*1 795 surеly have revealed him Counsel would al., Douglas K. et KNUTSON “compelling” the officers’ statements Plaintiffs-Appellants, told Mizera were deceitful. officers convicted, years, serve if that he would ten v. years knowing well that ten was the full INC., REVIEW, corpora- DAILY alleged mis- penalty for Mizera’s maximum tion, al., Defendants-Appellees. et assured Mizera of also
deed. officers INC., REVIEW, corpora- DAILY conviction, although they had to know that al., tion, Defendants-Appellants, et worse, Even not a certitude. conviction v. drop any charges officers offered pow- they legal had no when against Mizera al., Douglas et K. KNUTSON obtained immunity. Consent promise er to Plaintiffs-Appellees. misrepresentation is invol- by governmental 74-2802, Nos. 74-3423. Rothman, (United supra, v. untary. States Appeals, United Court States 1263; Fuller v. United see 492 F.2d at Ninth Circuit. 264, U.S.App.D.C. States (“Of garnering course Dec. 1976. permissible artifice is no more confession Dec. 1976. Rehearing Denied achieving the same result some than Rehearing En Banc Rehearing and coercion.”).) cruder Denied Feb. 1977. to eradicate the banc this case would en I Ryan between conflict
intra-circuit Rothman, supra, 492 F.2d v. States
United antecedents, bring and to
1260, and its Supreme controlling
Ryan in line merits, I authority. On the
Court Ryan for a new trial and remand
reverse evidence.6 tainted from the
free noteworthy that the Government’s re- the evidence culled this source was said 6. It rights sources, spect has independent for Mizera’s constitutional be available from in more than one instance. The deficient been panel did rules its admission not constitute panel Ryan, office and (United observes that Mizera’s resi- States error. grant “bugged” prior to (1976).) his con- p. dence were Nevertheless, May because sent on *5 Francisco,
Timothy (argued), H. Fine San Cal., appellants/cross-appellees. for Broad, (argued), Khourie Michael N. Schultz, Francisco, Cal., & San Khourie appellees/cross-appellants. HUFSTEDLER, Before MERRILL and SMITH,* and District Judges, Circuit Judge.
HUFSTEDLER, Judge: Circuit appeals cross-appeals and this case problems a of antitrust present potpourri newspaper sys- a distribution the context of publishers’ after before and conver- tem system independent dealer- sion of employers newspaper distributors publishers. personae : identify first the dramatis
We independent distribu- All the Daily newspapers published by of the tors Review, two (“DRI”). Defendants are Inc. officers or em- corporations individual pub- corporations. DRI ployees those * Smith, Court, Judge, Montana, Honorable Russell E. Chief States United District District of sitting by designation. appealed price-fix- Defendants have not afternoon daily Review a Daily lishes The holding. We affirm the district court ing morning Argus, daily newspaper; counts, remand for a other Section on the Daily Shopping Review paper; damages, and a limited remand new trial advertising circular. News, “throwaway” 2 count.1 on the Section Publishing Company (“BAPCO”) Bay Area Herald, Tri-Valley daily publishes the independent Sparks adopted an In 1950 Nеws, a Tri-Valley morning paper; and of his system for the distribution dealer week, circulation day per controlled three home subscribers. Under newspapers to wholly- paper. BAPCO afternoon purchased newspa- distributors system, this The individual subsidiary of DRI. owned and resold them publisher from the pers Floyd Sparks, L. William defendants are boys/girls), who deliv- (newspaper carriers Chilcote, and John Clark. Dallas Cleland papers to the subscribers. ered/resold controlling shareholder of Sparks is were, independent therefore two There BAPCO, of DRI and DRI, president system: the dis- in the distribution units companies’ newspa- publisher both carriers, which and the both of tributors vice-president is a Chilcote William pers. paper from the level above. purchased manager of DRI and a mem- and business 1969,relationships until between From 1950 Board of Directors DRI of the ber gov- and the papers distributors were is the director of circula- Cleland BAPCO. Agree- by a standard form Dealer’s erned newspapers published by of the four tion provided that the dealer would ment DRI. Clark is the circulation BAPCO and newspapers to the subscribers within sell manager Daily for The Review promotion territory subscription at a fixed his route Argus. subscription price, the and that dealer, publisher by the price paid to the allege that defendants en Plaintiffs territory and the size and boundaries agree horizontal and vertical tered into subject сhange publisher in They in restraint of trade. claim ments The dealer could not his sole discretion. dealership contracts used assign, hypothecate rights aris- transfer fixed resale and im DRI/BAPCO agreement prior ing under the without the territorial restraints violation *6 posed publisher. consent of the written Act, (15 1. U.S.C. the Sherman Section 1969, dispute claim that DRI’s termina a arose before a state 1.) They also In § system to whether the distribu- independent agency of its dealer violat as BAPCO tion independent Finally, they argue that the were contractors or em- ed tors Section 2 of the assistance of a consult- ployees. violated Section Sher With the defendants firm, (15 ing agreement up a new was drawn by attempting Act U.S.C. § man monopolize newspaper by The dis used DRI and its distributors. A trade. and by used plaintiffs agreement found for the on the BAPCO. trict court similar count, prices.2 pro- neither fixed retail It agreement but awarded price-fixing price for injunctive relief. The court for a dual rate wholesale damages nor vided to a for his remaining newspapers supplied defendants on the distributor found for the route, e., price up specified i. a certain to a 1 counts and on the 2 claim. Section Section injunction part as of our re- cross-appealed also dissolve the from the 1. The defendants mand. attorneys’ partial We award of costs and fees. do not reach this issue since there will be a carriers, dealers sold to the district 2. Since the They partial damages. new trial on have also agreement that the established not court found cross-appealed the district court’s continuation price,” price, but a “resale-resale a resale relief; injunctive DRI to court ordered actually product at which the sold keep open employment its offers to former dis- (383 F.Supp. a carrier level. the consumer at discharge any plaintiffs tributors and agreement found that The court perceive approved unless an arbitrator. We presumed would take all reasonable the dealers in no abuse of discretion the district court’s steps the carriers sold at to insure continuing injunction pending appeal; we its subscription price. Under this announced compensation by price ganizations without con- newspapers and different number of system. agree- verting the entire distribution above that number. The papers that there was court found no con- rights him to transfer his district permitted ment “present- notice; plaintiffs trans- fact since party days’ spiracy on 60 another decision, bondable, Sparks’ other than qualified, be and ed no evidence feree had to participation as active satisfaction. other fully trained DRI/BAPCO’s such agents in this party corporate could terminate the officers decision Finally either terminate], support notice. which would agreement days’ on 30 find- [to ing that DRI and BAPCO combined or con- 14,1973, wrote May plaintiffs’ counsel On (383 1.” to violate spired F.Supp. § provi- Sparks stating letter that certain agreements used DRI sions of the dealer unlawful restraints BAPCO constituted prohibits conspiracies Section BAPCO, July DRI and trade. In between two or restraint trade more 30-day provi- to the termination pursuant people purely economic entities. As a sion, they were all distributors that notified matter, the verbal officers or directors of a independent dealer terminating their entire corporation “conspire,” any can con delivery converting home system for they make restrains trade. For anti tract system of Under employee-distributors. purposes, trust if the Act Sherman forbids distribution, system employ- the internal activities it: such the newspapers and BAPCO sold ees of DRI “ socially . . . inconven- independent carriers. Each directly to historically surprising. long ient So employment dealer was offered terminated enterprise regarded the business as manager as a district within salaried unit, individual economic it must be system. new (P. Areeda, permitted to act.” Antitrust action; 6, plaintiffs August On filed this (2d 