Scott Publishing Co. v. Columbia Basin Publishers, Inc.
Scott Publishing Co. v. Columbia Basin Publishers, Inc.
Opinion of the Court
Scott Publishing Co., Inc., appellant herein, in 1955 filed an action in the United States District Court for the Western District of Washington, Northern Division, against Columbia Basin Publishers, Inc., and others,
The opinion of the district court is reported as Scott Publishing Co. v. Columbia Basin Publishers et al., D.C.W.D. Wash.1959, 180 F.Supp. 754, and appellant, in the statement of the case contained in its brief, has set out portions of that opinion which it admits accurately portray the background of the controversy. The facts as set out below are taken in part from those portions of the opinion of the district court adopted by appellant as uncontroverted and also from other portions of the opinion of the district court as well as from the record.
Appellant corporation was organized in the State of Washington in September, 1947, and since November, 1947, has been engaged in the business of publishing the Tri-City Herald, a daily evening newspaper, at Kennewick, Washington, and distributing such newspaper through the tri-city area of the State of Washington.
The principal officers of appellant since its organization have been Glenn C. Lee, publisher of the Tri-City Herald, and Robert F. Philip, president of the corporation. Lee and Philip had no newspaper experience before 1947. In that year they learned that the Pasco Herald, a weekly newspaper with a job printing shop and office supply business, located in Pasco, Washington, within the tri-city area, was for sale. They associated themselves with one Hugh Scott, who had had some newspaper experience, formed Scott Publishing Company and purchased the Pasco Herald, agreeing to pay therefor a total of $80,000 plus inventory. Scott Publishing Company took possession of the property on October 1, 1947, and continued to publish the Pasco Herald as a weekly newspaper until November 13,1947, when it began publication of a daily newspaper. At the beginning the Herald was published five days a week; but in January, 1949, a Sunday edition was added, and since that time the Herald has been published six days a week, Saturday being excluded.
Some time prior to the spring of 1949, Howard Parish, one of the appellees, became acquainted with the tri-city area.
During the summer and fall of 1949 there was increased labor activity in the tri-city area. The typographical workers in that area had previously been under the jurisdiction of the typographical union at Walla Walla, Washington, some fifty miles away, but in August of 1949 the defendant Kennewick-Pasco Local 831 was chartered and affiliated with the International Typographical Union.
Scott appealed to Pacific Northwest Newspaper Publishers Association for assistance in the negotiations, and the secretary of that association, one D. S. Haines, joined in the negotiations on behalf of Scott. These negotiations continued without agreement until March 3, 1950, when either a strike or a lockout ensued.
No labor agreement has ever been reached between the Herald and the union. During this long period of time the difficulties between the Herald and the union have continued. As a part of the strike activities of Local 831 picket lines were established on the Herald premises, attempts were made to induce both readers and advertisers of the Herald to cease doing business with that paper. Merchants that advertised in the Herald were placed on “Do Not Patronize” lists which were distributed. Radio broadcasts were made, and other unions in the area were induced to discourage their members from patronizing the Herald. As the district court said: “in short all the traditional means of exerting pressure against an employer involved in a labor dispute with organized labor was engaged in.”
In the publication of the News as a bi-weekly newspaper in competition with the established daily Herald, Columbia lost money, and when it changed to a daily publication Columbia was competing not only with the Herald but with the metropolitan morning newspapers circulated in the area. Columbia continued to lose money, and when one of the principal backers died in July, 1950, Parish attempted to get financial backing from another source. This source was Uni-typo, Inc.
