Affiliated Capital Corp. v. City of Houston

• Decision Date: 07 July 1981
• Docket Number: Civ. A. No. H-79-1331.
• Citation: 519 F. Supp. 991
• Parties: AFFILIATED CAPITAL CORPORATION, et al., Plaintiffs, v. CITY OF HOUSTON, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

519 F. Supp. 991

AFFILIATED CAPITAL CORPORATION, et al., Plaintiffs, v. CITY OF HOUSTON, et al., Defendants.

Civ. A. No. H-79-1331.

United States District Court, S. D. Texas, Houston Division.

July 7, 1981.

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Charles J. Brink, Houston, Tex., for plaintiffs.

Stephen D. Susman, Susman & McGowan, Houston, Tex., for plaintiffs.

Rufus Wallingford, Fulbright & Jaworski, Houston, Tex., for defendants City of Houston and Mayor McConn.

Richard B. Miller, Baker & Botts, Houston, Tex., for defendant Gulf Coast Cable Television.

MEMORANDUM AND ORDER

CARL O. BUE, Jr., District Judge.

I. The Pending Motions and The Court's Ruling

Various post-trial motions are pending before the Court: (1) plaintiff's Motion for Injunctive Relief and for Entry of Judgment in Accordance with the Verdict; (2) defendant McConn's Motion for Judgment on the Verdict; (3) defendant Gulf Coast's Alternative Motions for Judgment on the Verdict, Judgment Notwithstanding the Verdict or for New Trial; and (4) defendants City of Houston's and McConn's Motion for Judgment Notwithstanding the Verdict. Having considered the record of this case, the issues addressed in the memoranda, and the arguments of counsel, the Court rules as follows with regard to the motions: (1) plaintiff's motion should be denied in its entirety; (2) defendants' motions for judgment on the verdict or for new trial should be denied; and (3) defendants' motions for judgment notwithstanding the verdict should be granted.¹

In this complex and protracted anti-trust case which resulted in a jury verdict for the plaintiff, the instant rulings by the Court are necessarily expanded upon at length in light of the trial record to explain the reasoning utilized in reaching a decision adverse to plaintiff. The issues basically revolve around the meaning of two of the jury's answers to interrogatories propounded at the close of the evidence and the Court's obligation under the law at this stage of the trial to uphold the verdict if supported by the record. While persuaded that the plaintiff's proof can be viewed as advancing a second theory of conspiracy to limit competition for cable franchises separate and apart from the boundary agreements, this Court finds no evidence apart from the boundary agreements of a conspiracy which caused harm to plaintiff. Since the jury found such boundary agreements were not part of a conspiracy in unreasonable restraint of trade, the necessary nexus between a conspiracy and plaintiff's failure to receive a cable franchise is lacking. Accordingly, the defendants must prevail, and a judgment notwithstanding the jury verdict in their favor will be granted.

II. The Contentions of the Parties

The jury was instructed that in order to find that any of the defendants violated Section 1 of the Sherman Act, they had to find the following essential elements by a preponderance of the credible evidence:

(1) that the particular defendant entered into a conspiracy or agreement with one or more other persons; and (2) that the object of this conspiracy or agreement was to divide and allocate territories and thereby eliminate plaintiff or others as competitors for cable television franchises in Houston; or that the object of this conspiracy was to limit competition to those persons who participated in the agreement.

Instruction No. 12, Jury Charge.

Further, they were instructed as follows:

It is established that Gulf Coast agreed to divide or allocate the territories within which certain cable television companies would apply for a franchise, specifically with the Houston Cable and Westland groups. The question for you to determine is whether such agreements were made as part of a conspiracy which constituted an unreasonable restraint of trade which had a substantial adverse effect on competition. Also with regard to Gulf Coast, you must determine whether Gulf Coast engaged in a conspiracy with one or more other persons to limit competition for cable television franchises in Houston. If you determine that Gulf Coast entered such a conspiracy, you must determine whether that conspiracy constituted an unreasonable restraint of trade.

