Brief for Appellee United States of America : U.S. et al. v. Thomson Corp., et al. and Hyperlaw, Inc.

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ORAL ARGUMENT SCHEDULED FOR MAY 19, 1998 No. 97-5183 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT UNITED STATES OF AMERICA, ET AL., Plaintiffs-Appellees, v. THOMSON CORP., ET AL. Defendants-Appellees, HYPERLAW, INC., Appellant. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA BRIEF FOR APPELLEE UNITED STATES OF AMERICA (FINAL COPY) JOEL I. KLEIN Assistant Attorney General DONNA E. PATTERSON Deputy Assistant Attorney General CRAIG W. CONRATH ROBERT B. NICHOLSON JAMES K. FOSTER, JR. JOHN P. FONTE Attorneys Attorneys Department of Justice Department of Justice 1401 H Street, N.W. 601 D Street, N.W. Suite 4000 Room 10535 Washington, D.C. 20530 Washington, D.C. 20530 (202) 514-2435

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES A. Parties and Amici. All parties, intervenors, and amici appearing before the district court and in this Court are listed in the Brief for Appellant, HyperLaw, Inc. B. Rulings Under Review References to the rulings at issue appear in the Brief for Appellant, HyperLaw, Inc. C. Related Cases This case was heard in the United States District Court for the District of Columbia, in Docket No. 96-1415. Notices of appeal from that action were filed in this Court in Nos. 96-5309, 97-5062 and 97-5070. All three appeals were voluntarily dismissed by the appellants. Additionally, HyperLaw filed a notice of appeal from the December 23, 1996 district court's order which was docketed in this Court as No. 97-5063. This Court dismissed that appeal as moot on October 23, 1997. The "appeals now before the United States Court of Appeals for the Second Circuit," mentioned in appellant's certificate as to related cases, are not related to this case. Those appeals are from declaratory judgment actions concerning West Publishing Company copyright claims, and do not involve issues similar to those presented in this appeal.

TABLE OF CONTENTS

CERTIFICATE AS TO PARTIES, RULINGS AND RELATED CASES
TABLE OF AUTHORITIES
GLOSSARY
STATEMENT OF JURISDICTION
STATUTORY PROVISIONS
STATEMENT OF ISSUES
STATEMENT OF THE CASE

Proceedings In The District Court
Statement of Facts
1. Background To The Transaction
2. The Proposed Consent Decree
3. The District Court's Decisions

SUMMARY OF ARGUMENT

ARGUMENT

STANDARDS OF REVIEW
THE DISTRICT COURT'S FINDING THAT THERE ARE NO "DETERMINATIVE DOCUMENTS" WITHIN THE MEANING OF THE TUNNEY ACT IS NOT CLEARLY ERRONEOUS
THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY NOT REQUIRING A SECOND ROUND OF NOTICE AND COMMENT

CONCLUSION

WORD COUNT CERTIFICATE

CERTIFICATE OF SERVICE

ORAL ARGUMENT SCHEDULED FOR MAY 19, 1998 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 97-5183 UNITED STATES OF AMERICA, ET AL., Plaintiffs-Appellees, v. THOMSON CORP., ET AL. Defendants-Appellees, HYPERLAW, INC., Appellant. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA BRIEF FOR APPELLEE UNITED STATES OF AMERICA STATEMENT OF JURISDICTION The district court had jurisdiction to enjoin the subject acquisition under 15 U.S.C. &167;&167; 4 & 8 and 28 U.S.C. &167;&167; 1331 & 1337. This Court has jurisdiction to review the district court's final judgment under 15 U.S.C. &167; 29(a) and 28 U.S.C. &167;&167; 1291 & 1294. Final judgment was entered on March 7, 1997, and, after the district court granted an extension of time within which to file a notice of appeal from that final judgment, the notice of appeal was timely filed on July 9, 1997. (Doc. 136).¹ See infra note 4.

