Access Telecom, Inc. v. MCI Telecommunications Corp.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 98-50881

ACCESS TELECOM, INC.
Plaintiff-Appellant

versus

MCI TELECOMMUNICATIONS CORPORATION;
MCI INTERNATIONAL, INC.;
SBC COMMUNICATIONS, INC.;
SBC INTERNATIONAL, INC.;
SBC INTERNATIONAL LATIN AMERICA;
TELEFONOS DE MEXICO
Defendants-Appellees

Appeal from the United States District Court
for the Western District of Texas

December 1, 1999

Before REYNALDO G. GARZA, HIGGINBOTHAM, and DAVIS, Circuit
Judges.

HIGGINBOTHAM, Circuit Judge:

I.

During 1993 and 1994, Access Telecom, Inc. (ATI), a

corporation based in Texas, exported U.S. phone services to

customers in Mexico. These services allowed Mexican customers to

place U.S.-based phone calls directly from Mexico. Customers first
called ATI in Texas and then entered the new phone number they

wanted to call. ATI dialed that new number from the U.S. and

effectively spliced the customer’s first call to the new call,

enabling the customer to communicate with the new destination. As

a result, each call had two legs: the Mexican leg from Mexico to

Texas and the U.S. leg from Texas to the final destination.1

The benefit to ATI’s customers from this arrangement was that

the cost of the two-legged call was less than the cost of a normal

call from Mexico through Teléfonos de México (Telmex). The price

discrepancy existed because Telmex had a government granted

monopoly until 1996. Thus, the rate on a typical call from Mexico

to California was controlled by Telmex for its entire length.

Under ATI’s setup, Telmex controlled only the rate for the Mexican

leg of the call. The applicable rate for the U.S. leg of the call

was a U.S. rate.

The Mexican leg of each call was carried on toll free numbers

that ATI received from MCI. MCI in turn leased the lines for these

numbers from Telmex. In other words, MCI leased the Telmex lines

that connected Mexico to Texas. Telmex’s lines crossed the border

into Texas where they interconnected with U.S. lines. Telmex’s

contracts with MCI apparently neither foresaw nor forbid the

subsequent “reorigination” as practiced by ATI or other companies,

and in fact, MCI offered similar reorigination services of its own.

1
At some point, ATI also employed switching services in New York.

2
 ATI’s contracts with MCI incorporated the terms and conditions

of MCI’s U.S. “filed tariff” which provided that MCI calls may not

be acquired and used for resale in foreign jurisdictions once MCI’s

foreign partners have blocked or interrupted MCI or have threatened

to do so for such reasons. The tariff also stated that MCI was not

liable for acts or omissions of other companies who furnished a

portion of MCI’s 800 service. Finally, the tariff prohibited the

use of MCI services for unlawful purposes.

Mexican law required a permit to be a provider of

telecommunications services in Mexico. ATI never obtained such a

permit, maintaining it did not need to do so because it was not a

provider. Under ATI’s interpretation of Mexican law, a provider

was an entity that both owned and operated telecommunications

infrastructure within Mexico, which ATI did not do (as opposed to

reselling service directly or indirectly, which ATI perhaps did

do). Subsequent to the time period relevant in this lawsuit,

Mexico revamped its telecommunications laws and now explicitly

requires a permit to engage in resale activity.

In October 1993, Jose Rivas Moncayo of the office of the

Mexican Secretary of Communications and Transportation (SCT), sent

MCI a letter requesting that MCI halt the services of companies

offering “call-back services.” Call-back involved a procedure

whereby a customer called a U.S. company, and the U.S. company did

not answer the call. Instead, the company would use a form of

caller-id to locate the customer and then call the customer back.

3
Under call-back services, Telmex received no revenue for the

initial outbound call because that call was never “answered.” Such

services used Telmex phone lines to communicate location

information without paying Telmex anything for that privilege.

ATI’s service, however, paid Telmex exactly what Telmex had

contracted with MCI to receive for outbound calls using the lines

from Mexico to Texas. ATI’s service did not operate through call-

back, and MCI did not terminate ATI’s service. Subsequent to the

time period relevant in this lawsuit, the SCT issued further

communications condemning practices that achieve similar results as

“call-back” services.

On April 19, 1994, Telmex notified MCI of its intention to

disconnect customers who were using its service for resale. The

list of 85 customers that it provided, however, did not include

ATI. On April 29, 1994, MCI received another letter, requesting a

list of customers in the resale business, but MCI refused to

provide such a list. The letter requesting customers was written

on Telmex letterhead by an employee of SBC International, a

subsidiary of Southwestern Bell. Southwestern Bell is part of a

consortium that owns a controlling stake in Telmex.

Telmex allegedly began disconnecting 800 numbers on July 21,

1994, without warning. Previously it had assured MCI that it would

give notice of disconnection so MCI could warn MCI’s customers. On

September 28, 1994, Telmex sent MCI a list of prohibitions on the

use of MCI’s numbers, threatening to terminate all of MCI’s Mexican

4
business without notice if MCI did not cooperate. ATI’s numbers,

save three, were disconnected on October 19, 1994; the rest were

disconnected soon thereafter. At this time, ATI was earning

approximately $3 million a year.

There is disagreement whether MCI provided Telmex with ATI’s

numbers. According to the deposition of Carol Ansley, an SBC

employee, Ansley sent Rafael Perez Aguilar of Telmex a list of

ATI’s numbers, and Ansley testified that as far as she knew, MCI

had not provided SBC with ATI’s numbers. ATI, however, discovered

a cover memo written by Ansley, stating that “attached you will

find a list of I-800 numbers MCI has identified as being with

Access Telecom.” ATI also notes that John Bachman, an MCI manager,

sent an e-mail on October 18, to an MCI employee, Laura Alvarado,

instructing her to “take down” ATI’s numbers. In Alvarado’s

deposition, however, she insists that she did not provide the

numbers to Telmex. Even MCI has stated that the provision of ATI’s

numbers to third parties without permission would be in violation

of U.S. law.

In an effort to continue providing service to its customers,

ATI sought alternative service from AT&T. According to ATI, MCI

immediately informed SBC and Telmex of ATI’s attempt to obtain

service from AT&T. Telmex allegedly assured MCI that ATI would not

be able to reestablish the numbers through AT&T. ATI ultimately

could not obtain alternate service through AT&T. ATI’s business

collapsed, along with approximately 80 other similar U.S.

5
companies.

II.

In June 1995, MCI commenced arbitration proceedings seeking to

recover payment of ATI’s phone bill, ultimately receiving an award

for nearly $1.2 million. In July 1995, ATI sued Telmex, SBC, and

MCI in Texas state court, alleging claims of breach of contract,

tortious interference with contract, negligent misrepresentation,

promissory estoppel and federal and state antitrust violations.

The case was removed and transferred to the Western District of

Texas. The federal court granted Telmex’s motion to dismiss all

claims against it 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. MCI

and SBC moved for summary judgment on all of ATI’s claims, which

the district court granted. The court held that the filed tariff

doctrine barred ATI’s claims for negligent misrepresentation and

breach of contract. The district court granted summary judgment on

a promissory estoppel claim, holding that ATI could not justifiably

rely on representations by MCI as to Mexican law.

The district court also held that ATI could not recover on its

claim alleging that MCI tortiously interfered with ATI’s customer

contracts because this was essentially a breach of contract claim

and was barred by limitation of liability provisions in MCI’s

tariff. In addition, the court rejected ATI’s claim that MCI

6
conspired with Telmex and SBC to block ATI from contracting with

AT&T for service because ATI never sought or obtained a permit from

the SCT and thus ATI’s prospective relations with AT&T would have

been illegal. Finally, the district court rejected ATI’s

antitrust claims on the ground that the conduct of which ATI

complained did not have a direct, substantial, and reasonably

foreseeable effect on U.S. domestic or import commerce or export

business.

