understanding of what is happening. This was
not the intent of the Tunney Act
The added language expresses, further, the intentions of not replacing one
mechanical procedure with another of similar nature, of emphasizing the
truism that in examining proposals of settlements of particular cases, case
by case judicial scrutiny is necessary; and, of insuring that in remedying
the abuse of judicial rubber stamping of proposed consent decrees, flexible
judicial procedures evolve
House Judiciary Committee Report No. 93-1463 (October 11, 1974), 1974
U.S.C.C.A.N. 6535, 6543. HyperLaw wrote the following with regard to what
this Court and the public do and do not know:
Indeed, those disclosure provisions are especially important in a
situation such as this one where the final transaction that may be approved
by the Court is going to be substantially different than the original
proposed decree of June, 1996. HyperLaw suggests that the public reaction
to the original announcement of 1996 proposed decree had stated what now
appears to be the arrangement. That is, that
Thomson and West will transfer all of the divested products to Reed
Elsevier (Lexis-Nexis) now the second largest legal publisher. Smaller
publishers will be unable to bid on any single divested products. Thomson
and West will seek approval of the court of a mutual anti-trust release.
All basic operative documents will be either filed under seal, or withheld
from the Court.
In the recent January 28, 1997 submission, the Joint Status Report of
Defendant Thomson and West and Amicus Curiae Reed Elsevier (Lexis-Nexis),
it appears that West (Thomson) and Lexis (Reed Elsevier) are seeking to
obtain the blessing of a federal court to an anti-competitive arrangement.
Now, in 1997, Reed Elsevier and Thomson state in their Joint Status
Report:
In conjunction with the Definitive Agreements, the parties also agreed on a
form of mutual antitrust release to be executed by both parties at the
closing of the Definitive Agreements (the "Closing").
HyperLaw's (first, unamended) Motion for Leave to Intervene, February 5,
1997. Since the situation has worsened by an order of magnitude. There
has been yet another completely new description of what it is that the
parties intend, what the license agreements will do, how the present form
will be changed to meet new concerns and how this will (or will not) affect
the industry. The lower court and counsel present got a week or two to
consider these complete changes--the public and smaller publishers got no
meaningful opportunity whatsoever. This was over before the transcript of
that conference was even available!
Counsel for Thomson and Reed Elsevier, in bringing the anti-trust release
to the Court sought the district court's blessing of their back-room deal,
which appears to be merely a renegotiation of their prior 1988 and 1996
back-room deals.
In short, HyperLaw submits that the district court was manuevered into
approving something that it could not even begin to fully understand based
on the paucity of information it had received. And if the court is
ignorant of these things, the public is far behind--the public doesn't even
know what the issues are, much less the facts relating to those issues.
Moreover, even if the court below thought it understood, the lack of input
from the public meant that no critical comment occurred.
II. The District Court erred in interpreting its role in the Tunney Act
process as being little more than a rubber stamp.
Both the Appellees and the court below seem to believe that this Court's
decision in United States v. Microsoft, 56 F.3d 1448 (D.C. Cir. 1995), has
turned the district courts into a powerless rubber stamp. The result of
this is that there are now several new agreements as well as several new,
major portions of the consent decree between both the government and the
parties and between Thomson/West and Lexis/Reed-Elsevier--which have not
been the subject of any informed public notice or comment. There have been
no hearings, no examinations, no gathering and testing of evidence before
the public. There has not even been an assertion by the DOJ that it
understands the possible effects of these new schemes. (HyperLaw will not
here adduce the reams of negative comments and its documentation of
negative effects which are already occurring--as they are outside of the
record, but it asks that it be allowed to respond in detail should the
opposition briefs even begin to imply that this has been anything other
than a disaster for consumers.)
The intent of Congress, expressed in the Tunney Act, was not served in any
way by having a federal district court once again preside over an secret
market splitting agreement which continues forward the original 1988
agreement.
Mindless application of Microsoft which does not take into account that
the facts in that case were a universe away form the situation presented
here. The Microsoft ruling is limited to a set of facts which may not
always be present--and when those facts are not present, there must be
either an exception to (or a refinement of) Microsoft. If any case calls
for that interpretation or refinement it is this one.
Microsoft does not anticipate a three-giant, controlled industry becoming
a two-giant industry where, as is the case here, 100% of the entire on-line
market would be shared by those contracting two entities--and where the
Justice Department simply refuses to release any of the relevant
information. What could have been the meaning of that Act if both the
Court and the public can be kept completely in the dark?
The mutual antitrust release between Thomson/West and Lexis/Reed Elsevier
merely underscores the problem. The District Court stated in its opinion
that there are additional points not reachable by that Court which others
will have to pursue in other forums and at other times. However,
additional action by the district court was mandated even under its
restrictive reading of the statute.