STATUTORY PROVISIONS

All applicable statutes, etc., are contained in the Brief for Appellant, HyperLaw, Inc. STATEMENT OF ISSUES 1. Whether the district court clearly erred when it found that there were no determinative documents within the meaning of the Tunney Act in this antitrust consent decree proceeding. 2. Whether the district court abused its discretion when it determined that additional public notice and comment was not needed for it to make its public interest determination. STATEMENT OF THE CASE A. Proceedings In The District Court On June 19, 1996, the United States of America and the states of California, Connecticut, Illinois, Massachusetts, New York, Washington and Wisconsin ("plaintiffs"), filed a complaint challenging the proposed acquisition of West Publishing Company ("West") by the Thomson Corporation ("Thomson") as a violation of Section 7 of the Clayton Act, 15 U.S.C. &167; 18, and Section 1 of the Sherman Act, 15 U.S.C. &167; 1. (Doc. 1; J.A. 123). The complaint sought permanent injunctive relief. Simultaneously, the plaintiffs filed, pursuant to the Antitrust Procedures and Penalties Act ("Tunney Act"), 15 U.S.C. &167; 16(b)-(h), a proposed consent decree to settle the case. (Doc. 3 Attachment; J.A. 591). On July 5, 1996, the United States published the proposed decree and a competitive impact statement ("CIS") in the Federal Register. See 61 Fed. Reg. 35,250 (1996). . Comments were received from 26 parties, to which the plaintiffs filed a response, including amendments to the proposed decree, on September 23, 1996. (Doc. 43; J.A. 625).² On September 30, 1996, the district court heard oral argument from the plaintiffs, from Thomson and West, and from amicus curiae Lexis-Nexis. The district court also received amicus briefs from appellant, HyperLaw, Inc. (Doc. 49), and Lexis-Nexis. On October 23, 1996, the plaintiffs moved for entry of the revised proposed consent decree as a final judgment. (Doc. 58; J.A. 709). On December 23, 1996, the court entered an opinion and order finding all aspects of the proposed decree to be in the public interest except for one, and on that basis it denied the plaintiffs' motion for entry of a final judgment. (Docs. 77 & 78).³ It pointed out, however, how it believed the defects could be remedied, and invited submission of a revised decree. 949 F. Supp. at 931-32. A revised decree was submitted on February 4, 1997 (Doc. 99), but was again denied by order and opinion filed on February 27, 1997. (Docs. 116 & 117; J.A. 73). This time the court pointed out additional minor defects that had to be corrected before it would enter a final . judgment. In that order the court also granted HyperLaw's motion to intervene for purposes of appeal. On March 7, 1997, after the parties submitted another revised consent decree, the court entered the revised decree as a final judgment. (Doc. 126; J.A. 87). This appeal followed.⁴ B. Statement of Facts 1. Background To The Transaction West was the largest publisher of legal research materials in the United States -- notably of court decisions contained in its National Reporter System. (Doc. 6 p. 5; J.A. 159). Thomson, a Canadian corporation, also was a very large publisher of legal research materials in the United States. (Id. at 4-5; J.A. 158- 59).⁵ On February 25, 1996, Thomson agreed to purchase West for approximately $3.42 billion in cash. (Id. at 5; J.A. 159). The plaintiffs in their antitrust complaint alleged that the proposed acquisition would significantly reduce competition in several specific product markets in three major categories: 1) print and/or CD-ROM sales of nine "enhanced primary law" products (i.e., annotated caselaw or statutes)⁶; 2) print and/or CD-ROM sales of 47 "secondary law" products (i.e., federal or state procedure manuals, law treatises, practice guides, etc.)⁷; and 3) the provision of comprehensive online legal research services. (Doc. 1 pp. 8-20; J.A. 130-42). The complaint explained that Thomson and West were the strongest publishers in the nine enhanced primary law product markets, and were either the only two or two of only a few publishers in the 47 secondary law product markets. (Doc. 1 p. 3; J.A. 125). Additionally, West claimed copyright infringement when a rival used what is commonly referred to as "star pagination" -- the insertion of an asterisk or other symbol in the text of a decision to indicate internal page breaks in West's National Reporter System, and the placement nearby of the West reporter's page number. (Id. at 12; J.A. 134). West had granted few, if any, licenses to employ star pagination to anyone other than Lexis-Nexis. (Id.). Because courts usually require citations to the National Reporter System,. the complaint alleged that West's copyright claim chilled entry into the primary and secondary law markets charged in the complaint because new entrants could not offer products using star pagination without the threat of copyright infringement litigation. (Id.). Finally, the complaint explained that Lexis-Nexis and Westlaw are the nation's two largest comprehensive online legal research services -- electronic databases that allow users to search for and find relevant portions of primary and secondary law materials. (Doc. 1 p. 16; J.A. 138).⁸ West places its own primary and secondary law products on Westlaw. (Id. at 18; J.A. 140). Lexis-Nexis places its own and third parties' material on its service, including some Thomson primary and secondary law products such as United States Code Service and its annotated statutes for California, New York, Massachusetts and Michigan. (Id.). Thomson also licensed to Lexis-Nexis its Auto-Cite electronic citator service that is used to gather case history and negative commentary for a case. The complaint alleged that the acquisition would increase Thomson's incentive to raise prices for, reduce quality and innovation of, or withhold access to, some of the products it was licensing to Lexis-Nexis. (Id. at 19; J.A. 141). . 2. The Proposed Consent Decree Simultaneously with filing the complaint, the plaintiffs filed a proposed consent decree to remedy the violations charged in the complaint. The proposed decree required Thomson to divest its U.S. Reports Lawyers' Edition, its enhanced statutory law products, and one secondary law product in each of the relevant secondary law markets. (Doc. 3 Attachment p. 6; J.A. 596). It further required Thomson to divest its Auto-Cite product, and to permit the states of California, Washington and Wisconsin to reopen bidding of their contracts to publish the official state reporters, thus allowing those states to cause a divestiture of the state reporter products and related assets if they so chose. (Id. at 6, 17; J.A. 596, 607). The purchasers of divested products would receive all production assets of the products, including intellectual property and work in progress, to allow those products to remain viable. (Id. at 3-4; J.A. 593-94). The decree also required Thomson to license the use of star pagination in the National Reporter System to other legal publishers (id. at 15-16; J.A. 605-06), and set forth a model license agreement with a fee schedule. (Id. at Exhibit B; J.A. 615). That agreement contained a provision that required the licensee to give up its right to challenge West's copyright claim. (J.A. 619).. ⁹ The proposed decree did not prohibit the defendants from consummating their transaction. Rather, it required them to hold the divestiture products separate and to maintain those products as ongoing and viable assets until divestiture was completed. (Doc. 3 Attachment pp. 14-15; J.A. 604-05). Additionally, through a stipulated order which the court signed on June 19, 1996, the defendants agreed to abide by the terms of the proposed decree as though the decree was in