On appeal, ATI challenges the dismissal of its tortious

interference and antitrust claims, the denial of summary judgment

in ATI’s favor with respect to the lawfulness of ATI’s activities,

and the dismissal of Telmex on personal jurisdiction grounds. ATI

separately complains that merits discovery was improperly limited.

III.

A. Characterization of ATI’s Business

The proper resolution of many issues in this case depends on

the characterization of ATI’s business. ATI characterizes its

business as exporting U.S. reorigination services to Mexican

customers. The defendants characterize ATI’s business as providing

a Mexican telecommunications service in Mexico. At first glance,

the defendant’s characterization has appeal. No matter how ATI’s

business is described, the end result enabled Mexican customers to

make long distance phone calls in Mexico for prices less than those

generally charged by the Telmex monopoly. This characterization,

7
however, confuses the ends with the means.

In the past, phone calls may have been seen as indivisible

commodities. Today, that is too simple a view. Admittedly, by

selling the “U.S. leg” of a call to Mexican customers, ATI enabled

cheaper long distance communication. That is not the same as being

a Mexican telecommunications provider. A distinction exists

between “provider” and “reseller,” which is easier to see in a more

familiar context.

If ATI and Telmex were shipping companies, ATI might transport

goods solely between U.S. cities. If Mexican customers shipped

their goods to ATI in Texas, ATI could then transport them to

another destination in the U.S. Alternatively, Mexican customers

could ship directly to their final destination using Telmex alone.

Shipping to New York via ATI might be cheaper, however, than

shipping via Telmex. To say that ATI is a Mexican shipping

provider would be imprecise. No matter which company the customer

uses, Telmex, as a monopoly, is the only provider of shipping

service from Mexico to Texas, and in every instance Telmex receives

the previously agreed rate for its services. Thus, in Mexico, ATI

is at most a reseller of Telmex’s shipping service, although even

the label of “reseller” is debatable.

To equate resale with provision, however, entails that every

business is a provider if that business ships goods to its

customers via Telmex and charges the customer for the shipping

cost. In our case it would entail that every business which has a

8
toll free number, yet which charges the cost of the phone service

back to the customers, is a telecommunications provider because it

technically is “reselling” phone service. This ignores the crucial

difference between resellers and providers, which is that a

reseller cannot compete with a monopoly provider because the

provider is the reseller’s only supplier. The reseller can only

undersell the provider if the provider sells its services to the

reseller for less than they are worth. That is not the same kind

of competition a provider faces against another provider.

Competition between the provider and the reseller is at the mercy

of the provider and the provider’s knowledge or ignorance of the

market.

Because of this difference, it is more appropriate to

characterize ATI as an exporter of U.S. phone services who

incidentally and indirectly resold Mexican telecommunications

services. In a real sense, ATI was not even the primary reseller

of Mexican telecommunications services. MCI was the reseller,

under contract from Telmex. ATI purchased MCI’s services and MCI

billed ATI for the calls made to ATI’s numbers by ATI’s customers

who were purchasing U.S. service. ATI may have recouped the cost

of the Mexican leg of the call from its customers just as any other

business may recoup the cost of toll free phone service through its

service fees. ATI’s setup is thus the same as any American

business which contracted to offer toll free 800 numbers to Mexican

customers in order to provide service across the phones, such as

9
touch tone brokerage service or even $3.95/minute astrological

advice. The only difference is that ATI offered U.S. phone service

rather than another service delivered by phone. While this may

make ATI appear to be a Mexican “provider,” this ignores the

foregoing distinctions. To not distinguish between direct

providers, direct resellers, and indirect resellers ignores the

competitive reality that it is the providers who determine whether

subsequent resales are profitable; it also leads to the illogical

result that all businesses are telecommunications providers. This

characterization of ATI’s business is compatible with one

interpretation of the laws which were in place in Mexico at the

time, requiring permits only for the joint installation, operation,

and exploitation of infrastructure. ATI’s claim that the “and” has

its normal conjunctive meaning agrees with these distinctions,

because this reading separates true providers from mere resellers.

With these distinctions in mind, we now address the tortious

interference issues.

B. Tortious Interference

1. Choice of Law

To properly decide the tortious interference issues, we must

make three choice of law decisions: first, which law governs ATI’s

tort cause of action; second, which law governs the validity of the

contracts and prospective business relations which form the basis

of the tortious interference claims; and third, whether any foreign

law invalidates the contracts for other reasons. A federal district

10
court must follow the choice-of-law rules of the state in which it

sits. See, e.g., St. Paul Mercury Ins. Co. v. Lexington Ins. Co.,

78 F.3d 202, 205 (5th Cir. 1996).

(a) Tort Choice of Law

The first choice is which law governs ATI’s tort cause of

action. Texas follows the most significant relationship test of the

Restatement (Second) of Conflict of Laws § 145, for these

decisions. See Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex.

1979). Under the modern “most significant relationship” test,

courts considers: (1) the place where the injury occurred; (2) the

place where the conduct causing the injury occurred; (3) the

domicile, residence, nationality, place of incorporation, and place

of business of the parties; and (4) the place where the

relationship between the parties, if any, is centered. See

SynderGeneral Corp. v. Great Am. Ins., 928 F. Supp. 674, 677 (N.D.

Tex. 1996), aff’d, 133 F.3d 373 (5th Cir. 1998). Since Texas was

the site of injury, home to the injured business, and place of

export of the U.S. portion of the business, it would be reasonable

to apply Texas law; however, the parties appear to assume without

argument that Texas law governs, and so, without deciding, shall

we.

Thus, we examine Texas law to determine the requirements for

a tortious interference claim. Under Texas law, the existence of

a valid contract (or the potential for one in claims for

11
interference with prospective contracts) is an element of a claim

for tortious interference. See Juliette Fowler Homes, Inc. v.

Welch Associates, Inc., 793 S.W.2d 660, 665 (Tex. 1990). There is

no remedy for interference with illegal contracts, see Ben E. Keith

Co. v. Lisle Todd Leasing, Inc., 734 S.W.2d 725, 727 (Tex. App.-

Dallas 1987, writ ref’d n.r.e.).

(b) Contract Choice of Law

The ATI contracts at issue in this case include ATI’s

contracts with its Mexican customers, ATI’s contracts with MCI, and

ATI’s attempted contracts with AT&T. The second choice of law

question arises because we must determine whether these contracts

were valid. Validity of a contract, however, is determined by the

law which governs the contract, which calls for another choice of

law analysis, this time using the modern “most significant

relationship” test of the Restatement (Second) of Conflict of Laws

as applied to contracts, which Texas has adopted. See Duncan v.

Cessna Aircraft Co., 665 S.W.2d 414, 420-21 (Tex. 1984).

ATI, based in Texas, exported Texas reorigination services to

Mexican customers and resold Mexican telecommunications service.

These customer contracts had choice of law provisions identifying

Texas as the applicable law and place of formation. In Texas,

contractual choice-of-law provisions are ordinarily enforced if the

chosen forum has a substantial relationship to the parties and the

transaction. See De Santis v. Wackenhut, 793 S.W.2d 670, 677-78

12
(Tex. 1990). However, a choice-of-law provision will not be

applied if another jurisdiction has a more significant relationship

with the parties and their transaction than the state they choose,

that jurisdiction has a materially greater interest than the chosen

state, and the jurisdiction’s fundamental policy would be

contravened by the application of the law of the chosen state. See

Restatement (Second) of Conflict of Laws § 187.

The defendants argue that the choice of law clauses in the ATI

customer contracts are not determinative, because these contracts

concerned issues of payment and formation, mostly stating that the

contracts were formed in Texas and would be payable in Texas in

U.S. dollars. The contracts did not concern the terms of ATI’s

actual provision of service. It is true that contractual choice of

law clauses are construed narrowly. See Thompson and Wallace of

Memphis, Inc. v. Falconwood Corp., 100 F.3d 429 (5th Cir. 1996).