To conclude otherwise is to adopt the pre-Tunney Act "rubber stamp" that
Judge Wright and the Congress sought to avoid.
Finally, if this Court intended to create a complete carte blanche for the
Justice Department, one in which it can repeatedly refer to central,
critical, and finally determinative documents in virtually every pleading
filed, state that it is making its decisions completely or principally on
those specific documents, and then certify that there are no such
documents, then this Court miscomprehended the congressional intent in the
Tunney Act. HyperLaw believes that it is the absurd extension of a
doctrine, rather than the doctrine itself which has created the instant
error.
To have the Justice Department and the parties repeatedly discuss the
1988, 1996 and now the 1997 documents as being the controlling documents in
pleadings and to then certify that there were no critical documents truly
makes an ass of the law. Trying to convince the public that this is what
the Tunney Act intended despite detailed provisions and an extensive
congressional history is not only incorrect, it is offensive.
There is a limit to the fantasy a court can accept and still maintain the
stautory mandate. United States v Central Contracting Co., 537 F Supp 571
(E.D.Va. 1982). HyperLaw strongly urges the Court to attempt to find any
meaning in the "sunshine legislation" of the Tunney Act in the face of
being asked to "blandly accept government certification" that the emperor
does in fact have clothes on--and that they are wonderful, magnificent
ones.
To refuse to enforce the Tunney Act under these facts would be an error of
law under this Court's Microsoft decision--a wild extension of a doctrine
to its most extreme and absurd limit.
Conclusion
As discussed above, the lower court was being asked to approve a merger
and divestiture arrangement and possibly other agreements when the public
cannot even begin to understand the true relationships here because of the
failure to follow the notice and disclosure requirements of the statute. .
This is the exact reason for the Tunney Act disclosure provisions. If this
is not a situation for applying the requirements of the Act, it is
difficult to imagine what would be. Appellant HyperLaw urges this Court to
remand this matter to the District Court for further proceedings in
conformance with the Tunney Act.
Dated: January 28, 1998
RESPECTFULLY SUBMITTED,
______________________________________
Lorence L. Kessler (D.C. Bar # 203521)
1825 I Street, N.W., Suite 400
Washington, D.C. 20006
202-857-8067
Paul J. Ruskin
72-08 243rd St.
Douglaston, NY 11363
(718) 631-8834
Carl J. Hartmann
69 Sussex St.
Jersey City, NJ 07302
(201) 434-1738
Counsel for Appellant HyperLaw, Inc.
APPENDIX EXHIBITS
Exhibit A-1 Opinion dated August 5, 1996, Matthew Bender & Company and
HyperLaw v. West.
Exhibit A-2 Excerpt from Docket Sheet, West Publishing Company v. Mead Data
Central, Inc., 4-85-931, United States District Court, District of
Minnesota.
Exhibit A-3 Article, How West Was Won, American Lawyer, September, 1996.
Exhibit A-4 HyperLaw Motion For Summary Judgment, Matthew Bender & Company
Inc. and HyperLaw v. West Publishing Company.
Exhibit A-5 Summary Judgment for Matthew Bender and HyperLaw in the SDNY
action relating to West's copyright claims with regard to its citations.
Exhibit A-6 Judgment rendered after the bench trial in favor of HyperLaw in
the SDNY action relating to West's copyright claims with regard to the text
of judicial decisions appearing in its reporters.
Exhibit A-7 Letter, dated August 30, 1996, from Michael S. Harris to Louis
Andreozzi, Appendix Exhibit A-7.
HyperLaw Exhibit B- Letters, from HyperLaw to Attorney General Reno and
Lawrence Fullerton dated September 26, 1996 re amicus brief.
HyperLaw Exhibit C Affidavit of Kendall F. Svengallis dated October 7,
1996.
HyperLaw Exhibit D Advertisement, "Only a select few can discuss the
specifics of a case with each other", Lawyers Cooperative Publishing
Advertisement, Law Technology Product News, September 1994.
HyperLaw Exhibit E Complaint, Mead Data Central, Inc. v. West Publishing
Company, 76-Civ. 3618 W.C.C., United States District Court, Southern
District of New York, August 16, 1976 (Antitrust including FLITE and JURIS
and spurious copyright claims to text of court opinions.)
HyperLaw Exhibit F Complaint, Mead Data Central, Inc. v. West Publishing
Company, C-3-87-426, United States District Court, Southern District of
Ohio, August 18, 1987. (Antitrust including control of statutes and
opinions, FLITE and JURIS, Fifth and Eleventh Circuits, spurious copyright
claims to text of court opinions.)
HyperLaw Exhibit G Docket Sheet, West Publishing Company v. Mead Data
Central, Inc., 4-85-931, United States District Court, District of
Minnesota.