effect. (Doc. 3 p. 2; J.A. 585). Thus, although the defendants consummated the acquisition on June 20, 1996, the divestiture products were at all times held separate. The proposed consent decree and CIS were published in the Federal Register on July 5, 1996. Among other things, the CIS explained that there were no "determinative materials or documents" within the meaning of the Tunney Act, 15 U.S.C. &167; 16(b), that were considered by the United States in formulating the proposed decree. (Doc. 6 p. 24; J.A. 178). The public then had 60 days in which to comment. See 15 U.S.C. &167; 16(b). The plaintiffs received comments from 26 parties. On September 23, 1996, the plaintiffs filed with the court their response to the public comments,¹⁰ along with a copy of each of the comments received. (Doc. 43; J.A. 625). In response to the comments, the parties agreed to lower the star pagination license fee. They also clarified that neither Thomson nor West would use the existence of the star pagination license agreement to support West's copyright claim, that the license fee need only be paid by the publisher and not by third party information providers, and that the license fee for books was payable only in the year printed. (Doc. 43 pp. 35, 40, 50-51, 52; J.A. 663, 668, 678-79, 680). Additionally, at the September 30, 1996 hearing, in response to concerns voiced by the court, Thomson agreed to eliminate the license provision that prohibited licensees from challenging West's copyright claim (Tr. 41-42, 84; J.A. 798-99, 841). In its amicus brief filed October 18, 1996, HyperLaw argued, among other things, that the government failed to make available "determinative documents" within the meaning of the Tunney Act. It claimed that those documents included, at the very least, "secret 1988 agreements between West and Lexis-Nexis," and the 1996 license extension agreement between Thomson and Lexis. (Doc. 49 pp. 4, 9-10 & n.8).¹¹ It further argued, . by reference to "HyperLaw's letter to DOJ dated October 10, 1996 (HyperLaw Exhibit J)," that the government was required to republish for public comment the revised proposed consent decree. (Id. at 3). On October 23, 1996, the plaintiffs filed their response to HyperLaw's amicus brief reiterating that there were no determinative documents, and explaining why the modifications to the proposed decree did not require republication. (Doc. 57). Also on October 23, 1996, the plaintiffs moved for entry of a revised consent decree. (Doc. 58; J.A. 709). In addition to the changes noted above, and in response to a supplemental brief filed by Lexis-Nexis (Doc. 65), the submitted proposed decree clarified: 1) that Thomson would not prohibit buyers of divestiture products from cross-citing to Thomson products; 2) that Thomson's assignment of its Auto-Cite agreement with Lexis- Nexis as part of the divestiture of Auto-Cite would be only "if permitted by contract;" and 3) that the Auto-Cite database to be divested was sublicensable. (Doc. 58 at 2; J.A. 710). 3. The District Court's Decisions On December 23, 1996, the court issued a lengthy opinion and order finding all aspects of the proposed consent decree in the public interest except for the star pagination license agreement. The court first found that the plaintiffs had fully . complied with all procedural requirements of the Tunney Act. The court specifically rejected HyperLaw's claims that the government should be required to disclose additional documents and that the court could not approve the revised decree until it was published in the Federal Register, finding "nothing in the statute or in the case law" to support HyperLaw's claims. 949 F. Supp. at 915 n.7. The court then evaluated whether the divestitures required by the proposed decree would remedy the violations charged in the complaint. The court found that the decree's hold-separate safeguards, in conjunction with the degree of assets to be divested and a buyer's ability to hire Thomson/West employees, demonstrated that "the divested products will attract strong, capable buyers who will be able to ensure the viability of the [divestiture] products." 949 F. Supp. at 915-16. The court also found that the divestiture products had sufficient brand recognition, and that the purchasers of those products would be able to continue cross- referencing other Thomson products. Id. at 916-17. Thus, the court "conclude[d] that the Proposed Final Judgment adequately ensures the viability of the divested Thomson products, thereby curing the specific allegations in the complaint." Id. at 918. For the same reasons, the court also found that the specific divestitures required by the proposed decree, including Supreme Court Reports Lawyers Edition and Auto- Cite, cured the offense charged in the complaint in the comprehensive online legal research services . product market. Id. at 921-24. The court then addressed West's copyright claim and the star pagination license agreement. The court expressed "serious doubts" about the merits of West's claim. 949 F. Supp. at 925- 26. It then noted that "the consent decree does legitimize Thomson/West's ability to profit from the licenses for use of star pagination while the issue is litigated in the Second and Eighth Circuits." Id. at 926.¹² It concluded that "[t]hat fact alone is troublesome in view of the weakness of West's claim." Id. Although the court found the mandatory nature of the license agreement in the public interest, since it gave publishers protection from litigation by Thomson and West (id. at 928-29), it found that the fees to be paid by a licensee would "maintain[] by court order significant barriers to entry into the relevant markets identified in the complaint." Id. at 929. Thus, the court found that the "license agreement and fee schedule do not effectively remedy the anticompetitive effects of the merger alleged in the complaint." Id. The court then "suggest[ed] that the public interest would be served if West and Thomson would agree to amend the license provisions . . . to provide a free license" until West's copyright claim is judicially resolved. Id. at 930. And, although it denied entry of the decree, the court invited the parties to "submit a revised Proposed Final Judgment with an appropriate motion at their earliest convenience." Id. at 931-32. On January 26, 1997, Thomson agreed to sell all of the divestiture products to Lexis-Nexis. (Doc. 98). Subsequently, on February 4, 1997, the defendants submitted a revision to the proposed decree, which the plaintiffs supported, addressing the license fee issue raised in the court's December opinion. (Doc. 99). The revision provided that for any publishing company with net sales of less than $25 million per year, all license fees would be deferred until either "a final judicial determination" of West's copyright claim had been made, or December 31, 2000, whichever came first. If no final judicial determination had been made by December 31, 2000, licensees would start paying prospectively according to the fee schedule, but the fees accrued to that point would continue in abeyance. Deferred fees would become payable 30 days after West's copyright claim was upheld. (Id.). Also on February 4, 1997, HyperLaw moved to intervene for purposes of appeal. (Docs. 100 & 106; J.A. 506, 531). On February 27, 1997, the court entered an opinion and order addressing these matters. (Docs. 116 & 117). First, the court concluded that the proposed sale of all divestiture products to one buyer rather than several did not alter its . previous findings concerning "the soundness of the divestiture process and the sufficiency of the divestiture package." (Doc. 116 pp. 3-5; J.A. 75-77). It then addressed the revision to the license agreement and noted that a minor change was needed to clarify