However, the defendants’ argument cuts both ways. To the degree

that these contracts do not concern the services allegedly illegal

in Mexico, it becomes harder to argue illegality of those contracts

under Mexican or Texas law; furthermore, so long as these contracts

were interfered with, the fact that a separate service agreement

was not interfered with does not matter, since the interference

claim only needs one contract as its basis.

Without deciding how determinative the choice of law clauses

are, however, it appears that there is no demand to choose Mexican

over Texas law under a most significant relationship test. The

13
Restatement § 188 states that

[i]n the absence of an effective choice of law by the
parties . . . the contacts to be taken into account . .
. to determine the law applicable to an issue include:
(a) the place of contracting; (b) the place of
negotiation of the contract; (c) the place of
performance; (d) the location of the subject matter of
the contract; (e) the domicil, residence, nationality,
place of incorporation and place of business of the
parties.

In this case, we have a very symmetric relationship between

the parties and the services provided. Each forum is home to one

of the parties, one forum’s business is exporting services, the

other forum’s resident is receiving services, the U.S. favors

competition in telecommunications, Mexico at the time did not.

ATI’s indirect resale of the Mexican leg of the service may center

in Mexico, but even a portion of that service occurs in Texas,

since Telmex’s lines cross into Texas and interconnect at the

border. Further, that service was provided by MCI under agreements

with Telmex and ATI, and the ATI-MCI agreements were entered into

in Texas. Even assuming the Mexican leg of the calls implicates

Mexican interests more than Texas interests, the remaining contacts

that ATI’s contracts had with Texas, including the choice of law

clause which is of some weight, is at least a deciding factor in

such a close case.

This makes sense if one looks at the fundamental policies

involved, which include Mexico’s interest in a domestic telephone

monopoly. Mexico would not have a fundamental policy contravened

14
by the application of Texas law in this case. The export of U.S.

telecommunication services and even the resale of Mexican services

does not contravene Mexico’s legitimate monopoly over its domestic

lines. Telmex can charge whatever it likes for incoming and

outgoing calls on its lines. The resale of the Mexican leg either

directly by MCI or indirectly by ATI is only profitable if Telmex

allows it to be. If Telmex sets a monopoly price for its initial

service, Telmex recoups all potential monopoly revenues from that

fee. Telmex may wish to use its monopoly as leverage in order to

gain higher revenues from the U.S. leg of calls, but attempts to

tie domestic monopoly power into the international market is not

within the scope of the domestic monopoly. As such, it is not a

Mexican interest which tips the scale in Mexico’s favor.

Texas, on the other hand, would have a fundamental policy

contravened by the choice of Mexican law (assuming Mexican law is

different on the question of contract validity), namely the ability

of Texas companies to make valid export contracts in Texas for the

sale of U.S. services.

The remaining contracts and prospective contracts are more

obviously governed by Texas law. ATI’s contracts with MCI were

negotiated and entered into in Texas, between Texas businesses.

ATI’s potential contracts with AT&T presumably would have been

similar. In this case, Mexico’s only connection with these

contracts is the fact that the contracts involve the use of Mexican

lines for a portion of the calls. Given the fact that the parties

15
are in the U.S., the contracts were made in the U.S., and that

there is no claim that these contracts were illegal under Mexican

law, there seems to be no reason to choose Mexican law to determine

the validity of these contracts, despite the fact that part of

their subject matter existed in Mexico.

We hold, then that Texas law determines the validity of the

contracts and prospective contracts at issue in this case.

However, this is still not the end of the analysis.

(c) Foreign Law Which Invalidates Contract Under Texas Law

Under Texas contract law, it is “well settled” that “[a]

contract made ‘with a view of violating the laws of another

country, though not otherwise obnoxious to the laws either of the

forum or of the place where the contract is made,’ is illegal and

‘will not be enforced.’” See Ralston Purina Co. v. McKendrick, 850

S.W.2d 629, 639 (Tex. App. – San Antonio 1993, writ denied)

(quoting San Benito Bank & Trust Co. v. Rio Grande Music Co., 686

S.W.2d 635, 638 (Tex. App. -- Corpus Christi 1984, writ ref’d

n.r.e.)).

This rule has not been analyzed by the Texas appellate courts

which have relied on it, and the Texas Supreme Court has not

adopted this rule expressly.2 “To determine state substantive law,

2
“Writ refused, n.r.e.” is not the same as “writ refused,” in the writ history
of Texas appellate cases. Only an unqualified “writ refused” must be treated as
on equal footing with other Texas Supreme Court precedent. See Texas
Jurisprudence, 3d § 145.

16
we look to final decisions of the state's highest court.” Shanks v.

AlliedSignal, Inc., 169 F.3d 988, 993 (5th Cir. 1999) (citing

Transcontinental Gas Pipe Line Corp. v. Transportation Ins. Co.,

953 F.2d 985, 988 (5th Cir. 1992)). “‘When there is no ruling by

the state’s highest court, it is the duty of the federal court to

determine as best it can, what the highest court of the state would

decide.’” See id. (quoting Transcontinental, 953 F.2d at 988).

Thus, we must make a guess as to how the Texas Supreme Court would

interpret this rule. Because the Texas Supreme Court has chosen to

follow modern choice of analysis, we proceed with that background

assumption. As such, there are two aspects to this rule that must

be discussed before it can be applied.

The first aspect is the rule’s tacit assumption that foreign

law is relevant to the contract in question. For example, there is

no reason to suspect Texas courts would deem void a contract

between Texans for the sale of cheese in Texas, even if Mexican law

purported to make all sales of cheese illegal, even those occurring

in Texas. Mexican law would be inapplicable to the contract in

question because Mexico has no legitimate interest in the contract.

The second aspect to consider is the meaning of “with a view.”

First, we discuss the rule’s assumption that foreign law is

relevant.

Historically, the assumption that the laws of a foreign

country were relevant or applicable to a contract was justified if

the contract was to be performed in the other country because place

17
of performance or place of contract decided the choice of law

question. See 6 WILLISTON ON CONTRACTS § 1749 (1938). Moreover, “good

morals and the obligations of international comity demand denial of

judicial sanction to the intentional breach of . . . the general

laws of a friendly state.” Id. Under modern choice of law

analysis, however, place of performance or place of contract

formation is not always determinative. Furthermore, principles of

comity only extend so far. See Republic of Philippines v.

Westinghouse Elec. Corp., 43 F.3d 65, 75 (3d Cir. 1994) (noting

that comity “must yield to domestic policy” and “cannot compel a

domestic court to uphold foreign interests at the expense of the

public policies of the forum state”).

As stated, modern choice of law analysis in Texas applies the

law of the forum with the “most significant relationship” to the

contract in question. Duncan v. Cessna Aircraft Co., 665 S.W.2d

414, 420-21 (Tex. 1984). Thus, a contract legal in the U.S. may be

illegal in Mexico, yet under choice of law analysis, Mexican law

might not be chosen to apply. If Mexican law does not apply to

determine validity, then to say the contract is illegal in Texas

because it violates Mexican law reverts too quickly back to a

discarded conclusion, a conclusion rooted in the traditional

assumption that Mexican law always has an interest in the contract

if some aspect of the contract is illegal under Mexican law.

There are at least two reasons to defer to foreign law,

however, even if that law would not be chosen to govern the

18
contract. First, a contract legal in the U.S. and illegal in

Mexico may places parties in a dilemma. They can either perform

the contract and face Mexican liability (Mexico, after all, may

have personal jurisdiction over the parties). On the other hand,

the parties can breach the contract, but then face U.S. liability

for contract damages. This dilemma, however, is not implicated in

tortious interference claims, because by definition, the defendant

is not a party to the original contract and thus need not choose

between breaking foreign law or facing U.S. liability. A dilemma

only exists to the third party if foreign law gives the third party

a duty or right to interfere. No duty is alleged in this case with

respect to MCI and SBC and the right to interfere (privilege) is

addressed below.