The evidence shows that Unitypo was formed as a corporation in 1946 by the International Typographical Union. The stock of Unitypo was held by members of the executive council of the I.T.U. in trust for the membership, and funds for the operation of Unitypo were supplied by the I.T.U. from its defense fund. The evidence showed that since its inception Unitypo has .started newspapers in various cities in the United States and Canada where members of the I.T.U. have become engaged in a strike or a lockout with a monopoly publisher. It has also rendered encouragement and financial assistance to publishers considered friendly to labor and who were in competition with a newspaper considered unfair by the I.T.U. The activities of Unitypo in various places in assisting newspapers who were competing with so-called unfair newspapers were described in a report of one of its committees as the “development of a new and practical economic defensive weapon for economic pressure on unfair employers through permanent and effective competition.”
Parish had heard of the activities of the I.T.U. and Unitypo, and when the losses of Columbia continued, he sought authority from the stockholders to seek a loan from Unitypo. This authorization was obtained on June 15, 1950, but it was not until after the death of one of the principal backers of Columbia in July, 1950, that Parish contacted Unitypo in Indianapolis, asking for financial assistance. A representative of Unitypo and of the I.T.U. was sent to Pasco to investigate. This representative, one Clarence R. Martin, who was an attorney for the I.T.U. and Unitypo, arranged for a $10,000 loan, which money was advanced to Columbia.
Appellant contends that there has been a violation by the appellees of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1 and 2, Section 2(a) of the Robinson-Patman Act, 15 U.S.C.A. § 13 (a), and Section 3 of the Clayton Act, 15 U.S.C.A. § 14.
“A finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”
It is with this principle in mind that we have examined the record.
Section 1 of the Sherman Act proscribes any “contract, combination. * * or conspiracy, in restraint of trade,” and Section 2 makes criminal the action of any “person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any * * * trade or commerce * * There was in this as in most cases no direct evidence of any contract, combination or conspiracy in restraint of trade or of any attempt to monopolize any trade; and reliance was necessarily placed on circumstantial evidence to establish appellant’s claims.
The district judge, while conceding that conflicting inferences could be drawn from some of the testimony, found that no violation of Section 1 or Section 2 had been proven. He found that “the intent and purpose of Unitypo, Inc., and I.T.U., in first assisting financially the Columbia Basin News and later taking over its publication, was simply to keep in operation in the Tri-City area a newspaper to compete with the Tri-City Herald, and was not to drive the Tri-City Herald out of business for the purpose of establishing a monopoly.”
There was ample testimony to support the findings of the district judge. Much of it is referred to in the court’s opinion. There was testimony that on several occasions subsequent to 1950 and up to 1954 the union by letter communicated with Scott in an attempt to resume negotiations for a labor contract; and that if Scott had been willing to accept a union contract such as the News had with Local 831, Scott’s troubles with the union would have been over. While Unitypo, Inc., over a period of years, advanced large sums of money to continue the publication of the Columbia Basin News, yet at no time was any offer made by Unitypo to furnish Parish or Bryce or the Columbia Basin News with funds to purchase the Herald, nor was there any evidence that at any time such a request had been made by either Parish, Bryce or Columbia Basin Publishers. If there had been any intent to monopolize, the Herald probably could have been purchased for a much lesser sum of money than was advanced over the years by Unitypo. Unitypo and the I.T.U., of course, wanted to do whatever they could in order to induce the Herald to operate under union conditions. To have two newspapers in the area operating under union conditions would of course provide more work for the members of the union. Both the union and the News management were happy to receive aid from the other in the struggle each was having against the Herald. For either side to have refused aid from the other side under the circumstances would have been highly unusual. The acceptance of such aid under the circumstances is not unlawful as long as there is no contract, combination or conspiracy to restrain trade and as long as there is no monopolizing or attempting to monopolize, or a conspiracy to monopolize.
There was no evidence that the demands made by the union when they negotiated with the Herald were unreasonable, nor was there any unreasonableness on the part of the union in insisting upon a written contract with the Herald. The court found that both Scott and the union negotiated in good faith but were unable to reach an agreement. The policy of Unitypo in continuing to advance money for the publication of the Columbia Basin News was in line with its national policy which it had followed in other places when there was a labor dispute with a publisher in competition with another newspaper which operated under union conditions. The difficulty that the News had in endeavoring to be a successful paper in the area, and the losses that it suffered in its efforts to succeed, are an indication of how firmly entrenched the Herald was.