that a "final judicial determination" was a Supreme Court decision on the merits. (Id. at 8-9; J.A. 80-81). Finally, it granted HyperLaw's motion to intervene for purposes of appeal. (Id. at 10-11; J.A. 82-83). After the license agreement was so clarified, the court entered the amended proposed consent decree as Final Judgment on March 7, 1997. (Doc. 126; J.A. 87). Subsequently, the plaintiffs approved the sale of the divestiture products to Lexis-Nexis, and the sale was completed on March 31, 1997. SUMMARY OF ARGUMENT The district court's finding that none of the four document's singled out by HyperLaw are "determinative documents" within the meaning of the Tunney Act is not clearly erroneous. As this Court recently explained, a determinative document is one that had a significant impact on the government's formulation of the proposed decree. Since two of the documents at issue did not even exist when the consent decree was drafted, they could not have been instrumental in that drafting. And HyperLaw offers no evidence to show that the other two documents it seeks played a role in the decree's formulation. Indeed, HyperLaw's evidence proves the exact opposite.. Additionally, the district court did not abuse its discretion by not requiring a second round of public comments in this case. The few modifications that were made to the original proposed decree were a "logical outgrowth" of that proposal. Indeed, none of the changes were contrary to HyperLaw's or the public's interests, and the only substantive changes involved the star pagination license, not the divestiture provisions of which HyperLaw complains. Because the divestiture provisions in the original proposal were not modified during the course of the proceeding, those provisions were necessarily subject to full notice and comment. ARGUMENT I. STANDARDS OF REVIEW 1. In United States v. Western Electric Co., 993 F.2d 1572 (D.C. Cir.), cert. denied, 510 U.S. 984 (1993), this Court left unresolved whether the district court's underlying findings in a Tunney Act case, which if improper could constitute abuse of discretion, are reviewed under the "clearly erroneous" standard or are reviewed de novo. See 993 F.2d at 1577-78 (citing Fed. R. Civ. P. 52 but analogizing Tunney Act appellate review to review of district court's application of substantial evidence standard in reviewing an agency decision). In either case, the government's determinations are due substantial deference. Id. We believe that the court's finding that the government was correct that there are no determinative documents in this case. should be reviewed under the clearly erroneous standard. 2. We are not aware of any decision setting forth the standard for reviewing a Tunney Act district court's determination that an additional round of notice and comment is not required for it to make its "public interest" finding. Because the court enjoys broad discretion in controlling the evidence gathering in these cases, see infra pp. 21-22, we believe that its decision in this regard should be reviewed for an abuse of discretion. II. THE DISTRICT COURT'S FINDING THAT THERE ARE NO "DETERMINATIVE DOCUMENTS" WITHIN THE MEANING OF THE TUNNEY ACT IS NOT CLEARLY ERRONEOUS The Tunney Act's notice and comment provision requires the government to make available to the public copies of the proposed consent decree, and "any other materials and documents which the United States considered determinative in formulating such proposal." 15 U.S.C. &167; 16(b). In its CIS, the government certified that there were no determinative documents. (Doc. 6 p. 24; J.A. 178). And although HyperLaw claimed that there were such documents, citing Section 16(b), the district court agreed with the government. See 949 F. Supp. at 915 n.7. Nonetheless, HyperLaw's primary argument (Br. passim) is that the district court erred when it held that the Tunney Act did not require production of any documents in this case. HyperLaw argues that there are four determinative documents that the government failed to produce: 1) the 1988 settlement. agreement between West and Mead Data¹³; 2) the March 1996 agreement that extended Lexis-Nexis' licenses for Thomson content included on its service¹⁴; 3) the January 1997 Thomson/Lexis- Nexis sales agreement for the divestiture products; and 4) the mutual release that was part of that sales agreement. See HyperLaw Br. at 22 n.9.¹⁵ HyperLaw's claim borders on the frivolous. Just seven months ago, in Massachusetts School of Law of Andover v. United States, 118 F.3d 776 (D.C. Cir. 1997) ("MSL"), this Court held that Section 16(b)'s statutory language and legislative history lead to the conclusion that the term "determinative documents" encompasses "only . . . documents, such as reports to the government, that individually had a significant impact on the government's formulation of relief -- i.e., on its decision to propose or accept a particular settlement. " 118 F.3d at 784 (quoting Gov't's Br.) The Court gave as an example of a determinative document the "Ramsden memorandum" that formed the basis for the government's decision not to require ITT to divest the then recently acquired. Hartford Fire Insurance Company. Id.¹⁶ HyperLaw, which omits any reference to MSL, does not come close to showing that the documents it claims are determinative "individually had a significant impact on the government's formulation of relief." 118 F.3d at 784.¹⁷ Neither the 1997 West/Lexis-Nexis sales agreement for the divestiture products, nor the mutual release attached to it, could have been determinative in government formulation of the proposed final judgment in 1996, because neither the agreement nor the release then existed.¹⁸ Nor does HyperLaw give any remotely persuasive. explanation why the March 1996 Thomson/Lexis-Nexis agreement, that merely extended existing licenses for 5 years, would have been determinative in formulating the decree. HyperLaw is thus left with arguing that the government must have considered the 1988 settlement agreement between West and Mead Data a determinative document because, allegedly, "the Government's own papers" "constantly" and "repeatedly" refer to that settlement agreement. (Br. 12, 17 n.5, 18, 20, 25 n.12, 29, 30). But the record is clear that no government "papers" refer to this 1988 agreement. Thus, although HyperLaw claims that it "described the many references to these 1988 agreements made in connection to the proposed consent decree" in its counsel's October 10, 1996 letter to the Department of Justice (Br. 20-21 & n.8), neither its brief nor that October 1996 letter provides one citation to any government document that makes reference to the 1988 agreement. Indeed, no such government document exists.¹⁹ Thus, HyperLaw's claim that "the Justice Department . . . repeatedly refer[ed] to central, critical, and finally determinative documents in virtually . every pleading filed" (Br. 30) (emphasis in original) is totally baseless.²⁰ Moreover, HyperLaw's claim, that "[a]ccording to the Government's own papers, these documents were used in its negotiation of the [star pagination] License Agreement" (Br. 18), is totally refuted by the very "evidence" upon which it does rely. Thus, on page 14 of its brief, HyperLaw quotes at length from an article in the September 1996 issue of The American Lawyer titled How West Was Won. That article, in turn, quotes "West's chief lawyer" as explaining that the proposed star pagination license agreement "is not analogous at all to the [1988] Lexis agreement with West -- [it is] different in almost every way -- and thus determining what Lexis might or might not save [by switching from its existing agreement to the proposed license agreement] is a very difficult calculation. " (Br. at 14) (second alteration in Br.). It is hard to imagine how a document that is "not analogous at all" and "different in almost every way" from the proposed license agreement was determinative in the formulation of that agreement.