HyperLaw Exhibit H Docket Sheet, West Publishing Company v. Mead
Corporation, Mead Data Central, Inc., Civ. 4-88-142, United States District
Court, District of Minnesota.
HyperLaw Exhibit I Complaint, West Publishing Company v. Mead Corporation,
Mead Data Central, Inc., Civ. 4-88-142, United States District Court,
District of Minnesota, February 22, 1988. (Antitrust relating to Lexis
exclusive access to regulatory material and copyright infringement for
copying from West reporters.)
HyperLaw Exhibit J Letter, dated October 10, 1996, from Carl J. Hartmann,
counsel for HyperLaw, to Craig Conrath, Esq. re disclosure of documents.
HyperLaw Exhibit K Letter, dated March 13, 1995, from Carl J. Hartmann to
Joseph Musilek, counsel for West, confirming, inter alia, that a copy of
the 1988 settlement agreements were not in the possession of the Minnesota
United States District Court supervising the settlement.
HyperLaw Exhibit L Draft Motion to Intervene in Minnesota United States
District Court.
HyperLaw Exhibit M Letter Dated October 3, 1996 from Joel I. Klein, Deputy
Assistant Attorney General to Alan D. Sugarman declining to file an amicus
brief in Matthew Bender and HyperLaw v. West in support of HyperLaw's
motion for a determination that West copyrights are not infringed when a
competing publisher keys-in and publishes the text of court opinions from a
West case reporter, but does not key-in the West headnotes and syllabi.
HyperLaw Exhibit N HyperLaw Comment Letters Filed Under the Tunney Act with
United States Department of Justice, N-1 June 26, 1996 to Assistant
Attorney General Anne Bingaman (not in comment letters filed by DOJ), N-2
June 26, 1996 to Craig Conrath, N-3 June 28, 1996 to Craig Conrath, N-4
September 3, 1996 to Craig Conrath.
HyperLaw Exhibit O Tax Analysts' Memorandum in Support of Motion For
Reconsideration of Leave to Participate As Amicus Curiae
Pertinent Statute
TITLE 15. COMMERCE AND TRADE
CHAPTER 1. MONOPOLIES AND COMBINATIONS IN RESTRAINT OF TRADE
15 USCS @ 16 (1997)
@ 16. Judgments
(a) Prima facie evidence; collateral estoppel. A final judgment or decree
heretofore or hereafter rendered in any civil or criminal proceeding
brought by or on behalf of the United States under the antitrust laws to
the effect that a defendant has violated said laws shall be prima facie
evidence against such defendant in any action or proceeding brought by any
other party against such defendant under said laws as to all matters
respecting which said judgment or decree would be an estoppel as between
the parties thereto: Provided, That this section shall not apply to consent
judgments or decrees entered before any testimony has been taken. Nothing
contained in this section shall be construed to impose any limitation on
the application of collateral estoppel, except that, in any action or
proceeding brought under the antitrust laws, collateral estoppel effect
shall not be given to any finding made by the Federal Trade Commission
under the antitrust laws or under section 5 of the Federal Trade Commission
Act [15 USCS @ 45] which could give rise to a claim for relief under the
antitrust laws.
(b) Consent judgments and competitive impact statements; publication in
Federal Register; availability of copies to the public. Any proposal for a
consent judgment submitted by the United States for entry in any civil
proceeding brought by or on behalf of the United States under the antitrust
laws shall be filed with the district court before which such proceeding is
pending and published by the United States in the Federal Register at least
60 days prior to the effective date of such judgment. Any written comments
relating to such proposal and any responses by the United States thereto,
shall also be filed with such district court and published by the United
States in the Federal Register within such sixty-day period. Copies of such
proposal and any other materials and documents which the United States
considered determinative in formulating such proposal, shall also be made
available to the public at the district court and in such other districts
as the court may subsequently direct. Simultaneously with the filing of
such proposal, unless otherwise instructed by the court, the United States
shall file with the district court, publish in the Federal Register, and
thereafter furnish to any person upon request, a competitive impact
statement which shall recite--
(1) the nature and purpose of the proceeding;
(2) a description of the practices or events giving rise to the alleged
violation of the antitrust laws;
(3) an explanation of the proposal for a consent judgment, including an
explanation of any unusual circumstances giving rise to such proposal or
any provision contained therein, relief to be obtained thereby, and the
anticipated effects on competition of such relief;
(4) the remedies available to potential private plaintiffs damaged by
the alleged violation in the event that such proposal for the consent
judgment is entered in such proceeding;
(5) a description of the procedures available for modification of such
proposal; and
(6) a description and evaluation of alternatives to such proposal
actually considered by the United States.
