---X. Plaintiffs, Civ. No (Weinstein, J.) -against- MEMORANDUM OF LAW OF THE STATE C F NEW YORK AS AMICUS CURIA.:,

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1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK BARTHOLDI CABLE COMPANY, INC., formerly known as LIBERTY CABLE COMPANY, INC. and LVE, L.L.C., ---X Plaintiffs, Civ. No (Weinstein, J.) -against- TIME WARNER, INC., TIME WA,rtNER ENTERTAINMENT, L.P., TIME WARNER CABLE OF NEW YORK CITY, AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION, TIM - WARNER CABLE, INC., TIME WARNER CABLE GROUP, PARAGON COMMUNICATIONS, doing business as PARAGON CABLE MANHATTAN, QUEENS INNER UNITY CABLE SYSTEM, INC., BROOKLYN-QUEENS CABLE COMPANY, GERALD LENIN, and TURNER BROADCASTING SYSTEM, INC., Defendants. MEMORANDUM OF LAW OF THE STATE C F NEW YORK AS AMICUS CURIA.:, DENNIS C. VACCO Attorney General of the State of New York STEPHEN D. HOUCK Assistant Attorney General in Charge Antitrust Bureau 120 Broadway, Suite 2601 New York, N.Y (212) Robert L. Hubbard Richard L. Schwartz Assistant Attorneys General Of Counsel

2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK X BARTHOLDI CABLE COMPANY, INC.,. formerly known as LIBERTY CABLE COMPANY, INC. and LVE, L.L.C.,. -against- Plaintiffs, Civ. No (Weinstein, J.) TIME WARNER, INC., TIME WARNER ENTERTAINMENT, L.P., TIME WARNER CABLE OF NEW YORK CITY, AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION, TIME WARNER CABLE, INC., TIME WARNER CABLE GROUP, PARAGON COMMUNICATIONS, doing business as PARAGON CABLE MANHATTAN, QUEENS INNER UNITY CABLE SYSTEM, INC., BROOKLYN-QUEENS CABLE COMPANY, GERALD LEVIN, and TURNER BROADCASTING SYSTEM, INC., Defendants X PRELIMINARY STATEMENT This memorandum is submitted by the Attorney General o= the State of New York as amicus curiae in support of plaintiffs Bartholdi Cable Company, Inc. and LVE, L.L.C. This memorandum addresses only questions of law concerning the proper construction of N.Y. Gen. Bus. Law (the "Donnelly Act"), New York State's antitrust law, and only to the extent raised by Point I T of the Memorandum of Law in Support of Defendants' Motion to Dismiss the- Amended Complaint, or in the Alternative, For a More Definite Statement dated September 20, 1996 ("Defendants' Mem."). Point II incorrectly contends that attempted monopolization, although violating federal antitrust law, does not violate the Donnelly Act and that, thus, plaintiffs' attempted monopolization claim under the Donnelly Act should be dismissed as a matter of law.. 1

3 INTEREST OF THE AMICUS The Attorney General is New York State's chief antitrust law enforcer. He represents the State, other governmental units, and the people of the State in actions to secure injunctive and monetary relief for violations of the Act, Donnelly Act H 342-a, 342-b, 342, has exclusive authority to bring criminal antitrust actions, Donnelly Act 341, and has broad investigatory powers, Donnelly Act 343. The Attorney General has similar rights under federal antitrust law. 15 U.S.C. 15 (right of the State to sue for damages in its proprietary capacity) ; 15 U.S.C. 15c (authority of Attorney General to sue for damages on behalf of New York residents) ; Hawaii v. Standard Oil Co., 405 U.S. 251, (1972) (authority to seek injunctive relief on behalf of the general economy of the state). Using these powers, the attorney General plays an important role in preventing anticompetitive conduct and redressing harm resulting therefrom. E.g., New York v. Reebok, 96 F.3d 44 (2d Cir. 1996) ; People v. Rattenni, 81 N.Y.2d 166, 613 N.E.2d 155, 597 N.Y.S.2d 280 (1993) ; New York v. Henderson Brothers Inc., 840 F.2d 1065 (2d Cir.), cert. denied, 488 U.S. 848 (1988). The Attorney General's unique statutory role and expertise in New York State's competition policy justify consideration of his amicus curiae submission in this action. The Attorney General has that the antitrust laws are underlying legislative policy. a substantial interest in ensuring interpreted in accord with their The Attorney General respectfully

4 requests consideration of this memorandum because the issues involved herein are important to the proper interpretation and application of state antitrust law.' ARGUMENT Defendants Have Not Carried Their Burden of Showing That the Donnelly Act Differs from Federal Precedent As to Attempted Monopolization Claims Defendants argue that plaintiffs' attempted monopolization claims under the Donnelly Act shbiuld be dismissed as a matter of law because Donnelly Act 340(l) and 340(5) do "not refer" to "attempts." Defendants' Mem. at 16. Contrary to defendants' strained argument, the plain language of the Donnelly Act makes clear that it reaches attempted monopolization claims. Moreover, the argument fails to consider, let alone explore, the general rule that federal precedent -- which reaches attempted monopolization claims -- applies unless a contrary legislative intent is established. Use of the statutory term "a ttempt" is not a magical prerequisite to Donnelly Act coverage of attempted monopolization claims. The legislature plainly conveyed its intent to create civil liability for acts falling short of actual monopolization without using the word "attempt." Section 340 repeatedly uses the In addition, the Attorney General has repeatedly investigated antitrust concerns in the cable industry. For example, a recent investigation resulted in a settlement designed to allow the emergence of competition to traditional cable television systems : direct broadcast satellite ("DBS") systems. New York v. Primestar Partners L.P., Trade Cas. (CCH) 70,403 (S.D.N.Y. 1993) ; see Mark Robichaux, Once a Laughingstock, Direct-Broadcast TV Gives Cable a Scare, Wall St. J., Nov. 7, 1996, at Al.

