Lamb Enterprises, Inc. v. Toledo Blade Company

• Decision Date: 31 May 1972
• Docket Number: No. 71-1662.,71-1662.
• Citation: 461 F.2d 506
• Parties: LAMB ENTERPRISES, INC., a Delaware Corporation, Wonderland Ventures, Inc., a Michigan Corporation, Plaintiffs-Appellants, v. The TOLEDO BLADE COMPANY et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

461 F.2d 506 (1972)

LAMB ENTERPRISES, INC., a Delaware Corporation, Wonderland Ventures, Inc., a Michigan Corporation, Plaintiffs-Appellants, v. The TOLEDO BLADE COMPANY et al., Defendants-Appellees.

No. 71-1662.

United States Court of Appeals, Sixth Circuit.

May 31, 1972.

COPYRIGHT MATERIAL OMITTED

Gerald H. Gottlieb, Los Angeles, Cal., for appellants; Gerad H. Gottlieb, Los Angeles, Cal., Marvin L. Karp, Cleveland, Ohio, on brief.

Robert J. Hoerner, John Lansdale, Jr., Cleveland, Ohio, for appellees; John Lansdale, Jr., James H. Woodring, Squire, Sanders & Dempsey, Cleveland, Ohio, for the Toledo Blade Co., Daniel M. Redmond, Dow, Lohnes & Albertson, Washington, D. C., for Cox Broadcasting Corp., Ralph Bragg, Spengler, Nathanson, Heyman, McCarthy & Durfee, Toledo, Ohio, for Buckeye Cablevision, Inc., Thomas P. Mulligan, Jones, Day, Cockley & Reavis, Cleveland, Ohio, for the Ohio Bell Tel. Co., on briefs.

Before PHILLIPS, Chief Judge, WEICK, Circuit Judge, and WILSON^*, District Judge.

WEICK, Circuit Judge.

This appeal arises out of a private anti-trust action brought by the Lamb companies (Lamb) in the District Court against The Toledo Blade Company (Blade), Cox Broadcasting Corporation (Cox), Buckeye Cablevision, Inc. (Buckeye), and Ohio Bell Telephone Company (Bell), to recover $54,319,900 damages, the complaint alleging that Lamb was excluded from the community antenna television (CATV) business in Toledo, Ohio, as a proximate result of a conspiracy entered into by said defendants to violate Sections 1 and 2 of the Sherman Act¹ and Section 7 of the Clayton Act². The complaint contained a separate count against Bell alone, in which Lamb sought to recover damages for breach of an alleged contract to provide Lamb priority in service and equipment of a CATV station in Toledo, and contained also a count for damages against Cox, Blade and Buckeye for allegedly inducing Bell to breach its contract with Lamb.

The case was tried before a jury for five weeks, during which time Lamb abandoned its claims against Bell for breach of contract and against Cox, Blade and Buckeye for inducing such breach. At the close of the evidence and arguments of counsel the Court submitted to the jury, as authorized by Rule 49(a) Fed.R.Civ.P., a special verdict requiring the jury to make a special written finding upon each issue of fact.

The jury made findings as follows:

Special Issue No. 1:

Do you find from a preponderance of the evidence that during the period between January 26, 1965 and March 23, 1966, the defendants Blade, Buckeye, Cox, and Bell, or any combination with each other, entered into a combination, contract or conspiracy, the purpose of which was to foreclose, prevent, or preclude plaintiffs Lamb from entering the community antenna television business in the Greater Toledo area?

The answer is, "No."

Special Issue No. 4:

Do you find from a preponderance of the evidence that from approximately January 26, 1965, to approximately the latter part of September, 1965, the defendants, or any of them individually, were engaged in a "relevant line of commerce", product or service market, as these terms have been defined to you, in the Greater Toledo area?

The answer is, "Yes."

Special Issue No. 5:

Do you find from a preponderance of the evidence that during the period from January 26, 1965, to approximately the latter part of September, 1965, the defendants, or any of them, individually or in any combination with each other, possessed monopoly power so as to control and dominate interstate trade and commerce in the mass communications media, or in dissemination of news and advertising, to such an extent as to exclude actual and potential competitors from that field of interstate trade or commerce?

The answer is, "No."

Special Issue No. 8:

Do you find from a preponderance of the evidence that any such monopoly or attempt to monopolize, as above found by you, was a substantial and proximate cause of damage to the business or property of plaintiffs Lamb?

The answer is, "No."

Special Issue No. 10:

Do you find from a preponderance of the evidence that from approximately January 26, 1965, to approximately the latter part of September, 1965, Blade and Cox were engaged in a "relevant line of commerce", produce or service market, as those terms have been explained to you? If so, identify such "relevant line of commerce."