1974).) Analysis ed. agreed news- defendants to continue to sell problem has been to define an economic papers open to the and to hold v. Joseph unit. Kiefer-Stewart Co. E. This employment.3 agrеement offers of Sons, Seagram & Inc. 340 U.S. stipulated tempo- later formalized in a Supreme S.Ct. 95 L.Ed. injunction. rary incorporated separately held that two Court allege Plaintiffs that defendants entered corporate fam within same subsidiaries contracts, into both horizontal and vertical conspire: ownership and ily can “common conspiracies. They claim combinations does not liberate from the control [them] agreements unlaw- post-1969 that the . impact of the antitrust laws . .es to fix resale ful contracts corporations] . . . where pecially [the impose restraints on territorial the distribu- *7 (Kief competitors.” themselves out as hold also that the They tors. claim termination er-Stewart, 215, supra, 340 71 S.Ct. U.S. and the actual terminations were provision subsidiaries). (wholly-owned at 261 Accord: of Section 1. violations Corp. v. Parts Life Mufflers Int’l Perma 1981, 134, 141-142, 88 S.Ct. 392 (1968) U.S. I wholly-owned and (parent 982 L.Ed.2d 20 Intraenterprise Conspiracy. A. v. Bearing Co. Roller subsidiary); Timken 593, 598, BAPCO 71 assert that DRI and (1951) Plaintiffs 341 U.S. States United partial- or- conspired appropriate the distribution and (parent 1199 L.Ed. 971, 95 S.Ct. agreement, profits trial, were derived relieved DRI of distributor After the district court pre- employment obligations the distributor’s from the difference between of its because its purchase price publisher his sale from the and financial condition. carious uniform the carrier. DRI did set a distributors, varied for all wholesale agreed-upon an income to arrive at for each distributor. 802 single DRI and BAPCO form a ex- subsidiary).) At the other ly-owned relationship be unified structure. regardless of in- treme, held that we have DRI’s mere far exceeds owner tween them structure, there can be no corporate ternal stock, therefore, subsidiary’s and ship of is long only corporation as one as conspiracy parent independent case of and this is not a Sons, Seagram E. & Inc. (Joseph involved. single business unit subsidiary, but Liquors, (9th & Ltd. Oke Cir. v. Hawaiian only by technicality sepa separated 71, 80-84.) 1969) The heretofore 416 individual, The same incorporation. rate what, question any, if limits unanswered DRI, controlling shareholder of Sparks, is can drawn 1 and be on Section should be publisher and corporations of both president separate incorporation conspiracies corporations Both newspapers. of all five situation. charge of im same individuals have the Antitrust law is concerned with operations, such as circulation. portant action of distinct economic concerted co-conspirators. alleged individual two case, any whether such action entities. Cleland, employees and/or and Chilcote particular turns on the facts.4 has occurred daily of both firms. All three officers just among Separate incorporation is one sports page, same fi newspapers have the faсtors; may significant it be in an many log, “Night Day page, nancial T.V. it may only sense or a techni antitrust Bay,” page (except editorial Around the cality, byproduct of decisions with no per week), editorials and substantial two impact. corporate structure antitrust advertising. of news and All amounts sepa itself determines whether there are composition work for the common features (In entity.
rate units or one re Penn Cen Moreover, plant. at one DRI is done (E.D.Pa.1973) Litigation 367 tral Securities compete or hold themselves do not BAPCO F.Supp. (subsidiaries 1158 each covered competitors.5 The lack of intraenter as out geographical region); I. Haas different (or competition representations there prise Trucking Corp. Corp. v. N. Y. Fruit Auction issue, conspiracy of) dispositive is not 868; also, (S.D.N.Y.1973) F.Supp. See factor in our decision. but it is an additional Co., (E.D. Beckman v. Walter Kidde & Inc. in this importance particularly evident Its N.Y.1970) 1321, (2d F.Supp. case, corporations aff’d are horizontal Cir. where the 1971) 593.) conspiracy a horizontal ly 451 F.2d related. Since 44; 1974) Signal 4. Some courts have decided that there was in 493 F.2d T.V. Co. v. people conspiracy fact no between even where 1972) 1260.) (8th 462 F.2d A.T.&T. Cir. corporate might conspired. units For have refused to The Second Third Circuits example, person may be the sole decision- one intraenterprise conspiracy when com find an separate corporations maker in two so that lacking. (Ark Supply petition was Dental Co. conspiracy meeting-of- be no there can Corp. (3rd 1972) Cir. 461 F.2d Cavitron (Windsor the-minds sense. Theater Co. v. Wal 1; Co., 1094-95, n. Beckman v. Walter Kidde & (D.Md.1950) F.Supp. brook Amusement Co. 1321, 1325-26, F.Supp. (E.D.N.Y.1970) 316 Inc. 1951) a ff’d Cir. 189 F.2d On (2d Subsequent aff’d hand, separate conspire two other entities can Kiefer-Stewart, Supreme Court decided person large via a who is a shareholder or There, held Life Mufflers. the Court Perma (America's corporations officer in both Best despite conspiracy possible fact that a Corp. Wayne Newspapers, Cinema v. Fort Inc. subsidiary vertically parent (N.D.Ind.1972) F.Supp. 328). In America’s competing were not with each oth Cinema, however, related recognized Best the court Corp. (Perma units, Int’l Parts Life Mufflers v. significance er. the antitrust of the economic 134, 141-42, opposed charge people 88 S.Ct. to the of them. 392 U.S. *8 term, 982.) in States v. Last United L.Ed.2d suggestion in that 5. Court’s Kiefer-Stewart (1975) 422 and Southern Nat’l Bank Citizens commonly-owned pretend firms who to be 2099, 41, Court, 95 S.Ct. 45 L.Ed.2d U.S. competitors competitors must act like has cre- dicta, “[tjhis noted that Court has held that in some confusion in ated the lower courts. commonly compete firms must even owned compe- Eighth Fifth and Circuits have held that other, they against each if hold themselves out corporate tition between the units is not neces- (Id. 95 S.Ct. at as distinct entities.” sary finding intraenterprise conspiracy. for a 2116.) (Battle Liberty (5th Life v. Nat’l Ins. Co. Cir. summary judgment reversed a favor of com- attempt to interbrand restrain held We that elimination of a compete Presstite. they the fact do petition, can be an unreasonable restraint alleged competitor have no interbrand that (a) “unfair” predatory was no con- either methods strongly suggest there when restraint competitor, (b) force out the used to or are spiracy. which a market structure in loss of there is corpo- the two on these facts Arguably will enhance a manufacturer’s a distributor incapable conspiracy as were units rate power and to diminish the market tend unnecessary It is for us to of law. matter compete. other manufacturers to ability of however, because the question, that decide prevent attack on successful facts same proved Plaintiffs neither of the there findings factual court’s district might which bring elements them within conspiracy. no Predatory usually Industrial. tactics justification, or no social economic
little II economy by potentially and can harm the Turner, monopolies. (See “Anti producing Restraints. Horizontal A. Case,” Cellophane and the Policy trust corporate if the units were ca Even termi Harv.L.Rev. (1956)70 conspiring, plaintiffs have failed to pable however, here, pursuant to a nations were concerted action effected that the show right gave party the which either contract A termina restraint on trade. horizontal there was relationship; to discontinue of some ad is not unlawful because tion compensation or for the provision no business, effect on distributor’s verse the exercise distributorship sale of of the if the effect is the elimination even hardly can right contractual The com from the market. distributor Moreover, plaintiffs’ if “unfair.” deemed that the re distributor must show plaining accepted, a manufacturer contention bring to or did to deal was intended fusal replacing a prevented “from ever could be beyond restraint of trade some about independent distributors its system suffered the distributor of business loss sales,” of direct a result that system own distributor-compet market’s loss of a (437 did not endorse. F.2d even Industrial (9th Corp. Bushie (E. g., v. Stenocord itor. 1343; Ford Dealers’ see Cartrade Inc. v. 119; 1972) F.2d Ricchetti Cir. (9th 1971) 446 F.2d Ass’n Cir. Adv. Brau, (9th 1970) Inc. Cir. Meister Furthermore, any of DRI/BAPCO’s 1211, 1214.) rely almost exclu Plaintiffs suit, after initiation of even solicitations Materials, Inc. Building Industrial sively on irrelevant; unfair, alleged, as if (9th 1970) 437 Corp. Cir. v. Interchemical relationship among the and the newspapers independent Industrial was an 1336. F.2d only preserve continued distributors products manufac of sealant distributor quo during trial. the status very had a by Presstite. Presstite tured prove market. In Plaintiffs failed to strong position the sealant also hori alleged any had tried to acts actual Presstite that defendants’ had dustrial anticompetitive Plaintiffs by selling directly effect. it out business zontal force customers, making some sales had to show would have DRI/BAPCO’s Industrial’s Industrial, and market6 position wholesale some relevant dominant below key people. sales restraint within that market. hiring one of Industrial’s and an actual legally termi relevant market is argued that it could Plaintiffs claim Presstite newspapers, Sparks un community if it to and therefore Industrial chose nate dominated, to all competing. opposed We as questionably terminate it it could definition, 1964) however, prelude Lessig (9th market v. Tidewater Oil Co. Cir. restraint, City monop- (Twin “probability showing required. 