Davidson v. Kansas City Star Company

• Decision Date: 23 February 1962
• Docket Number: No. 12268 and 12525.,12268 and 12525.
• Citation: 202 F. Supp. 613
• Parties: George L. DAVIDSON et al., Plaintiffs, v. The KANSAS CITY STAR COMPANY et al., Defendants. Don EGAN et al., Plaintiffs, v. The KANSAS CITY STAR COMPANY et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

202 F. Supp. 613

George L. DAVIDSON et al., Plaintiffs, v. The KANSAS CITY STAR COMPANY et al., Defendants.

Don EGAN et al., Plaintiffs, v. The KANSAS CITY STAR COMPANY et al., Defendants.

Nos. 12268 and 12525.

United States District Court W. D. Missouri, W. D.

February 23, 1962.

Ray D. Jones, Jr., and Carrol C. Kennett, and Hammond C. Woods and Ben W. Swofford, Kansas City, Mo., for plaintiffs.

Watson, Ess, Marshall & Enggas, Kansas City, Mo., for defendants.

GIBSON, District Judge.

Plaintiffs bring the instant actions under the provisions of Sections 4 and 16 of the Clayton Act (Sections 15 and 26, Title 15 U.S.C.A.), claiming damages and injunctive relief against defendants for alleged violations of Sections 1 and 2 of the Sherman Act (Sections 1 and 2, Title 15 U.S.C.A.), and Sections 2 and 3 of the Clayton Act (Sections 13 and 14, Title 15 U.S.C.A.). These two cases may be considered together.

Plaintiffs allege that they are independent contractors, referred to as "Carriers" who purchase defendants' newspapers for cash at wholesale prices and sell them at retail prices within fixed boundaries. They are motorized, that is, they throw the papers onto the customers' homes from moving vehicles. They allege that their sole profit is derived from the difference between the wholesale cost of the newspapers and the retail price they receive for them. The plaintiffs each entered into a contract with the defendants which provided in part that plaintiffs will not sell papers outside of the district assigned to them and that they would not sell nor circulate any other newspaper except with the written consent of defendants. Plaintiffs allege that these contracts were not the result of any negotiations, but were forced upon plaintiffs, as defendants refused to deal with any Carrier who refused to agree to the terms of the contracts, and since no Carrier can earn his livelihood without the patronage of the defendants, this amounted to coercion.

Plaintiffs contend that this "tying Agreement" substantially lessened competition, apparently invoking Section 3 of the Clayton Act, in that plaintiffs have the capacity and ability to deliver other newspapers, but defendants have refused to allow them to do so.

Plaintiffs further allege that defendants discriminated against certain Carriers by selling newspapers to other favored Carriers at a wholesale price lower than that charged plaintiffs, while at the same time, defendants set and enforced the retail price of all newspapers delivered by all home Carriers at the same price, and that, therefore, plaintiffs were forced to pay more for their newspapers than the favored Carriers and were thereby damaged. Plaintiffs also contend that defendants favored certain Carriers by consigning newspapers with return privileges to certain favored Carriers, granting early delivery rights to certain favored Carriers, and allowing certain Carriers to retail the newspapers at higher prices than uniformly set by defendants.

Plaintiffs pray for injunctive relief and for treble damages in the sum of Four million five hundred twenty-five thousand seven hundred fifty-nine and 65/100 Dollars ($4,525,759.65) in Case No. 12268 and for Two million six hundred fourteen thousand two hundred fifty-three and 01/100 Dollars ($2,614,253.01) in Case No. 12525.

No answer has been filed as yet in either case, and defendant has filed a motion to dismiss in both cases. A previous motion to dismiss was sustained by this Court in case No. 12268-2 on June 1, 1959, and leave was given at that time to file an amended complaint for injunctive relief only in that case. It is the amended complaint in case No. 12268-2 and the original complaint in case No. 12525-1 to which the instant motions to dismiss apply. Defendant contends, as grounds for the instant motions, that the complaints fail to state a cause of action in favor of plaintiffs. For the purposes of the instant motions, the allegations contained in the complaints must be taken as true. The sole question presented then is, whether under the allegations of fact as stated by plaintiffs, a cause of action has been stated against defendants under the provisions of the anti-trust statutes.

