## Facts

- Telfon Communications Corporation operated a broadcasting-school franchise system from San Francisco.
- Thomas W. Moore, a New York resident, bought a Hartford, Connecticut franchise but began operating in the New York market, which Telfon sought to reserve for itself and which conflicted with related business arrangements.
- After negotiations and threats of litigation, Telfon sued in the Northern District of California to terminate Moore’s franchise agreement (1970).
- Moore counterclaimed against Telfon, its president William A. Anderson, and Bear, Stearns & Co., alleging antitrust violations and breach of contract, and also filed a cross-complaint adding additional defendants, including insurers.
- In discovery, Moore learned Anderson had recorded seven telephone calls with Moore without Moore’s knowledge; Anderson asserted he routinely recorded business calls and did so here to preserve evidence of what he viewed as extortionate threats.
- Moore brought claims for common-law invasion of privacy, violation of California’s privacy statutes (Cal. Penal Code §§ 630–637.2), and violation of the federal wiretap statute (18 U.S.C. § 2511); a jury found for Telfon and Anderson.
- Moore’s antitrust counterclaim remained pending for about six years; after Telfon filed for bankruptcy, the district court dismissed the counterclaim with prejudice for failure to prosecute and denied Moore’s motion to transfer venue under 28 U.S.C. § 1404(a).
- The district court also entered an order addressing amendment and dismissal of Moore’s cross-complaint, but the disposition was unclear as to what had been amended and what had been dismissed.
- Moore’s counsel (Broad, Khourie & Schulz) was permitted to withdraw; the district court declined to fix counsel’s fees and disbursements on the ground it lacked jurisdiction in the posture presented.
- The Ninth Circuit consolidated appeals from the privacy/wiretap judgment, the failure-to-prosecute dismissal and venue ruling, the cross-complaint order, and the fee-related order.

## Issues

1. Whether jury instructions and the evidence supported a defense verdict on claims under 18 U.S.C. § 2511 and California privacy law arising from Anderson’s participant recordings of calls with Moore.
2. Whether the district court abused its discretion by dismissing Moore’s antitrust counterclaim with prejudice for failure to prosecute after extended delay.
3. Whether the district court abused its discretion in denying transfer of venue under 28 U.S.C. § 1404(a).
4. Whether the district court’s order addressing amendment and dismissal of Moore’s cross-complaint was sufficiently clear and legally consistent to be affirmed.
5. Whether the district court properly declined, for lack of jurisdiction, to fix withdrawing counsel’s fees and disbursements within the underlying case.

## Decision

- Affirmed the jury verdict for Telfon and Anderson on the federal wiretap and state privacy claims.
- Affirmed dismissal with prejudice of Moore’s antitrust counterclaim for failure to prosecute.
- Affirmed denial of Moore’s motion to transfer venue under 28 U.S.C. § 1404(a).
- Affirmed the district court’s refusal to fix withdrawing counsel’s fees and disbursements on jurisdictional grounds.
- Remanded the portion of the order addressing Moore’s cross-complaint for clarification and appropriate reconsideration due to ambiguity in the disposition.

## Legal Principles

- Participant recording of telephone calls is not per se unlawful under 18 U.S.C. § 2511; liability turns on whether the interception was willful and undertaken for a prohibited, wrongful purpose rather than for legitimate evidentiary or business-protection reasons.
- A jury verdict on privacy and wiretap claims will be upheld where supported by substantial evidence and where instructions, viewed as a whole, do not misstate governing law.
- Under California’s statutory privacy scheme, liability may depend on whether the communication was “confidential,” whether consent may be implied from context, and whether statutory exceptions apply (including recordings made to obtain evidence of crimes such as extortion).
- Dismissal for failure to prosecute is reviewed for abuse of discretion; prolonged inactivity and prejudice to case administration can justify dismissal with prejudice.
- Venue transfer decisions under 28 U.S.C. § 1404(a) are committed to district court discretion and are reversed only for clear error or abuse of discretion.
- When an order simultaneously grants leave to amend and dismisses claims in a way that creates uncertainty as to operative pleadings and parties, remand is appropriate to clarify the disposition.
- A fee dispute between a party and withdrawing counsel may be treated as collateral; a district court may decline to adjudicate fees within the main action when jurisdiction is lacking in the posture presented.

## Conclusion

The Ninth Circuit largely upheld judgments and discretionary trial-management rulings arising from a franchise dispute, including a defense verdict on recorded-call privacy claims and dismissal of long-delayed antitrust counterclaims, but remanded to ensure the district court’s cross-complaint disposition was clear and consistent.


Moore v. Telfon Commc’ns Corp., 589 F.2d 959 (9th Cir. 1978)