*3 radio and television stations. There are O’SULLIVAN, Before PHILLIPS and types regular membership, two and EDWARDS, Judges. Circuit operations associate. The costs prorated among the under a members adopted by formula of assessments Judge. PHILLIPS, Circuit Directors, acting Board of the au- under principal daily newspapers Three were thority By-laws. of its published Ohio, Cincinnati, prior in incorporation (1) newspaper At the time of of AP 1958: An afternoon own- representative by appellant, in ed known Cincinnati of Times-Star as The applied Times-Star, (2) Post, for and was AP admitted to mem- The Cincinnati bership. paper, pai't Times-Star to and also an afternoon which was a subscribed regular Scripps-Howard system; (3) AP used wire services mem- as and continuously morning Enquirer, The ber from until Cincinnati time publication years paper. July 19, 1958, publication discontinuance of As of later. of The and Times-Star was discontinued paper sold was to the owner of its 1) The Contract Between Parties The Seripps competitor, afternoon Company, the E. W. afternoon and combined controversy This arose out a con- newspaper published thereafter has been parties, tract between the entered into under the name Post of The Cincinnati August 4, 1948, provided that: and * * * Times-Star. shall continue until ter- “[I]t Appellee, Press, years’ the Associated upon filed minated the Member two against appel- notice, writing, registered breach contract action mail ” * * * lant ; for failure to assessments for provided further that: and years “Upon AP’s two news services for the sale or transfer of busi- following publication. agree- discontinuance of ness of the Member which this diversity relates, Jurisdiction is based of ment the Member shall cause sitting citizenship. judge, writing agree district Member’s successor to judgment jury, without a rendered to fulfill the terms conditions Contemporaneously 1. with the sale Cincinnati Post “Post and Times-Star as newspaper, appellant, Seripps Times-Star,” an the name of the E. W. Corporation, changed Company “Seripps,” Press as “UP,” Company Cincinnati Taft Times-Star the International Serv- News Ingalls Corporation. Appellee “INS,” sometimes ice as Inter- and United Press opinion will he referred to in this as “The national as “UPI.” UP and INS “AP,” merged Associated Press” the Cin into UPI “Times-Star,” cinnati Times-Star damages during agreement thereof week the term $1540.81 this membership apply in The 103 weeks. same class as in the Associated Press 2) The Wire Services the Member.” alleges Appellant appellee admits stopped publication of When practice established July 19, 1958, in- AP was requiring newspaper a member in the Scripps telegram of the sale formed metropolitan geographical cities given: following directions were area of the United States to receive n “Accordingly please all services cancel pay for all three of its basic news wire -x * * immediately pur con- under and, city, addition, services to such *4 you.” assessments tract No back Cincinnati, required appellant to receive publica- owing by appellant when were pay Kentucky part and for the wire as a weekly The tion of Times-Star ceased. practice, appel- of the basic service. This n assessmentof through paid appellant was contends, lant constitutes an unlawful publication one after June week tying arrangement in violation of Section had been discontinued.
of Times-Star 3Act,2 1 of the Sherman and renders the no services were furnished Thereafter contract void and unenforceable. payments appellant AP and no further “tying” policy practice AP and This only at is- were The assessments made. together single four services in a two-year sue in case are those for the this appellant “package” requiring and publication period termination of after four take and for wire services delivery AP news wire and after of the any one them is the order to receive appellant services to had discon- been principal appeal. issue on this tinued. provided AP The wire4 services appellant judge district held that The appellant under contract with its weekly assessments to AP for was liable in a from AP’s Chief of described letter news for the two suc for its wire service Columbus, Ohio, Bureau to the editor ceeding years appellant had because August 1, dated Post Times-Star years AP two in advance notified 1958, as follows: services,2 and of the news termination telephone our “Pursuant conversa- Scripps a member since did not become n ofAP and did not subscribe listing tion I am below the basic service that was delivered to news previously ap furnished to wire services and is the Cincinnati Times-Star pellant. judgment is based proposed the Post to be delivered to per week which assessment of $1583.81 Times-Star; in effect on the date of termination was “ saving publication, gen- AP of less a ‘A’ circuit. This is a trunk per representing carrying the cost of the week $43 eral news wire stories facilities, or net top general wire and mechanical interest. 1954, appellant “Every contract, 2. own- In June transferred com 1.§ 15 U.S.C. ersbip publication in tbe form of trust or other bination wholly-owned subsidiary, wise, conspiracy, The Cin- in restraint of trade Publishing Company, among which in cinnati or commerce the several newspaper Scripps foreign nations, four turn sold years or with illegal declared to be is * S! Appellant’s contract with later. assigned subsidiary. never was to its grows no had cause to deal with the sub- 4. The use of the word “wire” out of sidiary appellant transmitting because continued to the earlier method of telegraph act as a member. The District Court Morse Code. explained held that there was no novation with- term the record as fol- requirements physical wire; in the of Ohio law. This lows: “It is not a intervening period ownership op- many an electronic channel. cases by appellant’s subsidiary eration is not there is no is a wireless beam significance telephone company considered to have used or West- purposes appeal. of this ern Union.” “ stringent program This ‘D’ trunk circuit. circuit cost reduction in an commodity stories, possible effort to make it carries financial for Times-Star survey AP, quotations news. A and other business to survive. made was UP and INS wire costs. A substantial Big Circuit. This “Ohio Cities expenditure item of was the AP assess- regional Ohio, circuit carries ment, which at that time was $1452.25 general copy. Appellant week. determined that it regional. “Kentucky circuits, Two did not need all of AP’s serv- basic news n one style, operating in TTS one August 14, 1957, appellant On ices. Kentucky