459 held of actual F.2d Service, Finley proof Sport Inc. v. & Co. is not an element of Charles O. olization” essential 1264, 1274-75.) claim, a Section 1 in a Section claim. *9 Only that deter- Bay. after ties around the they do not think had to We newspapers. any court draw could a is made mination value of the cross-elas- a numerical produce domi- concerning the market community to show news- conclusions demand ticity of of DRI/BAPCO. Proofs of nance a distinct submarket. papers Supreme out the Court in set the factors less been even have Finally, plaintiffs (1962) 370 v. United States Brown Shoe showing an actual restraint diligent in 325, 1502, 510, 82 S.Ct. 8 L.Ed.2d U.S. that court found district that market. industry public sufficed: and have would competing carried a had ever plaintiffs no peculiar characteristics or use recognition, opportunity had declined aft and two paper customers, distinct distinct product, Moreover, failed to plaintiffs do so. sensitivity price change. and prices, costs are internal distribution that show produce any evidence on did not Plaintiffs entry newspa- in the barrier substantial reliance on defend- factors. Their these business, demand for distribu- or that a per papers must be Sparks’ admission ants’ by indepen- not be met could tion services major Bay four Area below the priced currently in the entrepreneurs not dent tends to compete in order newspapers trade. distribution newspaper premise; their it shows substitutabil- refute shown that only the Since sparse Plaintiff’s thus one market. ity and trade, but might restrain the terminations many questions leaves unan- argument did, not actually they are they not To what extent These include: swered. point. on this to reversal entitled news, coverage sports and feature does papers overlap with community Furtherance of Termination in B. coverage metropolitan and satellite- Conspiracy. Fixing Price non-community papers Do papers? city special editions or have sec- local distribute claim that the termina Plaintiffs particular communities? What is tions eliminate the made in order to were tions penetration extent of of the non-com- permit dealers uncooperаtive papers in the town served munity control the re to continue to DRI/BAPCO significant Is there a publications? price-fix Sparks’ newspapers. its price of sale who subscribe to resale of readers both two different ing number scheme involved newspapers, or do consumers to carriers types of tend distributor’s prices: restrained) carriers’ only type?7 one and the (indirectly choose answers to restrained).8 (directly produce precise questions will to subscribers first, restraint on indirect cross-elasticity of de- As to the measurement price, it is difficult mand, resale they provide ground- but distributor’s made to were the terminations argue determination of the work for reasonable refus- In the usual the restraint.9 newspaper product market in the communi- continue full-fledged questions summary judgment All relate to the sales of from a 7. of these newspapers. findings Similar factors would be im- court’s detailed and the district trial advertising space portant Moreover, to the sale law. these —the conclusions of fact and newspapers product other market go agreements agreements the carrier compete. alleged Sparks’ of the retail continuation illegal contracts were terminated. fix after complaint plaintiffs alleged two verti- 8. In their scheme, they no were in furtherance of the If dealership (1) restraints trade: cal conspir- “contract combination additional agreements in effect from 1969 until the termi- dealership agree- acy” nations, need be shown. (2) agreements the carrier used appeal. they appeal, were not raised on after the terminations. raise ments On publisher also the “combinations” between the (a) (b) street sale dealers and/or Brokerage v. Ralston Purina Co. Trixler Co. 9. may motor route distributors. We not consider 1045, 1051; 1974) Bushie Cir. claims; they not raised the new below Corp. (9th Stenocord Mufflers, supra, unlike Perma Life note Colgate States v. But cf. United 119. Supreme permitted where the Court such a 63 L.Ed. U.S. 39 S.Ct. “shotgun” approach, appeal this is not an *10 terminations did not the situations, perpetuate or threat viola- termination al to deal (9th Corp. tion. In Germon v. Times Mirror is unlawful because it coerc- of termination 1975) a held price. to fixed Cir. the court to adhere es the distributor might nonconforming enjoinable be even a dealer noti- a “termination if of Elimination contract, pursuant adherence to the done to if the contractu- dealers that all other fies upon being will en- al used price be clause relied were to resale manufacturer’s termination scheme.” Similarly, competitive threatened foster an unlawful a forced. (Id. resumption Similarly, with a at Noble v. coupled termination or a Newspapers McClatchy ex- relationship (upon a distributor’s of the 1081, 1086, willing enjоin we F.2d were to adhere to the resale willingness to pressed compensation or award for a termination if the effectively restrains distributor price) comply it were made because a refusal to price. setting his own resale cases, with territorial restrictions. In both however, Knutson, there was no however, issue before was the the court the dealers; miscreant termination single selective termination of a distributor and the level of distribution wholesale the entire question was raised whether termination employee system. replaced an being used as enforcement mecha- not further the Thus, terminations did the nism for an unlawful As to restraint.11 the price. resale plaintiffs’ on the price, restraint restraint on the no distributor’s such merely Knutson; not threaten to convert did Sparks question arises in a complete adherence attempt to coerce to his is not an in an conversion enforcement mecha- conversion, no nism, distribu price; after full a choiceof an alternative form of being is, There restrained. tor was distribution. course, question that now no DRI/BAPCO price restraint, As to that on the second price papers which at are sold controls subscribers, price to retail carriers; such control results from claim that the terminations were used to integration. But that control is the vertical They ar- anticompetitive foster an schemе. (e. g., the by any Bay firm other exercised gue Sparks eliminated the distributors performs newspapers) that its own
Area newspapers so that could influence di- his services.10 distribution charged rectly by the carriers and (motor dealership permitted remaining independents ter- adult agreements
