735 F.2d 1184 (9th Cir. 1984), 83-2024, Dunn v. Phoenix Newspapers, Inc.

Docket Nº:83-2024.
Citation:735 F.2d 1184
Party Name:Gary J. DUNN, individually and as guardian of Steven Dunn, a minor child; and G. Michael Dunn, Plaintiffs-Appellants, v. PHOENIX NEWSPAPERS, INC., Defendant-Appellee.
Case Date:June 26, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1184

735 F.2d 1184 (9th Cir. 1984)

Gary J. DUNN, individually and as guardian of Steven Dunn, a

minor child; and G. Michael Dunn, Plaintiffs-Appellants,


PHOENIX NEWSPAPERS, INC., Defendant-Appellee.

No. 83-2024.

United States Court of Appeals, Ninth Circuit

June 26, 1984

Argued and Submitted Nov. 18, 1983.

Page 1185

Kenneth R. Reed, Michael Wischkaemper, Kenneth D. Nyman, Phoenix, Ariz., for plaintiffs-appellants.

Richard A. Segal, Gust, Rosenfeld, Divelbess & Henderson, Phoenix, Ariz., for defendant-appellee.

Appeal from the United States District Court for the District of Arizona.

Before DUNIWAY, TIMBERS, [*] and SKOPIL, Circuit Judges.

DUNIWAY, Circuit Judge:

This is an antitrust suit brought by newspaper home-delivery carriers against the publisher of two newspapers. The carriers complained that the newspapers violated the Sherman Act, 15 U.S.C. Sec. 1, and parallel state law, Ariz.Rev.Stat.Ann. Sec. 44-1402, by directly signing up home subscribers and engaging in other conduct setting the

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price that home subscribers paid to the carriers. The district court rejected the carriers' per se violation analysis and, after bench trial, filed detailed findings of fact, and decided for the newspapers under the "rule of reason." The carriers appeal, and we affirm.


Plaintiffs Gary J. Dunn, his minor son Steven Dunn, and G. Michael Dunn were carriers for the Arizona Republic and the Phoenix Gazette, daily newspapers published by defendant Phoenix Newspapers, Inc. The carriers were independent contractors, not employees of the newspapers. The newspapers did not grant the carriers monopolies or exclusive geographical sales rights. The newspapers set the prices at which they sold papers to the carriers.

The newspapers engaged in various practices that, the carriers say, tended to set the price that home-delivery subscribers would pay the carriers: (1) The newspapers published "suggested retail subscription prices" for home-delivery, as well as newsstand "face" prices, in each copy of the papers. (2) When the newspapers changed the published home-delivery subscription rates, they notified subscribers by prominent notices in the papers. (3) When the newspapers switched from carriers to motor route distributors, they directly notified subscribers of rate increases by form letter. (4) At various times, the newspapers used subscription-boosting practices such as door-to-door, telephone, and direct mail solicitation; newspaper advertisements quoting home delivery subscription rates; and promotional subscription discounts ("Eight-for-Four" and "Eight-for-Eight" plans). The carriers were contractually obligated to deliver the papers to such new subscribers. (Exh. 1, p 9.) (5) The newspapers offered direct plans ("Easy Pay Plan" and "Debit Transfer Plan") under which home-delivery subscribers paid directly to the newspapers at the suggested subscription rates, and the newspapers credited the carriers' accounts on a weekly basis. The carriers were not contractually obligated to participate in these plans. (See Exh. 1, p 8.) (6) The newspapers offered the carriers prepared billing invoices at the published home-delivery subscription rates.

The contractual agreements between the newspapers and carriers did not cover subscription prices, and the newspapers told both the carriers and subscribers that published subscription rates were "suggested retail prices" and that carriers were free to charge whatever prices they wanted. There was no evidence that the carriers ever tried to deviate from the suggested retail subscription price. Consequently, there was no evidence as to what the newspapers' actual response to a price increase by a carrier would have been.


The parties disagree as to the appropriate standard of review. Findings of fact must be upheld unless they are clearly erroneous. Fed.R.Civ.P. 52(a). Whether the newspapers' practices as found violate the Sherman Act is a question of law, not fact, and is subject to de novo review. See United States v. General Motors Corp., 1966, 384 U.S. 127, 141 n. 16, 86 S.Ct. 1321, 1328, n. 16, 16 L.Ed.2d 415. The carriers are wrong in saying that all issues on appeal are issues of law subject to de novo review. The newspapers are wrong in saying that all issues on appeal are issues of fact subject to the "unless clearly erroneous" rule.


A. Agreements between Newspapers and Subscribers.

Section 1 of the Sherman Act forbids "[e]very contract, combination ..., or conspiracy, in restraint of trade or commerce among the several States." 15 U.S.C. Sec. 1. A manufacturer that suggests resale prices and unilaterally refuses to deal with distributors that do not comply does not violate the statute. Monsanto Co. v. Spray-Rite Service Corp., 1984, --- U.S. ----, ----, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775; United States v. Colgate &

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Co., 1919, 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992; Filco v. Amana Refrigeration, Inc., 9 Cir., 1983, 709 F.2d 1257, 1261; General Cinema Corp. v. Buena Vista Distribution Co., 9 Cir., 1982, 681 F.2d 594, 597. Resale price maintenance is illegal only if implemented by contract, combination, or conspiracy. Albrecht v. Herald Co., 1968, 390 U.S. 145, 149, 88 S.Ct. 869, 871, 19 L.Ed.2d 998...

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