Chelson v. Oregonian Pub. Co., 82-3201

• Decision Date: 16 November 1983
• Docket Number: No. 82-3201,82-3201
• Parties: 1983-2 Trade Cases P 65,618 Gary J. CHELSON, et al., Plaintiffs-Appellants, v. OREGONIAN PUBLISHING COMPANY, an Oregon corporation, and Patrick L. Marlton, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1368

715 F.2d 1368

1983-2 Trade Cases P 65,618

Gary J. CHELSON, et al., Plaintiffs-Appellants, v. OREGONIAN PUBLISHING COMPANY, an Oregon corporation, and Patrick L. Marlton, Defendants-Appellees.

No. 82-3201.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 3, 1983.

Decided Sept. 14, 1983.

As Amended Nov. 16, 1983.

Richard H. Williams, George Wagner, Spears, Lubersky, Campbell & Bledsoe, Portland, Or., for defendants-appellees.

Thomas A. Balmer, Rick T. Haselton, Frank Langfitt, Lindsay, Hart, Neil & Weigler, Portland, Or., for plaintiffs-appellants.

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

Before FERGUSON, BOOCHEVER, and NORRIS, Circuit Judges.

BOOCHEVER, Circuit Judge:

Plaintiffs-appellants sued alleging violations of sections 1 and 2 of the Sherman Act and section 3 of the Clayton Act. The district court granted summary judgment for defendants on the ground that plaintiffs failed to show antitrust injury. We hold that the case presents genuine issues of material fact and reverse.

I. Background

Chelson and the other appellants are independent newsdealers ("dealers") who distribute the Portland Oregonian newspaper published by the appellee Oregonian Publishing Company ("Oregonian"). In late 1979 and early 1980, a number of dealers were approached by Advertising Distributor Services, Inc. ("A.D.S."), a competitor of Oregonian in advertising services. A.D.S. was interested in having the dealers distribute advertising circulars in the Portland market. A.D.S. and the dealers were unable to reach an agreement. A.D.S. eventually abandoned the metropolitan Portland market.

The dealers blame their failure to reach an agreement with A.D.S. on Oregonian, which they claim threatened to terminate any dealers who distributed inserts for A.D.S. They allege that Oregonian and its circulation director violated sections 1 and 2 of the Sherman Act and section 3 of the Clayton Act by selling the Oregonian to dealers for resale to readers on the condition that the dealers refrain from dealing with A.D.S. (Numerous other claims have been dismissed from the suit and are not at issue on appeal.) Jurisdiction was based on sections 4 and 16 of the Clayton Act. ¹

The district court granted summary judgment for Oregonian "on the narrow ground that plaintiffs cannot show antitrust injury." Having eliminated all federal causes of action, the court also dismissed a pendent state claim for tortious interference with contractual relations and prospective economic advantage. The dealers seek reversal of both the judgment and dismissal of their pendent claim.

II. Standard of Review

We conduct de novo review of a motion for summary judgment. State ex rel. Edwards v. Heimann, 633 F.2d 886, 888 n. 1 (9th Cir.1980). We view the evidence presented in the light most favorable to the dealers to determine if there is a genuine issue of material fact and, if not, whether Oregonian is clearly entitled to prevail as a matter of law. Id. at 888.

III. Antitrust Injury

The concept of antitrust injury has been the elusive subject of numerous opinions. Recent Supreme Court cases have directed courts to examine the context of an antitrust claim in determining whether a plaintiff may recover for alleged injury. In the past, courts have labelled the issue "antitrust standing." The Court now suggests that the term "standing" may be inaccurate because a determination of "antitrust standing" requires inquiry beyond that performed to determine standing in a constitutional sense. "Harm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact, but the court must make a further determination whether the plaintiff is a proper party to bring a private antitrust action." Associated General Contractors v. California State Council of Carpenters, --- U.S. ----, ---- n. 31, 103 S.Ct. 897, 907 n. 31, 74 L.Ed.2d 723 (1983) (citation omitted).

The doctrine of antitrust injury received careful attention from the Court in Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982). In McCready, the plaintiff alleged that she was a consumer of psychotherapeutic services and that she had been injured by the defendant group health plan's conspiracy to restrain competition in the psychotherapy market. The health plan allowed reimbursement for the services of psychiatrists, but not those of psychologists. Reviewing the record on a motion to dismiss, the Court held that the plaintiff's allegations brought her within the meaning of section 4 of the Clayton Act as a person injured "by reason of" antitrust violations.