A second, but more important, reason to defer to foreign law

even if it does not apply to the contract is the mentioned

principle of comity, which suggests that the U.S. should respect

Mexican law on a kind of “golden rule” basis. The leading Texas

case demonstrates this situation although without this explicit

reasoning. See Ralston Purina Co. v. McKendrick, 850 S.W.2d 629

(Tex.App.-San Antonio, 1993). In Purina, a contract to export

goods into Mexico was found illegal in Texas because the parties

were smugglers who did not have the necessary Mexican licenses.

Id. at 639. Even if Texas law applied to that contract under a

most significant relationship test, the principle of comity would

19
be a strong basis to hold the Texas contract illegal under Texas

law, and thus not a basis for a tortious interference claim. If

there is no dilemma and there is no basis for comity, however, the

old rule makes no sense under modern choice of law analysis which

already takes into account the interests of the various fora. To

allow foreign law to jump back in and change the conclusion

circumvents the principles behind the original choice of law.

The second aspect of the rule that must be analyzed is what

“with a view” means. The language implies the existence of an

intention on the part of at least one of the parties to violate

foreign law. It is unclear whether the rule requires both parties

to have illegal intentions, as it has been remarked that one

party’s mere knowledge of the other’s illegal intentions is

insufficient to void a contract. See International Aircraft Sales,

Inc. v. Betancourt, 582 S.W.2d 632, 635 (Tex.Civ.App.-Corpus

Christi May 31, 1979, writ refused n.r.e.). If intention did not

matter, the rule could merely state that contracts which violate

foreign law are illegal. The policy behind this part of the rule

appears to be that it is against the public policy of the domestic

forum to encourage willful attempts to break foreign law. Given

these considerations, however, it makes no sense to apply the rule

if there is no intention of either party to violate foreign law.

More importantly, however, if foreign law is sufficiently unclear

as to the legality of certain actions, then it is unreasonable to

say the parties entered the contract with a view to violate

20
anything.

Because the Texas Supreme Court has not addressed these

issues, we consider how the court might decide the first issue, and

we decide that when a contract governed by Texas law violates the

laws of a foreign country, that violation does not void the

contract for purposes of tortious interference claims if the

foreign policies at issue do not demand comity. In this case, if

Mexican law banned the import of U.S. switching services or the

incidental resale of Mexican capacity by a non-provider, it would

be a policy designed to increase the monopoly power of a domestic

company outside the territorial boundaries of that country. Such

policies do not demand comity. It would not be the case of a

country banning an import which is arguably injurious to the health

or morals of its citizens, such as toxic waste or pornography.

Instead, if ATI’s activities were illegal in Mexico, then it would

be an example of a country banning the import of a competitive

service for which no legitimate monopoly exists. While it is fine

for a country to take a protectionist position, the legality of

U.S. contracts need not turn on it.

Because there is no “dilemma” alleged in the current case with

respect to third parties being forced to choose between U.S.

contract damages and Mexican liability, we do not decide the effect

of such a dilemma on the rule.

Thus, even if Mexican law prohibited the resale of already

resold telecommunications services or prohibited the importing of

21
U.S. telecommunications services, these facts do not serve as a

defense to a claim of tortious interference with such contracts in

situations when the alleged tortfeasor is not forced to choose

between violating foreign law or suffering U.S. liability, when

Texas law otherwise governs the underlying contracts and torts.3

An alternative basis to decide this issue, of course, would be

that contracts entered “with a view” to violate foreign law are not

void for the purposes of tortious interference claim if neither

party to the contract had illegal intentions. An illegal

intention is not shown in this case, at least for the purposes of

summary judgment. As shown below, Mexican law at the time was

sufficiently unclear and capable of multiple interpretations as to

what was or was not legal. Such difficulty in interpreting foreign

law makes it unreasonable to conclude any contract was entered with

a view to violate foreign law. The fact that ATI attempted to get

a permit “just in case,” does not prevent them from successfully

arguing that their service was legal and they believed it was

legal. While the content of foreign law is a legal question, the

question of ATI’s intention is not, and there is sufficient

evidence to permit a jury to conclude ATI was acting with the view

that their services were legal; as such, summary judgment against

3
For the purposes of this analysis, it is assumed that the SCT’s refusal of a
permit to ATI suffices to show exclusion from the Mexican market. This
assumption is made without deciding that such a refusal shows a permit was
legally required, but only that one was not readily available. Had one been
easily available and a mere “formality,” then it would not make sense to
characterize Mexican law as protectionist.

22
ATI on the tortious interference claims would be improper unless

ATI’s activities were illegal under U.S. law or subject to another

defense, as discussed below.

2. Validity Under U.S. Law

It remains to determine whether ATI’s contracts and services

were illegal with respect to U.S. law. The defendants assert that

ATI’s activities were contrary to 47 U.S.C. § 214, which requires

authorization before a carrier “shall undertake the construction of

a new line or of an extension of any line, or shall acquire or

operate any line, or extension thereof, or shall engage in

transmission over or by means of such additional or extended line.”

ATI, however, merely provided a service that connected different

lines and did not itself construct any new lines. Section 214

applies only to the construction of facilities and does not prevent

carriers from offering new services. See MCI Telecommunications

Corp. v. FCC, 561 F.2d 365 (D.C. Cir. 1977).

Furthermore, even with respect to call-back, a practice truly

hostile to a legitimate domestic monopoly, the FCC decided in 1995

that even call-back did not violate U.S. or international

telecommunications law and only prohibited the service on comity

grounds where “expressly prohibited” in the foreign country. In

re VIA USA, Ltd., 10 FCC Rcd. 9540 ¶¶ 50-51 (1995). Thus, during

1993 and 1994, there was no basis to deem call-back, let alone

reorigination, illegal under U.S. law.

23
 3. Other Tortious Interference Defenses

The defendants also support the entry of summary judgment in

their favor on a number of alternative legal grounds, including

federal preemption, the terms of MCI’s tariff, Texas tortious

interference doctrine, and privilege.

(a) Privilege

First, the defendants assert that they are protected by the

common law defense of privilege. The Texas Supreme Court has

explained this defense thus:

Under the defense of legal justification or excuse, one
is privileged to interfere with another’s contractual
relations (1) if it is done in a bona fide exercise of
his own rights, or (2) if he has an equal or superior
right in the subject matter to that of the other party.
One may be privileged to assert a claim even though that
claim may be doubtful, so long as it asserted a colorable
legal right. However, the defense of legal justification
or excuse only protects good faith assertions of legal
rights.

Victoria Bank & Trust v. Brady, 811 S.W.2d 931, 939-40 (Tex. 1991).

The Restatement, cited as authority in Victoria Bank, explains

that the defense “protects the actor only when (1) he has a legally

protected interest, and (2) in good faith asserts or threatens to

protect it, and (3) the threat is to protect it by appropriate

means.” Restatement (Second) of Torts § 773.

MCI did have a legal right to halt MCI’s service with ATI if

Telmex threatened to cut off MCI’s service. That right was based

on the MCI’s contract with ATI. But ATI’s tortious interference

24
claim is not based on MCI halting ATI’s service; it is based on MCI

giving away ATI’s confidential information. As such, ATI’s claims

concern actions which cannot be traced to legal rights stemming

from a contract or domestic or foreign law. If MCI “disclose[d]

the business or application(s) of [its] customers,” it was in

violation of U.S. law, according to MCI’s correspondence with

Telmex.4 MCI maintains that it was trying to protect its interest

in its contract with Telmex, and to ensure that AT&T was not

receiving illegal preferential treatment from Telmex. The problem

with MCI’s argument is that the tortious interference was allegedly

accomplished through improper release of confidential information.

Release of nonconfidential information may be a basis for

privilege. See Restatement (Second) of Torts § 773 illus. 1.

The release of confidential information, however, is not an

“appropriate means” to protect other interests.

If Telmex cut off ATI’s service as alleged, it might have been

against Mexican law, but whether or not it was, Telmex’s privilege

is not before us, except insofar as SBC attempts to claim it by

virtue of SBC’s part ownership of Telmex. SBC maintains that it

was protecting the interests of its affiliated company Telmex.