Appellant relies upon remarks made by Parish before he established the News to the effect that he would buy the Herald out for five cents on the dollar and also on remarks later made by Parish, in letters written to Unitypo asking for more money to keep the News going, to the effect that they were “driving Lee and Scott Publishing Company to the wall” as showing an intent to drive the Herald out of business in order to create a monopoly. However, the court considered the circumstances under’ which those letters were written and held that they appeared to be “merely communications on the part of Parish and Bryce in the nature of a sales pitch to their financial angel in an effort to keep the money coming, and were no doubt received in that spirit by the I.T.U. and the Unitypo, Inc.”
As further evidence of lack of proof of a conspiracy or an attempt to monopolize, it can be pointed out that within three months of the time of the strike at the Herald, Parish inserted an advertisement in a trade journal in an attempt to sell the Columbia Basin News. Later in that same year, there were efforts on the part of Parish and Bryce to interest Lee in the purchase of the Columbia Basin News. Lee had an appraisal made of the News plant, and thereafter there were further negotiations between Bryce and Lee for the sale of the News to Scott. These negotiations, however, resulted in no agreement for the asserted reason that Bryce insisted that as a condition of the sale the contract between the union and the Columbia Basin Publishers, Inc., would be honored.
The appellant also complains of the fact that on occasions the News sold advertising space for less than the price listed on its “rate cards”; that it published a free distribution weekly known as the Columbia Basin News Shopper; that it gave the largest advertiser in the area, C. C. Anderson Company, free advertising in the Shopper; and that it reduced the rates to local advertisers on national advertising.
The district court found that while the advertising rates originally set by the News were not always followed, these rates were “totally unrealistic” when the comparative circulation of the News and the Herald was considered, and that the rates charged were not “unreasonably low” compared to the advertising rates of the Herald with its larger circulation.
In considering the action of the News during the period in question, the court found that “[a]lmost all of the devices, including the cooperative advertising practice, the publication of the Columbia Basin News Shopper, the giving of more favorable rates to larger advertisers, and the free distribution of newspapers, used by Columbia Basin News in this competitive struggle and of which plaintiff complains, were at one time or another throughout the period here in question used by the Tri-City Herald in this competitive struggle. In addition, Tri-City Herald used devices such as rebates to advertisers and payments of commissions to local advertising agencies on local display advertising to attract advertising, which were not used by Columbia Basin News.”
Appellant contends that the evidence demanded a finding of conspiracy to drive the Herald out of business and of an attempt on the part of the News to create a monopoly. It wishes us to draw inferences from the testimony contrary to
“[T]he Court finds that the intent and purpose of Unitypo, Inc., and I.T.U., in first assisting financially the Columbia Basin News and later taking over its publication, was simply to keep in operation in the TriCity area a newspaper to compete with the Tri-City Herald, and was not to drive the Tri-City Herald out of business for the purpose of establishing a monopoly. The Court further finds that the purpose and intent of Parish, Bryce and Columbia Basin Publishers, Inc., at all times was to establish a newspaper in competition with the Tri-City Herald, and that accepting whatever financial assistance Unitypo, Inc., or I.T.U. were willing to furnish is not inconsistent with that intent and purpose.21 * * * * * *
“In this case the evidence does not show either an actual restraint of trade or a monopoly, or the specific intent on the part of any of the defendants, either individually or in combination, to restrain trade or create a monopoly in the daily newspaper business in the Tri-City area.”22
While it may be contended that if the district court had made other and different findings in reference to a conspiracy w.e might have been forced to uphold them, he, however, had the primary duty to draw the inferences and to make the findings; and we cannot say after a review of the extensive record that the findings of the district judge as to absence of violations of Sections 1 and 2 of the Sherman Act were clearly erroneous.