The Court addressed in particular the question whether McCready's injuries were too remote to bring her within the meaning of section 4. It examined the physical and economic nexus between the alleged violation and harm, and the relationship between the alleged injury and "those forms of injury about which Congress was likely to have been concerned in making defendant's conduct unlawful and in providing a private remedy" under section 4. Id. 102 S.Ct. at 2547-48. The Court concluded that McCready's alleged injury was "inextricably intertwined" with the injury the alleged conspirators sought to inflict on psychologists and the psychotherapy market. Id. at 2551.

In its most recent effort to explain the concept of antitrust injury, the Supreme Court stated that the question whether a plaintiff may recover for alleged injury "requires us to evaluate the plaintiff's harm, the alleged wrongdoing by the defendants, and the relationship between them." Associated General Contractors, --- U.S. at ----, 103 S.Ct. at 907. In that case, plaintiff unions (the "Union") alleged that the defendant multiemployer association coerced some of its members and third parties to enter into business relationships with nonunion firms in violation of the antitrust laws. The Union claimed that this coercion adversely affected the trade of unionized firms and restrained the Union's business activities. The Court held that the Union's allegations of injury resulting from antitrust violations were insufficient as a matter of law, thus the Union was not a person injured within the meaning of section 4 of the Clayton Act. Id. at ---- - ----, 103 S.Ct. at 911-12.

The Court focused on three factors in determining whether sufficient allegations had been made that the Union suffered antitrust injury. First, it noted that the Union was neither a consumer nor a competitor in the market in which trade was restrained, and it was not clear whether the Union's interests would be served by enhanced competition. Second, the Union failed to make specific allegations demonstrating a connection between the alleged antitrust violation and the Union's alleged injury. The Court held that the Union's claim of injury from the alleged unlawful coercion was therefore speculative. Third, the Court stated that public policy disfavors the potential for duplicative recovery or complex apportionment of damages. That policy weighed against allowing recovery for the indirect injury alleged by the Union. ²

Disputed issues of fact in this case preclude us from completing the analysis prescribed by the Supreme Court in McCready and Associated General Contractors. In both McCready and Associated General Contractors, the Court focused on the relationship between the alleged antitrust violation and the alleged injury. Here, the nature of that relationship depends on facts in dispute, thus those facts are material to the outcome of this case.

The dealers argue that they would have reached an agreement with A.D.S. in late 1979 or early 1980 but for Oregonian's threats to terminate those dealers who contracted with A.D.S. Those threats, they contend, led the dealers to add a "risk premium" to the price they sought from A.D.S. and led to the disruption of the dealers' organization. A.D.S. was then unwilling to meet the unnaturally high price or negotiate with the disrupted organization. ³ Oregonian claims that the dealers and A.D.S. never came close to an agreement because the dealers were asking for too much money and were too disorganized to provide the services A.D.S. required. ⁴

The disputed facts are material to the issue of antitrust injury. If in fact the dealers and A.D.S. would have reached an agreement but for the actions of Oregonian, we would conclude that the dealers have shown antitrust injury within the meaning of section 4 of the Clayton Act. Like McCready, their injury would be "inextricably intertwined" with the alleged injury Oregonian sought to inflict on the advertising distribution market. The dealers would be able to specify the damage to their business caused by Oregonian's actions. That damage would be the loss of business from A.D.S. Unlike the Union's allegations in Associated General Contractors, the dealers' claim does not rely on speculation that their business might in some indirect way have been adversely affected by the defendant's conduct. The injury claimed here is distinctly more concrete than that made by the Union, which asserted, at best, a tenuous relationship between the multiemployer's association and some unspecified weakening of Union trade. Although the dealers here are neither consumers nor competitors in the relevant market, it is clear that their interests would directly be served by enhanced competition in the market. If the facts are as the dealers allege, the injury they claim is of the type that sections 1 and 2 of the Sherman Act and section 3 of the Clayton Act were intended to forestall. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 487-88, 97 S.Ct. 690, 696-97, 50 L.Ed.2d 701 (1977). If, however, the publishing company can show that the dealers were too disorganized and were never close to agreeing on price with A.D.S., regardless of Oregonian's acts, no damages were caused by the alleged antitrust conduct,...