The route, account, party proper either after no- retail and street sale deal- mination tice; ers). anti-competitive goal no on the reason there was restriction Since the believed, party price-fixing place ceiling If one as scheme was to for termination. did, relationship subscription price, was no on the Sparks terminations him, advantageous he had com- be in the scheme longer could furtherance of if it, long Sparks unlawfully to terminate as restrain the plete freedom as continued general legality of internal distribution 10. which the Court outlawed 55 L.Ed. paradox case law incorpo- of the on intrab- price creates resale maintenance 1§ because opinions restraints. in this area are against rand prohibition rated ancient restraints competition price in terms cast often Since this is the doctrinal basis alienation. Thus, single sales of a brand. manufacturer against price per mainte- se rule resale independent its to a cannot confine distributors nance, apply to the rule is difficult cases price, territory or fix their resale be- certain there is no “alienation.” where determine the cause these restraints implied also that termina- court Germon Yet, the brand sold. manufacturer for action tions retaliation the antitrust full control over of his can assume (520 might prohibited. Retali- integrates product, into if he forward distribu- find in Knutson since all ation is difficult any possibility eliminates of intrab- tion and companies terminat- for both distributors competition. rand Moreover, ed, merely plaintiffs. goes reason for this “double standard” Sparks acted out of a found that district court way back Dr. Miles Medical Co. v. all the maintaining high level of real for concern Sons Co. 220 U.S. 31 S.Ct. Park & is, subscription price.” clearly The letter long That newspapers.12 states, however, that an offered bonus for ways Sparks permissible as there *11 depend subscriber does not on subscription prices, an intent to con- each new control suggested necessarily charging the rate. Taken its control does not trol or actual letter does not amount to coer Sparks’ post-termina- entirety, If violate Section cion, remaining indepen- relies on “individual self-interest dealings with the tion 1, bring general voluntary acquies about violative of then to are not Section dents Parke, (United v. Davis & facilitated those cence.” States which the terminations 29, 46-47, 503, (1960) 362 80 price- in furtherance of a Co. U.S. S.Ct. dealings were not сonspiracy. 4 L.Ed.2d fixing plaintiffs’ of a The remainder of evidence While the uncontested facts demon continuing theory restraint is based on a unalloyed intent Sparks’ strate to establish terminations, coercion-by-example. newspapers, for his prices uniform the to plaintiff-employees, treatment of tality of his actions does not amount to the employ the decision not to most of the requisite quantum of coercion: no “mean disciplinary are said to be meas- depend[ed] compliance ingful event on carry an ominous threat inde- ures that to non-compliance” requests with his of the might tempted pendents who be to sell (Butera (1st v. carriers. Sun Oil Co. suggested price. Plaintiffs are above 434, 437.) Although the new Sparks’ treatment of the suggesting that carrier contract makes no mention of a satisfies the coercion distributors Schwinn price, the carriers have been sent resale danger a “communicated of ter- standard of “strongly letters recommend” resell Arnold, (United mination.” States ing price suggested newspap at the 365, 372, (1967) 388 & Co. U.S. 87 attempt The letters also to show a Schwinn ers.13 1249.) They have unity newspapers of interest between the 18 L.Ed.2d S.Ct. however, not, any profit provided and the carriers since the latter can evidence of di- efforts, promotional concerning poten- former’s from the rect communication “depend nonconforming independents; which are said to on a uniform tial fate keep advertising carriers, circulation in order to his depart- rev- five efforts of the circulation (383 F.Supp. 1362-63.) enues. professional solicitors. -The suc- ment campaign, ability and the df the cess of 12. Because the issue is unlawful control vel professional help and the office solicitors to non, the extended discussion the district your route, you depend on build circulation 1362-65) (383 F.Supp. court and the defend- We, subscription price. there- on a uniform newspapers ants of the economic need for to fore, strongly you charge recommend that really subscription maintain a low is not suggested your $3.75 subscribers the rate point. maintenance is unlawful Resale per month. per se and Albrecht v. Herald Co. Benham became “Last November when Mr. 998, implicit- U.S. S.Ct. L.Ed.2d employee Argus, company at the re- ly (adver- rejected newspapers’ “dual market” your monthly sale) wholesale rate from tising newspaper position justifi- duced as a subscriber, you (Id. per giving price fixing. $2.54 $2.32 cation for maximum 54, at 151— Thus, large profit margin. while the economic S.Ct. increase in We want imperatives newspaper might business earning prof- of the you to continue those increased explain why (lawfully Sparks wanted to control its, you plan give we a bonus each so unlawfully) prices, they resale do not affect every subscription you deliver. An mоnth on legality of the methods he used. you employee company will contact explain your parents the details of this 13. “NOTICE OF RATE INCREASE program. Receipt of the bonus does not de- August “Effective 1975 the Publisher will your charging suggested pend sub- on charged Argus increase the wholesale rate rate, you scription but —the more subscribers per $2.92 carriers to month. At the same you more bonuses will earn. have—the time, suggested subscription rate will be good Increased circulation is “REMEMBER: per $3.75 month. increased profits everybody more for for and means prevent “To the loss of circulation and of you!” profits, plans carrier promotion campaign the Publisher a massive coopera- based on the provision renegotia to the contractual exclusively possible incidental rely they court found they activities the district one claim that tion. In at least case effects independent More- violations. split was foisted on the distributor not fact overlook the over, plaintiffs they will. contend that against Finally, his response the distributors’ initial Sparks’ newspaper price manipu the wholesale employ- integrate and offer was to lawsuit discourage sales outside a distribu lated distributor, including the to each ment assigned territory. The wholesale tor’s danger of em- A communicated plaintiffs. varied, depending to distributors yet qualify as coercion does ployment publishеr upon what and distributor maintenance. of resale context for a reasonable income believed *12 figure an was decided route. Once income to show coer- have thus failed Plaintiffs used, a rate was with one upon, dual independents and remaining cion of the up to a number of therefore, per termi- subscriber certain have, proven not that the subscribers, higher a retail rate for each sub of a furtherance nations Nevertheless, beyond expressly scheme. that. If a contract scriber price-fixing to, the trial during, and after outside prior prohibits designated sales a territo events a amount substantial generated it is unlawful whether or not coercive ry, concerning independents and employed confusion have been to enforce it. devices open to action legitimate courses of express of an contractual In the absence coercive potentially this While Sparks. agreement, proof coercion that the man plain- award to justify does not an “fallout” insisting is “firm and ufacturer resolute” terminations, might warrant it for the tiffs im compliance any ambiguous on or court, so, it it chose to do district on plicit limitations dealer freedom is neces independent each Sparks inform require sary (See to show unlawful restraint. Unit news- right freely her to resell the of his or Arnold, Co., v. supra, ed States Schwinn & suggested at other than the papers 1856.) 87 In Bever 388 U.S. S.Ct. that there is no This assure price. Distributors, Brewing age Olympia Inc. v. anticompetitive from the effect residual 1971) (9th (territorial 21 Cir. 440 F.2d Co. Sparks for penalizing without terminations restrictions), an customer we held that actions. his lawful exchange stating of letters the distributor’s to restrict manufacturer’s intention itself to Ill a supported was not contract and approval Territorial Restrictions. finding that was no effort to jury’s a there alleged (Id. at impose the restraints. cite three fac distributors 1972) Gray (9th Oil 469 Shell Co. Cir. support their claim of an unlawful tors to fixing), con (price 742 there was no F.2d First, they on areas of resale. restriction restriction and the court framed tractual in the that the reference argue territorial question as whether the distributor re agreement was a contractual dealers’ affirma Second, deprived by of his free choice some they point of trade. to four straint (Id. at a of the manufacturer. plaintiff-distributor’s in which tive conduct instances realigned territory (a “split”), pursuant 747.)14 398, 400, 406-07.) analysis accepted of the has been 396 F.2d The Tenth Circuit