With regard to the City of Houston and Mayor McConn, if you determine from a preponderance of the evidence that either of those defendants participated in or acted in furtherance of a conspiracy to divide or allocate the territories within which the cable television companies would apply for a franchise with the purpose of excluding plaintiff from a franchise, or of a conspiracy to limit competition for cable television franchises, you must next determine whether such alleged conspiracy constituted an unreasonable restraint of trade, which had a substantial adverse effect on competition.

Instruction No. 17, Jury Charge.

In conformity with the instructions, two interrogatories concerning liability on separate conspiracy theories, one specifically related to boundary agreements and one related to a conspiracy independent of those agreements, were submitted to the jury. The first interrogatory encompassed the issue of whether the established boundary agreements were part of an illegal conspiracy,² and the jury responded with a negative answer. The third interrogatory encompassed the issue of whether any of the defendants participated in an illegal conspiracy to ensure that only co-conspirators would receive franchises,³ and the jury responded affirmatively, finding that defendants Gulf Coast, City of Houston and Jim McConn participated.⁴ The jury then found causation and damages in affirmative answers to Interrogatories Nos. 5 and 6.

Defendant Gulf Coast contends that it is entitled to judgment based on the negative answer to Interrogatory No. 1, for the following reasons:

(1) Given the finding that the boundary agreements were not part of an unlawful conspiracy, there is no evidence to support an affirmative answer to Special Interrogatory 3;

(2) The finding that the boundary agreements were not part of an unlawful conspiracy precludes an affirmative answer to Special Interrogatory 5 — that an unlawful conspiracy proximately caused injury to plaintiffs' business or property — since there is no evidence of any unlawful conspiracy contributing to plaintiffs' failure to obtain a franchise other than testimony linking the boundary agreements with such failure; and

(3) The finding that the boundary agreements were not part of an unlawful conspiracy resolves all arguments against the applicability of Noerr-Pennington to the facts of this case and renders that doctrine controlling as a matter of law.

Defendants City of Houston and McConn contend that they are entitled to judgment on the following grounds, inter alia:

I. In light of the jury's answer to Special Interrogatory No. 1, there is no evidence to support the jury's answers to Special Interrogatories Nos. 3 and 5....

II. In light of the jury's answer to Special Interrogatory No. 1, the evidence is conclusive that all other actions of the Mayor and the City of Houston were within the scope of the legislative process, and are exempted from antitrust liability....

Plaintiff asserts that it has never taken the position that the boundary agreements simply were a more specific and all-inclusive description of the conspiracy to limit competition. Instead, plaintiff's theory throughout the course of proceedings was that "the boundary agreements were illegal standing alone⁵ as well as being part of the conspiracy to limit competition", and plaintiff asserts that the boundary agreements "were not the only acts that it put in evidence to establish the existence of a conspiracy to limit competition."⁶ Plaintiff characterizes the conspiracy addressed in Interrogatory No. 3 as one in which the "co-conspirators agreed to limit competition from non-conspirators, including plaintiff..., and agreed to limit competition with each other."⁷

III. The Test for Sufficiency of the Evidence and The Relevant Proof

On motions for ... judgment notwithstanding the verdict the Court should consider all of the evidence — not just that evidence which supports the non-mover's case — but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, .... The motions for ... judgment n. o. v. should not be decided by which side has the better of the case, nor should they be granted only when there is a complete absence of probative facts to support a jury verdict.

Boeing Company v. Shipman, 411 F.2d 365, 374-75 (5th Cir. 1969) (en banc); accord, Bazile v. Bisso Marine Company, 606 F.2d 101, 104 (5th Cir. 1979), cert. denied, ___ U.S. ___, 101 S.Ct. 94, 66 L.Ed.2d 33 (1981). Pursuant to the Court's obligation to implement that standard, the Court carefully has reviewed documentary evidence and testimony in the light most favorable to plaintiff, and has analyzed comprehensively the plaintiff's assertions regarding the inferences to be drawn therefrom.

The Court concludes that with regard to liability of defendants for a conspiracy to limit competition of non-conspirators and to limit competition among co-conspirators, that is, whether such a conspiracy existed independent of the boundary agreements and whether defendants Gulf Coast, City of Houston and McConn participated in it, substantial evidence exists in the record to create a likelihood that reasonable persons could reach different conclusions. With regard to evidence of a causal relationship between that...