all-caps, state deliver AP, wrote a letter to the text of which news. printed meeting margin.5 in the A “Wirephotos. Full service on this repre- held in Cincinnati between facility delivery consists appellant Sep- sentatives of AP and day night glossyprints op- 10, 1957, purpose tember for the of dis- eration. cussing a reduction in the basic news “The assessment the basic meeting During services. requested minimum news service outlined AP to to it furnish weekly. $1,558.05 above is circuit, con- which was *5 necessary” appel- sidered the “most Wirephoto “The assessment for lant the AP news services. This re- weekly. service is $279.80 quest “A,” would have eliminated the addition, “In the Times-Star re- Kentucky wires, granted, and, “D” and if optional ceived various services would have effected a ” substantial reduc- * * (cid:127)* appellant’s operating tion in AP costs. stipulation A of facts entered into be- request, stating declined this that it was parties tween the describes AP the basic practice require of AP all members wire services furnished to Times-Star points pay at Ohio trunk to receive and as follows: “A,” Big for the “D” and the Ohio Cities wires, “The appellant leased wire news service re- news and that con- must in pay ferred to the above be- contract price tinue to the unit for all these tween the AP and the Times-Star wires order receive of them. general consisted of news and stories Previously appellant requested had in- general interest carried and trans- of AP formation how much was be- circuit; mitted the “A” trunk ing paid Kentucky for the wire. State stories, commodity quo- the financial replied AP that: tations and business news carried service, Kentucky “The state sub- “D” transmitted over the trunk ject your inquiry, is October 25 circuit; regional and the Ohio part of the basic Press Associated general copy carried and Cincinnati, provision service in Big transmitted over Ohio integral part of this an service is circuit.” your the basic service covered Agreement. 3) Times-Star’s Re Efforts duce Costs payment “There is a of $10.00 weekly operating deficit, appel- Faced with an of The toward maintenance Lexing- undertook, beginning lant Associated Press bureau undergoing stringent day many edition, 5. no “We are re- are of cost features program duction use to us. the TIMES-STAR surveying analysis costs, our that a wire service “An our rates shows figure neighborhood we feel News Basic weekly Service somewhere charge $1,452.25 $700 much closer excessive. week would come great- “Our files will show that we have to our use of the service. ly copy anticipate reduced the amount of AP “We will discussion carrying subject taking any we are and as we have no Sun- before other action.” charge judge ton, no there is The district ruled that: but Kentucky state for the interpreta- “The Act’s Sherman in the included contract than that considerably tion broadened .has figure. not one of the This iswire early since the tie sales cases which- optional not cov- services various products patent- involved tied to figure.” ered the contract products. entirely possible It is dispensing- the Plaintiff’s method of down, having request been turned Its its news is in violation of the Sher- appellant to receive and continued Act.” man But that: “Defendant provide until continued of said basic services all has failed to this Court with compelled operating losses Times-Star sufficient facts which it be- July publication discontinuance concludedthat there a natural di- gathering vision in the cost of news- Scripps pro- Immediately thereafter A, D, transmitted over the and State- posed AP “A” wire subscribe to the complete trunks. Without such a di- become trunk circuit service and to vision, unnecessary it is to- and futile purpose. member of associate explore the other elements of the.- provide “A” wire service declined to agreement.” alleged tying Scripps Scripps also would unless The district court ruled that on the- agree wire and to subscribe “D” “paucity facts,” pre- cannot (also known the Ohio Cities wire asserting either in vail violation of the treating wire). policy of This “S” Sherman Act as a defense or under its- insepa- three wire as one these services counterclaim. ap- package” “economic has been rable *6 by metropolitan plied consistently 4) Application AP to Sherman Act to AP newspapers area in this United consisting generally States, the area clear is the Associated' line east the Mason-Dixon north of subject provisions is the- Press City, Kansas Missouri.6 by Supreme Act. As Sherman said Court States, in Associated Press v. United “ty- asserting this In addition 1, 7, 1416, 1418, 326 65 S.Ct. ing arrangement” a was violation 2013: 89 L.Ed. against defense Act and a valid Sherman action, appellant publishers AP’s breach of contract “Member gaged AP are en- seeking exactly $157,366.92 profit a filed counterclaim in business for damages against AP under the in treble sell' as are other business men who food, aluminum, anything- steel, Act. Sherman markets, 250,000 major approximately up newspaper 6. AP miles make connecting most of leased news wire of the United States. originating This network is. cities of the United States. in the States News United by single point, leased AP from of wires is not sent to a but is trans- Telegraph Telephone directly Com- American to AP members from the- mitted pany Telegraph and the Western Union bureau in area in which the- AP news Company. originates. AP and in the each office is news News abroad York, AP member office of each where there AP from- sent offices New employees, throughout is one trans- are the- which it is transmitted receiving mitting machine ma- and one services United States. Leased wire newspapers chine attached to each circuit furnished smaller cities receiving purpose transmitting single circuit, are transmitted a and: large multiple- on the circuit. Each member to members in cities over equipment uses this kind of leases circuits. As held the District Court:- called, pays multiple circuits, commonly from AP and are for it. There “These trunks, approximately metropolitan 43 areas have into existence be- come throughout country including cause, present technology, Cincin- under national; nati, impossible state, AP to which considered all transmit point be “trunk cities.” These cities and international news on one circuit.”
759
ages
people
Restatement,
Inter-
need or
See
else
want.
breach thereof.”
598;
Contracts,
514, special
Associated
national News Service v.
also
§
note.
§
Press,
Supreme
230
S.
As said
[39
248 U.S.
Court in United
Inc.,
38, 51,
293].
Ct.
L.Ed.
A.L.R.