14. This issue by recently variations held that a with some four Circuits. has followed Janel and Circuit, price-fixing clearly pre-Schwinn provision prohibiting in a sales Second contractual territory per applied is a se it and held that in the absence in itself case outside provision, violation; express must contract there must be a firm and enforcement an resolute (10th showing (Redd conduct a restraint of the v. Shell Cir. course of be shown. Oil Co. (Susser Corp. (2d 1054-58.) Although 1975) the Fifth dealer’s freedom. v. Carvel Schwinn, 1964) 505, 510.) Circuit, against F.2d has the firm After in dictum set itself Cir. however, requirement, required context that court evidence of firm even in the and resolute despite express agreements (Copper Liquor, implicit Inc. v. and resolute enforcement 1975) (Janel Adolph F.2d customer Sales Co. contractual limitation. Coors Cir. Parfums, (2d Corp. 943), v. Lanvin Inc. it has found such enforcement Thus, biguous is am contract necessitate determination when sell must focus on the inquiry made biguous, newspapers efforts to whether pri of areas of Designations conduct. er’s restriction. implied enforce mere suggestions responsibility mary face, ap- its the dual structure On express do prohibition without an territory confining to be a device for a distrib- pears themselves, a violation. not, constitute by assigned to his area. a dealer utor When respon territory primary A reference territory his over wholesale took however, may transgress sibility, Section following method: was calculated con can show course of if the of subscribers in the area 1. The number prohib the manufacturer has by which duct rate, multiplied by subscription territory. (Hobart outside the sales ited produced gross income giving the Bros., supra, note 899 — area.16 enforcement efforts manufаcturer’s coercion. A restraint not be a blatant need income 2. The carriers’ total is subtract- is un present if “some course of action amount, the re- giving ed this contingent or threatened dertaken maining income to be divided be- unwillingness” distrib willingness or newspaper tween the and the dealer. restriction; the action to adhere to utor newspaper agree and the dealer *13 making a event meaningful “must involve area, on a reasonable income from the depend compliance non-compliance.” on size, taking into consideration the 14, supra, 437.) 496 (Butera, note F.2d at density, difficulty of the area. and express- The contracts in Knutson do not (the remaining newspa- amount They sales.15 ly prohibit extraterritorial income) num- per’s by is divided the a number designate publisher district which subscribers, giving the first ber apparently distributor understand and dealer, e., wholesale rate to the i. the area, specific provide a and define “base rate.” supplied quantities will be “such dealer [of initially rate charged The base was for newspaper] as he shall certain order [at territory in the at number subscribers territory.” supply the needs his rates] territory was A acquired. time the recognized, is a the district court this As was higher charged rate for each additional (383 F.Supp. 1368.) Al- at borderline case. for paper. Cleland testified the reason express though prohibition, is nо there (1) to give this was reasonable income strong implication is a that a distribu- there (the territory for rate specific each dealer his base is confined to a area. Never- tor calculations) theless, sufficiently (2) am- help newspaper the contract seems 944; (Id. Sealy, before at Bros. v. cases it. Hobart Co. v. States Inc. 388 87 U.S. Gilliard, (5th 1973) T. 471 Malcolm Inc. Cir. 1238.) Sealy, 18 S. Ct. L.Ed.2d In 894, 900-901; Aviation, Eastex Inc. v. F.2d gave found the exclusive territories Court 1975) Sperry & Hutchinson Cir. participant enclave in it could each “an which 1307; Corp. (5th v. Oil Cir. Lehrman Gulf effectively zealously did maintain re 26, 38.) has First Circuit danger prices, free from of outside sale requirement en- also endorsed a that there be (Id. 1852.) incursions.” at S.Ct. at involving in a case con- forcement measures no fix, however, Sealy price price, was a minimum (Butera (1st tractual restriction. Sun Oil Co. protect meant that exclusive territories 434, 437.) 1974) 496 F.2d competition by price seller ed each cut relationship between the maximum ters. 1, supra. 15. See note territoriality quite price fix and in Knutson is subscription 16. Because rate was unlawful Exclusive territories inhibit the max different. ly publisher, plaintiffs claim that fixed they prevent price fix imum since control ancillary price- set-up the territorial to the Albrecht, by competitive Thus, forces. scheme, per fixing and thus se unlawful. encourage newspaper competition tried to Schwinn, stated that territo the Court dicta territory priced dealer who above of a “part rial restrictions that of a scheme 147-49, (390 U.S. the fixed maximum. at per fixing” are unlawful (388 se violations. S.Ct. citing at United U.S. 87 S.Ct. (the higher recover its circulation costs without the territory. course, Of rate). initial break-point determination of the for base rate was made on the basis of the justification newspapers’ Whatever the number subscribers within the territory, rates, charging higher dual for the rate higher applied regardless rate newspapers above the amount needed whether additional cusi ners came from territory for the inhibits extraterritorial territory or outside it. only Not does the dealer pay high- sales. papers, for additional but he is er also The interaction splits between the likely greater to incur costs in acquiring the dual problematic. more As serving customers outside his territory. pointed court, out the district the mere profit squeeze, resulting This from the dual split fact of a does not show that territorial rates, beyond inhibits dealer sales his as- imposed restrictions were on the dealers. signed area.17 (383 F.Supp. Areas of primary responsibility are subject realignment Nevertheless, the dual rate struc as exclusive territories. The question is not, by adequate ture is itself to meet the whether a dealer was restrained from sell- making restraint standard of “a meaningful ing area, outside his whatever that area depend upon сompliance event or non-com happened to be. When a dealer resists a pliance the restriction.” A similar sit however, split, and is coerced into accepting Butera, There, supra. uation arose in it, realignment can be construed as company oil used a dual pricing system for forcing a distributor to cease sales in the sales to its dealers: the “tankwagon price” area. It should be noted that split once a rate, base competitive was the but a allow effected, the carriers of the lost area are e., (i. price reduction) given ance given to the new dealer and new subscrib- gasoline sold in areas and at times when the by professional ers secured (hired solicitors competitive required local situation retail *14 the by newspapers) go to the new dealer. price. (496 sales at a lower 435.) F.2d at nearly Since all new subscribers are ac- company suggested The also varied its re quired by solicitors, the carriers or the after price depending tail on the local conditions. split a the new unlikely dealer is to contin- The prohibit First Circuit refused to the operations any ue in the lost area. practice as unlawful price fixing because “ suggested to price ‘adherence a [was not] provided Plaintiffs have not any substan- quid pro quo the for . receiving coercion, tial evidencе of blatant such as a ” competitive (Id. allowances.’ at [the] threat, accept termination to a split. Even Lehrman quoting Corp. (5th v. Gulf Oil in the one instance where the dealer active- 26, 39.) Although the whole- ly split (1970, resisted Knutson), the plain- sale clearly structure narrowed the tiffs do not seriously claim that Knutson range in which price, a dealer could succumbed because of threats. But defend- court refused to constrain company’s ants admit and the district court found that pricing decisions, long wholesale as the split “whenever a resulted in a loss of circu- applied wholesale were without re- lation, adjusted the dealer’s rate was to gard alleged to a dealer’s adherence to the any avoid loss of income of the dealer.” restraint. split, After Knutson’s 1970 his rates were Knutson, price applied the dual favorably adjusted. (383 to all F.Supp. 1368.) at newspapers, additional whether sold within manipulation This admitted of the whole- Moreover, system limited, however, contrary seems to be since distributors were not publisher’s to upon generate interests. Since subscriptions. the volume relied new importance of circulation is of newspapers’ prime profits professional critical to the The solicitors and carri- source, advertising, by rate; revenue higher ers were not affected these expect one groups (in conjunction incentives newspaper rather than disin- two employees) subscriptions. subscriptions. responsible nearly centives increased The