²¹ In short, none of the four documents HyperLaw seeks . " individually had a significant impact on the government's formulation of relief. " MSL, 118 F.3d at 784. Indeed, none of those documents even constitutes a " smoking gun[] or the exculpatory opposite." Id. Thus, the district court correctly held that the government was correct that they were not determinative documents within the meaning of the Tunney Act. III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY NOT REQUIRING A SECOND ROUND OF NOTICE AND COMMENT The government, in conformance with the Tunney Act (15 U.S.C. &167; 16(b)), published both the proposed decree and the CIS in the Federal Register. 61 Fed. Reg. 35,250 (1996). After receiving public comments, and again in conformance with Section 16(b), the government published the comments and its response to them. 61 Fed. Reg. 53,386 (1996). In the district court, HyperLaw nonetheless argued that because the parties had made certain modifications in response to the public comments, additional notice and comment was required. (Doc. 49). The district court disagreed, finding "nothing in the statute or in the caselaw that requires . . . further publication and opportunity to comment." 949 F. Supp. at 915 n.7. HyperLaw's claim that the court erred is meritless. In a Tunney Act proceeding, the role of the district court is to determine if the proposed consent decree is "in the public interest." 15 U.S.C. &167; 16(e). As the legislative history explains, the statute's "procedural" requirements -- government preparation of a CIS and participation in a notice and comment proceeding -- are intended "to assist the court in making that determination." S. Rep. No. 93-298, at 4- 5 (1973); accord H.R. Rep. No. 93-1463, at 21 (1974) (comments of Rep. Hutchinson) (the statutory requirement that "the Department of Justice . . . publish a competitive impact statement in the Federal Register and receive public comment . . . is to enable a court to determine whether a proposed consent decree is in the public interest "), quoted in Alex. Brown & Sons, 169 F.R.D. at 541. Moreover, Congress "anticipated that the trial judge will adduce the necessary information through the least complicated and least time-consuming means possible." S. Rep. No. 93-298 at 6. Indeed, Congress fully intended that the court would enjoy broad discretion in how it chose to obtain the necessary information. Id. at 7. Thus, Tunney Act notice and comment is analogous to agency rulemaking notice and comment. Both are intended to inform the decisionmaker of the pros and cons of the proposed action.²² And in the agency rulemaking context, the law is well settled that additional notice and comment is required only rarely. In. Omnipoint Corp. v. FCC, 78 F.3d 620 (D.C. Cir. 1996), this Court explained that whether a second round of comment is required depends on " whether the final rule promulgated by the agency is a "logical outgrowth" of the proposed rule. " 78 F.3d at 631 (quoting American Water Works Ass'n v. EPA, 40 F.3d 1266, 1274 (D.C. Cir. 1994)). The Court further explained that an agency "act[s] well within its authority" when it chooses to modify a proposed rule "based on comments responding to the [notice of proposed rulemaking]." 78 F.3d at 632. In fact, "[i]n most cases, if [after publishing notice] the agency then alters its course in response to the comments it receives, little purpose would be served by a second round of comment." American Water Works, 40 F.3d at 1274 (emphasis added). Rather, "a new round of notice and comment" is required only if it "would provide the first opportunity" for the public to comment on the proposed rule. Id. The same rule could well apply in Tunney Act proceedings. Cf. United States v. American Telephone & Tel. Co., 552 F. Supp. 131, 144-45 (D.D.C. 1982) ("AT&T")(suggesting without deciding that notice and comment would be required if "a major modification" were made to an existing consent decree), aff'd, 460 U.S. 1001 (1983).²³ And it is clear that the judgment . submitted for approval in October 1996 after notice and comment (Doc. 58), and generally approved by the court in December 1996, was a "logical outgrowth" of the original proposed decree. Omnipoint Corp., 78 F.3d at 631. It contained only two substantive changes to the original proposed decree -- both concerning star pagination licensing, and both in response either to the public comments or the court's expressed concerns. First, at the September 30, 1996 hearing, in response to concerns voiced by the court, Thomson agreed to eliminate the provision requiring a star pagination licensee to give up its right to challenge West's copyright claim (Tr. 41-42, 84; J.A. 798-99, 841). Second, in response to "many comments on the level of the pagination fees," the parties agreed to lower those fees (Doc. 43 pp. 39-40; J.A. 667-68).²⁴ The only other changes to the original proposed decree were the addition of language to clarify: 1) that Thomson would not use the star pagination license to support West's copyright. claim; 2) that the license fee need only be paid by the publisher; 3) that the license fee for books was payable only in the year printed; 4) that Thomson would not prohibit buyers of divestiture products from cross-citing to Thomson products; 5) that Thomson's divestiture of Auto-Cite would not violate its contract with Lexis-Nexis; and 6) that the divested Auto-Cite database would be sublicensable. (Doc. 43 pp. 35, 50-52; Doc. 58 p. 2; J.A. 663, 678-80, 710). All of the modifications were a natural outgrowth of the notice and comment process. Taken separately or together, the nine of them do not fundamentally change the original proposed decree. All either benefited HyperLaw and contributed to the public interest, or had no adverse effect on them. Thus, additional notice and comment was not required. Omnipoint Corp., supra; American Water Works, supra. Indeed, HyperLaw can not explain why any of the specific modifications that the parties made to the decree required additional comment. Rather, quoting its February 1997 motion to intervene for purposes of appeal, HyperLaw shifts its focus from the text of the decree to the actual carrying out of the decree. Thus, it claims that "the final transaction [Thomson's purchase of West and sale of the divestiture products to Lexis-Nexis] . . . is going to be substantially different than the original proposed decree of June, 1996." (Br. 25) (first emphasis added). Apparently, HyperLaw is implying that when . Thomson agreed to sell all the divestiture products to Lexis- Nexis, as opposed to other buyers, somehow this modified the decree and required further notice and comment. In fact, however, on the issue of divestiture nothing in the decree changed. The decree as originally proposed in June 1996 and as ultimately entered by the court in March 1997 merely required Thomson to divest specifically identified legal products, and to obtain the government's approval of any intended sale. It did this to remedy the acquisition's anticompetitive overlap of specific Thomson and West legal products as charged in the complaint.²⁵ The language of the decree never required nor prohibited the sale of the divestiture products to any particular entity. And since there was never any change to the decree in this respect, the original notice and comment were wholly sufficient. The district court, in rejecting HyperLaw's argument pressed here on appeal, correctly explained that the divestiture sale to Lexis-Nexis did not change the decree in any way; it merely carried it out (Doc. 116 pp. 4-5; J.A. 76-77):