However, SBC is only a 10% owner of Telmex and there is evidence

which a factfinder could find that SBC’s actions in helping Telmex

and MCI shut down ATI were as much for SBC’s benefit as its own

4
Neither side cites the regulation that such disclosure violates; however, no
party disputes that such disclosure is illegal without permission.

25
entity rather than as an agent of Telmex, given that SBC intended

to independently enter ATI’s market. Because there is not a

completely obvious “unity of interest” between SBC and Telmex,

summary judgment on SBC’s privilege defense is inappropriate.

Thus, there is no basis on which to rest a defense of privilege for

SBC and MCI at the summary judgment stage.

(b) Preemption

MCI argues that its filed tariff preempts ATI’s Texas tort

claims because of the federal “filed-rate doctrine.” Many cases

speak about federal preemption of state claims when there are filed

tariffs. See, e.g., Marcus v. AT & T Corp., 938 F. Supp. 1158

(S.D.N.Y. Aug 21, 1996), aff’d, 138 F.3d 46 (2d Cir. 1998) (holding

the following claims preempted: deceptive acts and practices, false

advertising, fraud and deceit, negligent misrepresentation, breach

of warranty, and unjust enrichment by failing to disclose that

customers were billed per minute rounded up to the next higher full

minute for long distance services). The leading and controlling

case in this area for our purposes is AT&T v. Central Office

Telephone, Inc., 118 S. Ct. 1956 (1998), In which the Supreme Court

expounded on the filed-rate doctrine.

Central Telephone, a bulk reseller of long distance services

purchased from AT&T, sued AT&T, alleging breach-of-contract and

tortious interference claims. Under the filed-rate doctrine,

federal law preempts claims concerning the price at which service

26
is to be offered, and the Supreme Court ruled that it also preempts

claims concerning the services that are offered. See id. at 1962-

64. The Court thus found the breach-of-contract claims preempted.

The Court also found the tortious interference claim preempted, but

only because that claim was “wholly derivative of the contract

claim for additional and better services.” Id. at 1964. The

tortious interference claim alleged that AT&T’s refusal to provide

certain types of service led to interference of Central Telephone’s

contracts with its customers. See id. at 1964-65. It was thus not

protected by the saving clause of the Communications Act. See id.

at 1965 (“A claim for services that constitute unlawful preferences

or that directly conflict with the tariff—the basis for both the

tort and contract claims here—cannot be ‘saved’ under § 414.”).

ATI’s tortious interference claims are different. It does not

allege that MCI stopped providing service, resulting in ATI being

unable to meet customer demand. Rather, ATI alleges that MCI

released confidential information, first to Telmex and then to

AT&T. This information ultimately led those parties to deny

service to ATI. This claim is not derivative of a contract claim.

It does not concern the provision of services which are covered by

the filed tariff, but rather it concerns illegal actions outside

the scope of the tariff and not derivative of any phone services.

Therefore, the filed rate doctrine does not preempt ATI’s tortious

interference claims.

27
(c) Filed Tariff

MCI argues that its filed tariff precludes liability because

there is a contractual provision stating that MCI may halt service

if a situation arose involving threats from the third party

partner. This only goes to whether MCI breached its contract with

ATI, not whether MCI breached duties imposed outside of the

contract, as alleged by ATI, and thus this argument fails as a

defense to tortious interference. The right to halt one contract

does not grant the right to interfere with another by any

conceivable means. MCI may well have been entitled to cut off

service to ATI once Telmex threatened it with cutting off

international 800 service. But the provision did not authorize MCI

to respond to such threats by helping Telmex cut off ATI, or by

preventing ATI from having a contractual relationship with AT&T.

(d) Breach of Contract

MCI argues that ATI’s tortious interference claims are nothing

more than claims that MCI breached its contract with ATI, and as

such are precluded from serving as the basis of tortious

interference claims. Under Texas law, “the general law is that

where a defendant’s conduct breaches an agreement between the

parties and does not breach an affirmative duty imposed outside the

contract, the plaintiff ordinarily may not recover on a tort claim

if the damages are economic losses to the subject matter of the

28
contract.” National Union Fire Ins. Co. v. Care Flight Air

Ambulance Serv., Inc., 18 F.3d 323, 327 (5th Cir. 1994). However,

this does not mean tort damages cannot be measured by economic

losses from the contract. See American National Petroleum Co. v.

Transcontinental Gas Pipeline Corp., 798 S.W.2d 274 (Tex. 1990)

(allowing recovery for exemplary damages for tortious interference

claim when damages from the tort were the same as economic damages

from breach of contract). Furthermore, it is obvious that ATI’s

claims are not breach of contract claims, but rather are

allegations that MCI breached duties imposed affirmatively outside

the context of the ATI-MCI contracts. Thus, this defense fails as

well.

(e) No Issue of Material Fact

Finally, MCI argues that there is no evidence that MCI

actually gave ATI’s numbers to Telmex. There is at least a

material issue as to this fact, however, and summary judgment is

inappropriate. The fact that MCI and MCI’s employees say they did

not give away the numbers flies square in the face of the memoranda

and communications discovered by ATI which suggest that MCI planned

to and did do just that.

C. Federal and State Antitrust Claims

1. Prima Facie Showing

The district court dismissed ATI’s federal and state antitrust

29
claims because the court failed to find a relevant U.S. market. In

order to support an antitrust claim, there must be actions which

have a reasonably foreseeable effect in a defined U.S. market. See

15 U.S.C. § 6a; Hartford Fire Insurance Co. v. California, 509 U.S.

764, 796 (1993) (allowing Sherman act recovery for foreign conduct

that produces “some substantial effect in the United States”).

ATI asserts that there was a direct and substantial effect on

trade or commerce, and second that it was engaged in export trade.

The substantial effect that ATI identifies is that its own

business, as well as that of other companies, failed, “resulting in

an inability to sell its U.S. telephone switching services to all

Mexican customers.” The alleged actions by Telmex and the other

defendants were aimed at shutting down this market. It is clear

that the U.S. export market for reorigination services was a

definite and sizable export market, and the failure of these 80

businesses is clearly an effect on export trade from the United

States. The market is significant, with ATI’s annual revenues

alone reaching $3 million/year at the time the events occurred.

Under 15 U.S.C. § 6a, the antitrust laws do “not apply to conduct

involving trade or commerce (other than import trade or import

commerce) with foreign nations unless . . . such conduct has a

direct, substantial, and reasonably foreseeable effect . . . on

trade or commerce which is not trade or commerce with foreign

nations, or on import trade or . . . export trade . . . with

foreign nations.” By showing a significant effect on a U.S. export

30
market, ATI meets the export trade exception.5

For the purposes of the antitrust inquiry, however, it

matters whether the importation of these U.S. services was legal

under Mexican law. If the importation of these services was

illegal, there is no legal export market to Mexico. If there is no

legal U.S. export market to Mexico and the only U.S. export market

affected is the Mexican market, then there is no antitrust injury.

Cf. Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574,

582 (1986) (“American antitrust laws do not regulate the

competitive conditions of other nations’ economies.”). In other

words, foreign countries may make laws or create monopolies that

effectively and completely exclude U.S. import competition. That

does not then mean that U.S. companies can enter the market anyway

and make antitrust claims when things do not work out. Even in the

U.S., the existence of a legitimate government granted monopoly

precludes claims of antitrust violation when a plaintiff wants to

compete in the regulated market. See Alameda Mall, Inc. v. Houston

Lighting & Power Co., 615 F.2d 343 (5th Cir. 1980).

5
This is not to say that the factfinder could not ultimately
conclude that the relevant market for antitrust liability is the
Mexican long-distance market. Our characterization of Telmex’s
business and our determination that the actions of Telmex and the
other defendants had a “direct, substantial, and reasonably
foreseeable effect” on the U.S. export market for switching
services does not preclude the factfinder from making an
independent determination of the relevant market for the purposes
of antitrust liability. Cf. Doctor’s Hospital of Jefferson, Inc.
v. Southeast Medical Alliance, Inc., 123 F.3d 301, 311 (5th Cir.
1997).

