A federal jury yesterday found American Telephone & Telegraph Co. guilty of massive antitrust violations in the telephone equipment business and awarded Litton Industries Inc. $276.7 million in damages.
Ending seven days of deliberations, the five woman, one man jury in U.S. District Court in New York City found the Bell System guilty of monopolizing the market in switchboard telephone equipment during the early 1970s. The Litton case is the basis for significant parts of the Justice Department's suit here against AT&T.
The jury awarded the Beverly Hills, Calif., company $92.25 million, tripled under federal antitrust law to $276.7 million.Litton had sought $570 million. The jury found AT&T guilty of monopolization and attempting to monopolize the telephone equipment market, but dismissed charges of conspiracy to monopolize and conspiracy in restraint of trade.
Theodore Craver. Litton's staff vice president and director of trade regulation, said the company is "very gratified with the result" and said the verdict has "vindicated our position."
Craver said the verdict "renews our faith in the jury system" and said Litton is not disappointed with the damage award. "There was no way to determine what the numbers would have been because it's obviously a 'but for' situation." he said. "The jury made their determination, and we're very happy with it."
Litton attorney William Simon of the Washington law firm Howrey & Simon said: "We asked for more but we're never disappointed when we win. It ain't chicken feed."
An AT&T spokesman, Edward Goldstein, assistant financial officer, said the company would appeal the decision. "The verdict, however, is neither a complete win or a complete loss of either side," Goldstein said. "We remain convinced that the evidence demonstrated our intent to deal reasonably and fairly with competitors.
"We are disappointed that the jury found, in part, otherwise," Goldstein said. "While we believe the award of $92 million is unjustified, it is a far cry from the $570 million Litton sought."
But the verdict is clouded by a decision earlier this month by the judge hearing the case, U.S. District Judge William Conner, who pledged to impose "substantial sanctions" against Howrey & Simon for misconduct and negligence in connection with discovery procedures in the suit.
Conner ruled that the law firm had concealed evidence and made false statements to the court and AT&T lawyers. Conner deferred action on the sanctions until the jury's verdict, but yesterday asked Litton to file a response to his decision within 10 days. AT&T was given 10 days to reply.
The verdict follows by just over a year a jury verdict for MCI Communication Corp. in another antitrust suit against AT&T. In that case, based on charges the AT&T violated antitrust laws in monopolizing the long distance communications market, a jury in Chicago awarded MCI $600 million, tripled to $1.8 billion. That verdict, which AT&T appealed and is now being considered by a federal appeals court panel, is considered the largest in antitrust history.
The Litton victory, like the June 1980 verdict in the MCI case, was clearly viewed as good news to the Justice Department's trial team in the government's landmark antitrust case against AT&T. substantial portion of the government's evidence in the case is based on the Litton charges.
"A key issue in both the Litton case and the broader government case was AT&T's insistence that competing companies like Litton connect their equipment to the AT&T telephone system using an "interface device," that AT&T claimed was needed to help prevent damage to the network.
The case was filed on June 7, 1976, alleging that AT&T conspired to monopolize the sale and leasig of switchboard or PBX equipment. These computerized devices were designed to connect. AT&T lines with individual telephones within an office or other facility.
Litton Systems Inc. a subsidiary of the Beverly Hills based company entered the business in 1971, but withdrew from the field three years later. Litton alleged that it was driven from the business as a result of anticompetitive AT&T practices.