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BELL TEL. CO. v. REUBEN H. DONNELLEY CORP.

June 17, 1986

THE BELL TELEPHONE COMPANY OF PENNSYLVANIA
v.
THE REUBEN H. DONNELLEY CORPORATION and DONNELLEY DIRECTORY; THE REUBEN H. DONNELLEY CORPORATION v. THE BELL TELEPHONE COMPANY OF PENNSYLVANIA



The opinion of the court was delivered by: LUONGO

 I. Background

 The Bell Telephone Company of Pennsylvania is a Pennsylvania corporation with its principal place of business in the Commonwealth of Pennsylvania. The Donnelley Directory is an unincorporated division of the Reuben H. Donnelley Corporation, which is a Delaware corporation with its principal place of business in the State of New York. The Reuben H. Donnelley Corporation and Donnelley Directory do business in the Commonwealth of Pennsylvania.

 Donnelley has served as Bell's representative with the exclusive right to sell advertising in Bell's Yellow Pages directories to businesses in Pennsylvania since 1931. The current contract embodying this relationship ("Sales Agreement") was entered into on September 24, 1981, and became effective on January 1, 1982. Article XVIII of the Sales Agreement allowed either party to terminate the agreement, upon one year's written notice, effective any time after January 1, 1985.

 In its letter of June 28, 1985, Bell notified Donnelley that it was exercising its right to terminate the Sales Agreement effective June 30, 1986. On July 2, 1985, Donnelley sent a letter to Pennsylvania Bell Yellow Pages advertisers informing them of Donnelley's plans to publish its own Pennsylvania directories upon termination of the Sales Agreement.

 After learning of the distribution of Donnelley's letter, Bell filed a complaint in this court, alleging that Donnelley's actions constituted a breach of its contractual and common-law obligations to Bell and requesting equitable relief, including a motion for a temporary restraining order and a preliminary injunction. I entered a temporary restraining order on July 16, 1985, enjoining Donnelley from further disseminating the July 2, 1985 letter, from communicating with Bell's present or potential advertisers with respect to Donnelley's plans to market its own directory, or soliciting any of Bell's present or potential advertisers on behalf of Donnelley. The order also required Donnelley to provide Bell with certain information concerning the response generated by the July 2nd letter and to respond to all subsequent inquiries about Donnelley's plans for its proprietary directories with a prepared message. Before the preliminary injunction hearing was held, the parties negotiated a consent decree which set forth Donnelley's obligations to Bell for the remainder of their contractual relationship with respect to promotion of and solicitation for Donnelley proprietary directories.

 In November of 1985, Bell began distributing a Yellow Pages newsletter to its Pennsylvania advertisers. Donnelley thereupon filed a complaint in this court requesting equitable relief, alleging that the newsletter indirectly disparaged Donnelley and harmed its business reputation with its advertisers and that Bell's distribution of the newsletter constituted a breach of Bell's contractual and common-law duties to Donnelley. Donnelley's motion for a preliminary injunction was denied.

 After Donnelley informed Bell of its plans to solicit advertisers on its own behalf after July 1, 1986, the parties unsuccessfully attempted to work out a mutually agreeable proposal. On April 9, 1986, Bell filed an amended complaint in which it requested declaratory, injunctive and monetary relief, alleging that Donnelley's proposed solicitation of advertisers for Donnelley proprietary directories, commencing on or soon after July 1, 1986, will violate the consent decree.

 Before me now is Bell's motion to enforce the consent decree. Bell seeks an order enjoining Donnelley from implementing its planned solicitation.

 II. The Present Dispute

 The current controversy concerns the scope of the limitations imposed by the consent decree on Donnelley's solicitation activities on its own behalf after July 1, 1986. Donnelley has announced that it plans to begin soliciting advertisers on or shortly after July 1, 1986, for Donnelley proprietary directories to be distributed in various parts of Pennsylvania. One of these directories will be distributed throughout the City of Philadelphia. The primary objective of Bell's motion is to preclude Donnelley from commencing its planned solicitation of advertisers on its own behalf in the City of Philadelphia on July 1, 1986. *fn1"

 Advertising in directories is sold by means of campaigns called canvasses. A sales canvass for a particular Bell directory consists of Donnelley's solicitation of local advertising for that particular directory. The parties have identified canvasses for 31 directories ("transition directories") which will be in progress on July 1, 1986. A directory was listed as a transition directory if the service order close date for the canvass of that directory fell after July 1, 1986. The service order close date is the date after which Donnelley will not accept new advertisements, insertions, changes and cancellations for a particular directory. Under the terms of the Sales Agreement and the consent decree, Donnelley's obligations to Bell continue after July 1, 1986 with respect to the transition canvasses.

 Bell contends that the consent decree prohibits Donnelley from soliciting advertisers for Donnelley proprietary directories in the distribution areas of the transition directories and all Bell directory distribution areas which are contiguous to the distribution area of the transition directory until the canvass for the transition ...


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