States v. Loew’s
97, 105,
are alike
the Sherman
All
covered
product, and that a in re the antitrust laws did not violate meaning the anti- advertising space pur not exist within quiring be product one unless the sale morning trust laws afternoon- chased in both purchase of an- upon the is conditioned newspapers. reasons of the One product. distinct difficulty holding de was its Court’s products. lineating The- distinct separability first two is the question of appeal. said: Court on this be determined issue to however, issue, disposing of this adjudicated “The common core sep- necessary pass arrangements it not is the unlawful arability services four of the wire of all purchase of second distinct forced appellant. areWe AP to furnished purchase- commoditywith the desired the “A” required to decide whether ‘tying’ product, re- of a dominant sulting wire, separable the “D” from wire competi- economicharm did concluded Here, since market. tion in the ‘tied’ services. either of these or need not want newspapers however, under- two required wheth- to decide Neither we single ownership place,, same at the separable Kentucky wire indistinguish- er the State time, sell and terms only issue the other services. advertisers; from products no> able Big Ohio separability is whether (in ‘tying’ product exists dominant fact, product separable was a Cities wire distinguished space the- in neither since wires; three from the other Times-Picayune can- nor the States Big viewed, is, was the Ohio that “tying” bought alone, one “A,” separable product, ; other) ‘tying’ no lever- as age as the prod- wires, Kentucky the “tied” “D” and in- excludes sellers in one market uct. present pur- second, because poses products are identical and that the Even if it be concluded at principally market the same.” 345 U.S. was used Cities wire regional and local to transmit news services that the other wire interest and Times-Picayune- heavily upon AP relies principally to transmit used support of the district of the decision classifications, faced we are different however, noted, It should be court. problem the Ohio of whether Times-Picayune to- rationale separate product, represents dominance” was weakened “market *8 three services the other whether it and subsequent Pa in Northern decision is, product, news. one that involve but States, supra, Railroad v. United cific Co. Though separability products is an ele Furthermore,, 1, 514. 356 78 U.S. S.Ct. rarely tying case, every has ment posed ty Times-Picayune on the in contrast to ing issue, problematical before the issue a “tying”' a dominant there was v. Jerrold courts. United States See applied to- product in the instant case 559, 545, F.Supp. Corp., Electronics 187 wit, appellant, Cities-. the Ohio curiam, aff’d, (E.D.Pa.), U. 365 n. 25 “tying” prod This was the news service. 806, 755, re 567, 5 L.Ed.2d 81 S.Ct. S. essential considered uct which 890, hearing denied, 81 365 S.Ct. U.S. desiring operations, to- not while to its 1026, 200. 6 L.Ed.2d subscription to the “tied”' continue its Kentucky “A,” products, “D” and question adjudicating here in- In that, as- begin looking added It should be those few wires. volved, State we Times-Picayune a> separability, to the force of al- bear on cases which
761
precedent,
recently
per curiam,
one
567,
court
said: “Fur
aff’d
81 S.Ct.
thermore,
Times-Picayune
755, rehearing
denied,
890,
case
365
81
1026, involving
been limited to the
exact set
facts be S.Ct.
master television
* *
systems
fore
the court
dealers, apartment
American antenna
normally
Manufacturers Mutual Insurance Co. v. houses and communities
unable
Broadcasting-Paramount
signals.
American
The
to receive television
Jerrold
atres, Inc.,
F.Supp. 848,
(S.D.
equipment
221
850
would not sell its
unless
N.Y.).
purchase
customer would also
a service
contract which
assure
would
Jerrold su-
Inc., supra,
In United States v. Loew’s
pervision over the installation and main-
the defendants
;
tenance and also would not sell its vari-
picture
distributed motion
films to tele-
designed
equipment
ous items of
community
vision stations
the method known as
systems separately,
antenna
booking;
is,
block
that
TV stations were
only
components
but would
sell them as
required
purchase
package
a
films
complete system.
holding
aof
In
get any
way
pro-
at all. In this
film
practice
Act,
this
violated the Sherman
ducers were able to tie bad films to the
passed upon
question
the court first
argued,
alia,
desirable ones. It was
inter
separability.
This issue was stated
single product
that “movies”
as follows:
separability
there was no
of two
products.
question
distinct
“The difficult
Court answered
raised
by saying:
contention
“The dis-
defendants is whether
.this
judge
copyrighted
trict
should be
found that each
treated as a case of
by appellants
product
film
block booked
sale of one
to the sale
for tele-
product merely
unique prod-
vision use ‘was in itself a
of another
or
as the
;
single
theme,
product.
ap-
uct’
sale
feature films ‘varied in
It is
parent that,
general rule,
performance,
stars,
in artistic
in audi-
as a
a man-
fungible.
