Albrecht v. Herald Company

• Decision Date: 20 October 1966
• Docket Number: No. 18161.,18161.
• Citation: 367 F.2d 517
• Parties: Lester J. ALBRECHT, Appellant, v. The HERALD COMPANY, a corporation, d/b/a Globe-Democrat Publishing Company, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

367 F.2d 517 (1966)

Lester J. ALBRECHT, Appellant, v. The HERALD COMPANY, a corporation, d/b/a Globe-Democrat Publishing Company, Appellee.

No. 18161.

United States Court of Appeals Eighth Circuit.

October 20, 1966.

Gray L. Dorsey, Chesterfield, Mo., Bartley, Siegel & Bartley, Clayton, Mo., for appellant. Donald S. Siegel, Clayton, Mo., with him on the brief.

Lon Hocker, of Hocker, Goodwin & MacGreevy, St. Louis, Mo., for appellee.

Before MATTHES, MEHAFFY and GIBSON, Circuit Judges.

MEHAFFY, Circuit Judge.

This is a treble damage action under § 4 of the Clayton Act, 15 U.S.C.A. § 15, for violation of § 1 of the Sherman Act, 15 U.S.C.A. § 1.

Lester J. Albrecht (hereafter plaintiff) appeals from a judgment entered pursuant to a jury verdict finding for The Herald Company, a corporation, d/b/a Globe-Democrat Publishing Company, defendant-appellee (hereafter Globe-Democrat). We affirm.

For many years the Globe-Democrat has been a morning newspaper in St. Louis, Missouri, delivered to home customers of the St. Louis and other areas through a system of 172 routes. Globe-Democrat carriers are entrepreneurs, purchasing their papers at wholesale and selling them at retail. Plaintiff owned and operated Route 99 in the City of Kirkwood, St. Louis County, said route consisting of some 1200 customers.

Globe-Democrat advertised in its newspaper a suggested retail price. Each carrier had an exclusive territory but was subject to termination inter alia for charging more than the suggested retail price. In case of termination, the carrier was given sixty days to provide a satisfactory purchaser for his route. Plaintiff had knowledge of Globe-Democrat's written price policy.¹

Plaintiff adhered to the suggested retail price for several years but started overcharging in 1961. He admittedly received calls from Globe-Democrat about reported overcharging in 1961 and 1962. Finally, on May 20, 1964 Globe-Democrat wrote plaintiff as follows:

"The Globe-Democrat Publishing Company has received and referred to you a large number of complaints from customers in the territory you are servicing as a carrier that you are charging subscribers more than the publisher\'s suggested retail price.

"The system we customarily follow of respecting as exclusive territories of our carriers prevents the normal effect of competition to keep prices down. In order to protect the reading public against artificially high prices in restraint of trade in the territories of overpricing carriers, we have expressed in our statement of policy the intention to compete in such territories by selling the Globe-Democrat at retail ourselves or for resale by another carrier at the lower prices in the over-priced territory.

"In accordance with this policy, we are sending to each resident of your appointed territory the enclosed letter."

The enclosed letter advised the residents of the territory that some subscribers were being overcharged and that the Globe-Democrat would deliver the paper at the suggested retail rate.² These letters evidenced Globe-Democrat's decision to compete and provide its readers with the paper at the suggested rate. In addition, Globe-Democrat directed the Milne Circulation Sales Corporation, a national firm with a St. Louis office, whose business it was to procure readers for newspapers throughout the country, to engage in telephone and house-to-house solicitation to all the residents of the area in Route 99.³ The customers thus procured — some new — some who had quit because of plaintiff's overcharge — some who changed to take advantage of the lower price — were furnished home delivery of the paper by Globe-Democrat personnel. This campaign resulted in a customer list of 314 by July 7, 1964. Globe-Democrat did not want to engage in the carrier business, and in July of 1964 advertised the new route as available without cost. George John Kroner took over the route. Kroner, a route carrier in another neighborhood, knew the Globe-Democrat would not tolerate overcharging. He knew why the route was given to him without charge and understood that he might have to return it to Globe-Democrat if plaintiff sold his route or discontinued his overcharging practice.

During this period and thereafter, Globe-Democrat continued to sell its papers to plaintiff and plaintiff continued to serve his customers. On June 1, 1964, Globe-Democrat again objected to plaintiff about overcharging and warned plaintiff that legal steps would be taken if necessary. Following this warning, a conference between plaintiff and Globe-Democrat took place. Plaintiff was told that he could charge any price he wanted, but unless the Globe-Democrat's policy was followed, the Globe-Democrat did not have to do business with him. Plaintiff continued his practice of overcharging.

