Brown v. Hansen Publications, Inc.

• Decision Date: 05 July 1977
• Docket Number: No. 74-2166,74-2166
• Citation: Brown v. Hansen Publications, Inc., 556 F.2d 969 (9th Cir. 1977)
• Parties: 1977-2 Trade Cases 61,553 Gerald BROWN and Judy Brown, husband and wife, Plaintiffs-Appellants, v. HANSEN PUBLICATIONS, INC., a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 969

556 F.2d 969

1977-2 Trade Cases 61,553

Gerald BROWN and Judy Brown, husband and wife, Plaintiffs-Appellants, v. HANSEN PUBLICATIONS, INC., a corporation, Defendant-Appellee.

No. 74-2166.

United States Court of Appeals Ninth Circuit.

July 5, 1977.

Fred J. Pain, Jr., Pain & Julian, Tanner, Jarvis, Owens & Hoyt, Phoenix, Ariz., argued for plaintiffs-appellant.

Leo R. Beus, Jennings, Strouss & Salmon, Phoenix, Ariz., argued for defendant-appellee.

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

Before BROWNING and KENNEDY, Circuit Judges, and SWEIGERT, ^* District Judge.

PER CURIAM:

Appellants Gerald and Judy Brown brought this action against Hansen Publications, Inc., alleging violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a), in the distribution in the Phoenix area of popular (as distinguished from classical or educational) sheet music and music books. The district court entered judgment in favor of Hansen Publications. We affirm.

Hansen Publications, Inc., a Florida corporation wholly owned and controlled by Charles Hansen, is engaged in the publication of popular sheet music and music books. Music Retailers, Inc., and Pacific Coast Music Jobbers, Inc., California corporations wholly owned and controlled by Charles Hansen, are engaged in the distribution and sale of sheet music and music books.

Music Retailers operated concessions for the sale of sheet music and music books in branches of Wallich's a chain of California music stores. Wallich's opened a branch in Phoenix, Arizona, with Music Retailers operating the sheet music and music book concession. Music Retailers acquired similar concessions in two other Phoenix music stores, and negotiated unsuccessfully to acquire a concession in a fourth. During the time in question, Music Retailers controlled about 10 percent of the total retail business in popular sheet and book music in the Phoenix area with these concessions.

Appellants purchase sheet music and music books from Hansen Publications and other publishers and sell it at wholesale to retail outlets in Arizona. The concession arrangements between Music Retailers and the three music stores precluded appellants from selling music to these stores. Appellants' Sherman Act claims rested upon the fact that Music Retailers entered into the three concession arrangements and attempted to negotiate the fourth. Appellants' Robinson-Patman Act claim rested upon the contention that Hansen Publications made its sheet music and music books available to Music Retailers on more favorable terms than to appellants.

Appellants raise two narrow issues on appeal.

1. The district court rejected appellants' charge that Hansen Publications attempted to monopolize on the ground that appellants failed to establish the specific intent to monopolize essential to such a claim. Lessig v. Tidewater Oil Co., 327 F.2d 459, 474-75 (9th Cir. 1964). ¹ Appellants argue that intent to monopolize was established as a matter of law by the acquisition of the three exclusive concessions and the negotiations to acquire a fourth, because the admitted purpose of these acts was to increase Music Retailers' sales in the Arizona market by securing on an exclusive basis the business done through these outlets.

An exclusive concession is intended to and does exclude competing sellers from the particular outlet. But exclusive dealing arrangements are not per se illegal. ² The preemptive purpose present in such arrangements is not necessarily equivalent to the specific intent to exclude competition and fix prices that characterizes attempts to monopolize. Exclusive dealing contracts may be procompetitive in purpose. Appellee's witnesses avowed such a purpose and expressly denied any intent to exclude competitors or control prices in any part of commerce.

Appellants did not challenge the concession agreements under section 3 of the Clayton Act, 15 U.S.C. § 14. They have not taken issue with the district court's holdings that these agreements were not unreasonable restraints of trade violating section 1 of the Sherman Act and did not establish monopolization in violation of section 2. Appellants' only contention on appeal is that the record required a finding of specific intent to monopolize because of the preemptive purpose of the concession agreements. For the reasons stated, we cannot agree with that contention. A finding of intent to monopolize "was not compelled and we cannot say the district court's contrary determination was clearly erroneous." Knutson v. The Daily Review, Inc., 548 F.2d 795, 815 (9th Cir. 1976). ³

2. The district court rejected appellants' Robinson-Patman Act claim on the ground that Hansen Publications and Music Retailers were so closely related that the latter could not be considered a "purchaser" from the former for the purposes of the Robinson-Patman Act. ⁴

As we have noted, both Hansen Publications and Music Retailers are solely owned by Charles Hansen. The two corporations have the same officers and the same directors. In their trial brief appellants concede that "(d)uring the times in question Hansen, Pacific Coast and Music Retailers utilized the same employees, the same office space, the same records, and their accounting and payroll (were) all handled by Hansen. In a prior action between these same litigants (Brown & Hansen) a finding of fact was entered that the operations of Hansen and Music Retailers were so intermingled that it was impossible to separate them and that they all were in reality the acts of Hansen."

The "sales" of sheet music and music books by Hansen Publications to Music Retailers resulted in bookkeeping adjustments in the Miami, Florida, office of the Hansen enterprise. Music "sold" to Music Retailers and not resold to consumers was simply returned to Hansen Publications. The facts relied upon by appellants as reflecting favored treatment of Music Retailers by Hansen Publications (that Hansen Publications did the accounting, paid the employees of Music Retailers, and took back the music sheets and books Music Retailers did not sell) were merely aspects of the integration of the two operations. The district court did not err in concluding that the activities of the Hansen enterprises involved in this litigation were in substance those of a single trader.

Appellants advance two primary arguments to the contrary. The first is based upon testimony that Music Retailers' local manager exercised considerable discretion in determining the prices at which Music Retailers resold sheet music and music books at wholesale to retail outlets. Appellants argue that control by one corporation of another corporation's pricing...