appeal, etc.,’
ence
and were
ufacturer
to deal in
cannot be forced
*
*”
*
product
the minimum
could be
.argued product one case, court the instant the defendant involved, wit, pro- sponsorship of TV and an unloader manufactured silos grams, separability and that there was no base of which could be installed products. of two more distinct years defendant made it silo. For six *9 disagreed, saying court that 35 undesir- practice from to sell its unloader able as stations are not the same 95 de- com number customers its silo. A of F.Supp. sirable stations. 221 at 850. op plained would not that the unloader successfully another leading area, A erate silos in this for dis- case its problem, separability products, To meet defendant make. cussion of selling adopted policy unloaders not v. Jerrold Electronics United States pres (E.D.Pa.), in F.Supp. they Corp., supra, were to be installed unless already-owned publisher ently-purehased or silos The former assistant to question good testified its was Times-Star that “we own manufacture. had arrangement coverage Kentucky” was a Northern whether this that, quite there,” laws. “had staff over which anti-trust violated Kentucky longer the AP was no wire light held of the cus- The court that He needed. further said that if the jus- complaints tomer the defendant was dropped requested, “D” had wire been adopting policy; tified in its and that new he would have subscribed to the UPI requirement in- that the unloaders be financial wire. On the hand he de- only in stalled defendant’s silos was rea- Big the AP scribed Ohio Cities wire sonable under the circumstances. publication to “essential” of Times- the court’s de- Thus it will be seen that telegraph Star. The former Times-Star really question cision not does turn Big editor testified that the AP Ohio by basing fact, inseparability. superior Cities wire “was far to the Unit- reasons,” decision on “sound business pub- ed Press state service.” The former presuppose court seem to lisher of Times-Star described the Ohio separate products. there are two Big major Cities wire as “the service Dehydrating case ob- Process Co. The Associated Press” Times-Star viously nearly analogous would be more purposes, and said “we needed on its to the case if the facts instant very badly.” service required purchase manufacturer had situation, ap- In this better who than prerequisite of an unloader as a to the pellant position in a was choose which purchase of a silo. wire services needed and wanted and that, independent judgment inherent in One evils to exercise tying arrangement is that forces the end? buyer give up independent judg his clearly Yet the record establishes that where, whether, purchase ment as to required appellant to continue to sub- product. the tied Loew’s United States ap- scribe and for three wires which 97; Inc., supra, 45, pellant need, did want and order Railway Northern Pacific Co. v. United receive fourth wire which it con- supra, 514. thereby essential, sidered to be Turning again case, give up appellant independ- instant forced arrange- judgment there can be no doubt that ent as to to subscribe whether publishers ment here involved forced to the three unwanted and unneeded serv- give independ- up their Times-Star ices. This one of the situations judgment object ent as to which of the is “an wire concern.”' of anti-trust required operations. Inc., supra, services was for its v. Loew’s States appel- 38, 44-45, At the time refused to furnish Big lant the Ohio wire to the ex- Lending support to the view that Kentucky “A,” clusion “D” separable Cities wire is wires, Times-Star was a subscriber to its other wires is AP’s treatment of began various other wire services. give Kentucky wire. AP had refused to using July certain UP services separate quotation for this already and at time an AP and was wire, taking position that it was receiving INS subscriber. It was the UP part of the basic service Cincinnati. sports national state wire and wire. opinion quoted’ Earlier in this we have duplica- Certain these services were AP’s statement in a letter Appellant’s Kentucky executives, “part tions. in an ef- deficit, operating fort to an combat con- basic Associated Press Service in Cin- “A,” cinnati, provision cluded that the AP “D” Ken- for this service tucky longer integral required. part services no service cov- the basic agreement.” published by your copy Scripps The amount of AP ered When greatly bought paper proposed. *10 had been reduced. the and agreed wire, business, “A” AP tion to and to the financial market to subscribe news, Kentucky particularly its from “A” wire if the wire at eliminate the to reducing news; thereby service, as- moment cannot accommodate such basic general had that It news of all kinds in week. addition sessment $240.60 regional separate to quote news is assessment transmitted over the refused to wire, Big Big wire; appellant Ohio Cities Cities that news from for the Ohio to charge separate .yet abroad on occasion quote a carried on it able to been was Kentucky question; Scripps all of wire. Thus the wires if and that for the major Kentucky sepa- there were four or wire was five stories the cost of the might coming time, Scripps. parallel in at one The conclu- be im- rated possible put wire, separability one of the Ohio them all on and as to the sion “spilled Big over” obvious to us. excess be Cities wire seems oth- Although may “spilled er wires. be news By demonstrated, con- AP this action over” from the other wires Ohio court, trary findings of the district Big Cities wire when the circuits sepa- wire can be the cost of a state that overloaded, this fact well known was rated the cost of its other wire serv- appellant. prerogative It was the separability question On the ices. to decide whether chose to charges difference we see no between Big only to subscribe the Ohio Cities Kentucky Ohio wire and the State service, thereby take the chance regional Big Cities wire. receiving incomplete “spilled over” news Further, sports wire, the AP international, national and financial n formerly part was of the basic wire regional events in addition to the .service, separated specific was Big local news carried Ohio (cid:127)charge per- made therefor. AP was Cities wire. separate cancel this mitted Times-Star to practice With reference to the services, service 1956. Other such “spilling news, over” the record shows wirephoto service, provided from the “A” wire sometimes optional basis, specific on an and for “spilled over” wire or on “D” charges. separate Big wire, the Ohio Cities and that “A” evidence further establishes “spilled and “D” wire news over” be Big operated Ohio Cities wire was Big on the Ohio Cities but we find different hours from the other services. regional no evidence that the Ohio Co- 'The Ohio wire was controlled from which Times-Star considered so essential lumbus, Ohio, while the other wires were operation “spilled to its over” on was was controlled elsewhere. Ohio wire Quite “A,” Kentucky “D” wires. ob- separable physically in that it connected viously it would rare indeed for news n differentcities and could be added to or regional of local and interest carried over provided taken from the service wire to ten Ohio cities Ohio newspaper. The “A” wire connected Virginia “spilled over” on West larger cities; the “D” wire connected connecting cities, “A” the “D” wire cities; Big con- wire