Godfrey v. Pulitzer Pub. Co.

• Decision Date: 01 December 1998
• Docket Number: No. 98-1149,98-1149
• Citation: 161 F.3d 1137
• Parties: 1998-2 Trade Cases P 72,354 Thomas M. GODFREY; Elliot Blaylock; Jay Bluestone; Donald R. Briscoe; Barrett Burstein; Florissant News, Inc., a Missouri Corporation; Ramon Devine; Timothy C. Devine; Donald Griesmer; Ronald Kaemmerer; Ferguson News Co., Inc., a Missouri Corporation; Felix Kucenas; Thomas J. Murphy; Ann S. Pointer; Cyril Salvo; Norman Segall; Robert Stroud; Jack R. Vogt; Harold Weggeman, Appellants, v. PULITZER PUBLISHING COMPANY, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1137

161 F.3d 1137

1998-2 Trade Cases P 72,354

Thomas M. GODFREY; Elliot Blaylock; Jay Bluestone; Donald R. Briscoe; Barrett Burstein; Florissant News, Inc., a Missouri Corporation; Ramon Devine; Timothy C. Devine Donald Griesmer; Ronald Kaemmerer; Ferguson News Co Inc., a Missouri Corporation; Felix Kucenas; Thomas J Murphy; Ann S. Pointer; Cyril Salvo; Norman Segall Robert Stroud; Jack R. Vogt; Harold Weggeman, Appellants, v. PULITZER PUBLISHING COMPANY, a Corporation, Appellee.

No. 98-1149.

United States Court of Appeals, Eighth Circuit.

Submitted June 11, 1998.

Decided Dec. 1, 1998.

Alan G. Kimbrell, St. Louis, Missouri, argued (Richard C. Witzel and David A. Dimmitt, on the brief), for Appellants.

Thomas C. Walsh, St. Louis, Missouri, argued (Jay L. Kanzler, Jr., on the brief), for Appellee.

Before HANSEN and MURPHY, Circuit Judges, and DOTY, ¹ District Judge.

HANSEN, Circuit Judge.

Appellants brought an action pursuant to Section 2(a) of the Robinson-Patman Price Discrimination Act ("the Act"), 15 U.S.C. § 13(a) (1994), claiming that Pulitzer Publishing Company ("Pulitzer") engaged in illegal discriminatory sales of the Saint Louis Post-Dispatch newspaper ("the Post Dispatch "). On Pulitzer's motion, the district court dismissed the action for lack of subject-matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Because we conclude the district court erred in its jurisdictional analysis, we reverse and remand.

I.

Pulitzer publishes the Post-Dispatch and distributes it by three primary methods. First, Pulitzer distributes newspapers for sale in vending machines and at retail outlets through independent contractors known as "branch dealers" or "branchmen." Second, Pulitzer sells newspapers to a network of independent carriers who then resell the papers to home subscribers. Finally, Pulitzer sells a limited number of newspapers to direct subscribers. This appeal involves the first method of distribution--sales via branch dealers.

Appellants are 17 of the roughly 37 branch dealers in the St. Louis area. Three of these 17 branch dealers operate in Illinois; 14 are based in Missouri. The 20 remaining branch dealers operate in either Missouri or Illinois. None of the 37 operate in both Missouri and Illinois. Pulitzer prints the Post Dispatch in Missouri and then ships copies across the Mississippi River to Illinois for resale by the branch dealers located in that state.

Under this distribution method, the branch dealers purchase newspapers from Pulitzer and then resell them to retail outlets (newsstands, convenience stores, supermarkets, etc.) and via vending machines located within their service area. Each branch dealer operates within a clearly defined service area. Further, the branch dealers have historically recognized these service areas as being exclusive territories and appear to respect the historic boundaries between service areas. ²

As filed with the district court, the complaint included 19 counts, each count alleging a violation of Section 2(a) of the Act, 15 U.S.C. § 13(a). Of these 19 counts, only Count I remains at issue. In Count I, appellants sought an injunction against Pulitzer based on an allegedly discriminatory pricing scheme. Specifically, appellants asserted that Pulitzer violated the Act by selling the Post-Dispatch to certain branch dealers at a lower price than Pulitzer sold the newspapers to appellants. Section 2(a) of the Act provides that:

It shall be unlawful for any person engaged in commerce, in the course of such commerce ... 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, ... and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly 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....

Id. (emphasis added).

Courts and commentators compartmentalize Robinson-Patman claims into three types of violations. First, "[a] primary-line violation occurs where the discriminating seller's price discrimination adversely impacts competition with his--the seller's--competitors." Best Brands Beverage, Inc. v. Falstaff Brewing Corp., 842 F.2d 578, 584 n. 1 (2d Cir.1987) (citations omitted). "[A] secondary-line violation occurs where the discriminating seller's price discrimination injures competition among [the seller's] customers...." Id. Finally, a tertiary violation occurs when, although "the purchasers of the discriminating seller did not compete directly, their customers competed within a unified market region." Id.

