Anderson News, L.L.C. v. Am. Media, Inc., Docket Nos. 15-2714-cv(L)

Citation899 F.3d 87
Decision Date19 July 2018
Docket Number15-2894-cv(XAP),15-2889-cv(XAP),Docket Nos. 15-2714-cv(L),August Term, 2016,15-2903-cv(XAP)
Parties ANDERSON NEWS, L.L.C., Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, Lloyd T. Whitaker, as the Assignee under an Assignment for the Benefit of Creditors for Anderson Services, L.L.C., Plaintiff-Appellant, v. AMERICAN MEDIA, INC., Time Inc., Hearst Communications, Inc., Defendants-Counter-Claimants-Appellees-Cross-Appellants, Bauer Publishing Co., LP., Curtis Circulation Company, Distribution Services, Inc., Hachette Filipacchi Media, U.S., Inc., Kable Distribution Services, Inc., Rodale, Inc., Time Warner Retail Sales & Marketing, Inc., Defendants-Appellees, Hudson News Distributors LLC, The News Group, LP, Defendants, v. Charles Anderson, Jr., Counter-Defendant-Cross-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Michael K. Kellogg (Joshua D. Branson, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC; Marc E. Kasowitz, Hector Torres, Seth Davis, Kasowitz, Benson, Torrest & Friedman LLP, New York, NY, on the brief ), Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC, for Plaintiff-Counter-Defendant-Appellant-Cross-Appellee Anderson News L.L.C. and Counter-Defendant-Cross-Appellee Charles Anderson, Jr.

Thomas P. Lynch, Lynch Rowin LLP, New York, NY, for Plaintiff-Appellant Lloyd T. Whitaker, as the Assignee under Assignment for the Benefit of Creditors of Anderson Services, L.L.C.

David G. Keyko (Eric Xinis Fishman, on the brief ), Pillsbury Winthrop Shaw Pittman LLP, New York, NY, for Defendant-Counter-Claimant-Appellee-Cross-Appellant American Media, Inc., and Defendant-Appellee Distribution Services, Inc.

Daniel N. Anziska, Kevin P. Wallace, Troutman Sanders LLP, New York, NY, for Defendant-Appellee Bauer Publishing Co., LP.

George G. Gordon (Jennings Durand, on the brief ), Dechert LLP, Philadelphia, PA, for Defendant-Appellee Curtis Circulation Company.

Jay A. Katz (Isaac Michael Bayda, on the brief ), McElroy, Deutsch, Mulvaney & Carpenter, LLP, New York, NY, for Defendant-Appellee Kable Distribution Services, Inc.

John M. Hadlock (Alexander Lycoyannis, on the brief ), Rosenberg & Estis, P.C., New York, NY, for Defendant-Appellee Rodale, Inc.

Rowan D. Wilson (Thomas G. Rafferty, Antony L. Ryan, on the brief ), Cravath, Swaine & Moore LLP, New York, NY, for Defendant-Counter-Claimant-Appellee-Cross-Appellant Time Inc. and Defendant-Appellee Time Warner Retail Sales & Marketing, Inc.

Jonathan R. Donnellan, Eva M. Saketkoo, Hearst Corporation, Office of the General Counsel, New York, NY, for Defendant-Counter-Claimant-Appellee-Cross-Appellant Hearst Communications, Inc. (as successor-in-interest to Appellee Hachette Filipacchi Media U.S., Inc.).

Before: Livingston, Chin, and Carney, Circuit Judges.

Susan L. Carney, Circuit Judge:

Plaintiffs-appellants Anderson News, L.L.C., and Anderson Services, L.L.C., (together, "Anderson") appeal from an award of summary judgment to defendants on Anderson's allegation that, in early 2009, defendants conspired to boycott Anderson and drive it out of business, in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. At the time, Anderson provided wholesaler services to the single-copy magazine industry, in which magazines are published and sold individually to consumers (in contrast to sales by subscription). As a wholesaler, Anderson was responsible for collecting single-copy magazines from publishers, delivering those magazines to retailers, accounting for the number of magazines sold, and recycling unsold magazines.

In an effort to decrease the financial burden imposed on it by publishers' practice of shipping many more magazines than are sold, in mid-January 2009 Anderson announced that it would begin charging publishers a delivery surcharge of $0.07 per magazine shipped, and called for agreement to the surcharge before February 2009 "to ensure future distribution." J.A. 1450.1 Defendants-appellees, a group of publishers and their distributors (which provide marketing and logistics services to the publishers), refused to pay the proposed surcharge and found wholesalers other than Anderson to deliver their magazines. Anderson sued the publishers and distributors, alleging a conspiracy in violation of antitrust laws to boycott Anderson and making various related state law claims. Some defendants counterclaimed, alleging that Anderson's proposed surcharge was itself the result of an unlawful conspiracy to raise prices.

