BUFFALO COURIER-EXP., INC. v. Buffalo Evening News, Inc.

• Decision Date: 09 November 1977
• Docket Number: No. CIV 77-582.,CIV 77-582.
• Citation: 441 F. Supp. 628
• Parties: BUFFALO COURIER-EXPRESS, INC., Plaintiff, v. BUFFALO EVENING NEWS, INC., Defendant.
• Court: U.S. District Court — Western District of New York

441 F. Supp. 628

BUFFALO COURIER-EXPRESS, INC., Plaintiff, v. BUFFALO EVENING NEWS, INC., Defendant.

No. CIV 77-582.

United States District Court, W. D. New York.

November 9, 1977.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Furth, Fahrner & Wong by Frederick P. Furth, Kirk A. McKinney, Daniel S. Mason, San Francisco, Cal., Falk, Siemer, Glick, Tuppen & Maloney by Charles D. Tuppen, Jr., Buffalo, N. Y., for plaintiff.

Munger, Tolles & Rickershauser by Ronald L. Olson, Allen M. Katz, Los Angeles, Cal., Jaeckle, Fleischmann & Mugel by Manly Fleischmann, John H. Stenger, Buffalo, N. Y., for defendant.

BRIEANT, District Judge.^*

This action was filed in this Court on October 28, 1977. By its complaint, in which a jury trial is demanded, plaintiff seeks the following ultimate and preliminary relief (pp. 9, 10, 11):

"A. A declaration that defendant has violated Section 2 of the Sherman Act.

B. An Order preliminarily and permanently enjoining defendant from continuing to violate Section 2 of the Sherman Act by means of the acts alleged herein or by any other means which would prevent plaintiff from fairly competing in the trade and commerce of the publication of a daily metropolitan newspaper in Buffalo, New York.

C. An Order preliminarily and permanently enjoining defendant, its agent, servants, officers, employees, attorneys and all persons acting in concert with it from:

1. Distributing any editions of the Buffalo Evening News for no charge.

2. Distributing any editions of the Buffalo Evening News to any person who has not placed an order therefor.

3. Selling the Buffalo Evening News to any person at an unreasonably low price.

4. Setting its advertisement rates at an unreasonably low level.

5. Encouraging either implicitly or explicitly newscarriers, district managers or distributors of the Courier Express from leaving the Courier Express in favor of the Evening News.

6. Publishing disparaging remarks of and concerning the Courier Express to any person.

7. Sponsoring any contest violative of New York State law.

8. Undertaking any act, practice or scheme, the purpose of which is to eliminate the Courier Express as a competitor in the trade and commerce of the publication of a metropolitan daily newspaper in the City of Buffalo.

D. Damages in the amount proven at trial, and trebled as provided by law, together with costs and a reasonable attorney's fee, pursuant to section 4 and 16 of the Clayton Act.

E. Such other and further relief as the Court may deem just and proper."

The Court has subject matter jurisdiction pursuant to 15 U.S.C. §§ 1, 2, 5 and 15; and 28 U.S.C. § 1331.

Simultaneously with the filing of the complaint, and by Order to Show Cause signed on October 28, 1977 by Chief Judge Curtin of this Court, plaintiff sought a preliminary injunction restraining defendant, pending trial:

"A. From continuing to violate Section 2 of the Sherman Act by means of the acts alleged herein or by other means which would prevent plaintiff from fairly competing in the trade and commerce of the publication of a daily metropolitan newspaper in Buffalo, New York.

B. From distributing any edition of the Buffalo Evening News for no charge.

C. From distributing any edition of the Buffalo Evening News to any person who has not placed an order therefore.

D. From selling the Buffalo Evening News to any person at an unreasonably low price.

E. From setting its advertisement rates at an unreasonably low level.

F. From encouraging either implicitly or explicitly newscarriers, district managers or distributors of the Courier-Express from leaving the Courier-Express in favor of the Evening News.

G. From publishing disparaging remarks of and concerning the Courier-Express to any person.

H. From sponsoring any contest violative of New York State law.

I. From undertaking any act, practice or scheme the purpose of which is to eliminate the Courier-Express as a competitor in the trade and commerce of the publication of a metropolitan daily newspaper in the City of Buffalo."

An evidentiary hearing has been held, and the parties have also stipulated, solely for the purposes of this motion, and without conceding relevancy, some 28 separate agreed facts, with certain documents incorporated therein by reference. Familiarity with those agreed facts is assumed, and they will not be repeated below.