Appellants claim that Pulitzer's price discrimination harms competition between branch dealers. Thus, they claim a secondary-line violation. In particular, appellants alleged and Pulitzer admitted that Pulitzer reduced the price it charged certain branch dealers while continuing to charge appellants a relatively higher price. (Appellants' App. at 148, 167.) In this context, we refer to those branch dealers receiving the lower price as "favored branch dealers," and refer to the appellants as "disfavored branch dealers." Cf. Best Brands, 842 F.2d at 584.

Pulitzer filed a motion to dismiss for lack of subject-matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). The district court granted discovery for the limited purpose of determining the existence of jurisdiction. At the close of this discovery period, the court concluded that the appellants satisfied the Act's "in commerce" requirement. Despite this conclusion, the court dismissed the appellants' claim for lack of subject-matter jurisdiction because the appellants failed to provide sufficient evidence that the favored and disfavored branch dealers compete for sales. Appellants appeal the dismissal of Count I.

II.

Appellants argue three issues on appeal. First, appellants claim that jurisdiction under Section 2(a) of the Act does not depend on a competitive relationship between favored and disfavored buyers. Second, appellants contend that even if such a jurisdictional requirement exists, they sufficiently demonstrated a competitive relationship between the branch dealers. Finally, appellants argue that in any event, the competitive relationship issue is so intermeshed with the merits that it should be resolved only after a full trial. We agree with appellants--jurisdiction under Section 2(a) does not require a showing of a competitive relationship--therefore, we do not reach the second and third arguments.

The district court held that it lacked subject-matter jurisdiction because the appellants failed to show a competitive relationship between the favored and disfavored branch dealers. Implicitly, therefore, the court concluded that such a relationship was a jurisdictional prerequisite under the Act. Such a conclusion presents a question of law which we review de novo. See United States v. S.A., 129 F.3d 995, 998 (8th Cir.1997) (reviewing subject-matter jurisdiction and statutory interpretation de novo), cert. denied, --- U.S. ----, 118 S.Ct. 1200, 140 L.Ed.2d 329 (1998). Our review of the district court's fact-findings is governed by the principles laid out in Osborn v. United States, 918 F.2d 724 (8th Cir.1990). In Osborn, we held that a district court has power to decide issues of disputed fact when ruling on a Rule 12(b)(1) motion to dismiss for lack of jurisdiction. Id. at 729. "Jurisdictional issues, whether they involve questions of law or fact, are for the court to decide." Id. (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.1981), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981)). When, as in this case, the district court relies "on its own determination of disputed factual issues, [we] review those findings under the 'clearly erroneous' standard." Id. at 730 (citing Williamson, 645 F.2d at 413).

Federal courts are courts of limited jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, ----, 118 S.Ct. 1003, 1012, 140 L.Ed.2d 210 (1998). "The requirement that jurisdiction be established as a threshold matter 'spring[s] from the nature and limits of the judicial power of the United States' and is 'inflexible and without exception.' " Id. (quoting Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 28 L.Ed. 462 (1884)) (alteration in original). It is with these principles in mind that we undertake to ascertain the requirements of subject-matter jurisdiction in the instant case.

Unlike other federal antitrust legislation, namely the Sherman Act, jurisdiction under the Robinson-Patman Act is relatively narrow and "extends only to persons and activities that are themselves 'in commerce.' " Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 194, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974). Jurisdiction under Section 2(a) of the Robinson-Patman Act is not established "merely by showing that allegedly anticompetitive acquisitions and activities affect commerce." Id. at 195, 95 S.Ct. 392 (emphasis added). "With almost perfect consistency, the Courts of Appeals have read the language requiring 'either or any of the purchases involved in such discrimination (be) in commerce' to mean that § 2(a) applies only where 'at least one of the two transactions which, when compared, generate discrimination ... cross(es) a state line.' " Id. at 200, 95 S.Ct. 392 (quoting Hiram Walker, Inc. v. A & S Tropical, Inc., 407 F.2d 4, 9 (5th Cir.1969), cert. denied, 396 U.S. 901, 90 S.Ct. 212, 24 L.Ed.2d 177 (1969); Belliston v. Texaco, Inc., 455 F.2d 175, 178 (10th Cir.1972), cert. denied, 408 U.S. 928, 92 S.Ct. 2494, 33 L.Ed.2d 341 (1972)) (alterations in original).

Thus, the plain language of Section 2(a), and the cases interpreting that section, clearly establish the jurisdictional nature of the Act's unique "in commerce" r...