CONLEY PUB. GROUP v. Journal Communications

• Decision Date: 17 July 2003
• Docket Number: No. 01-3128.,01-3128.
• Citation: 2003 WI 119,265 Wis.2d 128,665 N.W.2d 879
• Parties: CONLEY PUBLISHING GROUP LTD., Freeman Newspapers LLC and Lakeshore Newspapers, Inc., Plaintiffs-Appellants, v. JOURNAL COMMUNICATIONS, INC., and Journal Sentinel, Inc., Defendants-Respondents.
• Court: Wisconsin Supreme Court

265 Wis.2d 128

2003 WI 119

665 N.W.2d 879

CONLEY PUBLISHING GROUP LTD., Freeman Newspapers LLC and Lakeshore Newspapers, Inc., Plaintiffs-Appellants, v. JOURNAL COMMUNICATIONS, INC., and Journal Sentinel, Inc., Defendants-Respondents.

No. 01-3128.

Supreme Court of Wisconsin.

Oral argument February 11, 2003.

Decided July 17, 2003.

For the plaintiffs-appellants there were briefs by W. Stuart Parsons, Brian D. Winters, Steven J. Berryman, Robert J. Pluta, and Quarles & Brady LLP, Milwaukee, and oral argument by Steven J. Berryman.

For the defendants-respondents there was a brief by John R. Dawson, James T. McKeown, G. Michael Halfenger, Paul Bargren, and Foley & Lardner, Milwaukee, and oral argument by John R. Dawson.

An amicus curiae brief was filed by Robert H. Friebert, Matthew W. O'Neill, and Friebert, Finerty & St. John, S.C., Milwaukee, and Anne Berlemann Kearney, Joseph D. Kearney, and Appellate Consulting Group, Milwaukee, on behalf of the Wisconsin Utilities Association. An amicus curiae brief was filed by Daniel Blinka, Milwaukee, William C. Gleisner, III, Madison, and R. George Burnett and Liebmann, Conway, Olejniczak & Jerry, S.C., Green Bay, on behalf of the Wisconsin Academy of Trial Lawyers.

¶ 1. DAVID T. PROSSER, J.

This case involves allegations of predatory pricing by one Wisconsin newspaper against another. The Circuit Court for Waukesha County, Donald J. Hassin, Judge, dismissed the antitrust claims of Conley Publishing Group Ltd., et al., (Conley) against Journal Communications, Inc., and Journal Sentinel, Inc., (collectively, the Journal) and granted the defendants summary judgment. Conley appealed. The case is now before us on certification from the court of appeals, pursuant to Wis. Stat. (Rule) § 809.61 (2001-02).¹

¶ 2. The court of appeals has certified three issues for our review. First, should the United States Supreme Court decision in Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), be adopted as the law in Wisconsin governing predatory pricing under Wis. Stat. § 133.03? Second, does the federal rule governing the admissibility of expert opinion testimony set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)—an evidentiary rule we have not adopted in Wisconsin—affect the applicability of Brooke Group to Wisconsin law? Third, does Wisconsin's predatory pricing law require a plaintiff to "disaggregate" its damages in order to survive summary judgment? [1]

¶ 3. We hold that a claim of predatory pricing under Wis. Stat. § 133.03 must conform to the requirements established in Brooke Group for similar claims under Section 2 of the federal Sherman Antitrust Act. A plaintiff alleging that a defendant engaged in predatory pricing must prove that (1) the prices and other direct revenues from the practice complained of are below an appropriate measure of the defendant's costs; and (2) the defendant has a dangerous probability of recouping its investment "losses" in these below-cost prices by later raising prices above competitive levels. Applying these standards, we conclude that the plaintiffs have not presented sufficient evidence to permit a reasonable jury to conclude that the Journal either engaged in below-cost pricing or, assuming that it did, that there is a dangerous probability of the Journal recouping the losses that it may have incurred from its Sunday-daily conversion program. Accordingly, we affirm the circuit court's decision to grant summary judgment.

¶ 4. Because the plaintiffs' action fails to survive summary judgment on these grounds, we need not address whether the circuit court properly granted summary judgment on the issue of causation, either on the basis of insufficient evidence or on the basis of plaintiffs' failure to "disaggregate" their damages. Finally, because the parties to this action have not contested the admissibility of any expert's opinion, we decline to reevaluate, at this time, the standard for admitting expert testimony under Wis. Stat. § 907.02.

I. BACKGROUND FACTS AND PROCEDURAL HISTORY

¶ 5. The Waukesha Freeman is a paid, daily newspaper that was founded in 1859. It is distributed to residents of Waukesha County as an afternoon paper Monday through Friday. There is also a Saturday morning edition but no Sunday newspaper. While the Freeman provides coverage of state, national, and international news, its primary focus is on the Waukesha community.