[T]he Court has already decided that divestiture is an acceptable remedy for the anticompetitive effects of the Thomson/West merger and that the procedures set forth in the consent decree for accomplishing the divestiture are well designed to assure viability

and competitiveness. The fact that all of the Divesture (sic) Products will be sold to Lexis-Nexis does not alter that conclusion . . . . [Thus], the Court sees no reason to alter its judgment that the divestiture as set forth in the consent decree, whether to one buyer or to many, is in the public interest. In short, the district court did not abuse its discretion when it decided that it had sufficient information without additional notice and comment to make its public interest determination. CONCLUSION For the foregoing reasons, the judgment of the district court should be affirmed.²⁶ Respectfully submitted. JOEL I. KLEIN Assistant Attorney General DONNA E. PATTERSON Deputy Assistant Attorney General CRAIG W. CONRATH ROBERT B. NICHOLSON JAMES K. FOSTER, JR. JOHN P. FONTE Attorneys Attorneys Department of Justice Department of Justice 1401 H Street, N.W. 601 D Street, N.W. Suite 4000 Room 10535 Washington, D.C. 20530 Washington, D.C. 20530 (202) 514-2435

CERTIFICATE REQUIRED BY CIRCUIT RULE 28(d) I hereby certify that the foregoing Brief for Appellee United States of America contains no more than 12,500 words.

