Associated Press v. International News Service

• Citation: 240 F. 983
• Decision Date: 29 March 1917
• Docket Number: 263.
• Parties: ASSOCIATED PRESS v. INTERNATIONAL NEWS SERVICE.
• Court: U.S. District Court — Southern District of New York

240 F. 983

ASSOCIATED PRESS v. INTERNATIONAL NEWS SERVICE.

No. 263.

United States District Court, S.D. New York.

March 29, 1917

Stetson Jennings & Russell, of New York City (Frederic B. Jennings and Winfred T. Denison, both of New York City, of counsel) for complainant.

William A. De Ford, of New York City (Samuel Untermyer, Henry A Wise, Irwin Untermyer, William A. De Ford, Claude A Thompson, and John T. Sturdevant, all of New York City, of counsel), for defendant.

AUGUSTUS N. HAND, District Judge.

This is a motion for an injunction pendente lite to restrain the defendant from appropriating the news gathered by the complainant. Each party to the suit is engaged in the business of procuring news and supplying it to newspapers. The complainant is a membership corporation, and the defendant a stock corporation. The complainant during the year 1915 expended about $3,500,000 in gathering news from all parts of the world for its members, which was assessed among them under the provisions of its by-laws, and the defendant expended more than $2,000,000 during the same year in supplying news to its customers. It thus appears that the gathering and distributing of news requires a very large expenditure of labor and capital, and it is hardly necessary to say that no modern daily newspaper can afford to be without the facilities offered by a well-equipped news agency.

The by-laws of the Associated Press provide that each member shall be entitled to receive a service of news for the purpose of publication in the newspaper specified in his certificate of membership, and for that purpose only, and that a member shall publish the news of the Associated Press only in the newspaper, language, and place specified in his certificate of membership, and shall not permit any other use to be made of the news furnished by the corporation to him or to the newspaper which he represents, and that no member shall furnish, or permit any one in his employ or connected with the newspaper specified in his certificate of membership to furnish, to any person who is not a member, news of the Associated Press in advance of publication. Each of the members is likewise required by the by-laws to gather and supply the local news of his district to the Associated Press, and to no one else (affidavit of W. P. Leech, verified January 19th, filed on behalf of complainant).

Much the same arrangement as above outlined exists between the International News Service and the newspapers receiving its service. A considerable number of newspapers make use of the news furnished by both of these agencies. The value of the news accumulated by each of the parties to this suit depends upon its accuracy and upon its reaching the newspapers served before the news of any other competing news agency can be furnished. The bill of complaint states that:

'An essential part of the plan of operation of the complainant accordingly is that news collected by it shall remain confidential and secret until its publication has been fully accomplished by all of complainant's members, because otherwise competing newspapers, which bear no part of the cost, would unfairly and inequitably receive the benefit of the service, and such a result would ultimately greatly impair the usefulness of the Association to its members and imperil its very existence.'

There is, to be sure, no requirement of the by-laws of the Associated Press that its members must publish news furnished by it at the same hour, and they necessarily do issue their publications at various times. Western papers, owing to the difference in time, can be furnished by a competing news agency with the news of the Associated Press published in the newspapers of its Eastern members, and gathered by it at great cost, with no expense of collection to the rival agency, unless the sale of the news can be withheld for a sufficient time to prevent this. It is therefore undoubtedly a part of the successful operation of a country-wide news agency that rivals shall not be able to sell the news which its customers have published in the East to newspapers published several hours later in the West. In no other way can the results of its labor and enterprise receive any real protection within much of the territory it undertakes to serve. I comment upon this noticeable fact in passing, without at this time discussing the legal features.

The complainant alleges that the defendant has wronged it, and should be enjoined as to three matters: (1) Arranging with employes of members of the Associated Press to furnish its news to the defendant for a consideration before publication; (2) inducing members to violate complainant's by-laws and permit defendant to obtain news of the Associated Press before publication; (3) copying news on bulletin boards and in early editions of complainant's members and selling this news to defendant's customers.