5 word "may" or similar language to modify the substantive standard for establishing a monopolization claim and to make illegal conduct that "may" result in a monopoly. See Donnelly Act 340(l) ("A monopoly... [that] is or may be established or maintained") (emphasis added) ; id. ("Competition or the free exercise of any activity... [that] is or may be restrained") (same) ; id. ("For the purpose of establishing or maintaining any such monopoly or unlawfully interfering with the free exercise of any activity.. [that] is or may be restrained") (same). Defendants cite some of this language, Defendants' Mem. at 16, but apparently do not recognize or choose to ignore its significance. isolation, doctrine. Moreover, the Donnelly Act cannot properly but must be construed in light of federal be read in [T] he Donnelly Act... should generally be construed in light of Federal precedent and given a different interpretation only where State policy, differences in the statutory language or the legislative history justify such a result. antitrust X.L.O. Concrete Corp. v. Rivergate Corp., 83 N.Y.2d 513, 518, 634 N.E.2d 158, 611 N.Y.S.2d 786 (1994) (internal quotation marks and citations omitted). Under People v. Rattenni, 81 N.Y.2d 166, 613 N.E.2d 155, 597 N.Y.S.2d 280 (1993), the party urging a divergence in the meaning of state and federal antitrust law carries the burden of supporting such different meanings. See id. at 172, 613 N.E.2d at 159, 597 N.Y.S.2d at 284 (Defendants "have presented no persuasive reason grounded in statutory language, legislative history or policy for us to depart from the Supreme Court's

6 interpretation of the Sherman Act."). See generally Burton Agata, An Overview_ of Substantive Law Under the Donnelly Act, in. Antitrust Law in New York State 31, (Robert L. Hubbard, ed., N.Y.S. Bar Association 1995). The New York State Court of Appeals has applied precisely this analytical framework to interpret the anti-monopoly provisions of the Donnelly Act. In Columbia Gas. Inc. v. New York State Electric & Gas Corp., 28 N.Y.2d 117, 268 N.E.2d 790, 320 N. Y.S.2d 57 (1971), the court considered a claim that the defendant "'is abusing monopolistic position in the lighting market to restrict its the freedom of municipalities to choose among competing energy sources."' Id. at 127, 320 N.Y.S.2d at 65. Citing and relying on federal precedent under section 2 of the Sherman Act, the court remanded for "a comprehensive rule of reason inquiry," precisely what is appropriate under section 2. Id. a t (citing United States v. Griffith, 334 U.S. 100, 107 (1948) and other Suoreme Court cases construing section 2) ; see, e. g., X.L.O. Concrete Corp. v. Rivergate Corp., 83 N.Y.2d 513, , 634 N.E.2d 158, 611 N.Y.S.2d 786 (1994) (citing federal precedent for the antitrust illegality defense under the Donnelly Act). This general rule mandates the conclusion that claims of attempted monopolization are actionable under the Donnelly Act. Defendants properly concede that federal precedent prohibits attempted monopolization. Defendants' Mem. a t 16. Thus, the Donnelly Act also prohibits attempted monopolization because defendants have not carried their burden of establishing why the

7 Donnelly Act should be interpreted differently. To the extent the memorandum decision Bevilacaue v. Ford Motor Co., 125 A.D.2d 516, 519, 509 N. Y.S.2d 595 (2d Dep't 1986) is to the contrary, it should be rejected. The language purportedly construing the Donnelly Act as to attempted monopolization is dicta because the challenged claim (the second cause of action) was asserted only as a matter of common law. Id. at 517, 509 N.Y.S.2d at 598. Moreover, as with defendants' arguments, that portion of Bevilacaue is totally devoid of any reasoned analysis (such as an application of the X.L.O. rule). It is no accident that in the ten years since Bevilacque was issued, the opinion has never be cited by any court for the proposition the defendants seek to advance here. On the contrary, the Second Department itself has recently refused to dismiss, for failure to state a cause of actic-, an attempted monopolization claim under the Donnelly Act. Anan-` v. Soni, 215 A.D.2d 420, 626 N.Y.S.2d 830 (2d Dep't 1995). CONCLUSION For the reasons set forth above, claims of attempted monopolization are actionable under the Donnelly Act. Respectfully submitted, DENNIS C. VACCO Attorney General for,the State of fnew Yor rlh\amc\barthold.brf L y : Robert L. Hubbard (RH 3821) Assistant Attorney General Antitrust Bureau 120 Broadway, Suite 2601 New York, N.Y

8 CERTIFICATE OF SERVICE This is to certify that, on November 8, 1996, the undersigned served copies of the attached MEMORANDUM OF LAW OF THE STATE OF NEW YORK AS AMICUS CURIAE dated November 8, 1996, by causing same to be telecopied to them and in addition to be deposited in sealed envelopes, with first class postage prepaid thereon, in an official repository of the United States Postal Office, addressed to the last known addresses of counsel for all parties as follows : Lloyd Constantine Stuart W. Gold Constantine & Partners Cravath, Swaine & Moore 909 Third Avenue _ Worldwide Plaza New York, New York Eighth Avenue New York, New York Dated : New York, New York November 8, 1996