(c) Publication of summaries in newspapers. The United States shall also
cause to be published, commencing at least 60 days prior to the effective
date of the judgment described in subsection (b) of this section, for 7
days over a period of 2 weeks in newspapers of general circulation of the
district in which the case has been filed, in the District of Columbia, and
in such other districts as the court may direct--
(i) a summary of the terms of the proposal for the consent judgment,
(ii) a summary of the competitive impact statement filed under subsection
(b),
(iii) and a list of the materials and documents under subsection (b)
which the United States shall make available for purposes of meaningful
public comment, and the place where such materials and documents are
available for public inspection.
(d) Consideration of public comments by Attorney General and publication of
response. During the 60-day period as specified in subsection (b) of this
section, and such additional time as the United States may request and the
court may grant, the United States shall receive and consider any written
comments relating to the proposal for the consent judgment submitted under
subsection (b). The Attorney General or his designee shall establish
procedures to carry out the provisions of this subsection, but such 60-day
time period shall not be shortened except by order of the district court
upon a showing that (1) extraordinary circumstances require such shortening
and (2) such shortening is not adverse to the public interest. At the close
of the period during which such comments may be received, the United States
shall file with the district court and cause to be published in the Federal
Register a response to such comments.
(e) Public interest determination. Before entering any consent judgment
proposed by the United States under this section, the court shall determine
that the entry of such judgment is in the public interest. For the purpose
of such determination, the court may consider--
(1) the competitive impact of such judgment, including termination of
alleged violations, provisions for enforcement and modification, duration
or relief sought, anticipated effects of alternative remedies actually
considered, and any other considerations bearing upon the adequacy of such
judgment; (2) the impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the violations set
forth in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
(f) Procedure for public interest determination. In making its
determination under subsection (e), the court may--
(1) take testimony of Government officials or experts or such other
expert witnesses, upon motion of any party or participant or upon its own
motion, as the court may deem appropriate;
(2) appoint a special master and such outside consultants or expert
witnesses as the court may deem appropriate; and request and obtain the
views, evaluations, or advice of any individual, group or agency of
government with respect to any aspects of the proposed judgment or the
effect of such judgment, in such manner as the court deems appropriate;
(3) authorize full or limited participation in proceedings before the
court by interested persons or agencies, including appearance amicus
curiae, intervention as a party pursuant to the Federal Rules of Civil
Procedure, examination of witnesses or documentary materials, or
participation in any other manner and extent which serves the public
interest as the court may deem appropriate;
(4) review any comments including any objections filed with the United
States under subsection (d) concerning the proposed judgment and the
responses of the United States to such comments and objections; and
(5) take such other action in the public interest as the court may deem
appropriate.
(g) Filing of written or oral communications with the district court. Not
later than 10 days following the date of the filing of any proposal for a
consent judgment under subsection (b), each defendant shall file with the
district court a description of any and all written or oral communications
by or on behalf of such defendant, including any and all written or oral
communications on behalf of such defendant, or other person, with any
officer or employee of the United States concerning or relevant to such
proposal, except that any such communications made by counsel of record
alone with the Attorney General or the employees of the Department of
Justice alone shall be excluded from the requirements of this subsection.
Prior to the entry of any consent judgment pursuant to the antitrust laws,
each defendant shall certify to the district court that the requirements of
this subsection have been complied with and that such filing is a true and
complete description of such communications known to the defendant or which
the defendant reasonably should have known.
(h) Inadmissibility as evidence of proceedings before the district court
and the competitive impact statement. Proceedings before the district
court under subsections (e) and (f) of this section, and the competitive
impact statement filed under subsection (b) of this section, shall not be
admissible against any defendant in any action or proceeding brought by any
other party against such defendant under the antitrust laws or by the
United States under section 4A of this Act [15 USCS @ 15a] nor constitute a
basis for the introduction of the consent judgment as prima facie evidence
against such defendant in any such action or proceeding.
(i) Suspension of limitations. Whenever any civil or criminal proceeding
is instituted by the United States to prevent, restrain, or punish
violations of any of the antitrust laws, but not including an action under
section 4A [15 USCS @ 15a], the running of the statute of limitations in
respect of every private or State right of action arising under said laws
and based in whole or in part on any matter complained of in said
proceeding shall be suspended during the pendency thereof and for one year
thereafter: Provided, however, That whenever the running of the statute of
limitations in respect of a cause of action arising under section 4 or 4C
[15 USCS @@ 15, 15c] is suspended hereunder, any action to enforce such
cause of action shall be forever barred unless commenced either within the
period of suspension or within four years after the cause of action
accrued.
CERTIFICATE OF SERVICE
I hereby certify that on January 28, 1998, I caused copies of HyperLaw's
Appellant's Brief to be served on following counsel by U.S. Express Mail,
postage pre-paid.
John P. Fonte, Esq.
U.S. Department of Justice
Appellate Section
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001
Wayne D. Collins, Esq.
Attorney for The Thomson Corporation
Shearman & Sterling
Citicorp Center
New York, New York 10022
______________________________