connecting cities, or wire the Ken- nected ten in Ohio and cities West Vir- tucky carrying pri- news of state wire ginia, two of which did not receive Kentucky mary interest readers in “D” wire and one which did re- not area. either ceive the “A” wire or “D” wire. is clear that Times-Star found it (cid:127)Separate receiving equipment re- subscription necessary to continue its quired for each wire. the Ohio Cities wire because this was support providing contention wire satis- service regional coverage factory news services are dis- of news of products, tinct AP introduced evidence local interest. contends regional “D” wire used and local news sometimes is transmission general separable, the transmission news in addi- did not make the Ohio *11 equipment duplications for each item lump and of news not a there because system. sum for total Fi- the this and other wires. carried nally, however, shows, that when while Jerrold had cable and evidence duplication, to sell which manu- it is because antennas were is a by concerns, duplicated is a matter factured required item news equip- newspaper in the readers electronic interest system bought example, in if Presi- ment be For Ohio area. spoke F.Supp. it.” at at 559. United States dent of the story Columbus, Ohio, the or Cleveland Transposing sepa- four these criteria of wire “A” transmitted over would be rability case, to the facts of the instant Big Cities wire. the Ohio also over we find: story interest of nationwide
A financial competitor, UPI, 1. AP’s offered ev- might originating be carried over in Ohio erything necessary complete for a news Big and the Ohio “D” wire both the service, charge but did not for its basic major accident occurred If Cities wire. single package AP; wires in a as did resulting Ohio, in a num- substantial in dispatches 2. The number of deaths, it be carried over ber of vary AP and other news services con- wire, perhaps also over the “A” siderably by newspapers and are used as Big A minor acci- circuit. Ohio space any Hardly and interest warrant. resulting in one death ordi- dent in Ohio same; two versions are the reported only narily would be charges separately 3. UPI Big Cities circuit. wires, as does AP for the Ken- Electronics v. Jerrold United States tucky (at proposal least in its Corporation, supra, the laid down court Scripps), sports wire, and various separability as follows: four criteria supplemental wires; presented “There are several facts Finally, AP offered certain wires in record which to show this tend optional basis, required appel- on an but community that system television antenna lant to subscribe for the “A” “D” properly cannot be char- Kentucky “package” wire and wire on single product. as a acterized Oth- basis order to receive the Ohio community entered an- ers who Cities wire. equip- all tenna field offered of the necessary complete sys- arrangement ment tem, for a It is true that no gear spelled expressly but none of them soldtheir out in the contract be- single exclusively package parties upon as a as tween the based action, By-Laws. did Jerrold. The record also estab- or in the AP pieces accomplished By-Law lishes that the number of result system considerably provision varied so each that the nature extent of any hardly two versions of the news service to be furnished a mem- alleged product the same. Fur- ber shall be determined the Board charged thermore, the customer was Directors.7 VII, any except 7. Article 2 of news service Section member provided By-Laws, News,” pro- By-Laws. cause as entitled “Use of these 2. Each member take the vides as follows: “Sec. shall speci- Corporation news service of “Sec. 1. Tlie nature and extent of the fied Section 1 of this article and use news service to be furnished to a mem- part provided it in or in in his whole be Board of ber shall determined Corporation contract and' with the admission, Directors, the member’s conformity By-Laws with the thereof.”' initial be fixed and the assessment shall Paragraph of6 the contract between the the same time and the same au- parties provides: thority. Both nature extent “In terms the event of such news service and the assessment agreement conditions of this shall changed from time to time contrary or become to or inconsistent Directors, provided By-Laws the Board of with the the Associated Press, By-Laws the Board of not omit shall control.” Directors shall
765
tying arrangement
A
911,
or condi
568,
1337;
70
94
S.Ct.
L.Ed.
expressly
tion “need not be
embodied in
6
Laws,
Toulmin’s Anti-Trust
21.24
§
arrangements
written
(1951).
contracts. Such
As said in United States
U.
v.
may
Gypsum
be deduced
a
from course
Co.,
con
364,
S.
395,
333 U.S.
S.
68
Co.,
duct.”
Refining
525,
Osborn v. Sinclair
Ct.
finding
illegal
understanding
condition or
ords in
a
such manner as to establish an-
might be found.”
accurate division
of costs
between its
three
wire
basic
services. We are of the-
district
court
laid
opinion, however, that the determination
strong emphasis
finding
upon its
that the
tying arrangement
of the existence of a
record in this case contains insufficient
illegal
Act,
which is
under the Sherman
evidence
establish a natural division
constituting
complete
thus
a
defense to-
gathering
in the costs of
news trans
contract,
AP’s action for breach of
“A,”
Big
“D”
mitted
Ohio
way
kept
not controlled
AP has
its-
Cities wires
amounts
the costs
cost records.
respective
providing
to AP of
these
serv
specific
AP was able to
arrive
a
expressly
ices.
It
held that
charge
per
week for its Ken-
$240.60
provide
“has failed to
this court with
tucky wire when it decided to offer this-
sufficient facts
con
wirephoto
Scripps.
concession to
cluded
in
that there is a natural division
priced separately
service was
at $278.80-
gathering
the costs of
news transmitted
Separate charges
week.
also were es-
A,
over the D
trunks.” A find
and state
sports
tablished for the
and other-
ing of
court is
fact
the district
bind
formerly
optional services, some of which
ing upon
“clearly
unless
er
court
part
a
basic service. We have-
52(a),
roneous.”
Fed.R.Civ.P.
Rule
no
doubt that
division could be made
obligation
appellate
our
as an
court
charge
Big-
Ohio
“clearly
findings
erroneous”
overrule
Cities wire. Once it is determined that
case,
in an anti-trust
district court
separability exists,
important
is not
tried
as in other civil actions
district
might experience
that AP
inconvenience
judge
jury.
v.
Osborn
Sinclair
without
making
charges.
a breakdown Refining Co., supra;
A. C. Becken Co.
Corp.,
(C.A.7),
F.2d 1
cert.
error
Gemex
The basic
of the district court
holding
denied,
that,
L.
order to establish
876;
Pictures,
defense,
Ed.2d
Ball v. Paramount
affirmative anti-trust
it was-
denied,
obligatory
(C.A.3),
upon appellant
prove
fused to
wires,
continued
three
appellant has
When
established
wires,
all four
subscribe
arrangement
exists, coupled
regional
although
the Ohio
it desired
power to im
with “sufficient economic
pose
recurring
experiencing a
service
appreciable
restraint on
com
free
operating deficit.
affecting
product”
petition
in the tied
desirability
“not
amount
insubstantial”
of interstate
hav-
uniqueness and
Both
commerce,
defense under
established,
“suf-
the Sherman
follows
ing
been
require
Act does
affirmative evidence
power”
inferred.
will be
ficient economic
competition
supra,
of actual harm to
Inc.,
the ex
Loew’s
United States
of such harm.
tent
Northern Pacific
97.