We now give our attention to the claimed violation of Section 2(a) of the Robinson-Patman Act, 15 U.S.C.A. § 13(a). The district court found that there were no price discriminations by Columbia Basin News in the sale of advertising which had the effect of lessening competition or which tended to create a monopoly or to injure, destroy or prevent competition. The appellant contends that the record shows that there were some price differences between rates charged by Columbia Basin News to one advertiser from those charged to other advertisers. This, however, in itself is not sufficient to show a violation of the Robinson-Patman Act.
In Balian Ice Cream Co. v. Arden Farms Co., 9 Cir., 1955, 231 F.2d 356, 367, this court said:
“It is also broadly stated in the argument that a differential in price in and of itself constitutes discrimination within the meaning of § 2(a) of the Clayton Act, as amended.
“But this postulate is universal, arrived at with insufficient bases. ‘Congress was dealing with competition, which it sought to protect, and monopoly, which it sought to prevent.’ There is no presumption set up anywhere that, merely because there is a differentia] in various areas, necessarily a price discrimination exists.” [Footnote omitted]
In F. T. C. v. Anheuser-Busch, Inc., 1960, 363 U.S. 536, 553, 80 S.Ct. 1267, 1277, 4 L.Ed.2d 1385, the Supreme Court said:
“What we have said makes it quite evident, we believe, that our decision does not raise the specter of a flat prohibition of price differentials, inasmuch as price differences constitute but one element of a § 2(a) violation.”
The language of the Act provides that a discrimination in price is unlawful “where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any
From all the evidence it appears that the Herald grew demonstrably during the years in question. The language of the Court in Times-Picayune Publishing Co. v. United States, 1953, 345 U.S. 594, 621,
“The Item, the alleged victim of the Times-Picayune Company’s challenged trade practices, appeared, in short, to be doing well.
“The record in this case thus does not disclose evidence from which demonstrably deleterious effects on competition may be inferred.”
Without discussing the details of the claimed price difference relied upon by appellant, we find that there was substantial evidence in the record to justify the finding of the district court that there were no price discriminations by Columbia Basin News in the sale of advertising which had the effect of lessening competition or which tended to create a monopoly or injure, destroy or prevent competition.
The complaint also charged a violation of Section 3 of the Clayton Act, 15 U.S.C.A. § 14. The district court found that “[n]o advertising was sold in the Columbia Basin News or the Columbia Basin News Shopper, and no rates for advertising in either or both were fixed, upon any understanding or agreement that the advertiser would not advertise in the Tri-City Herald or any other advertising media in the area.”
We believe there was ample evidence in the record to support the district court’s findings that there were no violations on the part of appellees of either Sections 1 and 2 of the Sherman Act, Section 2(a) of the Robinson-Patman Act, or Section 3 of the Clayton Act.
The judgment is affirmed.
. Howard Parish and Associates, Inc.; Howard W. Parish; James M. Bryce; Kennewick-Pasco Typographical Union No. 831; Unitypo, Inc.; International Typographical Union; Woodruff Randolph; Don Hurd; Walter D. Marviek; Charles M. Lyon; Harold H. Clark; Joe Bailey; Francis E. McGlothlin; A. L. Wiiie; Seattle Typographical Union No. 202; and Allied Printing Trades Council of Seattle.
. 15 U.S.C.A. § 15. “Any person who shall bo injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.”
15 U.S.C.A. § 26. “Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws * * * when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings * *
. 15 U.S.C.A. § 1, Sherman Act, § 1. “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal * *
15 U.S.C.A. § 2, Sherman Act, § 2. “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor * *
15 U.S.C.A. § 13(a), Robinson-Patman Act, § 2(a). “It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monoply in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * *
15 U.S.C.A. § 14, Clayton Act, § 3. “It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.”
. The name of the paper was changed from the “Pasco Herald” to the “TriCity Herald” when daily publication commenced.
