Hayden Pub. Co., Inc. v. Cox Broadcasting Corp.

• Citation: 730 F.2d 64
• Decision Date: 06 March 1984
• Docket Number: D,No. 556,556
• Parties: 1984-1 Trade Cases 65,897 HAYDEN PUBLISHING CO., INC., Plaintiff-Appellant, v. COX BROADCASTING CORP. and United Technical Publications, Inc., Defendants-Appellees. ocket 83-7499.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 64

730 F.2d 64

1984-1 Trade Cases 65,897

HAYDEN PUBLISHING CO., INC., Plaintiff-Appellant, v. COX BROADCASTING CORP. and United Technical Publications Inc., Defendants-Appellees.

No. 556, Docket 83-7499.

United States Court of Appeals Second Circuit.

Argued Jan. 9, 1984.

Decided March 6, 1984.

John E. Haigney, Ide & Haigney, New York City (John Timbers, New York City, of counsel), for plaintiff-appellant.

James A. Treanor, III, Treanor & Harvey, New York City (Michael R. Treanor, New York City, Andrew A. Merdek, John P. Schnitker, Dow, Lohnes & Albertson, Washington, D.C., of counsel), for defendants-appellees.

Before KAUFMAN, OAKES, and CARDAMONE, Circuit Judges.

OAKES, Circuit Judge:

Hayden Publishing Co., Inc. (Hayden), appeals from an order of the United States District Court for the Eastern District of New York, Mark A. Costantino, Judge, granting summary judgment to Cox Broadcasting Corp. (Cox) and United Technical Publications, Inc. (UTP). Hayden, the plaintiff below, alleged that Cox and UTP violated sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1-2 (1976). In particular, Hayden alleged that Cox and its wholly owned subsidiary, UTP, monopolized the market for advertising in the electronics catalogue industry by means of UTP's publication, Electronic Engineers Master (EEM). Additionally, Hayden claimed that the defendants engaged in various anticompetitive acts to injure its rival publication, Gold Book. Finding that Hayden had failed to establish that the relevant market consisted only of EEM and Gold Book, Judge Costantino granted summary judgment in favor of Cox and UTP and dismissed Hayden's complaint. Hayden Publishing Co. v. Cox Broadcasting Corp., 566 F.Supp. 503 (E.D.N.Y.1983). Because we find that genuine issues of material fact remain, including the question of market definition, we reverse.

FACTS

As described by Hayden, the electronics catalogue industry consists of publications designed for, and distributed free to, electronic design engineers, purchasing agents for engineering companies, and other specialized users of electronic products. These publications contain two sections, the first a "directory section," which lists by product category companies that supply various electronic products and services, and the second a "catalogue section," which provides space for advertising. Typically, the catalogue section provides descriptions, specifications, prices, and illustrations of electronic devices, thereby enabling design engineers to determine whether these items should be incorporated into their products. Because such publications are given free to this very specialized audience, the publishers derive their income from product advertising.

In Hayden's amended complaint of October, 1979, it charged that Cox and UTP violated sections 1 and 2 of the Sherman Act ¹ by monopolizing, attempting to monopolize, and conspiring to monopolize the market for "domestic advertising in electronics catalog-directories." These alleged illegal acts of the appellees included offering free advertising pages in EEM, selling advertising in multi-year packages in anticipation of Gold Book's entry into the market, pricing some of EEM's advertising below cost, and having salespeople make false statements about Gold Book's financial stability and future prospects. Cox and UTP, of course, deny these allegations.

The central issue which has emerged thus far in the litigation is the definition of the relevant market. Hayden's contention is that the market is a very limited one, consisting only of EEM and Gold Book. Cox and UTP argue, however, that many other publications compete with EEM and Gold Book for advertising data on electronic products and, in the district court, they "nominated" nine publications for inclusion in the market. ²

PROCEEDINGS BELOW

In March, 1980, the defendants-appellees moved for summary judgment. Based on Hayden's answers to certain interrogatories, they claimed that "[p]laintiff has conceded that should the relevant product market in fact be any larger than alleged [i.e., than EEM and Gold Book], defendant UTP has not monopolized or attempted to monopolize it--and by necessary extension, neither Cox nor UTP has unreasonably restrained trade therein" (emphasis in original). ³ Claiming that the nominated publications Hayden insisted that it had made no such concession. Moreover, it claimed that the nominated publications were not competitors of EEM and Gold Book, ⁴ and that even if they were found to be part of the relevant market, EEM still enjoyed monopoly power. In addition, Hayden cross-moved for partial summary judgment, asking the court to rule with respect to each of the nominated publications that it did not compete with EEM. Hayden did not ask the court to determine that EEM and Gold Book were the sole participants in the market.

were competitors of EEM and Gold Book, they sought dismissal of Hayden's claims.