infer- were for all new ences that can be drawn from this fact are IV income) thus the dealer’s (and sale rate pro giving quid close to perilously comes Damages. area. refraining sales a lost for quo damage due lost Plaintiffs claim sort pattern some had shown plaintiffs If suit, they had initiated this profits.18 After adjusted rates were downward in which Daily Review distributors and the seven sought sell outside their when dealers Argus of the four distributors raised two territories, prob- the Butera standard would prices. Because subscription their the trial pattern been No has ably met. such be damages began on April renego- provided contracts shown. period new-price considered largest" either upon initiation tiation of the rates (September court was six months lower times rates were at lowered party, 28, 1974); February plaintiffs state ter- with no indication that request dealers’ now their brief that further data is avail disputes were involved. The small ritorial proof damages is based on a able. splits plaintiff-areas of total number profits between this comparison of dealer adjusting the isolated instance of (four) and period period “before” “after” split when he resisted a rates Knutson’s (1969-73). the restraint was in effect when anticompetitive use inadequate tо show an held district court that evidence Although rate structure. of the dual inadequate prove either fact of was abuse, clearly subject plain- system was e., damage, plaintiffs i. that suffered some it not shown that was abused. tiffs have damage in a injury, actual amount by speculation other than and con manner It is very This close case. undeniable (383 1379.) F.Supp. at jecture. newspapers operating and dealers were territories; there is no system under a district court that the data for found attempted any dealer to sell evidence period “inherently the “after” so sus- (383 prior to the his area suit. outside patently destroy as to pect and artificial” ade- F.Supp. at But neither there (383 value of evidence. probative these divi- quate evidence that territorial F.Supp. Daily Each Review deal- imposed by the and enforced sions her in the increased his or first two er system It newspapers. may after the restraint was re- months actually implicit yielded higher prof- horizontal division moved. The increase and a among per the distributors it subscriber decrease num- of territories two figures, re- of subscribers. From these arrangement ber even vertical-horizontal Daily net Review calculated a a minimum of coercion from above. quiring *15 they monthly in income. This mul- increase strong had incentives to adhere Each dealer times their number of months as a tiplied delivеry territory, including his ease of to to arrive at a amount of total dollar dealer re- reciprocal to errors and response and $1,800 $36,000). damages (ranging from to integrity territorial from other spect for that their estimates are Plaintiffs claim however, chosen, Plaintiffs have dealers. not all the circulation conservative since of thus pursue purely theory to a vertical and drop price to the increase attributable they were restrained. In must show that during period there the “after” were no and conclude, there- they have failed. We this attempts acquire to made new customers. fore, that the district court’s conclusion plaintiffs prove failed terri- prices that the Argus the their on Two dealers raised 1, part price-fix- 1974, damage were a of the April torial divisions two weeks before the damage they' on to the trial ing appeal. Subsequent scheme is unassailable trial. contract, legal They going the suant to valid and did not also claimed loss of concern 18. sought violation, plaintiffs dealerships injunc- value tion and an the of their further antitrust any damages them continue in business. not other than to enable were their entitled Since, F.Supp. during (383 profits period of the court found the viola- as the district lost terminations, affirm, 1384-89) pur- we the tion.
811 profits prices, prices so that if earlier had fair giving the increased been filed affidavits plaintiff for businesses the could recover for of their distribution reasonable price. (282 561, April May. Despite ap- of the at 51 months the difference U.S. availability 248.) (See of for these two also parent Corp. data Zenith Radio S.Ct. plaintiffs period, (1969) 100, in the “after” months Hazeltine Research Inc. 395 U.S. average the circulation loss of 124-125, used 1562, 89 129; S.Ct. 23 L.Ed.2d Big- (15 Daily percent) Review dealers calcu- elow v. RKO Radio Pictures (1946) 327 Argus 264, 574, net 251, the two dealers’ increase 66 652.) late S.Ct. 90 L.Ed. A U.S. period. for the “after” Plaintiffs negative possible not all profit plaintiff need al- Argus the two dealers did not explanations state for his decline in ternative (and April until not may their did raise the defendants show that profits, but 1,1973) damages claim after March because injury. (Zenith caused other events 1974, February of March of 1973 until Corp., supra.) plaintiff from Radio must Argus suggested price higher 25$ damage, “proving fact prove some Daily price. Review than the Since damage of ... is satisfied . was home delivered in the Daily flowing Review proof damage some of dealers, Argus they felt beyond districts conspiracy; inquiry unlawful this hike would lead subscribers to switch price point goes only minimum amount Daily Review. (Zenith damage.” the fact of Ra- Corp., supra, dio 395 U.S. 114 n. Argus remaining Two of the three deal- 1562, 1570, 23 L.Ed.2d S.Ct. price changes. no ers made third in- this quantum injury, Even as to minimal of February creased his relaxed; otherwise, standard it would damages These three claimed applied loose defeat standard even to comparative study using on a based damages the amount of in antitrust cases. Daily data Review dealers and the (See Bigelow, supra, at 327 U.S. Argus dealers’ assertion that (“just damage reasonable” S.Ct. period “before” would have been 25$ permissible); estimates are Flintkote Co. v. higher they been of restraint. had free Lysfjord, supra, 246 F.2d at Daily 25$ ratio of to the actual Review multiplied by increases was the aver- Supreme Court has also established age monthly damages Daily Review proving relaxed standard amount damage per dealers to calculate the sub- damages fact in an antitrust case once the Argus scriber of these month three dealers. Story damage has been shown. figure multiplied by This the dealer’s Parchment, the Court noted where prior number of subscriber months violation makes difficult a certain determi- 1, 1973, damage March to arrive at a total enough damages “it will be if the nation of figure. damages as the extent of the evidence show inference, just and reasonable a matter of govern Different standards only approximate.” although the result be proof proof the fact and of the amount 250; also, (282 see S.Ct. U.S. (Story damages. Parchment v.Co. Pat *16 Bigelow, supra, 327 at 66 S.Ct. U.S. Paper terson Parchment Co. 282 U.S. in 574.) recently, Zenith More the Court 544; 51 S.Ct. 75 L.Ed. Flint the “practical limits” on emphasized the Lysfjord kote Co. v. F.2d in damages of antitrust proоf of standard 368, 390. But see Weinberg, “Recent 123-25, 89 S.Ct. (395 at cases. U.S. Trends in Antitrust Civil Action Damage reasoning of explained the We followed Determinations,” 1976 Duke L.J. Flintkote, supra, in those cases 495-96.) the Proof of fact of damage is 391: closely proof intertwined with of causation. cases in this Parchment, adjudicated supra, study the “A of the Story in Thus Court impression that dispels any probable readily natural area that “the effect” held governed depressed damages question violation this of of the antitrust price-fixing A determi- rule of in maximum cases. the common law application an cases have would have done is certainty. The nation of what a dealer reasonable speculation in anti- departed from this rule to involve and “second- long since bound litigation. plaintiffs supplied Even if had guessing.” trust evidence corroborating circumstantial