. The defendant International Typographical Union is a labor organization with its principal office at Indianapolis, Indiana. It has approximately 110,000 members in some 800 locals throughout the United States and Canada.
. Whether the rupture in relations between Scott and its employees was a strike or a lockout is not clear. However, which it was is immaterial to this case.
. The loan was arranged in the following manner: The Seattle First National Bank agreed to lend $10,000 upon receipt of a note and chattel mortgage on Columbia’s plant. This was immediately endorsed by the bank and assigned to Uni-
. See footnote 4.
. Ibid.
. Id., at page 766.
. In cooperative advertising, a national advertiser, either a manufacturer or distributor of a given product, will cooperate with a local retailer in local advertising. An advertisement will be inserted in a local newspaper advertising the product and the manufacturer or distributor will reimburse the local retailer who inserts the ad for a portion of the cost of the ad. In cooperative advertising Columbia Basin News would issue double bills, one bill to the local retail merchant at his contract rate, based on the number of inches of advertising that he used in the News, and this was the bill which the local advertiser would actually pay. Columbia Basin News issued a second bill to the local merchant to be submitted to the national advertiser for reimbursement at the open rate which in most instances would be higher than the local merchant’s contract rate. In this way the local merchant would receive reimbursement for a higher proportion of the bill for the given ad than the national advertiser had agreed to pay.
. The circulation of the Herald at all times exceeded that of the News.
. We do not feel that Union Leader Corp. v. Newspapers of New England, D.C.D. Mass.1960, 180 F.Supp. 125, modified 1 Cir., 1960, 284 F.2d 582, is applicable to the situation now before this court. In Union Leader the court was faced with
. 180 F.Supp. at page 768.
. Dividends on the stock of Scott were paid in 1953, 1954, 1956, 1957 and 1958. Salaries of officers were raised over the years and bonuses to officers were paid occasionally.
. 180 F.Supp. at page 769.
. Id., at page 767.
. Id., at page 770.
. Another advertisement attached to the above mentioned statement reads as follows:
“The FACTS!
LOOK AT THE HERALD’S ADVERTISING LEAD!
In the important TRI-CITY MARKET the HERALD PUBLISHES
69% of all AUTOMOTIVE DISPLAY
65% of all DRAPERIES and FLOOR COVERINGS
63% of all DRUG STORE DISPLAY
75% of all FURNITURE DISPLAY
69% of all HARDWARE and APPLIANCES
64% of all GROCERY DISPLAY
65% of all JEWELRY DISPLAY
73% of all LUMBER YARD DISPLAY
79% of all MEN’S WEAR DISPLAY
71% of all SHOE STORE DISPLAY
63% of all WOMEN’S WEAR DISPLAY
64% of all CLASSIFIED AUTOMOTIVE
64% of all REAL ESTATE — CLASSIFIED
64% of all LOCAL DISPLAY
70% of all NATIONAL DISPLAY
63% of all TOTAL ADVERTISING
82.4% COVERAGE OF ALL OCCUPIED DWELLINGS”
. The claim is also made by appellee that advertising is not a commodity and does not come within the provisions of the Robinson-Patman Act. The district court did not reach this issue, and in view of our finding that the evidence supports the judgment of the district court, we do not feel it necessary to reach this issue either.
. 180 F.Supp. at page 769.
Reference
- Full Case Name
- SCOTT PUBLISHING CO., Inc. v. COLUMBIA BASIN PUBLISHERS, INC. Howard Parish and Associates, Inc. Howard W. Parish James M. Bryce Kennewick-Pasco Typographical Union No. 831 Unitypo, Inc. International Typographical Union Woodruff Randolph Don Hurd Walter D. Marvick Charles M. Lyon Harold H. Clark Joe Bailey Francis E. McGlothlin A. L. Wilie Seattle Typographical Union No. 202 and Allied Printing Trades Council of Seattle
- Cited By
- 1 case
- Status
- Published