¶ 6. The Freeman's only competitor in the Waukesha County paid daily newspaper market is the Milwaukee Journal Sentinel (the Journal Sentinel). As of 2000, when this suit was filed, the Journal Sentinel controlled roughly 78% of the daily newspaper readership market in Waukesha County, while the Freeman controlled roughly 22%. In 1996 the Freeman had 28% of the market.

¶ 7. The Journal Sentinel is distributed throughout southeastern Wisconsin and, to a lesser extent, the rest of Wisconsin, and its daily edition is the only local paid daily newspaper in some southeastern Wisconsin counties, including Milwaukee County. Unlike the Freeman, the Journal Sentinel has a Sunday edition, which is the only local paid Sunday newspaper in Milwaukee, Ozaukee, and Waukesha Counties.

¶ 8. In August 2000 Conley Publishing Group, Ltd., Freeman Newspapers, LLC, and Lakeshore Newspapers, Inc.,² filed this action against Journal Sentinel, Inc., the publisher of the Journal Sentinel, and Journal Communications, Inc.³ In its second amended complaint, Conley alleged that the Journal was monopolizing or attempting to monopolize the market for readership of paid daily newspapers in Waukesha County in violation of Wisconsin's Antitrust Act, Chapter 133 of the Wisconsin Statutes. Relevant to this appeal are Conley's claims that the Journal engaged in predatory pricing of its newspapers in order to drive the Freeman out of business.

¶ 9. In particular, Conley alleged that, beginning in the middle of 1996, the Journal began targeting subscribers to the Freeman by offering a "Sunday-daily conversion program." This conversion program, which is the basis of Conley's predatory pricing claim, operated as follows. The Journal hired a marketing company to contact residents of Waukesha County who subscribed to the Sunday edition of the Journal Sentinel but not to the daily Journal Sentinel. These residents included subscribers who received the Freeman during the week as well as subscribers who received no local daily newspaper. The Journal then offered these Sunday subscribers the opportunity to receive the daily Journal Sentinel at no additional cost for the remainder of their Sunday Journal Sentinel contract, provided that the subscribers shortened the length of their Sunday subscription. For example, the Journal would offer a 52-week Sunday-only subscriber up to 49 weeks of the daily Journal Sentinel at no additional cost, if the subscriber agreed to shorten the existing Sunday subscription term to 49 weeks.⁴ ¶ 10. During the period that the conversion program was offered, the Freeman's circulation declined. According to the Freeman's publisher, during the 10 years prior to 1996, the Freeman's circulation remained relatively constant at around 22,000 subscribers. By the end of 1997, however, the Freeman's circulation had dropped to 17,466, down 3,958 from the beginning of 1996. In 1998, the only year that the Journal did not offer a Sunday-conversion program in Waukesha County, the Freeman gained a marginal number (91) of subscribers. As of June 11, 2001, the Freeman had a circulation of approximately 15,900 subscribers. The Freeman's decline in circulation led to a loss in subscription and advertising revenue. Conley quantifies these losses at somewhere between $1,108,800 and $3,853,067 from the time it acquired the Freeman in 1997 until the dismissal of its action.⁵

¶ 11. The Journal eventually filed a motion for summary judgment, which the circuit court granted on October 12, 2001. The court's ruling was based on its determination that Conley had failed to provide sufficient evidence to raise a genuine issue of material fact supporting (1) its predatory pricing claim; (2) a finding that the Journal's conduct caused the Freeman's loss or injury; and (3) a finding on the amount of damages attributable to the Journal's alleged anticompetitive behavior. Conley appealed, arguing that it had offered sufficient evidence for the case to survive summary judgment. The court of appeals certified the appeal to this court.

¶ 12. Additional relevant facts will be presented as needed throughout this opinion.

II. STANDARD OF REVIEW

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¶ 13. We review a grant of summary judgment applying the same methodology as the circuit court. Robinson v. City of W. Allis, 2000 WI 126, ¶ 26, 239 Wis. 2d 595, 619 N.W.2d 692. Although our review is de novo, we benefit from the circuit court's analysis. See Yahnke v. Carson, 2000 WI 74, ¶ 10, 236 Wis. 2d 257, 613 N.W.2d 102. Summary judgment is appropriate only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wis. Stat. § 802.08(2). "The well-established purpose of summary judgment procedure is to determine the existence of genuine factual disputes in order to `avoid trials where there is nothing to try.'" Yahnke, 236 Wis. 2d 257, ¶ 10 (internal quotation marks omitted). When a non-moving party contests the appropriateness of summary judgment, we draw all reasonable factual inferences in favor of that party. See Strasser v. Transtech Mobile Fleet Serv., Inc., 2000 WI 87, ¶ 32, 236 Wis. 2d 435, 613 N.W.2d 142.

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¶ 14. Interpretation of Chapter 133 and its application to claims of anticompetitive conduct are questions of law, which we answer independently of the courts below. See World Wide Prosthetic Supply, Inc. v. Mikulsky, ...