the sought by judge, the trial asser- apparently that it should observed “Preliminarily, still past their intentions would tions of evolutionary underlying the the reasons “conjectural hindsight.” entail liberality proving in dam- toward trend logic and sound in grounded are ages nearly imposing Rather than the influ- factors have policy. principal Two each impossible proving burden of what First, the self-evident enced the courts. if he free would have done had been dealer subject matter. of the intangible nature decision, pricing his we as make own is as what would have been To ascertain that, contrary, to the absent evidence sume what trying as determine difficult prices had it have raised his a dealer be. should so; is, that profitable to do dealers been mere assumption maximizers.19 This profit “Second, legal wrong- maxim a that recognition that a “re ly amounts to a wrong. profit should not his doer in fact restrains. The defendants straint” uncertainty sur- light the intrinsic attempt plaintiffs to show would have can rounding problem, responsibility this prices maximizing kept their beneath a large in with the for lies measure despite their violative behavior. Con point liable, long it been found has defendant might include testi trary evidence dealer presents that this ideal situation felt not his mony that he would have raised (246 application of that doctrine.” for that showing by or a the defendants price, F.2d at other than the re the dealers had reasons profit-maximiz a selling below straint major found two flaws The district court ing price. proof. First, that plaintiffs’ it said in probability not they did show reasonable respect non-Argus plaintiffs, With restraints, that, they absent the would have distinguishable easily Knutson is from Sto- prices during peri- their “before” raised operat- ry-Flintkote. The distributors recognizing plaintiffs While od. ing peri- the same in time businesses both “prove they actually engaged need and there was less uncer- substantially ods potentially violating futile act tainty comparability as of the two charac- agreement,” court price-fixing The only question is effect of periods. plaintiffs’ proof “conjectural as terized these increase on circulation and Second, hindsight.” the district court re- provided degree plaintiffs data on the fact-of-damage proof on the jected drop. The im- of circulation district court that the did not meet the ground recognized plicitly the differences between agree criteria. We Story-Flintkote did not Flintkote the Knutson that it respect Argus district court peri- comparability of the two address disagree the other but we as to plaintiffs, ods, reliability on the focused plaintiffs. Yet, the period. data from “after” difficulty upon with the dis- court in find- The fundamental factors which the relied Daily reasoning is that it creates a ing unreliability, trict court’s at least nearly recovery plaintiffs, barrier to to the insurmountable Review are relevant employed Citing In another another corol- realizing higher profit. case we lary assumption profit-maximizing hikes resulted evidence dealer had *17 Gray (9th In behavior. Shell Oil v. Co. Cir. profits, that a decrease the court held 1972) gasoline 469 distributors F.2d (469 damage proven. at fact of was not company’s claimed that the oil control over 749-50.) prices prevented raising retail them their
813 competition, interbrand forces of or other damage. In the fact of rather than amount would also have scaled down the Story of Parch- factors the dictates with keeping Zenith, Daily profits. Re- claimed loss of ment, plaintiff’s Bigelow, reduced shown that the plaintiffs view type of loss “precisely profits
net V antitrust violations of the the claimed that Monopolize. Attempt Section (Zenith, likely to cause.” would be laws S.Ct. supra, 395 U.S. phrase ‘attempt monop “The resale found a contractual court The district methods, employment of means the olize’ produced evi- plaintiffs restraint would, if practices suc means drops their despite circulation that dence cessful, accomplish monopolization, higher have been in some profits net short, which, though falling nevertheless there are some infirmi- Although amount. dangerous so close as to create a approach evidentiary showing, unlike their ties in (American Tobacco of it.” Co. probability Flintkote, signifi- are not so infirmities 781, 785, (1946) 328 U.S. United States v. the fact of question into as to call cant 1125, 1127, 1575.) Although 90 L.Ed. S.Ct. only to the amount of but relate damage, monopolization completed offense of re damage. only general intent to do the acts quires specific leading monopoly, to a “a intent Argus plaintiffs, respect of In competition monopoly destroy build court that these district agree with the we guilt attempt.” for the mere the-fact-of-damage meet essential did not States groups Argus (Times-Picayune of deal Unitеd Both Flintkote test. 594, 626, 97 L.Ed.2d average Daily figures Review S.Ct. relied on U.S. ers prices, and two of the compute their prices. never raised their Argus plaintiffs Lessig Co. v. Tidewater Oil Thus, produced dealers no inde Argus rejected we defend data, they any did not offer pendent proof dangerous of a argument that ant’s Daily of Re comparability of proof requires an evalua probability of success Argus dealerships and markets. view and in the rele power economic tion of a firm’s plaintiffs, Argus plaintiffs other Unlike market: vant damages, complete proof of had a failure probability reject premise “We proof some deficiencies simply essential monopolization is an of actual damages. amount of attempt monopo- proof of element remand of the amount dam On course, may probability such lize. Of non-Argus plaintiffs, as to ages issue in- evidence of relevant circumstantial accept court is not asked to district is the intent itself tent, specific but the Rather, the district evidence.20 unreliable probability dangerous only evidence findings is to make factual as to the court requires . statute damages as to which each non- amount has offered reliable evi Argus plaintiff (or attempt con- charge is “When the dence, having in mind that certitude is not mo- than monopolize, rather spiracy) justifies certainty that lack of required and is ‘not- relevant market nopolization, the scaling rejec the award but not total down ” 474.) (Footnotes course, (327 F.2d at Defendants, of can offer in issue.’ tion. conditions, omitted.) market intra- and proof excessive, damage plain- not believe that all then If the court does it increases immediately raised their reason- tiffs would have to an account should be reduced award amount had the contractual re- in the same ably supported by If the court the evidence. removed, then it should draw rea- been straint plaintiffs’ of their summaries dissatisfied and how much inferences as to when sonable supporting may require operations, it plaintiff altered his or her would have each be submitted. documents monthly prof- plaintiffs’ price. claimed If some *18 814 Pioneer, monopolize. (Morning of Les- Inc. v. Bis- substantial criticism
Despite the (8th 1974) of this to which F.2d is law Circuit marck Tribune Cir. 493 sig, it still the Co. issue, then, 383, 387.) in panel bound. sole this is case, presence attempt is the or absence this pa The district court held that the destroy competition to “specific intent of a pers by had fixing violated resale itself, Section In Lessig the monopoly.” or build in their prices contracts with the distribu the defendant’s Section relied on court Lessig, Bushie, tors. and Moore all endorse (resale exclusive price fixing and violations proposition the that a Section 1 violation possible inference of dealing) suрport to support can specific an inference (Id. Bushie v. itself of In specific intent. court, however, The district 1972) intent. refused (9th Cir. Corp. Stenocord 116, 121, importance to make inference because there was no reemphasized the we “predatory of or inferring knowingly evidence unlaw 1 violation in of a Section also, (See activity” fixing prices. in specific intent. Moore ful of requisite (9th 1973) illegal Co. characterized the contracts as a H. Mathews & Cir. court v. Jas. 328, 332.) recently, More we reaf- violation” and noted “technical that de F.2d Lessig formu- expanded prompt and took action to comply firmed fendants by plaintiffs’ la: when the law notified counsel practices unlawful. Assum may probability dangerous “. . . ing arguendo, requirement that there is a through proof specific also be shown conduct, “knowingly unlawful” there is no competition intent to exclude set engaged the defendants in it. question portion legiti- the market without in fixing illegal ap Price has been since the in- purpose. specific mate This business Act in the nine accompanied predatory pearance Sherman tent must be century; price un- resale accomplishing fixing conduct con directed teenth Ordinarily specific illegal early in- purpose. lawful tracts were held to be as Miles; prove price is will be in- maximum tent difficult and in Dr. resale anticompetitive ferred cоn- in fixing clearly from such outlawed Kiefer-Stew Indus, 1951; Reynolds (Hallmark duct.” maximum resale art 1973) Metals indus fixing specifically newspaper