The answer is, "Yes; dissemination of news."

Special Issue No. 11:

Do you find from a preponderance of the evidence that the effect of organizing Buckeye and the acquisition of its stock and assets by Blade and Cox in February, 1965, was either to substantially lessen competition or tend to create a monopoly in the "relevant line of commerce" you found in answer to Special Issue No. 10 in a "relevant geographic market" as that term has been explained to you in the Court\'s charge?

The answer is, "No."

The Court then entered judgment, dismissing the complaint. Lamb appealed, confining its claims of error to alleged violations of Section 1 of the Sherman Act and the Court's instructions to the jury. It is the claim of Lamb that there was a per se violation of Section 1 and that the judgment should be reversed "and the case remanded to the District Court for a new trial as to the amount of injury and damage suffered by plaintiffs as a result of defendants' violations of Section 1 of the Sherman Act," and in the alternative, for a new trial. We affirm.

I

A CATV system is a facility which receives television signals over high antennas erected on a tower, the base of which houses equipment which amplifies or modifies the signals transmitting programs broadcast by one or more television stations, and distributes such signals by coaxial cable to homes of subscribers who are willing to pay for such service.

A cable television company, desirous of entering into the business, may erect its own distribution system by renting from utility companies space on their utility poles for its equipment. Such an arrangement is known as "pole contact." Or the CATV company may contract with a telephone company whereby the telephone company agrees to construct the distribution system and lease it back to the CATV company under tariffs filed with the state Public Utilities Commission. Such an arrangement is known as "lease-back."

The corporate plaintiffs are entirely owned and controlled by Edward Lamb, of Toledo, and his family. Lamb was the majority stockholder and in complete charge of all operations. Lamb has been engaged in the operation of radio and television stations for a number of years, but more recently of CATV systems.

Blade, an Ohio corporation, owns and publishes two daily newspapers in the greater Toledo area, namely, The Blade, and The Toledo Times.³

Cox and its subsidiaries have interests in CATV systems in fourteen states.⁴

Buckeye is an Ohio corporation organized by Blade and Cox to furnish CATV service in the greater Toledo area. Its shares of stock were owned initially 55% by Blade and 45% by Cox, and are owned now 80% by Blade and 20% by Cox.⁵

Bell is a public utility which became interested in providing CATV service in 1964. The service was provided under tariffs filed with the Public Utilities Commission of Ohio.

II

The controversy in this case arises out of efforts of two corporations, Buckeye and Lamb, competing to be first to obtain a natural monopoly in the CATV business in Toledo. To be first to obtain the completed facility was all-important because in the CATV business, like that of electric, gas and telephone utilities, it is not feasible to compete house-to-house for customers in the same area. Buckeye was able to and did arrange construction of its CATV facilities first, and Lamb claims that this violated the anti-trust laws. We disagree.

Cox was first to approach Bell about CATV service in the Toledo area. The meeting took place in Atlanta, Georgia, on January 22, 1965. A few days later Cox met with officials of Blade and they agreed to organize Buckeye as an Ohio corporation in order to enter into the cable television business in Toledo. Bell was informed of the agreement, and it was made known to the public by a news item in the Toledo Blade on February 3, 1965, which was the date of incorporation of Buckeye.

Bell wrote Cox under date of February 2, 1965, offering to furnish cable television for the cities of Cleveland, Toledo, Columbus and Dayton, and setting forth rates for a five-mile and for an eleven-mile distribution system. Following this, there was additional correspondence and meetings between Buckeye and Bell resulting in an agreement whereby Bell agreed to and did furnish "lease-back" service to Buckeye for an eleven-mile distribution system in the Toledo area, at a cost in excess of $1,000,000.

Lamb's initial contact with Bell was on January 26, 1965. They discussed policies on pole contact and lease-back arrangements. Lamb indicated an interest in CATV installations, not in Toledo but in several cities in the Findlay, Ohio District. On January 29, 1965, Lamb wrote Bell stating that he would like to examine CATV possibilities in Sandusky, Fremont, Upper Sandusky and Norwalk. Bell then sent to Lamb a proposal containing the charges for a five-mile and for an eleven-mile distribution system for Sandusky, Fremont and Upper Sandusky; Norwalk was not included because Bell does not serve that city.

Bell's proposal was made subject to applicable tariffs approved by the Public Utilities Commission of Ohio. On February 9, Lamb requested proposal letters for Canton and Massillon, and on February 10 Lamb sent Bell a letter of intent for all five cities. On February 12 Lamb advised Bell that it decided to compete with Toledo Blade for cable television in Toledo. Bell immediately sent a proposal letter to Lamb in which it furnished rates for a five-mile and for an eleven-mile distribution system for Toledo. Three days later Lamb notified Bell that it had decided not to wire...