Corwin v. Los Angeles Newspaper Service Bureau, Inc.

CourtUnited States State Supreme Court (California)
Citation484 P.2d 953,4 Cal.3d 842,94 Cal.Rptr. 785
Decision Date17 May 1971
Parties, 484 P.2d 953, 1971 Trade Cases P 73,582 Harold CORWIN et al., Plaintiffs and Appellants, v. LOS ANGELES NEWSPAPER SERVICE BUREAU, INC., et al., Defendants and Respondents. L.A. 29799.

Darling, Hall, Rae & Gute, Darling, Mack, Hall & Call and John R. Shiner, Los Angeles, for plaintiffs and appellants.

Robert F. Tyler, Los Angeles, for defendants and respondents.

SULLIVAN, Justice.

In this antitrust case, plaintiffs Harold Corwin and Allen Barr, doing business as Statewide Publication Service (Statewide), appeal from a summary judgment in favor of defendant Los Angeles Newspaper Service Bureau, Inc. (Bureau) and 40 of its member newspapers also joined as defendants. As will appear, we have concluded that upon the record presented the summary judgment was erroneously granted and should be reversed.

Statewide, a partnership formed in 1966, operates a publication service and legal advertising business dealing almost exclusively with notices of sales by trustees under deeds of trust. Generally speaking, Statewide solicits, services and places the notices of trustee sales for publication in newspapers. Its services include proofreading the notices, verifying legal descriptions of the subject property and checking the affidavits of publication. When Statewide places a legal advertisment with a newspaper, it pays the paper's publication charges and then obtains reimbursement from the trustee. Although it has no formal contract with any newspaper, Statewide seeks a commission from them in the amount of 15 percent of the cost of the publication.

Defendant Bureau was organized in 1934 to enable newspapers in Los Angeles County to acquire a share of the legal advertising market which until that time had been effectively monopolized by the Consolidated Printing and Publishing Company. Membership in the Bureau is open to any fully adjudicated legal newspaper in the county. From an original membership of 33 newspapers, the Bureau has grown to include 111. In 19 of the 26 judicial districts in the County of Los Angeles, every newspaper qualified to print legal advertisements is a member of the Bureau.

Each member newspaper executes with the Bureau a written contract entitled a 'Representation Agreement' designating the Bureau its representative in soliciting and servicing all classes of legal advertising. Under paragraph Eighth of the contract the member agrees to pay the Bureau a 15 percent commission on each legal advertisement published by the newspaper, whether or not the particular advertisement was placed by the Bureau. 1 In return the contract provides that each member shall own one share of stock in the Bureau and shall be entitled to an annual pro-rata distribution of the Bureau's net profits. The profits are divided among the members on the basis of each member's contribution to the total commissions paid to the Bureau during the year. In addition, each member of the Bureau is entitled to make use of all the services performed by the Bureau.

Each member reserves the right to withdraw from the agreement any class of legal advertising. However, the contract provides in paragraph Second 2 that if the newspaper exercises such withdrawal privilege, it waives all right to participate in the annual distributions of the Bureau's net profits. This waiver extends not only to profits derived from classes of legal advertising which the member has excluded from his contract, but also to profits arising from nonexcluded classes of advertising. 3 The agreements have a term of three years and are renewed automatically unless, prior to expiration of a term, the newspaper indicates in writing its intent not to renew.

The Bureau processes all forms of legal advertising including notices of trustee's sales, certificates of fictitious names, probate notices, tax sale lists, and solicitations for bids for government contracts. It works with the advertiser to make sure that the notice is properly phrased in accordance with applicable statutes and to ascertain which newspapers are qualified to carry the particular advertisement. It also proofreads the advertisement and checks legal descriptions and affidavits of publication. The Bureau bills the advertisers on behalf of its member newspapers and remits the proceeds, minus its commission, to each newspaper at the end of the month. If an advertiser fails to pay, the Bureau absorbs the loss.