The Parties

Plaintiff is a New York corporation which is and has been for more than half a century, the publisher in Buffalo, New York, of a daily morning metropolitan newspaper, the "Courier-Express," hereinafter referred to as the "Courier." Reference herein to the Courier will also include the publishing corporation, or plaintiff, where the context so indicates.

Defendant is a New York corporation which is, and has been since April 15, 1977, publisher of a daily (except Sunday) afternoon metropolitan newspaper, the "Buffalo Evening News," hereinafter referred to as the "Evening News;" such reference also will include the defendant corporation as an entity, where the context so indicates. As discussed below, defendant acquired the assets, name and good-will of the Evening News by purchase from a business of the same name which had operated the paper since 1881.

The Verified Complaint

As amplified by the affidavit of Mr. Richard D. Lyons, Jr., the Courier's Secretary-Treasurer, sworn to October 28, 1977, and filed in support of this motion for a preliminary injunction, the complaint asserts in brief that both newspapers are engaged in interstate commerce, and that the acts complained of affect interstate commerce. After pleading the relevant market, discussed below, plaintiff charges that defendant, and others not sued, have conspired together to eliminate all competition in the publication of daily metropolitan newspapers in the Greater Buffalo, New York geographic market, and, by predatory means, to eliminate plaintiff's Sunday paper from the market, and thereby, because plaintiff is dependent on the profits of its Sunday paper to keep its daily paper alive, effect and create a monopoly.

Plaintiff charges a conspiracy in restraint of trade, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and also charges defendant with an unlawful attempt to monopolize (individually, and without regard to any allegations of conspiracy) in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. It was on this latter claim that the motion for a preliminary injunction was based.

Historical Background

About 50 years ago, the Evening News ceased to publish a Sunday paper. It sells its daily afternoon paper for 15 cents except on Saturday afternoon, when it sells its "Week-End" edition for 30 cents, containing most of the special features and supplements; including comics in color, commonly associated with a Sunday paper of general interest. It is and has been a six-days per week operation, and does not publish on significant holidays.

The Courier at all relevant times has published a daily morning paper, and a Sunday morning paper. It is a seven-day operation, and sells its week-day paper for 15 cents and its Sunday paper at 50 cents.

The circulation and advertising revenue of the Evening News has, for a long time, exceeded that of the Courier by substantial amounts, with only slight variation from year to year. Not only is the Evening News advertising revenue much greater than that of the Courier, but its total advertising linage has also substantially exceeded that of the Courier in recent years, notwithstanding the linage generated by the Courier on Sunday, when it is the only paper published. See Statement of Agreed Facts, and Schedules attached thereto for the precise figures and mathematical relationships. Whether judged on advertising linage, advertising revenue or circulation, the Evening News clearly emerges as Greater Buffalo's dominant newspaper of general circulation, and has been such for more than ten years. The circulation and total revenue of its Saturday afternoon (Week-End Edition) paper exceed those of the Sunday Courier.

According to its May 5, 1977 solicitation letter to advertisers, the Evening News covered with its daily edition 58%, and with its Week-End Edition 61%, of the 471,515 households located in the relevant "Audit Bureau of Circulation City and Retail Trading Zone," compared with 24% of these households covered by the weekday Courier and 53% by the Sunday Courier. This geographic area (See Ex. 1, p. 4 attached to Stipulation of Agreed Facts) includes all of Erie, Niagara, Orleans, Genesee and Wyoming Counties, and parts of Cattaraugus and Chatauqua Counties. In "Buffalo City and Suburbs" the Evening News coverage was somewhat greater.

Whether the existing disparity is accounted for by a preference for evening papers over morning papers, or because the Evening News is "a better paper" or a better managed paper, cannot be determined on this record. Suffice it to say that the papers do differ in content and style, and in their treatment of local and national news, and express different philosophical approaches to the great issues of the times.

Mr. Buffett Comes to Buffalo

Mr. Warren E. Buffett, who testified, is the controlling shareholder, a director, and Chairman of the Executive Committee of Blue Chip Stamps, a publicly owned trading stamp company, which has been immortalized by Mr. Justice Rehnquist Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975).¹ Mr. Buffett resides in Omaha, Nebraska, and is independently wealthy, apart from the substantial net worth of Blue Chip Stamps. He has considerable knowledge of the newspaper field. Since 1969, he has been Chairman of the Board of Directors of the publisher of eight associated weekly newspapers distributed in and around his home community.

Mr. Buffett, age 46, is also Chairman of the Finance Committee of the Washington Post Company, which publishes a newspaper of the same name, as well as Newsweek...