31
 This is not inconsistent with our holding that contracts for

reorigination services may still serve as the basis for tortious

interference claims. For the purposes of antitrust law, the

threshold choice of law determination always validates a foreign

government’s right to determine whether outsiders can compete. As

we have held, however, this choice of law is not mandated by the

law of tortious interference. Admittedly, this is a “conflict”

within U.S. law, but not one we need to resolve.

ATI challenges the district court’s award of summary judgment

against it on its antitrust claims against SBC and MCI. Because we

find that ATI’s services were legal under the law of Mexico at the

relevant time, anticompetitive means of stopping such service may

violate U.S. antitrust laws.

2. Legality of ATI’s Operations Under Mexican Law

The content of foreign law is a question of law and is subject

to de novo review. See Fed. R. Civ. P. 44.1; Perez & Compania v.

M/V Mexico I, 826 F.2d 1449 (5th Cir. 1997). “The court, in

determining foreign law, may consider any relevant material or

source, including testimony, whether or not submitted by a party or

admissible under Rule 43.” Fed. R. Civ. P. 44.1. Under this rule,

expert testimony accompanied by extracts from foreign legal

material is the basic method by which foreign law is determined.

Republic of Turkey v. OKS Partners, 146 F.R.D. 24, 27 (D. Mass.

1993). It is not, however, “an invariable necessity in establishing

32
foreign law, and indeed, federal judges may reject even the

uncontradicted conclusions of an expert witness and reach their own

decisions on the basis of independent examination of foreign legal

authorities.” Curtis v. Beatrice Foods Co., 481 F. Supp. 1275, 1285

(S.D.N.Y.), aff’d mem., 622 F.2d 203 (2d Cir. 1980). Likewise,

differences of opinion among experts on the content, applicability,

or interpretation of foreign law do not create a genuine issue as

to any material fact under Rule 56. Banco de Creditor Indus., S.A.

v. Tesorreria General, 990 F.2d 827, 838 (5th Cir. 1993). In

general, summary judgment is appropriate to determine the content

of foreign law. See 9 WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE

CIV.2D § 2444.

At issue is the legality of ATI’s business under Mexico law.

Under Mexican law at the time in question, a government concession

or permit was required in order to provide telecommunications

services in Mexico. It is undisputed that ATI had no permit or

concession from the Mexican government. What is disputed is

whether ATI’s business was within the scope of this law. ATI makes

the argument that at the time in question, the relevant regulatory

provisions envisioned the concession requirement to only apply to

entities who were providers of telecommunications services in that

they owned, installed, operated, and exploited telecommunications

infrastructure in Mexico, with emphasis on the “and.” The

defendants argue that a permit is required to install, operate,

“or” exploit telecommunications infrastructure in Mexico, with

33
emphasis on the “or,” and because ATI exploited the infrastructure,

they needed a permit. The defendants also argue that all

“resellers” needed permits.

ATI rests primarily on the deposition of Miguel Orrico

Alarcon, who was head of SCT legal counsel for 33 years. Orrico,

who is said to have drafted, applied, interpreted and enforced the

provisions at issue, explained that Mexico’s statutory definitions

of a “provider” of telecommunications service is limited to those

that install, operate, and exploit the network. Because ATI did

not install a network, and because special significance is attached

to the conjunctive language of the statute, ATI was not a provider

and therefore was not regulated under these provisions. Mexican law

changed subsequent to the time at issue in this case, and now

resellers explicitly are required to obtain permits.

The defendants focus on Moncayo’s letter and on the Secretary

of Communications and Transportation’s Official Circular Letter

119-1900. Moncayo’s letter is of little value, because it directly

discusses only “call-back” services, which ATI’s was not. The

Official Circular, however, condemns such services in addition to

“other similar or equivalent procedures with the same purpose.” The

Circular concludes that such services are “rendered outside the

legal provisions established by the Federal Law on

Telecommunications, in view of the exclusive nature of the right

granted to Teléfonos de México until August 1996 for rendering

basic national and international long distance service.”

34
 The defendants maintain that the Official Circular is entitled

to deference by this court as an agency’s interpretation of the

laws which it administers and enforces, citing Chevron U.S.A., Inc.

v. Natural Resources Defense Council, 467 U.S. 837 (1984). ATI

counters that the official circulars in fact have no legal effect,

and that in Mexico, only federal courts have the power to issue

resolutions determining the legality or illegality of acts.

Moreover, ATI emphasizes, only the General Bureau of Judicial

Matters has the sole power to “establish and systematize” the legal

criteria concerning the application of legal and regulatory

provisions, not Mr. Moncayo’s office.

Recognizing the difficulty of interpreting foreign law, courts

may defer to foreign government interpretations. The Seventh

Circuit reached this conclusion in deferring to an administrative

agency in France, a civil law country. See In re Oil Spill by the

Amoco Cadiz, 954 F.2d 1279, 1312 (7th Cir. 1992) (“A court of the

United States owes deference to the construction France places upon

its domestic law . . . . Giving the conclusions of a sovereign

nation less respect than those of [a U.S.] administrative agency is

unacceptable.”).

In Amoco Cadiz, the court was faced with conflicting

interpretations of French law. The court noted that had the

litigants been private parties, it would have had to resolve the

conflicts. See id. at 1312. Because the Republic of France was

before the court, however, the Seventh Circuit accepted its

35
interpretation of the law. See id. The Republic of Mexico is not

a litigant before this court and neither is the SCT. And while the

evidence shows that the SCT was empowered to enforce Mexican law,

it does not persuasively show that the SCT was empowered to

interpret Mexican law. The fact that U.S. courts routinely give

deference to U.S. agencies empowered to interpret U.S. law and U.S.

courts may give deference to foreign governments before the court

does not entail that U.S. courts must give deference to all agency

determinations made by all foreign agencies not before the court.

More importantly, the most relevant official circular at issue is

dated 1996, after the new laws went into effect; thus, it is

unclear whether the SCT position was that such activities were

currently illegal or had always been illegal. For these reasons,

we do not feel compelled to credit the SCT’s determinations without

analysis.

The defendants also argue that the relevant regulations

required a permit to be a reseller. The statute in question,

however is not without question. Our English translation of

Article 75 of the Telecommunications Rulings of Mexico reads as

follows:

The exploitation of the telecommunications network given
in concession must be carried out directly by its holder
and its commercialization may be made through agents in
accordance with the provisions approved by the Ministry.

We read this to mean that the direct operation of the network

must be accomplished by the actual provider, and that the provider

36
may designate others to commercialize the network. It does not say

commercialization “must” be made through those channels, however.

Furthermore, this court has not been apprised of the content of any

“Ministry provisions,” and the defendants have not identified any

regulation in place at the time which defines or regulates “resale”

or explicitly requires a permit for anything except provision,

which we have already decided ATI was not doing. Instead, we find

convincing the argument that before the new laws took effect, only

the direct provision of telecommunications services required a

concession from the Mexican government, for several reasons.

First, because ATI’s method was novel, it is unrealistic to

read the older Mexican law as covering the service. The new laws

explicitly regulate resale and pointedly are not retroactive; this

is at least some evidence supporting the notion that permits were

not previously envisioned.

Second, Mexico’s concession to Telmex specifically authorized

Telmex to resell any excess capacity, even before 1996, although it

did not require it to do so. Thus, what appears to be the case is

that Telmex resold capacity to MCI not realizing the boon it would

be for others to use that capacity with additional U.S. services

attached.

Third, a conclusion that any Mexican resale is covered by the

older, vague provisions would entail that every U.S. or Mexican

business with a toll free number would have been required to have

a permit because they “resell” Mexican phone service as much as ATI

37
did whenever they charge the cost of call-back to the caller

through their service fees. The fact that laws could try to

distinguish between resellers “primarily” engaged in resale versus

those “incidentally” engaged in resale does not change the fact

that the relevant laws are not so explicit.

