District of Columbia Cit. P. Co. v. Merchants & Mfr. Ass'n

• Decision Date: 30 April 1949
• Docket Number: Civ. A. No. 2118-48.
• Citation: 83 F. Supp. 994
• Parties: DISTRICT OF COLUMBIA CITIZEN PUB. CO. et al. v. MERCHANTS & MANUFACTURERS ASS'N, Inc. et al.
• Court: U.S. District Court — District of Columbia

83 F. Supp. 994

DISTRICT OF COLUMBIA CITIZEN PUB. CO. et al. v. MERCHANTS & MANUFACTURERS ASS'N, Inc. et al.

Civ. A. No. 2118-48.

United States District Court District of Columbia.

April 30, 1949.

Eugene E. Ditto, Washington, D. C., Harold L. Schilz, Washington, D. C., for plaintiffs.

John J. Carmody, Washington, D. C., Jo V. Morgan, Jr., Washington, D. C., for defendants Merchants & Manufacturers Ass'n, Inc., and the Hecht Co.

Leon Tobriner, Washington D. C., Gilbert Hahn, Jr., Washington, D. C., for defendants Kann, Inc., A. Kahn, Inc., and Young Men's Shop.

Hogan & Hartson, Washington, D. C. (Joseph J. Smith, Jr., Washington, D. C.) for defendant Woodward & Lothrop.

MOORE, District Judge.

Plaintiffs have brought an action against defendants for treble damages, alleging violation of Sections 1, 2 and 3 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1 et seq., and consequent injury to plaintiffs.

Motions to dismiss filed by each of the defendants are pending, as well as a motion for summary judgment filed by plaintiffs. Argument on all these motions was heard at the same time by the Court. The motions to dismiss are based on numerous grounds, but this opinion will deal only with the first, which is, in each motion, that the complaint fails to state a claim against the respective defendants upon which relief can be granted.

The substantial allegations of the complaint may be briefly summarized as follows:

Plaintiff District of Columbia Citizen Publishing Company is the publisher of the District of Columbia Citizen, a monthly newspaper with general circulation in the District of Columbia and elsewhere, which derives its income largely from advertising. Plaintiff Paul P. Walsh was for a time the owner and publisher of this newspaper, having transferred his rights therein to the corporate plaintiff in March, 1948.

Defendant Merchants and Manufacturers Association, Inc., is a trade association in the District of Columbia. The other defendants are alleged to be members of this trade association.

The Association maintains a committee on donations and advertising, whose decisions are alleged to control the advertising policy of the members of the Association. This committee is alleged to maintain an approved list of newspapers and publications in which it allows members of the Association to advertise. The members of the Association are alleged to comply with a rule of the Association that they will not advertise in any publication not approved by the committee. Solicitations for advertising by agents of the District of Columbia Citizen directed to members of the Association have been referred by them to the committee, which, it is alleged, has refused to approve such advertising, and thereafter advertising has been declined by these Association members. The refusal is alleged to be arbitrary and capricious, and for the purpose of injuring and destroying competition, and potential competition of the District of Columbia Citizen with other publications, "and some in which some of the said defendants and co-conspirators have a financial interest."

The District of Columbia Citizen is alleged to be an attractive newspaper comparing favorably in its essentials with any "specific purpose" tabloid newspaper or trade publication published on a weekly or monthly basis in any comparable metropolitan area. Its advertising is alleged to be well presented, and advertisers are alleged to have expressed satisfaction with its services. Its mail circulation is 15,000 copies, part of which go into interstate commerce; in April, 1948, it distributed 36,000 copies. It is alleged that the circulation would be much larger and more widespread but for the so-called boycotting or blacklisting by defendants, which, it is alleged, has diminished its circulation, impaired its prestige, and caused it heavy financial loss because of its failure to obtain advertising which it would have otherwise obtained.

For the purpose of passing on the motions to dismiss, the foregoing factual allegations of the complaint will be treated as true.

Section 1 of the Sherman Act makes combinations in restraint of interstate commerce unlawful; Section 2 extends the ban to monopolies and attempts to monopolize any part of interstate commerce; and Section 3 makes the prohibitions of Section 1 applicable to commerce in the District of Columbia.

While all monopolies involve restraints of trade, there may be restraints of trade which are not monopolistic. Consideration of this motion, therefore, involves two inquiries; first, whether the allegations, if true, show that the defendants monopolized or attempted to monopolize any part of interstate commerce; and secondly, if not, do they show that defendants combined to restrain trade in the District of Columbia, or in interstate commerce?

Obviously, the acts charged to defendants do not tend to create any monopoly of the newspaper publishing business on the part of defendants. They are not engaged in that business. It is alleged that some of them have a financial interest in some other publications; but the extent of this interest is not shown, nor is it alleged that defendants or any of them advertise in these other publications, or that any of them are on the committee's so-called approved list. None of the evil effects which are inseparably connected with monopolies can be reasonably expected to result from the mere agreement of defendants not to advertise in this small monthly newspaper.

Although not alleged, it is a matter of common knowledge that there are in the District of Columbia many large daily newspapers engaged in the dissemination of news and advertising matter to the public. It would strain the imagination to say that the reduction in circulation of a small monthly newspaper such as the District of Columbia Citizen could substantially affect the business of these daily newspapers one way or the other. The only possible monopolistic tendency would be in relation to other publications of similar character to the District of Columbia Citizen; and it is not alleged that defendants are interested in the publication of any such newspapers, or even that any exist.

It is alleged in the complaint that the defendants and nineteen other of the larger and more important retail and department stores in Washington have engaged in wrongful and unlawful attempts to monopolize the circulation of advertising within the District of Columbia and in interstate commerce; but such allegations are clearly without basis in the facts alleged to support the charge. The complaint states that the method employed to effect this monopoly is the boycotting of plaintiffs' newspaper by refusal to advertise in it. There is no allegation that more than twenty-four stores refused to advertise in the District of Columbia Citizen. There is no allegation that the defendants or any of the other nineteen stores attempted to coerce, induce or in any way influence other stores in the placing of advertising in the plaintiffs' newspaper, or any other newspaper in the District of Columbia. The complaint itself refutes this charge in alleging that persons and stores that have placed...