Plaintiffs have not specified in their complaint as to which of the sections of the anti-trust laws defendants have violated, other than a general allegation that they have violated Sections 1 and 2 of the Sherman Act and Sections 2 and 3 of the Clayton Act. They have not specified which acts of conduct violate specific provision of the anti-trust law. The amended complaint consists of only one count that includes claims under Sections 1 and 2 of the Sherman Act, Section 2(a), (b), (c), (d) and (e) of the Clayton Act as amended by the Robinson-Patman Act, and Section 3 of the Clayton Act. The plaintiffs do not state in their amended complaint what particular part or sections of these different Acts are violated by the defendants nor do they allege with particularity the acts which constitute the claimed violation. As a result, the Court, along with the defendants, is required to speculate on the legal foundation claimed by plaintiffs for each factual charge delineated in the complaint. This is not proper pleading. As stated in Hennepin Theatre Corporation v. Paramount Pictures, Inc., 1 F.R.D. 621 (D.C.Minn.1941, p. 622):

"The difficulty which arises in construing plaintiff's * * * complaint is * * * due * * * primarily to the failure of the plaintiff to distinguish between the alleged violations of the Sherman Anti-Trust Act and the Clayton Act, * * * These acts are independent enactments, and the violation of either constitutes a separate offense. Certainly, in order to plead, these defendants should know of the exact wrong with which they are charged."

It is apparent that many of the sections of the statutes enumerated in plaintiffs' complaint have no application to the factual situation herein alleged. However, in order to pass upon the defendant's Motion to Dismiss for failure to allege facts upon which plaintiffs are entitled to relief, the Court will consider, as best it can, the alleged factual situation in the light of each section alleged to have been violated.

SHERMAN ACT, SECTION 1

Section 1 of the Sherman Act forbids contracts, combinations, or conspiracies "in restraint of trade or commerce among the several States, or with foreign nations."

As was stated in the order of this Court of June 1, 1959, "There are no allegations contained in the instant complaint alleging any facts from which a `combination' or `conspiracy' by defendant may be inferred." The only defendants are the Kansas City Star Co. and its officers. They cannot conspire or combine amongst themselves and against themselves as they constitute one entity for the purposes of publishing a newspaper. This statement applies as well to the amended complaint. Thus, the only violation of Section 1 of the Sherman Act that is possible is a contract in restraint of trade or commerce. Clearly, in this case, there existed a contract, but is it a contract of a type about which plaintiffs would have the right to complain? Clearly the statute implies that any actions brought under it should be brought against the parties who combined, conspired, or contracted to restrain trade or commerce. The only restraint of commerce plaintiffs have any standing to complain of is the restraint of the "home delivery market" for newspapers. Assuming, for the moment that the effect of the contract in question was to restrain commerce or trade, this contract was entered into between plaintiffs and defendants. Therefore, if there was a restraint of trade inherent in the contract, plaintiffs were in pari delicto with defendants. Such a person has no right to complain of the effect of the actions of which he had a part in bringing about. Eastman Kodak Co. v. Blackmore, 2 Cir., 277 F. 694. A contrary result may be indicated where the party has terminated his relationship with the accused party. Victor Talking Machine Co. v. Kemeny, 3 Cir., 271 F. 810. However, in this case there is every indication that plaintiffs are still under contract with defendants. Furthermore, the alleged facts indicate that, if there were contracts in restraint of trade, they were in existence already at the time plaintiffs entered into their own contracts with defendants, and plaintiffs knew of their existence and effect. This is a further militation against plaintiffs' recovery. (See Continental Securities Co. v. Michigan Cent. R. Co., 6 Cir., 16 F.2d 378).

The restraint of trade or commerce named in Section one of the Sherman Act means "unreasonable" restraint of trade or commerce. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619. This is now well settled.

But the contracts entered into between plaintiffs and defendants had no effect of an unreasonable restraint on trade or commerce. The trade or commerce plaintiffs complain that the defendants have restrained is what they denominate the "home delivery market." As plaintiffs apparently base their complaint on the fact that they are not allowed to distribute newspapers other than the "Kansas City Star" the "home delivery market" must be taken to include the delivery of all newspapers. The defendants have clearly restrained plaintiffs from delivering any other newspaper than their own. However, there is no allegation that defendants have attempted to restrain any person other than plaintiffs from delivering other newspapers, and in fact, plaintiffs themselves, had they not entered into the contracts in question, would have been free to deliver any newspaper they chose, and further, when their present contract expires, they will be free again to do so.

The fact that it may be more economically feasible for another newspaper to avail itself of defendants' already established carrier system should not enter into it. Presumably defendants were required, at...