Fourth, to say that any Mexican resale required a permit would

have invalidated MCI’s contracts with Telmex insofar as neither MCI

nor Telmex has indicated that MCI had a permit. While it is not

necessary for either defendant to show its own conformity with

Mexican law, it adds skepticism to their argument that a permit was

required or even envisioned and lends credibility to the view that

what happened in this case is that Telmex made a bad bargain with

MCI and wanted to get out of it. Telmex’s contract with MCI might

have purported to restrict MCI’s subsequent use of the lines, but

ostensibly did not. Our view is further supported by the fact that

the SCT did nothing to instigate enforcement proceedings against

any business during the relevant time period. The evidence

indicates that by law the SCT was required to institute such

enforcement if there was evidence of illegality. Instead, the

precatory language of even the 1993 SCT letters, stating that the

SCT would be “grateful” if MCI suspended the service of its

customers, suggests that even to the SCT the services in question

were not clearly illegal.

Fifth, because Telmex has no legitimate interest in tying a

monopoly over domestic lines to the use of lines outside of Mexico,

38
we will not construe Mexican law as requiring a permit for the

importing of U.S. switching service unless explicitly authorized.

No one contends that the relevant laws are this explicit, however.

Furthermore, this interpretation conforms with the FCC’s extension

of comity to foreign law when foreign law is unambiguous.

For all of these reasons, we find ATI’s activity in Mexico to

be legal during the time in question. Thus it was improper to

dismiss ATI’s state and federal antitrust claims against SBC and

MCI. It is argued that this application of the export exception

circumvents the principle that antitrust laws do not extend to

other nations’ competitive rules. See Matsushita Elec. Indus. Co.

v. Zenith Radio, 475 U.S. 574, 582 (1986). This would only be true

if the legality of the export-import business were not taken into

consideration, which it has been. The fact that we find ATI’s

business to be legal in Mexico is not irreconcilable with Mexican

policy designed to protect Telmex from domestic competition, since

such a policy is not furthered by banning the import of U.S.

reorigination services. Furthermore, Mexican law could have

explicitly protected Telmex from even international competition by

making it illegal to import U.S. services, which would have been a

basis to defeat these antitrust claims.

D. Personal Jurisdiction over Telmex

A federal district court has personal jurisdiction over a

nonresident defendant to the same extent as a state court in the

39
state in which the district court is located. See, e.g., Bullion

v. Gillespie, 895 F.2d 213, 215 (5th Cir. 1990). The Texas long-

arm statute extends to the limits of the Due Process Clause of the

Constitution. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042. The

exercise of personal jurisdiction thus can be maintained if the

nonresident defendant has purposefully availed itself of the

benefits and protections of the forum state by establishing

“minimum contacts” with the forum state, see, e.g., International

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), and if the

exercise of jurisdiction over the nonresident defendant does not

offend “traditional notions of fair play and substantial justice.”

Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987).

Telmex claims both that it did not have sufficient contacts

with the forum state, and that the exercise of jurisdiction over it

would be improper because the procedural and substantive policies

of Mexico would be affected. Asahi noted that “[g]reat care and

reserve should be exercised when extending our notions of personal

jurisdiction into the international field.” Id. at 115 (internal

quotation marks omitted). Asahi, however, was concerned with

“[t]he unique burdens placed upon one who must defend oneself in a

foreign legal system.” Id. at 114. For Telmex, a company that

indisputably has engaged in numerous business dealings in the

United States, these concerns are de minimis, and even if Mexican

policy is relevant on the merits, it is not relevant to the initial

determination of personal jurisdiction. If Telmex has broken U.S.

40
law, then requiring Telmex to answer for that would be “fair play.”

Thus, there was no personal jurisdiction over Telmex only if

Telmex did not have sufficient contacts with Texas and the United

States. Minimum contacts can be established either through

contacts giving rise to general jurisdiction, or those giving rise

to specific jurisdiction. We shall consider these as well as ATI’s

alternative claim that jurisdiction is authorized under a special

provision of the Clayton Act.

1. General Jurisdiction

The lower court dismissed the claims against Telmex on

personal jurisdiction without an evidentiary hearing. In such

instances, the plaintiff satisfies his burden by presenting a prima

facie showing of jurisdiction. See Felch v. Transportes Lar-Mex,

S.A. de C.V., 92 F.3d 320, 326 (5th Cir. 1996). Conflicting

evidence must be resolved in favor of the plaintiff. See id.

(quoting Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990)).

General jurisdiction can be assessed by evaluating contacts of

the defendant with the forum over a reasonable number of years, up

to the date the suit was filed. See Metropolitan Life Insurance

Co. v. Robertson CECO Corp., 84 F.3d 560, 569 (2d Cir. 1996).

Telmex’s contacts with Texas over the time period from 1990 to 1996

were numerous; the major ones are highlighted here. Up until 1990,

Telmex leased telephone circuits between Arizona and Texas.

Telmex’s current lines interconnect with Texas at the border in

41
McAllen and El Paso. Telmex leased real property in Texas in 1995

and paid taxes to Texas that same year. Telmex contracted to

warehouse 75,000 telephone poles in Laredo around 1990-1991.

Telmex had correspondent agreements with a number of US carriers.

Settlement revenues from these agreements totaled approximately $1

billion a year in 1994-1995. The total revenues derived from Texas

residents totaled millions of dollars a month. Telmex also

solicited ads for yellow page ads in border cities of U.S.,

although it is unclear exactly where. Additionally, SBC is alleged

to be a Texas contact of Telmex, since SBC owns a portion of a

controlling interest in Telmex and thus exerts some control over

Telmex.6

The district court examined each Telmex contact and in

isolation from the others, rather than examining the contacts “in

toto” as required. See Holt Oil & Gas Corp. v. Harvey, 801 F.2d

773, 779 (5th Cir. 1986). In other words, even if a number of

different contacts are independent of one another, if they occur

with such frequency that the contacts in general are “continuous

and systematic,” there is general jurisdiction.

The question, then, is whether Telmex’s contacts with Texas

demonstrate a business presence in Texas sufficient to confer

6
A number of other contacts are also put forward, mostly involving Telmex paying
for services that were provided by corporations in Texas or the U.S. Such
services included consulting and finance services. To the degree these contacts
involve Texas, they add little to the issue; to the degree they are with other
states, they are irrelevant at this juncture. Other contacts, such as Telmex
being listed on the NYSE, or designating a NY agent for service of process are
also not very informative.

42
general jurisdiction. The mere renting or ownership of property in

a forum is not enough when that property is not used to conduct

business in the forum. Cf. Shaffer v. Heitner, 433 U.S. 186

(1977). And while Telmex’s other contacts may be continuous and

systematic contacts which constitute doing business with Texas,

Telmex has virtually no contacts which constitute doing business in

Texas. Primarily, Telmex interconnects its Mexican lines with

American lines, enabling long distance communication. The money

U.S. companies pay Telmex is for service on the Mexican leg of the

call; the money the U.S. carriers receive is for the U.S. leg of a

call. As such, Mexican and U.S. telecommunications companies do

business with each other in these situations, but neither is doing

business in the other country for jurisdictional purposes.

The lines Telmex leased from Texas to Arizona also were for

the purpose of connecting two points in Mexico and do not

constitute doing business in Texas. The fact that SBC owns a

portion of a controlling interest in Telmex also adds little to the

mix. SBC’s 10% interest is not a controlling interest, and

typically, the corporate independence of companies defeats the

assertion of jurisdiction over one by using contacts with the

other. See Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th

Cir. 1983) (“Generally, our cases demand proof of control by the

parent over the internal business operations and affairs of the

subsidiary in order to fuse the two for jurisdictional purposes.”).

The one contact that could constitute doing business in Texas

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would be the yellow page ads. However, the evidence on the yellow

page ads consists of nothing more than a comment that Telmex

solicited yellow page ads in border cities in the U.S. without

naming which cities, when this occurred, whether such ads actually

were actually placed, or for how long. Without more, such evidence

does not help establish continuous and systematic contacts.