S.Ct.
U.S. at
Railway
States, supra,
Co. v. United
1, 12,
514;
Commerce
8)
Oil
Standard
Interstate
Effect
States, supra,
of California
Co.
337 U.S.
v. United
question of wheth-
We comenext
293, 305,
“
of inter-
amount
a ‘not insubstantial'
er
arrangement
*15
tying
impact
of the
Northern
is affected.”
commerce
state
by
upon competition is illustrated
States, su-
Railway
v. United
Co.
Pacific
permit-
fact that if
had been
514,
1, 6,
518.
pra,
78 S.Ct.
356 U.S.
drop
(financial)
to
“D”
wire
ted
interstate
AP are
The activities
requested,
to
it would have subscribed
L. R.
Press v. N.
Associated
commerce.
adhering
By
UPI
financial wire.
650,
103,
L.Ed.
B.,
81
57 S.Ct.
U.S.
301
tying arrangement,
precluded
appellant was
AP’s contract
selling
competitor, UPI, from
its financial
required
contract,
which
a standard
Times-Star,
prevented
Times-
by
members. The
all its
be executed
subscribing
competing
Star from
to a
tying
to-
practice
wire services
financial
to be
wire which
considered
by
gether
AP contin-
has
followed
been
purposes.
for its
more desirable
uously
1935,
“D”
when the
since
Salt,
said:
In
the Court
International
tying
This
first established.
wire was
unreasonable, per se, to foreclose
“[I]t
requirement
practice
that has
has been
any
competitors
mar-
from
substantial
n continuedwith no variation.
The news-
arrangements.
by
means of
ket”
paper
of AP at
circulation members
396,
68
at 15.
332 U.S. at
S.Ct.
metropolitan
principal
trunk
the 43
Loew's, the Court said:
comprises
points
94
United States
ques-
“Moreover,
can be no
there
per
of all
cent of the total circulation
tion in
ef-
this case
the adverse
subscribing
newspapers in
these areas
resulting
competition
on
fects
free
agencies. They comprise
news service
illegal
appellants’
book-
from
block
subscribing
newspapers
:87
cent of all
ing contracts.
stations
Television
daily newspapers
areas. More
these
by appellants
forced
unwant-
take
throughout the nation subscribe to AP
films
ed films
access to
were denied
than
In short
other news service.
who,
marketed
other distributors
is the chief source
turn,
in
ing
were foreclosed
sell-
press.
American
48,
to the stations.” 371 U.S. at
proof
is no
in this case
49,
While there
83
at 104.
S.Ct.
precise percentages,
no
can be
under the
It is a
conclusion
reasonable
n doubtthat the
af
amount of commerce
‘not
that “a
insub-
in this case
evidence
tying practice
fected or restrained
commerce
amount of interstate
stantial’
of Cali
Co.
is substantial. Standard Oil
affected.”
States, supra,
fornia v.
Illegality
9)
Contract as Defense
293,
1051;
Co.
69
International Salt
S.Ct.
ancillary
Finally,
States, supra,
there is an
68
v. United
proposition
Refining Co.,
should
discussed.
12;
Osborn v. Sinclair
S.Ct.
question
Here
raises the
defense to the action.” 6 Toulmin’s
by way
Laws,
unlawfulness
the contract
(1951).
Anti-Trust
18.3
§
Supreme
defense. The
Court has said: Having found a
violation
Section of
“As a defense to an action
based
con-
Act,
the Sherman
this court will not en-
tract,
plea
illegality
based on vio-
by requiring appellant
force the contract
lation of the Sherman Act has not met
years
to
received,
for two
of service it never
“
with much favor in this
*
Court. This
* *
thereby
enforce
notably
has
plea
been
the case where the
precise
conduct made unlawful
”
purchaser
has been made
*
*
*
in an
the Act
358 U.S. at
action to
agreed
recover from him the
at 432.
price
goods
Kelly Kosuga,
sold.”
v.
516, 518,
10)
The Counterclaim
holding
L.Ed.2d 475. This
rooted
affirm action of the
We
principle
party
illegal
that a
to an
dismissing appellant’s
district court in
subsequently
contract cannot
use this ille- counterclaim,
of dam
since the evidence
gality
obliga-
to avoid his contractual
ages
speculative
support
is too
note,
tions. The Court
on to
went
how-
Judgments in
counterclaim.
anti-trust
“ * *
ever,
apply
that this view will not
speculation
cannot
cases
be rendered on
judgment
where the
of the Court would
against
guesswork,
party
even
who
enforcing
precise
itself be
conduct by
wrong
precluded
his own
a more
”
**
*
unlawful
made
the Act.
