Access Telecom, Inc. v. MCI Telecommunications Corp.
1999 U.S. App. LEXIS 31538, 45 Fed. R. Serv. 3d 1089, 197 F.3d 694 (1999)
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Rule of Law:
Under Texas choice-of-law principles, a contract is not rendered unenforceable for a tortious interference claim merely because performance may violate the economic protectionist laws of another country. Furthermore, U.S. antitrust laws apply to foreign conduct that has a direct, substantial, and reasonably foreseeable effect on a U.S. export market, provided that market is legal under the foreign country's laws.
Facts:
- During 1993-1994, Access Telecom, Inc. (ATI), a Texas-based company, offered a 'reorigination' phone service to customers in Mexico.
- The service allowed Mexican customers to bypass the high rates of Teléfonos de México (Telmex), the state-sponsored monopoly, by routing calls through ATI's Texas switch.
- ATI used toll-free numbers provided by MCI, which in turn leased the physical phone lines from Telmex.
- ATI operated without a permit from the Mexican government, believing its service as an exporter of U.S. services did not require one under then-existing Mexican law.
- In 1994, Telmex began disconnecting 800 numbers used by companies like ATI to protect its monopoly.
- MCI allegedly provided Telmex with a list of ATI’s specific phone numbers, and an internal MCI email instructed an employee to 'take down' ATI's numbers.
- Telmex disconnected ATI's phone numbers in October 1994, causing ATI's business, which was earning approximately $3 million annually, to collapse.
- When ATI attempted to secure alternative service from AT&T, MCI allegedly informed Telmex, which then took steps to ensure AT&T could not provide service to ATI.
Procedural Posture:
- MCI commenced arbitration against ATI to recover payment for phone services and received an award of nearly $1.2 million.
- ATI sued Telmex, SBC, and MCI in Texas state court, alleging breach of contract, tortious interference, and antitrust violations.
- The defendants removed the case to the U.S. District Court for the Western District of Texas.
- The district court granted Telmex's motion to dismiss for lack of personal jurisdiction.
- ATI moved for partial summary judgment on the issue of the lawfulness of its activities, which the district court denied.
- The district court granted summary judgment in favor of defendants MCI and SBC on all of ATI’s claims.
- ATI appealed the dismissal of its tortious interference and antitrust claims and the dismissal of Telmex to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
Does the alleged illegality of a U.S. company's telecommunications export service under the laws of a foreign country preclude its claims for tortious interference and antitrust violations against competitors who allegedly conspired to destroy its business?
Opinions:
Majority - Judge Higginbotham
No. The alleged illegality of ATI's service under Mexico's protectionist laws does not automatically bar its claims for tortious interference and antitrust violations. First, for the tortious interference claim, the court determines that under Texas's 'most significant relationship' test, Texas law governs the validity of ATI's contracts. The court predicts the Texas Supreme Court would not void a contract under the rule against contracts made 'with a view of violating the laws of another country' where the foreign law in question is merely economic protectionism not demanding of comity. Furthermore, because Mexican law was unclear at the time, ATI could not have formed the requisite intent to violate it. Second, for the antitrust claim, the court finds that the destruction of ATI's business and about 80 similar companies had a 'direct, substantial, and reasonably foreseeable effect' on the U.S. export market for these services. While an antitrust claim requires a legal export market, the court conducts a de novo review of Mexican law from 1993-1994 and concludes ATI's service was, in fact, legal because the law only required permits for entities that installed, operated, AND exploited infrastructure, which ATI did not do. Therefore, summary judgment against ATI was improper on both claims.
Analysis:
This decision provides a significant framework for U.S. companies operating in international markets with complex or protectionist regulatory schemes. It limits the ability of competitors to use the 'illegality defense' in tortious interference claims, distinguishing between foreign laws that demand respect (comity) and those that are purely anti-competitive. The ruling also affirms that U.S. courts will conduct their own rigorous analysis of foreign law to determine the legality of a U.S. export market for antitrust purposes, rather than deferring to a competitor's or even a foreign agency's interpretation. This protects U.S. exporters operating in legal gray areas from being unfairly eliminated by established foreign monopolies and their partners.