The District Court granted summary judgment to defendants on Anderson's antitrust and state law claims, and to Anderson on the counterclaims. Anderson now argues that the District Court ignored or too heavily discounted much of the evidence that Anderson presented in support of its claims, and maintains that it has offered sufficient evidence from which a jury could reasonably conclude that defendants entered into an unlawful agreement to refuse to deal with Anderson and to drive it out of business. Reviewing the evidence in light of the totality of the circumstances and under the Matsushita "tends to exclude" standard, Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 588, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), we conclude that the District Court correctly ruled that Anderson has failed to offer sufficient evidence that defendants entered into the alleged unlawful agreement to survive defendants' motions for summary judgment. We further decide that the District Court was correct in ruling that defendants did not suffer an antitrust injury and thus lacked antitrust standing to pursue the stated counterclaims. We therefore AFFIRM the District Court's judgments.

BACKGROUND
I. Factual background

The following statement of facts is drawn from the District Court's thorough recitation, supplemented by the parties' statements of undisputed fact under Federal Rule of Civil Procedure 56.1 and primary documents such as emails and other correspondence that are contained in the record. Although significant changes have doubtless since transpired, we describe relevant facts in this industry as they stood in 2008-2009, when the events in question occurred, as reflected by the record evidence.

In the United States, in 2009, publishers primarily sold magazines in two ways: by subscription and by single-copy purchase at a newsstand, supermarket, or another retailer. The single-copy magazine industry, which is our focus in this case, had long operated through four distinct levels of enterprise:

First, publishers created and produced magazines. Defendants Time Inc. ("Time"), American Media, Inc. ("AMI"), Bauer Publishing Co., LP. ("Bauer"), Rodale, Inc. ("Rodale"), and Hachette Filipacchi Media, U.S., Inc. ("Hachette") published a variety of magazines ranging from familiar titles like People and Star to more obscure titles like Yikes! and Twist . As of 2008, just before the events at issue here took place, sales of defendants' magazines constituted 42% of the U.S. single-copy market.

Second, distributors provided a variety of services, including marketing and billing services, to publishers. In 2008, four major distributors operated in the United States: defendants Time/Warner Retail Sales & Marketing, Inc. ("TWR"), Curtis Circulation Company ("Curtis"), Kable Distribution Services, Inc. ("Kable"), and non-defendant Comag. TWR represented only Time; Kable represented Bauer; Curtis represented Rodale, AMI, and Hachette; and defendant Distribution Services, Inc. ("DSI"), a wholly owned subsidiary of AMI, provided consulting and marketing services to AMI, Bauer, Rodale, and Hachette. Together, TWR, Curtis, and Kable served as national distributors for 75% of the single-copy magazine market in 2008.

Third, wholesalers served as middlemen between publishers and retailers. Wholesalers received magazines from publishers, delivered magazines to retailers, and set up in-store displays of those magazines for retailers. Once the magazines reached their "off-sale" date (that is, they were no longer current), wholesalers retrieved and disposed of the unsold magazines. In 2008, the U.S. market was occupied by four major wholesalers: Anderson News, Source Interlink Distribution, L.L.C. ("Source"), The News Group, LP ("TNG"), and Hudson News Distributors LLC ("Hudson"). As of late 2008, these wholesalers together distributed 93% of magazines in the single-copy market, and Anderson News served as wholesaler for approximately 30% of all single-copy magazines distributed in the United States.

As an ancillary matter, many wholesalers used logistics affiliates to coordinate the wholesalers' delivery and disposal services. Anderson Services was Anderson News's logistics affiliate. Many wholesalers also engaged delivery services to deliver magazines to retailers. Anderson Services and TNG's logistics affiliate shared ownership of two such services: ProLogix Distribution Services (East), LLC ("ProLogix East") and ProLogix Distribution Services (West), LLC ("ProLogix West").

At the fourth distinct level, retailers sold magazines to customers. During the relevant period, key retailers in the nation included Wal-Mart Stores, Inc. ("Wal-Mart") and The Kroger Co. ("Kroger"). To reduce their logistical costs, retailers generally demanded that all of their retail outlets be serviced by a single wholesaler.

Before the early 2000s, single-copy magazines moved through each level of the industry as follows: Publishers sold magazines to wholesalers at a certain discount from the cover price. Wholesalers in turn sold magazines to retailers at a slightly lower discount, and retailers sold to consumers at the cover price. Wholesalers collected unsold magazines and refunded retailers for them. Publishers then refunded wholesalers for unsold magazines. As the District Court recognized, even with a buy-back guarantee, publishers had an incentive to and therefore did sell wholesalers more magazines in the first instance...

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