In addition to its services in processing legal advertisements, the Bureau also acts as a representative for its member newspapers in the area of public relations and public law. It maintains for its members a compendium of the more than 2,000 statutes governing the various types of legal advertisements and renders expert assistance to its members in complying with those statutes. It also acts as a lobbyist for its newspapers in seeking changes in legal publication statutes, and it contributes support to other newspaper associations representing publishers on a statewide level.

While both the Bureau and Statewide operate as middlemen between legal advertisers and newspapers, the Bureau is primarily a representative of the newspapers and provides various services for their benefit. Statewide, on the other hand, primarily represents the trustees. Nevertheless, in the relatively narrow area of publication of notices of trustee's sales, their businesses are essentially identical. Both place notices of sale in the appropriate newspapers and post the notices on the premises; both proofread the notices, check the legal descriptions and the affidavits of publication. Each organization bills the advertiser and pays the newspaper for its publication costs.

In general, newspapers which belong to the Bureau have refused to pay Statewide any commission or have paid only a small commission on advertisements placed with them, because of their contractual commitment to pay the Bureau a 15 percent commission on all advertising they publish, regardless of its source. Members are understandably reluctant to pay the double commission which would result if they also paid Statewide for the advertising it furnishes. Consequently, whenever possible Statewide patronizes papers which are not members of the Bureau, but often it must place advertising with members because they are the only newspapers qualified to print the advertisement, the only newspapers printed frequently enough to carry it, or the only newspapers acceptable to the trustee.

Statewide commenced the instant action against the Bureau and 40 of its members 4 charging that the representation agreements between the Bureau and defendant publishers were entered into as part of a common plan and conspiracy violative of the Cartwright Act. (Bus. & Prof.Code § 16700 et seq.) 5 Statewide asserts two bases for this claim: First, it contends that the agreements constitute a combination of capital, skill or acts to restrict trade in the soliciting and servicing of the publication of notices of trustee's sales in violation of sections 16720 and 16726. This restraint of trade is said to flow from two clauses of the contract--paragraph Eighth (see fn. 1, Ante) which provides that the member newspapers must pay the Bureau a 15 percent commission for every legal advertisement whether or not placed by the Bureau paragraph Second (see fn. 2, Ante), which provides that members waive all rights to distribution of the Bureau's profits if they exclude any category of legal advertising from the contract. Second, Statewide argues that paragraph Second itself is a tying arrangement constituting a per se violation of sections 16720 and 16726. Statewide seeks three times the amount of its actual damages of $15,586.29 plus attorney's fees and costs. It also prays for an injunction forbidding defendants from enforcing or complying with their representation agreements and a declaration that the agreements are void as contrary to public policy, and that defendant publishers are not legally obligated to pay any commission to the Bureau for advertisements placed by Statewide.

Defendants demurred to the complaint and also moved for summary judgment. In support of the motion they filed two declarations of the secretary-treasurer of the Bureau; in opposition to the motion, Statewide filed a declaration of plaintiff Allen Barr. After examining the declarations, which state the facts set forth above, the trial court granted defendants' motion for summary judgment, at the same time ordering the demurrer off calendar. Judgment was entered accordingly. This appeal followed.

We have summarized on a number of occasions the well-established rules governing summary judgment procedure. (Code Civ.Proc., § 437c.) 'The matter to be determined by the trial court in considering such a motion is whether the defendant (or plaintiff) has presented any facts which give rise to a triable issue. The court may not pass upon the issue itself. Summary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his favor 6 and his opponent does not by affidavit show such facts as may be deemed by the judge hearing the motion sufficient to present a triable issue. The aim of the procedure is to discover, through the media of affidavits, whether the parties possess evidence requiring the weighing procedures of a trial. In examining the sufficiency of affidavits filed in connection with the motion, the affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. Such summary procedure is drastic and should be used with caution so that it does not become a substitute for the open trial method of determining facts.' (Stationers Corp. v. Dun & Bradstreet, Inc. (19...

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