__________________________
JOHN P. FONTE
Counsel of Record

CERTIFICATE OF SERVICE I hereby certify that on March 27, 1998, I served the foregoing final form Brief for Appellee United States of America, by first-class mail, upon the following counsel of record: Wayne D. Collins, Esquire Lorence L. Kessler, Esquire Shearman & Sterling 1825 I Street, N.W. 599 Lexington Avenue Suite 400 New York, New York 10022 Washington, D.C. 20006 Paul J. Ruskin, Esquire 72-08 243rd Street Douglaston, New York 11363 Carl J. Hartmann, Esquire 69 Sussex Street Jersey City, New Jersey 07302

___________________________________
JOHN P. FONTE
Counsel of Record

FOOTNOTES

1 References to Doc. are to the document numbers of the district court's docket sheet.

2 The comments and the plaintiffs' response to them were published in the Federal Register on October 11, 1996. See 61 Fed. Reg. 53,386 (1996).

3 The district court's December 23, 1996 opinion and order are reported at 949 F. Supp. 907 (D.D.C. 1996). References in this brief to that opinion and order are to the official reporter.

4 HyperLaw originally filed a notice of appeal from the December 23, 1996 district court order. That notice was dated February 12, 1997 and was docketed in the district court on February 27, 1997. (Doc. 119). That notice produced docket number 97-5063 in this Court. The government moved to dismiss that appeal on the ground that it was from a non-final order. After HyperLaw opposed that motion, we suggested that HyperLaw seek from the district court, pursuant to Fed. R. App. P. 4(a)(5), an extension of time to file a notice of appeal from the court's March 7, 1997 judgment. HyperLaw did so on June 5, 1997 (Doc. 132), and the court granted the motion on July 9, 1997. (Doc. 135). After that appeal was docketed in this Court as No. 97-5183 (the instant appeal), this Court, by order filed October 9, 1997, dismissed appeal No. 97-5063. Three other appeals also were taken by other persons from non-final orders entered by the district court in 1996, and were docketed in this Court as Nos. 96-5309, 97-5062 and 97-5070: all were voluntarily dismissed.

5 Thomson owned Lawyers Cooperative Publishing, Bancroft- Whitney, and Clark Boardman Callaghan. (Doc. 1 pp. 2-3; J.A. 124-25).

6 These products are the United States Code, United States Supreme Court case law, the California Code, California case law, the Massachusetts Code, the Michigan Code, the New York Code, Washington case law, and Wisconsin case law. (J.A. 151).

7 Appendix C to the complaint identifies them. (J.A. 154).

8 In its brief (at 8-9) HyperLaw correctly states that West and Lexis-Nexis "control almost 100%" of the comprehensive on- line legal research market. That was true both before and after the subject acquisition.

9 Prior to the government's investigation of the subject acquisition, Thomson and Lexis-Nexis "negotiated extensions of the most important licenses for Thomson content [placed on the Lexis-Nexis service], both legal and non-legal," and generally at existing prices. 949 F. Supp. at 921. With these extensions, the average length of the licenses was seven years. Id. (In its brief (at 17, 22 n.9), HyperLaw refers to this agreement as the March 1996 agreement between Thomson and Lexis). Subsequently, in the proposed consent decree, Thomson agreed to extend for five additional years the licenses for its non-legal data bases. Id.

10 For logistical reasons the State of Connecticut was unable to join the plaintiffs' response to public comments, but it did join the plaintiffs' motion for entry of the revised consent decree that was filed on October 23, 1996. See 949 F. Supp. at 912 n.4.

11 The 1988 agreements sought by HyperLaw refer to the settlement agreement between West and Mead Data Central, Inc., then provider of Lexis-Nexis, entered into after the Eighth Circuit decided West Publishing Co. v. Mead Data Central, Inc., 799 F.2d 1219 (8th Cir. 1986), cert. denied, 479 U.S. 1070 (1987). In that case, the court of appeals, affirming the grant of a preliminary injunction, held that Lexis-Nexis' star pagination to West's National Reporter volumes infringed West's compilation copyright. See HyperLaw Br. at 8 n.3.

12 As the district court noted, 949 F. Supp at 925-26, West's copyright claim has had a long history of litigation. In fact, in December 1996, West's copyright claim was the subject of litigation in both the Second and Eighth Circuits. See 949 F. Supp. at 926 n.18. The United States filed an amicus brief in both of those proceedings arguing that star pagination to West's reporters does not infringe any West copyright. Id. Since then, the Eighth Circuit appeal was dismissed after the parties settled, and the Second Circuit appeal has been briefed and will be argued on March 16, 1998. Matthew Bender & Co., et al. v. West Publishing Co. et al., No. 97-7430 (2d Cir.).

