Teams of lawyers from American Telephone & Telegraph Co. and the U.S. government filed into a courtroom Friday to resume planning for the Justice Department's landmark suit that seeks to break up the Bell System.
U.S. District Judge Harold Greene -- who by all accounts has been creative in steering the massive, six-year-old antitrust case through a series of complicated pretrial maneuvers over the last two years -- told the lawyers that this week he probably will order the trial to begin early in 1981.
But Greene's work -- and the millions of dollars already spent on what many believe is the most significant anti-trust case ever brought by the federal government -- also will be the subject of an extraordinary proceeding this week: The House Judiciary Committee will begin to consider whether the work of another House committee may well be undermining the entire Justice Department endeavor.
A significant number of congressional, academic and telecommunications experts, together with competitors of AT&T, believe that the Justice Department's suit will be effectively gutted by the efforts of the House Commerce Committee to rewrite the Communications Act of 1934 and restructure AT&T through legislation.
Rep. Peter Rodino (D-N.J.), chairman of the Judiciary Committee, has lead the attack on what the Commerce Committee has been doing requesting and getting referral of the communications rewrite bill to his committee after the Commerce Committee easily passed it on Aug. 25.
The legislative splitting up of the Bell System into regulated and unregulated units, Rodino said on July 1, "will have a dramatic effect on the pending litigation, perhaps imparing the chances of a settlement, or drastically altering the terms of the settlement that could be attained."
According to those who support the Rodino position, if the communications bill becomes law or even passes the House before the antitrust case against AT&T is over, Greene would be forced to consider that the nation's lawmakers had gone on record as favoring a particular set of structural goals for the communications industry.
Executives of AT&T repeatedly have said that passage of communications legislation and Carter administration support for that legislation indicates that government policy is taking different and contradictory positions.
On the one hand, the executives argue in asserting that the current telecommunications law is inadequate, Congress is pushing the legislative restructuring of their company. On the other hand, the Justice Department is seeking divestiture from AT&T of its critical equipment susbidiary, Western Electric, and its technical facilities, Bell Laboratories.
But Bell critics have long argued that, as much as anything else, At&t's aggressive support of the legislative option is designed to frustrate the Justice Department suit.
Charles Brown, chairman of AT&T, has called the Justice Department suit "obsolete" in light of the congressional effort. And, in a 1979 memo to the Senate Commerce Committee, AT&T asserted that Congress "is the appropriate forum for the resolution of the fundamental issues regarding the structure of an industry as essential to the nation's economy and security as telecommunications.
"It is equally important that the federal government as a whole adopt a single coherent telecommunications policy. Under these circumstances, we believe that it would be inappropriate for the Department of Justice to attempt to override Congress' painstaking determination of the public interest relative to the structural, economic and technical aspects of the telecommunications industry," the AT&T memo said.
An even more blunt statement of the phone company's position can be found in an untitled Bell memo -- not written on AT&T letterhead -- submitted 14 months ago to the Senate committee: "Bell does not ask that the Department of Justice be flatly precluded from pursuing the non-structural -- i.e. non-divestiture -- aspects of this case against the Bell System to judgment," the memo said.
The memo goes on to say that the Justice Department lawyers "could continue to bring the case to judgment, and if they prevail, recover a judgment barring conduct which may have served as a basis for liability. What the department should be barred from doing is recovering a judgment that is at cross purposes with the legislation."
In essence, then, AT&T discreetly is saying that even if new legislation is enacted, the Justice Department should be free to continue its case. But, at the same time, AT&T is saying that in light of the legislative effort and the accompanying restructuring dictated in all the versions of the bills before Congress, the Judice Department should also be precluded from seeking the end result it has repeatedly sought -- divestiture of key Bell subsidiaries.
An AT&T spokesman denies that behind all the aggressive Bell lobbying and legal maneuvering is an effort to undermine the government's antitrust case and says the memo is consistent with the company's testimony before Congress last year.
But William Saxbe, who as attorney general in 1974 brought the AT&T suit, has called the legislative effort by the House Commerce Committee "nothing more than a scandalous interference with the judicial process and the power of judicial control."
The committee is expecting to receive testimony this week from Henry Geller, who as head of the National Telecommunications and Information Administration, is the government's top communications policy maker. Geller and Sanford Livack, the head of the Justice Department's antitrust division, say that a so-called savings clause in the proposed House legislation effectively bars courts from considering the legislation in evaluating antitrust cases.
Nevertheless, many observers maintain that the views of the trust-busters have been suppressed. In addition, most antitrust division lawyers were to come forward and tell a congressional committee that the legislation would destroy or even limit their prosecutorial effectiveness in the AT&T case, they would, in effect, be giving AT&T just the opportunity critics say the company wants. For AT&T would surely use such a statement by government lawyers to prove just that point before either Greene or an appeals court.
Further complicating the matter is that the proposed legislation is designed to modify a 1956 consent decree between the government and Bell that essentially precludes AT&T from entering data processing and other fields that are unregulated.