In May, 1983, Judge Costantino granted the motion by defendants-appellees for summary judgment and dismissed Hayden's complaint, making no mention of the alleged concession on which the motion was based. The court found "ample evidence ... that reasonable interchangeability exists between EEM and the other publications cited by the defendants." 566 F.Supp. at 508. Although recognizing that interchangeability "is not the sole test for determining the relevant market," id., it held that that finding "enables this court to ascertain that the 'outer boundaries' of the relevant product market are not limited to EEM and Gold Book." Id. Invoking the criteria for submarket analysis enunciated in Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), the court found additionally that "[a]s to whether a valid 'submarket' exists consisting solely of EEM and Gold Book, here too plaintiff is unable to substantiate its market definition." Id. On the basis of these findings, the court dismissed Hayden's complaint and denied Hayden's cross-motions for summary judgment. 566 F.Supp. at 505 n. 1.

DISCUSSION

Summary judgment is available where "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). As the district court recognized, however, " 'summary [judgment] procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles ....' " 566 F.Supp. at 505 (citing Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962)). See also George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 554-55 (2d Cir.1977). Here, we believe that significant issues of fact are contested by the litigants and thus that the court erred in granting summary judgment. ⁵

As an initial matter, we believe that the court erroneously placed the burden of proof on Hayden for purposes of the defendants' motion for summary judgment. It is well established that "the burden [is] on the moving party to demonstrate the absence of any material factual issue genuinely in dispute...." Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317, 1320 (2d Cir.1975). Nevertheless, in considering the motion by Cox and UTP, the district court stated: "[T]his court has determined that Hayden has failed to meet its threshold burden of substantiating its market definition limiting the relevant product market or submarket to one consisting solely of EEM and Gold Book." 566 F.Supp. at 510. Although Hayden clearly will have the burden at trial of establishing the relevant product market, it did not have that burden for purposes of the defendants' motion for summary judgment.

For complete summary judgment in favor of Cox and UTP to have been appropriate, the defendants would have to have shown that there were no material factual issues involving monopolization or attempted monopolization as raised by Hayden's section 2 claims, or concerning restraint of trade as alleged by its section 1 claim. As the appellant correctly observes, however, the court made no such findings, but instead limited its inquiry to the question of the proper market definition.

As the Supreme Court has stated, "[t]he offense of monopoly under Sec. 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966). For Cox and UTP to prevail on a motion for summary judgment dismissing Hayden's section 2 claims, they would have to show, without disputed issue of fact, that EEM lacked monopoly power in the relevant market. Thus, assuming arguendo that the defendants established that the relevant product market was not limited to EEM and Gold Book, the question of EEM's monopoly power nevertheless remained. ⁶

A party has monopoly power if it has "a power of controlling prices or unreasonably restricting competition." United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 389, 76 S.Ct. 994, 1004, 100 L.Ed. 1264 (1956); see Standard Oil Co. v. United States, 221 U.S. 1, 58, 31 S.Ct. 502, 515, 55 L.Ed. 619 (1911). As this court noted recently, a number of factors must be considered in determining whether monopoly power exists. In Broadway Delivery Corp. v. United Parcel Service of America, Inc., 651 F.2d 122, 128 (2d Cir.), cert. denied, 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384 (1981), we stressed, following the Supreme Court's decision in United States v. Columbia Steel Co., 334 U.S. 495, 527, 68 S.Ct. 1107, 1124, 92 L.Ed. 1533 (1948), that the strength of competition, the probable development of the industry, and consumer demand, as well as the percentage of market share enjoyed by the...