Hirsh v. Martindale-Hubbell, Inc., MARTINDALE-HUBBEL

• Decision Date: 23 April 1982
• Docket Number: MARTINDALE-HUBBEL,INC,No. 81-5070,81-5070
• Citation: 674 F.2d 1343
• Parties: 1982-2 Trade Cases 64,723 Robert J. HIRSH, Appellant, v., Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1343

674 F.2d 1343

1982-2 Trade Cases 64,723

Robert J. HIRSH, Appellant, v. MARTINDALE-HUBBELL, INC., Appellee.

No. 81-5070.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 4, 1982.

Decided April 23, 1982.

Erik O'Dowd, O'Dowd & Burke, Tucson, Ariz., for appellant.

Philip von Ammon, Feenemore, Craig, von Ammon & Udall, Phoenix, Ariz., for appellee.

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

Before ELY, HUG and ALARCON, Circuit Judges.

ELY, Circuit Judge:

Robert J. Hirsh, a practicing attorney, brought this antitrust action ¹ challenging certain sales practices of Martindale-Hubbell (hereinafter "Martindale") as violative of § 1 of the Sherman Act (15 U.S.C. § 1) and § 3 of the Clayton Act (15 U.S.C. § 14). ² Upon the submission of cross motions for summary judgment, the District Court, 505 F.Supp. 114, concluded that no violation of those provisions of the antitrust laws had been established and entered summary judgment in favor of Martindale. ³ We affirm.

I. FACTUAL BACKGROUND

Martindale publishes the Martindale-Hubbell Law Directory (hereinafter "the Directory"), the nation's leading annual directory of attorneys and the only directory of its kind expressly approved by the American Bar Association. The Directory, a multi-volume set, contains listings of virtually every American and Canadian lawyer as well as listings of a limited number of foreign attorneys. ⁴ Martindale distributes the Directory, both nationally and internationally, to attorneys, law firms, public agencies, private concerns, libraries, and schools.

In addition to its ABA approval, certain other attributes of the Directory render it a particularly attractive forum for attorney advertising. First, the Directory is one of the few law lists containing individual evaluations of the competence and ethics of the attorneys it lists. ⁵ Second, Martindale offers an attorney the opportunity to publish a broad range of information concerning his educational background and professional achievements. ⁶ Finally, certain sales practices of Martindale, discussed more fully below, tend to expand circulation of the Directory among attorneys. This expanded circulation greatly enhances the efficacy of advertising in the Directory. ⁷

The Directory itself is divided into three sections: the geographic bar roster, the patent lawyer roster, and the biographical section. The geographic and patent lawyer rosters contain alphabetical listings, published without charge to the listed party, of individual attorneys and law firms. ⁸ Also contained in the geographic and patent lawyer sections are attorney advertisements known as "informative cards." Informative cards are available for purchase by any attorney or law firm, regardless of rating, ⁹ and contain information beyond that found in the individual listings. ¹⁰

The biographical section of the Directory contains additional attorney advertisements known as "professional cards." Professional cards may be purchased only by attorneys and law firms meeting certain minimum ethical and competency standards, and contain information additional to that found in either the individual listings or the informative cards. Certain information, however, may appear in both the informative and professional cards. ¹¹

Martindale imposes certain conditions upon the sale of professional and informative cards. First, attorneys wishing to purchase professional or informative cards are also required to purchase the Directory itself. (This requirement will be referred to as "the subscription requirement.") ¹² Second, only attorneys purchasing informative cards are permitted to purchase professional cards. Thus, in order to place a professional card in the Directory, an attorney must also purchase an informative card and subscribe to the Directory as well.

Under certain circumstances, however, Martindale sells the Directory and advertising separately. No advertising need be purchased in order to obtain the Directory itself. Furthermore, certain classes of attorneys, most notably foreign attorneys and attorneys sharing office space with a subscribing attorney, are permitted to advertise without purchasing the Directory.

Hirsh contends that these sales practices constitute two separate tying arrangements proscribed by § 1 of the Sherman Act (15 U.S.C. § 1) and § 3 of the Clayton Act (15 U.S.C. § 14). ¹³ According to Hirsh, the subscription requirement is an illegal tie-in, with the tying product being the advertising and the tied product being the Directory. Hirsh also contends that sales of informative cards (the tied product) are unlawfully tied to the sale of professional cards (the tying product).