I will take up the foregoing charges seriatim. The moving papers establish beyond a peradventure that the defendant employed at $5 per week a B. E. Cushing, the telegraph editor of the Cleveland News, a paper holding a certificate of membership from the Associated Press, to furnish the defendant with local news gathered by the Cleveland paper. Indeed, the defendant not only admits that such is the fact, but insists that such was the nature of the employment of Cushing and his only authorized service for defendant. Cushing not only furnished the defendant with local news of the Cleveland district, but also a substantial amount of other and particularly of foreign news, which had come to the Cleveland paper over the wires of the Associated Press. The sinking of the hospital ship Britannic in the AEgean Sea, the decision by the United States District Court in Kansas that the Adamson law was unconstitutional, the fire on the steamer Powhatan off Block Island, the German raid on the east coast of England on November 28, 1916, the sinking of the steamer Chemung in the Mediterranean, the declination of A. Bonar Law of the premiership and preliminaries to the appointment of Lloyd George, the explosion in the Quaker Oats plant in Canada, the fire in Toledo, Ohio, the illness of Lloyd George, the statements of Premier Briand as to the attitude of the Allies regarding German peace proposals, and the explosion and loss of life in mines of the Tennessee Coal & Iron Company were all matters in respect to which some communications were made to the defendant by Cushing of news received from the Associated Press.

Barry Faris, the day manager of the defendant, on November 21, 1916, wrote F. H. Ward, the manager of the Cleveland office of the defendant, a letter of which the material portion is the following:

'Dear Mr. Ward: Agnew had an arrangement somewhere in the Cleveland office whereby he could tip us off on big news stories that the A.P. was carrying. I wish you would find out from him just what this connection was, and if you cannot make use of it. It proves very valuable to receive a tip what the A.P. is carrying as soon as it puts it out on the wire. Don't mention the A.P. in any messages of that kind, but simply say, 'Ansonia carrying fifty dead Pennsylvania wreck Pittsburg,' or whatever it may be. * * *

'Barry Faris.'

The foregoing letter from a responsible man in the employ of the defendant indicates a systematic attempt to secure news of the complainant and is the strongest corroboration of the latter's charges. It is not necessary to suppose that such a system was known to the officers of the defendant, or the proprietor of the Cleveland News, who deny that knowledge; but it is sufficient that the system existed and the acts were frequent and continuous. The only qualification of the facts I have recited, which the defendant makes, is the statement of Cushing, in his affidavit submitted by defendant, that he seldom volunteered tips of the Associated Press to the defendant, and that there were only two cases that he can definitely remember where such information originated with him. It can hardly be thought that Faris, in his letter to Ward, referred to local Cleveland news when he spoke of 'big stories that the A.P. was carrying. ' The only difference between local and foreign news is that the latter was more valuable to the defendant, and the divulging of it more serious to the complainant, especially since the Allies have deprived the defendant of the right to use their cables, and thus get news readily in the countries of Europe. It was equally illegal for the defendant to secure local news from the Cleveland newspaper, since that involved a violation by the latter of its express contract with the complainant not to divulge this news to any one but the Associated Press, except so far as it published it in its own papers.

Agnew was the manager of the defendant in Cleveland, and makes oath to certain communications to the defendant in reference to the foregoing news of the Associated Press. Cushing himself deposes to his employment by the defendant, without the knowledge of either the Cleveland News or the Associated Press of his relationship with the defendant. He also swears that he communicated to the defendant both foreign and domestic news belonging to the Associated Press. There cannot be the slightest doubt that complainant's news was pirated at Cleveland, and it is not really questioned. Cushing says, in his affidavit read on behalf of the defendant, that 'he seldom volunteered tips to the manager of the Cleveland office of the International News'; but this is a weak qualification of the opposing affidavits, two of which he makes himself. He admits he was approached by the manager of the defendant's Chicago office and was employed to give it news. The intimate relation of the New York...