358 precise computation
damages. Big
atU.S.
the news of The bureau Associated circuit. General news of interest in Press in the area in which the news Ohio is taken from the B circuit at originates. originating News abroad relayed newspapers Columbus and The transmitted the offices circuit, the S or Ohio York from Associated Press New Cincinnati, Cities wire. At points to all transmitted exclusively B circuit is used for the Newspapers in the United States. transmission out Cincin- metropolitan require cities nati. greater volume of than news- years papers in “In the the vol- small cities. The leased by The ume of to after- furnished news transmitted news service newspapers metropolitan newspapers in noon Associated Press to great, B so small cities is over a cities became the A transmitted single inadequate. As- circuits circuit. leased wire news The majority quotes stip- opinion about dence about these circuits and describing to its AP’s leased wire news service ulation the news classifications *20 presented respective trial.” Im- be the over wires. members will carried the following quoted portion, Judge mediately District made his decision the stipulation provides, the entire record. “Additional evi- the separability.” sought I of of the sufficient evidence Press views sociated opinion finding his as a that as to whether read whole affected the members facility appellant’s proofs not a did as establish a should be established. new af- of fact that AP’s of all matter several With the assent members facility sep- fected, D wire was es- services—electronic channels —were the Commencing products. and the arate distinct tablished. trans- news which was theretofore require it me that would It seems to mitted to the Cincinnati Times-Star subtlety subjective and evalua- excessive B circuit was transmitted the into various com- tion to break down sup- (Emphasis circuit.” over the D tangled ponents of skein human the plied.) say, as to able to events called news so be help in offered small The evidence fact, to as a that information as certain separating measuring identi- into and separated by physical dis- events or time func- compartments AP’s vast total fiable degree of it ex- tance or interest the place gathering and another, of world-wide news tions or not in cites one and impresses that the persons me distribution. conduct the different whose may newsworthy events, up complexities involved the can be and make intricacies any impossible evidence divided so to as distinct it to offer identified make be dividing separate separate knowledge reliably products. and into Is for incorpo- myriad products make or articles of of events that distinct each thing up separate product, no ev- There news. real called the news a easy separa- permit separate products idence would be identified which to gathering of the Much tion into neat means transmission? divisions chosen variety speculation indulged coming of infinite of information of the can be go question up I the news. a factual that to make answer the involved events agree my myself separability. fact that of I with brothers cannot convince not, governor and in did of that news of the death Associated Press that the likely not, product my to each of allocate is a than news different view could Illinois, governor share a defined death of of its wire facilities one any resignation of itself fore^ more than of the does not news its costs total Mayor illegal finding How- conduct. of Cincinnati different close resignation perhaps product difficulty ever, than news of the obvious Dayton, Mayor making cost or of impossibility such Cleveland is, products I be- be Ohio. do not think that like reliable I division that lieve, supportive of the unlike chosen can be vehicles made relevant ap- delivery Judge’s finding fact of fact that for their to the user. The District separa- pellant prove made broad classifica- case of that the AP some failed to sure, bility so To tions of its total deliver news and distinctness. efficiently speedily Judge not emphasized it does more District immediately my view convert these provide this court had “failed separate into and distinct classifications facts sufficient products. newspapers Small received natural division is a that there concluded of all kinds wire. Could gathering news over one transmitted news in the cost having newspapers, trunks,” a con- one A, these D. and State over the given complete di- such tract receive “without such further said period, price unnecessary demand vision, to ex- and for fixed and futile society alleged separate price for the AP fix a plore other elements denied, perform- being said, refuse agreement.” also how- He “Recognition It seems me ever, contract? be made ance must question involved joining material the factual compulsory of two pre- all of the members things is a fundamental and distinct by way agreed illegal at all times to share have requisite of an tie sale situation. * * * getting the the cost of presented assessments Defendant *21 Kentucky the of The Associ- service should be in- “leased wire service subject cluded in mat- its assessment for Press.” That the whatever ated was appellant’s AP and reasons made fair to ter of contract with assess Times-Star newspaper but not a New York such contract no of such made breakdown only costs. this Thus incident into different kinds news. illustrates service application showing one of AP’s There is no record the assessment for- mula, geared any prior appellant’s request 1957, to estimated to needs and benefits, publisher any newspaper metropolitan entirely the leaves record any anyone delivery attempt requested prove slight- devoid else ever the anything proposed est connection “wire between the less than what was the re- providing duction and the cost of news service the Associated Press” the Kentucky developed, though, system wire. even as the separate em- electronic channels were Times-Picayune Publishing In Co. v. ployed out two classifications deliver States, 614, 594, 345 U.S. 73 S.Ct. speedy for more and efficient the whole (1953), 97 L.Ed. delivery. metropolitan paper Each used Supreme Court said: all of this news and was testified adjudicated “The common core of the publishing all of it was essential tying arrangements unlawful is the paper. such These circumstances purchase forced of a second distinct recognition sepa- bespeak a of the lack of commodity purchase desired rability provided by AP and the news ‘tying’ product, a dominant re- weighed upon should be issue factual sulting compe- in economic harm to separability. (Em- tition in the ‘tied’ market.” phasis supplied.)
I am not convinced that the fact that Scripps Company Ry. E. W. States, offered In Pac. Northern v. United Kentucky 5,1, 514, 518, eliminate wire the so-called the Court said: reduce the total assessment some proves A, separability purposes tying arrange- $240.00 “For our may agreement ment D and as an S wires. The record is defined clear party product always but sell one latter were as to- considered buyer gether the condition making that the up the AP’s basic service. purchases tied) (or also Kentucky appears the so-called different ”* * * product. (Emphasis sup- separate wire was con- furnished under plied.) day made on the con- same as the (tract suit, August 4, 1948, tract developed and it In which have the cases declaring illegal tying arrangements between and the Cincinnati Times- rule Company Covington, Kentucky. Star Clayton Act, under the Sherman of suit was physical contract in tying products usually AP and between had have Company Cincinnati corporeal and dif- existence distinct Cincinnati, products. Ohio. The record is unclear tied ferent from so-called any E.g., as to the reason for this and in event Co. v. United International Salt give permit significance States, does not us to 92 L.Ed. Scripps people (1947); Ry. the offer made to the Pac. v. United Northern booking supra. furnish the basic service for Cincinnati block Kentucky cases, products without assessment for a proposal drop moving pictures, products, wire. The service distinct paper itself, proves complete the combined no more each “in itself a each unique having being present product,” physical context than undoubted newspapers supple- metropolitan fact that aid or usable alone without moving by any picture Kentucky do not receive the mentation country. compari- films, products. found all No the tied United States Inc., 38, 47-48, opera- Loew’s, son was offered to show that (1962). paper tions L.Ed.2d 11 of the combined were such
776
emphasize
represented
appropriate
I
whether each news “wire”
a1
think
“separate
liberty
product.”
not
that this Court is
distinct
here
findings
in-
of fact or to draw final
make
2) Illegality
as
breach
defense
upon
simply
its own
of fact
ferences
contract.
of
of
evaluation
the evidence. Commission-
Duberstein,
80
363
er v.
kept
It should be
in mind
that
con
Conceding
(1959).