Co. was found to violate Section 1 in Al try sum, require (1) only spe we year before DRI/BAP- brecht (under intent Sec illegal cific some In the adopted illegal its contracts. CO predatory activity tion from defi light beginning of these cases with the specific Where intent can be inferred. general price fixing offense of nition of legitimate business justified conduct specific culminating in offense healthy exemplifies a merely reasons or Knutson, specific industry issue in monopo spirit competition, intent determination that there the district court’s support. The court lize is more difficult activity knowingly been no unlawful had specific the requisite below find refused to pred stand. in the absence of cannot Even therefore, is whether question, intent. The acts, the are un atory contracts themselves corporate individual the acts of the they accomplished the unlawful lawful specific require an inference of defendants maintaining a resale maximum purpose each of conduct intent. We discuss form price.21 all of separately, it should be noted that period when he During the together acts should be viewed in deter Review, Daily Sparks until mining attempt bought whether there was an Moreover, competitors oper- specific offense of maximum entrants or smaller scale destroy (or price fixing then, although (i.e., price”), could be resale exclude) used ate “limit monopoly. competition or build If support ac- predatory, it other efforts to could higher than cost the fixed maximum monopoly. quire a permit new but lower than a *19 trips purchases or The additional cash. bought 11 local news- corporations his paid as circulation even would be recorded of which no throwaways, six papers acquire were unable to new if the dealers Sparks The mere fact that longer exist.22 papers. purchase the The subscribers newspapers does not in numerous purchased for these contests were “prizes” awarded of an intent to an inference lead itself monthly on the dealer’s state- not reflected not a Sparks But monopoly. acquire a credits, were nor the ABC audi- ments Hearst; king- not build a he did diminutive of the contests. Plaintiffs informed tors newspapers in differ- noncompeting dom of DRI had set alleged employees that also acquired in the papers The areas. ent phony whereby start up system of orders 1962,1965, were all distrib- 1950’s, and 1970 fee) (for start orders would write dealers delivery Daily Review home in the uted subscribers. Professional nonexistent for competi- were acquisitions area. The 1972 alleged partici- were also to have solicitors Rewiew, Argus, Daily the the of either tors in this scheme. pated Shopping News. Daily Review advertising throwaways pur- were Three might These uncommendable tactics discontinued, then thus 1972 and in chased effect because new en- anticompetitive Shopping News without their leaving might discouraged by the false trants Moreover, purchases the 1972 competition. strength impression that market of DRI corpora- that the seller a covenant included entry. prevent would successful But an compete would not and its stockholders tion permissible high is also that circu- inference years of 10 in the DRI/BAPCO period for a actually competition would attract lation Finally BAPCO was operation. areas falsely presented espe- what was as an into $300,000 $20,000 only of which for acquired cially juicy market. This factor thus be- assets; physical to the be allocated could a neutral element in the search for comes $3,000, acquired for Village Pioneer specific intent. requisite name,” acquired was “the all that was but alone, short, 1 violation Section changed; and the name was later and the Sparks’ newspaper ac- conjunction in with $800,000, papers purchased for promotional quisitions, questionable of the cove- of which was one-half padding of circulation practices, and the compete. Sparks’ history of not to nant supported a district figures would have competitors prices greatly for purchasing intent, specific but finding court to the value of their tan- proportion out of we cannot finding compelled was not for, provides support assets but does gible contrary deter- say that the district court’s specific intent. compel, an inference of not clearly mination was erroneous. (“ABC”) The Audit Bureau Circulation upon injunction is ordered dissolved non-profit corporation which issues is a part, Affirmed issuance of mandate. on its members’ circulation and statements for further and remanded part, reversed the statements to advertisers distributes the views here- with proceedings consistent rely who on the data for the publishers bear their parties shall expressed. advertising purchase space. sale and appeal. costs on own periodic determinations of cir- Prior ABC, by sponsor culation DRI would SMITH, Judge District E. RUSSELL promotional pur- in which contests dealers dissenting): (concurring and chasing copies newspapers additional time I affirm. specified would be rewarded 1945 —Sparks purchases San Lorenzo Sun Journal and converts it 1950’s — 1962 —DRI —Sparks purchases Daily the Castro and Valley Reporter Sparks purchases converts to weekly insert in to a list of weekly purchases Sparks’ insert in the DR DR A rgus acquisitions Review ("DR”) is as follows: 1972 —DRI 1970 —BAPCO purchases Village 1972 —DRI 1965 —DRI Herald and News continued and Morning served acquires purchases purchases cither DR or News. Both three free weekly newspapers, publication dis- replaced Freemont News Register and San Leandro BAPCO and thus (now Tri-Valley Herald) Argus papers Pioneer Daily Review Shopping News. eliminated, subscribers now acquires the (now Tri-Valley News) Livermore profit make a sal intention of dealers to findings of trial court’s think that supported by profit are there is an intent does fact sufficient simply here did that all dealers are The trial court the conclusion warrant evidence. i.e., plaintiffs’ maximizers,” they witnesses. “profit not believe in fact plaintiffs’ inter- judge necessary considered to make a maxi- things trial all will do case; lack of and motives pre- ests effect of the profit. Here the mum *20 evidence; self- plaintiffs’ corroborating dealers, free, if would sumption is that contradictions; the times which raising of prices as means have considered first made were made.1 claims here increasing have taken the profits, would concluded: court so, to have do risked trouble paucity of prices
Because a competitive of a in effect raise of the evidence on credibility doubtful market, possibility publish- that the and the have not satisfied question, this their might by raising retaliated ers proof on the first element burden of their to dealers. damage . . . . Knut- of of the fact some do not do all fact is that dealers Inc., Review, supra as note Daily son v. profits. things necessary to maximize That profit much than why some dealers less witnesses, the plaintiffs Absent believable others, go and some broke. Between their the burden failed unless who did have profit production and the of intent opera- was satisfied proof burden of energy, lie of profit the factors maximum rule law. tion some willing- intelligence, and the imagination, Perhaps rule of law stated presumption a risk. If the ness take majority words: in these go as it goes here far must created conclusion-,then, impos- my opinion, imposing nearly support than
Rather proving what each dealer testimony sible burden I think the in this it is artificial. would have done if he had been free artificiality of discloses the it.3 case decision, own we pricing make his trial up: To sum it I think the court did that, con- absent evidence to the assume2 plaintiffs’ witnesses. I think believe not trary, would have raised his a dealer evidence, that, absence credible so; profitable it been to do prices had compelling rule of law no there is, profit maximizers. dealers profits court find that the loss trial assumption merely This amounts to a rec- proved. been had fact re- ognition that “restraint” in (Footnote . 19 of strains . . deleted, opinion is and footnote
majority added.)
2 of this dissent is rule of any
I am not aware of law assump-
permits courts make appellate may appellate An court cre-
tions fact. presumptions, mandatory kind
ate even
which bind the trier of fact the absence contrary. Although opinion
to the does so, say that seems to be what the ma- so,
jority disagree. has done here. If then I
I think it could be said that it is the univer- Inc., Review, Inc., Daily F.Supp. Review, Daily supra
1. Knutson v. note 3. See Knutson v. 1974). (N.D. 1379-81 Cal. at 1379-81. 2. The of the word “assume” is new in the use relating of the law the onus nomenclature probandi.