Both Hirsh and Martindale filed motions for summary judgment in the District Court. The Court granted the motion of Martindale and denied that of Hirsh, holding, inter alia, that the functional interrelationship between the Directory and the advertising it contains precludes a finding they are legally separate products. ¹⁴ We agree.

II. ANALYSIS

A. Standard of Review

Hirsh appeals the entry of summary judgment in favor of Martindale. In evaluating the propriety of summary judgment, our review is identical to that of the trial court. May Department Store v. Graphic Process Co., 637 F.2d 1211, 1214 (9th Cir. 1980); Securities Exchange Commission v. Murphy, 626 F.2d 633, 640 (9th Cir. 1980). Summary judgment is proper only where no genuine issue of material fact exists and the moving party is clearly entitled to prevail as a matter of law. Fed.R.Civ.P. 56(c); May Department Store v. Graphic Process Co., 637 F.2d at 1214. In the present case, both parties state that there are no disputed issues of material fact. These statements are amply supported by the record. Accordingly, our review here is limited to a determination whether Martindale is entitled to judgment as a matter of law.

B. The Alleged Advertising-Directory Tie ¹⁵

In order to establish the existence of an unlawful tying arrangement, four elements must be proved. First, there must be two separate products involved, the sale of one (the tying product) being conditioned upon the purchase of the other (tied product). Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 507, 89 S.Ct. 1252, 1260, 22 L.Ed.2d 495 (1969) (Fortner I ); Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348, 1352 (9th Cir. 1982). Second, the seller must have engaged in some modicum of coercive conduct toward the buyer. Moore v. James H. Matthews & Co., 550 F.2d 1207, 1216 (9th Cir. 1977). Third, the seller must possess economic power in the market for the tying product. Northern Pacific Railway Co. v. United States, 356 U.S. 1, 6, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). Finally, a "not insubstantial" amount of commerce must be affected by the challenged aggregation. International Salt Co. v. United States, 332 U.S. 392, 396, 68 S.Ct. 12, 15, 92 L.Ed. 20 (1947). ¹⁶ Once these elements are established, a tying arrangement is presumptively illegal and will be prohibited without a specific showing of anticompetitive purpose or effect. ¹⁷ Id.

"There is, at the outset of every tie-in case, ... the problem of determining whether two separate products are in fact involved." Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 507, 89 S.Ct. 1252, 1260, 22 L.Ed.2d 495 (Fortner I). In determining whether an aggregation of items constitutes one or more products for antitrust purposes, we must look to the function of the aggregation. Siegel v. Chicken Delight, Inc., 448 F.2d 43, 48 (9th Cir. 1971). This necessarily requires an inquiry into the nature of the relationship between the alleged tying product (the advertising) and the alleged tied product (the Directory). Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348, 1353. In evaluating this relationship, we must consider whether the aggregation serves to facilitate competition by promoting product quality or whether it, in fact, amounts to no more than a naked effort to impede competition on the merits. Our examination of the relationship between the items at issue here leads us to conclude that the Directory and the advertising it contains constitute but a single product.

Martindale offers advertising attorneys a system of legal advertising. The effective operation of that system requires both the printing of information regarding advertising attorneys and the circulation of that information. Through its subscription requirement, Martindale is able to supply both. To characterize the printing of the information and the circulation of that information as mere separable components of that system is to ignore the practical realities of advertising. See Principe v. McDonald's Corp., 631 F.2d 303, 311 (4th Cir. 1980).

Generally, an attorney advertising in the Directory is seeking to obtain the referral of legal business through the dissemination of information regarding his legal qualifications. In order for this effort to succeed, the attorney's advertisement must reach those persons with legal work available for referral. Because other attorneys are frequently the most productive source of referrals, circulation of the Directory among them is particularly important. Through its subscription requirement, Martindale is able to offer prospective advertisers a guaranteed circulation among other advertising attorneys. Because circulation is one of the principal determinants of the value of specific advertising space, this guaranteed circulation greatly increases the desirability of advertising in the Directory and tends to spur sales of additional professional and informative card advertising. As more attorneys place advertisements in the Directory, the volume of information contained therein tends to expand. This increased information content renders the Directory itself a more effective tool for persons seeking to refer legal work to others and thereby tends to...