It is alleged that MCI sells regular phone service,

international 800 service, and private line service for Telmex in

Texas. This would imply a principal/agent relationship from which

jurisdiction might arise. There is no evidence, however, that the

provision of service by MCI was on behalf of Telmex but instead it

appears to be in the nature of the resale of capacity in Mexico by

MCI and the independent provision of capacity in the U.S. by MCI,

as explained above with respect to the general interconnection

agreements.

The strongest argument for general jurisdiction is that Telmex

had arrangements with American carriers to accept telephone signals

from Texas, and in order to serve this purpose, Telmex’s

telecommunications lines crossed into Texas, terminating across the

border. The termination of Telmex’s telephone lines in Texas

allows for continuous and systematic transfer of calls. However,

despite the apparent force of the argument that such a contact

demonstrates a presence in Texas for business purposes, we are

bound by Applewhite v. Metro Aviation, Inc., 875 F.2d 491 (5th Cir.

1989), in which such interconnections, even though crossing the

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border into a forum, were held insufficient to confer general

jurisdiction under the Due Process Clause.

In sum, the totality of the contacts suggests that Telmex

conducted a great deal of business with Texas, but virtually none

in Texas, as such general jurisdiction cannot be shown, even on a

prima facie basis.

2. Clayton Act Jurisdiction

Because we find that ATI has shown potential U.S. antitrust

injury, jurisdiction over Telmex may be obtainable based on

nationwide contacts rather than just Texas contacts under the

jurisdictional provision of the Clayton Act, 15 U.S.C. § 22. This

provision allows for jurisdiction over any federal antitrust suit

in any district in which a defendant transacts business, and

provides that “all process in such cases may be served in the

district of which it is an inhabitant, or wherever it may be

found.” When jurisdiction is invoked under the Clayton Act, the

court examines the defendant’s contacts with the United States as

a whole to determine whether the requirements of due process have

been met. See Go Video, Inc. v. Akai Electric Co., Ltd., 885 F.2d

1406 (9th Cir. 1989).

However, while there may be some additional evidence of Telmex

doing business with the U.S., there is no evidence qualitatively

difference on the subject of doing business in the U.S. for what we

deem to be a relevant time period from 1990 to 1996. Thus, Clayton

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Act personal jurisdiction over the antitrust claims is also

unavailable.

3. Specific Jurisdiction

ATI maintains that specific jurisdiction over Telmex arises

because Telmex “purposefully directed its activities to residents

of Texas (ATI and over 80 other resellers).” As ATI recognizes,

specific jurisdiction over a nonresident exists when the defendant

“purposefully avails” itself of the privilege of conducting

activities in the forum, and the plaintiff’s cause of action arises

out of or relates to that act. See Burger King Corp. v. Rudzewicz,

471 U.S. 462, 476 (1985). By working through SBC and MCI to obtain

the numbers of resellers, ATI maintains, Telmex purposefully

availed itself of the forum.

While Telmex did not conduct much business in Texas, it

conducted a high volume of business with Texas and Texas

corporations. It was this business with which Telmex was concerned

when Telmex allegedly canceled ATI’s numbers. Such actions, if

done without a legal right, may amount to violation of U.S. law.

The issue of whether they were legally privileged, however, is not

before us, and such a defense would not defeat personal

jurisdiction. Thus, if the allegations against Telmex are true,

then Telmex may have violated U.S. antitrust law by harming a Texas

business through the willful cancellation of a necessary portion of

that business’s service. Such actions would have reasonably

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foreseeable consequences in Texas.

It is no use to say that ATI’s location in Texas was

“fortuitous.” ATI had to be located somewhere and Telmex knew

where that was and directed its actions toward Texas by canceling

phone service linked to Texas. Telmex’s lines ran right up and

into Texas for the express purpose of serving Texas residents with

Mexican phone service, a service which it received millions of

dollars a month in revenue. The allegation that Telmex shut down

these lines in order to harm a Texas business whose services were

legal in Mexico suffices to confer personal jurisdiction over

Telmex for the injuries suffered in Texas. The equivalent result

would hold if an electric company sent an electric spike through

its lines, damaging computers on the other end, even if that

company’s lines did not carry the spike all of the way to its

destination.

By conducting a large volume of business with Texas through

contracts carefully drafted to avoid subjecting Telmex to general

personal jurisdiction in Texas, Telmex may have avoided doing

business in Texas, but it made sufficient contacts with Texas and

received sufficient benefits that personal jurisdiction in Texas is

proper to answer for the consequences of the actions it allegedly

took, directed toward Texas, to protect its business with Texas.

E. Discovery

ATI complains discovery was improperly limited. The district

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court stayed discovery on everything except jurisdictional issues

and never lifted the stay. ATI contends that it was reversible

error for the district court to grant summary judgment for SBC and

MCI on all of ATI’s causes of action without allowing discovery on

substantive issues.

ATI points to SBC's assertion of the Copperweld doctrine,

which requires a factual determination as to whether a monopolistic

conspiracy occurred between economic competitors. This doctrine

was asserted for the first time in SBC’s motion for summary

judgment. ATI complains that it was unable to investigate the

relationship between SBC and Telmex for the purpose of this

doctrine. ATI also complains it was unable to investigate the

anticompetitive effect in the United States of the defendants’

conduct. In particular, ATI points to the fact that the district

court ruled against ATI on the issue of relevant market, without

affording ATI the opportunity to pursue the issue through

discovery. The issue of relevant market is a fact question. See,

e.g., C.G. Services, Inc. v. Control Data Corp., 759 F.2d 1241 (5th

Cir. 1985); Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732

F.2d 480 (5th Cir. 1984).

ATI has waived the issue of inadequate discovery with respect

to SBC. Under Federal Rule of Civil Procedure 56(f), the

appropriate way to raise the issue is for the party opposing the

motion for summary judgment to file a motion for a continuance with

an attached affidavit stating why the party cannot present by

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affidavit facts essential to justify the party’s opposition. ATI

did not do this with respect to SBC.

MCI made such a motion, but the district court denied it. To

obtain a continuance of a motion for summary judgment, a party must

“specifically explain both why it is currently unable to present

evidence creating a genuine issue of fact and how a continuance

would enable the party to present such evidence.” Liquid Drill,

Inc. v. U.S. Turnkey Exploration, Inc., 48 F.3d 927, 930 (5th Cir.

1995). The non-moving party may not simply rely on vague

assertions that additional discovery will produce needed, but

unspecified, facts in opposition to summary judgment. See Daboub

v. Gibbons, 42 F.3d 285, 288 (5th Cir. 1995). If it appears that

further discovery will not provide evidence creating a genuine

issue of material fact, the district court may grant summary

judgment. See Resolution Trust Corp. v. Marshall, 939 F.2d 274,

278 (5th Cir. 1991).

ATI failed to specify its intended discovery or how such

discovery would assist it in opposing summary judgment in favor of

MCI. ATI failed to identify who could provide information relevant

to the issues other than witnesses who had already been deposed one

or more times before.

When a party is not given a full and fair opportunity to

discover information essential to its opposition to summary

judgment, the limitation on discovery is reversible error. See

Anderson v. Liberty Lobby, 477 U.S. 242, 250 (1986). ATI, however,

49
has not persuasively indicated that it was deprived of any relevant

information with respect to MCI. Cf. RTC v. Marshall, 939 F.2d

274, 278 (5th Cir. 1991) (requiring the nonmovant to show how

additional discovery would lead to unresolved issues of fact). For

these reasons, it was proper for the district court to deny

additional discovery.

IV.

For the forgoing reasons, we REVERSE the district court’s

grant of summary judgment to MCI and SBC on the substantive issues

in this case, we REVERSE the dismissal of Telmex on personal

jurisdiction, and we REVERSE the denial of partial summary judgment

to ATI on the issue of the lawfulness of its activities in Mexico.

We REMAND this case to the district court for additional

proceedings consistent with this opinion.

REVERSED AND REMANDED.

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