1190,
77Q the free where purchaser? would better itself. tected chase Associated Press method of it then not, which, trict ment purchaser, to enter into the of the arrangements Department question its assembled automobiles present practices were indeed majority news, manufacturer counterclaim for ity in al action or the the contract trust had a obligations only, or sociated Press can steering separate price so as to gations voluntarily cannot employ ing difficult to understand der attack demand that henceforth it I The added costs will be pose European schemes, and in distributing such a impresses month for a laws by demanding contract or Judge’s contract majority opinion when the contract before us none desired join mechanism is facility foreign the the opinion whether competition sought because practices the separately, anti-trust by could the rearrangement into of Justice. I doubt made, by'a question anti-trust chaos Common Market. can making steering British Commonwealth term it me dismissal of for itself. resolved necessary. permitting the damages sell ten news, the news and any government. be relied Chevrolet automobiles frontal attack expressed assumed illegal tying arrange- legally stated that for the balance become a easily present it, laws member a transition my whether purchaser manufactured proofs be allowed laws, why with the Associated or if mechanism use arrangement designed by even I affirms the Dis- under view find no political being deliverable its Chevrolets of the entire upon. repudiate period the latter Congression- in a contract there should But I escape be contractual though appellant’s to be of the As- illegal ty- gathering danger under assessing and thus they the anti- is now a damages question supplied bargain If AP’s refused convert society illegal- period find it If news, Press for a to a pur- obli- pro- in a un- were the its or I tion papers were continued as a combined : [1] the two ment between the by-laws bars nor was there ing *25 conduct. no recoverable contract by-law provided, ed the contract or excused contract also opinion did not deal with other defenses claims that asserted lant’s of the Member’s election to do There was a further force “until me in registered mail to the longer publisher of. Times-Star. transferred sociated Press constitute the whole sions hereof and the er the Cincinnati Times-Star assets were Star daily called the Cincinnati Post owners of the Cincinnati business of tion shall member shall The ular regular membership associate “Upon Because of its of the or “Sec. 13. or a) disposition of this an “associate My provided its contract with the too Discontinuance 3) plaintiff’s (b) two liability agreement quoted automatically, publication, above views Other speculative by appellant. newspaper year years’ notice, membership.” newspaper to E. W. under terminated In case The AP provided sale Corporation, any by-law plaintiff the Member ceased Associated damages by appellant’s contract cease notice of recovery, membership” holding evidence, or it would continue in parties for an award By-laws quite described in issue. transfer of the does not Scripps Company, Cincinnati Times- shall cease contract contract (a) provision when it was no that “The represented Associated publication. Post, by These be the owner in defenses. Corporation, membership without obviously become an Press had suffered termination. majority the Member hereto.” A that becom- writing, to which of The As- both news- regular terminat- giving so.” illegality majority included in and the provide, reg- agree- appel- there- provi- Press his ac- ques- Aft- The put withstanding agreement relates, from the Member revenue new members operating ap- it had a cause Member’s successor net deficit shall writing proximate agree $600,000. Distriqt to fulfill the sum of The agree- Judge spoke subject and conditions of this on this terms as follows: during and to ment term hereof by-laws Plaintiff, “Under membership apply Associ- recoup can losses of revenue from in the class as the ated Press same other by members The Association Member.” use its assessment formula. First, an actual loss is sustained The did of the acts neither newspaper Plaintiff when a discon- terminated its liabil- have pay- tinues its having ity giving services without a successor notice — ing obligations. clearly contractual liability assume its breached —and corporation, being evidence, objec- Plaintiff a non- its contract. It offered profit corporation, sustained, then finds it nec- tion some of which essary expenses through to meet its various where the As- show instances an increased assessment of the mem- sociated Press had enforced the two bership. against year provision Whatever losses cor- members notice poration any gone incurs for reasons who had out The cir- must business. membership. assessed to the shown cumstances these cases were not members, through increased, have been the same the transaction as- sessment, whereby do not paper loss, the Times-Star was sold eliminate the n they only corporation. Scripps $3,710,000. subsidize But in enforcing Thus Plaintiff sustained a real event forbearance loss *26 when Defendant cancelled contract with others did not foreclose the con- tract.” rights AP’s on its insistence contract against appellant. I consider Associated Press’ obtaining method needed revenue damages. Appellant b) Recoverable assessing a formula for its members is prove urged its dam- failed to utility’s recovery unlike of its costs disputed ages. is not when by spreading among rates the users of payment of its discontinued Times-Star weekly power. City Memphis for and was lost such assessments revenue Memphis Light, on Behalf of Gas and Appellant to AP. offered evidence Water Co., Division v. Ford Motor during period year involved two (CA 6, 1962) F.2d 845 we held that the in excess of the obtained new revenue monthly minimum rate that Ford Motor payable total assessments agreed had period for a fixed during by increasing period such recoverable in full Ford’s breach of membership through of ra- additions contract, though Memphis even util- addi- dio stations and other media. Such ity required gener- was not thereafter revenue, however, tional did not take power ate deliver the contracted for place accruing ap- the loss by Ford. pellant’s pay. refusal The evidence during period judgment also I affirm showed that the entire involved AP deficit had a and that not- District Court.