On or about July 27, 1964, a representative of Globe-Democrat told plaintiff that the Globe-Democrat was not interested in being in the carrier business and would be happy if plaintiff would take the customers back so long as he charged the suggested retail price. Plaintiff made no commitment but left the meeting and made an appointment with his attorney to bring this lawsuit. On August 21, 1964, after institution of the suit, Globe-Democrat notified plaintiff of termination of his appointment as a Globe-Democrat carrier:

"We have received a copy of the Complaint which you have filed in the U. S. District Court asking damages from us in the amount of three hundred forty thousand dollars.

"It seems apparent that the prosecution of this action is clearly inimical to the purpose for which your appointment as carrier was made and you are hereby notified that your appointment as carrier is terminated.

"However, in accordance with our statement of policy, we will nevertheless give you the opportunity of producing a substitute whose credit, experience and efficiency is satisfactory to us, and we will not object to his appointment on the ground that he may be paying you in connection therewith. Under the circumstances, with the lawsuit pending, we believe that sixty days is a reasonable time for this purpose.

"Accordingly, we shall cease selling you newspapers on October 21st, 1964. In the meantime, we will be ready to interview any substitute you may wish to produce."

Thereafter, Globe-Democrat granted plaintiff an extension of nine days to consummate the sale of his route. He sold the route for $12,000.00, $1,000.00 more than he had paid for it, but less than he could have gotten if Globe-Democrat had returned Kroner's 300 odd customers then comprising Route 198. Despite the competition, plaintiff retained some 900 of his original 1200 customers.

This case went to the jury, which considered the sole question whether § 1 of the Sherman Act was violated by reason of a "combination" between the Globe-Democrat and plaintiff's customers or with Milne or Kroner. This was plaintiff's theory under his amended complaint. The original complaint was in two counts, the first of which plaintiff dismissed before trial. During trial plaintiff amended Count II, eliminating the charges of conspiracy and agreements and charging a "combination" between the Globe-Democrat and "plaintiff's customers and/or Milne Circulation Sales, Inc., and/or George Kroner."⁴ In charging the jury, the District Court used as its principal guide the teachings of United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960).⁵

Restraint of trade embraces only acts, contracts, agreements or combinations which restrict competition or unduly obstruct due course of trade, thereby operating to the prejudice of the public. The Supreme Court said in Apex Hosiery Co. v. Leader, 310 U.S. 469, 493, 60 S.Ct. 982, 992, 84 L.Ed. 1311 (1940):

"The end sought by the Sherman Act was the prevention of restraints to free competition in business and commercial transactions which tended to restrict production, raise prices or otherwise control the market to the detriment of purchasers or consumers of goods and services * * *."

and in Northern Pac. R. Co. v. United States, 356 U.S. 1, 4, 78 S.Ct. 514, 517, 2 L.Ed.2d 545 (1958): "The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade." See also United States v. American Linseed Oil Co., 262 U.S. 371, 388-389, 43 S.Ct. 607, 67 L.Ed. 1035 (1923); American Column & Lumber Co. v. United States, 257 U.S. 377, 400, 42 S.Ct. 114, 66 L.Ed. 284 (1921); Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 610, 34 S.Ct. 951, 58 L.Ed. 1490 (1914); Kansas City Star Co. v. United States, 240 F.2d 643, 658 (8th Cir. 1957), cert. den., 354 U.S. 923, 77 S.Ct. 1381, 1 L.Ed.2d 1438 (1957); Feddersen Motors, Inc. v. Ward, 180 F. 2d 519, 521 (10th Cir. 1950).

Globe-Democrat's activity here did not hinder, but fostered and actually created competition to the benefit of the public. To have condoned plaintiff's overcharging would have been a signal to all carriers, each monopolistic in his own right, to mulct the public for all the traffic would bear.

If Globe-Democrat's activities constitute a violation of the antitrust laws, it has only one alternative, and that is to terminate all home delivery carriers by the simple declination to sell. Globe-Democrat could then make the home deliveries by its own employees. It would thus automatically become a monopolist itself and wreck such havoc as Mr. Justice Douglas decried in his opinion in Standard Oil Co. of Cal. and Standard Stations v. United States, 337 U.S. 293, 318-319, 69 S.Ct. 1051, 1066, 93 L.Ed. 1371 (1949):

"But beyond all that there is the effect on the community when independents are swallowed up by the trusts and entrepreneurs become employees of absentee owners. Then there is a serious loss in citizenship. Local leadership is diluted. He who was a leader in the village becomes dependent on outsiders for his action and policy.

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