13 See supra note 11.

14 See supra note 9.

15 On February 18, 1997, Lexis-Nexis filed the divestiture products sales agreement under seal. (Doc. 109). The mutual release is Exhibit E to that sales agreement. Because these documents did not exist prior to 1997, HyperLaw first claimed that they were "determinative documents" in its February 1997 motion to intervene for purposes of appeal. See J.A. 551.

16 The Ramsden memorandum and its significance to an accurate interpretation of the Tunney Act is also discussed in United States v. Alex. Brown & Sons, 169 F.R.D. 532, 541-42 (S.D.N.Y. 1996), appeal docketed, No. 97-6130 (2d Cir. May 27, 1997).

17 Curiously, HyperLaw does rely on United States v. Central Contracting Co., 537 F. Supp. 571 (E.D. Va. 1982) (Br. 17 n.5, 30). In that case, the court concluded that "determinative documents" include " [t]he materials and documents that substantially contribute to the determination [by the government] to proceed by consent decree. " 537 F. Supp. at 577 (alterations in original) (quoting United States v. Central Contracting Co., 531 F. Supp. 133, 134 (E.D. Va. 1982)). That court also was of the view, unsupported by statutory text, legislative history, or subsequent courts, that documents individually not determinative can, in the "aggregate," be determinative. 531 F. Supp. at 134. No court since has followed Central Contracting. Indeed, one court, relying in part on this Court's decision in United States v. Microsoft Corp., 56 F.3d 1448, 1459-61 (D.C. Cir. 1995), recently concluded that Central Contracting's interpretation of the Tunney Act conflicts with both the statute's purpose and legislative history. United States v. Alex Brown & Sons, 169 F.R.D. at 541-42. See MSL, 118 F.3d at 784-85 (statutory language suggests determinative documents "individually" impacted formulation of decree, and broad disclosure requirement would conflict with Congress' intent to preserve government's ability to settle cases).

18 Moreover, as the district court correctly found, the sale of all the divestiture products to Lexis-Nexis, as opposed to several buyers, did not alter in any way the proposed consent decree. See Doc. 116 pp. 3-5; J.A. 75-77 & infra pp. 25-27.

19 The few HyperLaw citations to documents referring to the 1988 agreement are to either letters, affidavits, or pleadings prepared by Thomson or Lexis-Nexis representatives, and none of them suggests that the government considered the 1988 agreement determinative. See, e.g., HyperLaw Br. at 13 (quoting Lexis- Nexis comments that the government's understanding, that under its existing agreement with West, Lexis-Nexis was paying 17 cents per thousand characters, "is not correct," and explaining that it actually was paying approximately the same rate (9 cents per thousand) that was contained in the proposed consent decree).

20 HyperLaw's unsupported claim that the "1988 agreements were anti-competitive from their inception" (Br. 20, 28) has no place in this case, because the legality of that agreement was not challenged by the government's complaint. See United States v. Microsoft Corp., 56 F.3d at 1459-60 (Tunney Act district court's jurisdiction is limited to evaluating the legality of only those practices against which the complaint was directed).

21 See also supra note 19.

22 As Judge J. Skelly Wright told Congress, the Tunney Act would provide antitrust consent decree courts with "light from the public." (HyperLaw Br. 21). The district court found that just such light was provided here, and described as "particularly helpful the public comments of Lexis-Nexis and HyperLaw [and nine other named commentators]." 949 F. Supp. at 909 n.1. Contrary to HyperLaw's claim (Br. 19), however, we note that Judge Wright made clear that the remarks now set forth in block quotes on pages 19 and 20 of HyperLaw's brief "represent[] my personal views on the pending legislation, and not necessarily the views of the [Judicial] Conference." The Antitrust Procedures and Penalties Act: Hearings on S. 782 & S. 1088 Before the Subcomm. on Antitrust and Monopoly of the Sen. Comm. on the Judiciary, 93d Cong., 146, 147, 151 (1973) (statement of Hon. J. Skelly Wright).

23 Arguably the standard should be more deferential to district court procedural discretion in Tunney Act cases, because the notice and comment procedure is intended "to assist the court in making [its public interest] determination," and the court enjoys broad discretion in how it chooses to resolve that issue. S. Rep. No. 93-298 at 5, 7. Moreover, HyperLaw is wrong in implying (Br. 22-24) that AT&T requires additional notice and comment whenever the parties to a proposed Tunney Act consent decree modify the proposal prior to its entry. In fact, after notice was published and comments were received in AT&T, the court required the parties to agree to several substantive changes to the proposed modified judgment without any additional notice or comment being given, before it entered the decree as in the public interest. See 552 F. Supp. at 225-26. See also MSL, 118 F.3d at 778 (noting that after notice and comment "several modifications had been made" to the proposed decree, and the court found the modified proposal in the public interest).

24 After the court's December 23, 1996 opinion and order, the parties made a third substantive amendment to the star pagination license fee agreement to satisfy the court that the license was in the public interest. See supra pp. 11-14.

25 Moreover, it was always likely that the divestiture would -- as it ultimately did -- take place after the decree was entered as a final judgment. The district court entered final judgment on March 7, 1997, and the government approved the sale of the divestiture products to Lexis-Nexis on March 28, 1997. The sale was consummated on March 31, 1997.

26 The seven plaintiff states have authorized the United States to say that they also urge affirmance of the district court's final judgment.