Home Placement Service, Inc. v. Providence Journal

• Decision Date: 27 October 1983
• Docket Number: Civ. A. No. 77-158 S.
• Parties: HOME PLACEMENT SERVICE, INC. and Joseph P. Muschiano v. PROVIDENCE JOURNAL COMPANY.
• Court: U.S. District Court — District of Rhode Island

573 F. Supp. 1423

HOME PLACEMENT SERVICE, INC. and Joseph P. Muschiano v. PROVIDENCE JOURNAL COMPANY.

Civ. A. No. 77-158 S.

United States District Court, D. Rhode Island.

October 27, 1983.

Gonnella & Gonnella by Ralph J. Gonnella, Providence, R.I., for plaintiffs.

Edwards & Angell by Edward F. Hindle, Knight Edwards, Joseph V. Cavanagh, Jr., Providence, R.I., for defendant.

OPINION

SELYA, District Judge.

I.

This civil action was brought by Home Placement Service, Inc. ("HPS") and its founder/president, Joseph P. Muschiano ("Muschiano"), charging that it had been scuttled in violation of 15 U.S.C. §§ 1 and 2 (the Sherman Act). The defendant is the Providence Journal Company ("PJB"), a publisher which towers over the Rhode Island market. PJB publishes, inter alia, a morning daily newspaper ("The Providence Journal"), an afternoon daily newspaper ("The Evening Bulletin"), and a Sunday newspaper ("The Providence Sunday Journal"). Each of these publications has a statewide audience (extending, indeed, into southeastern Massachusetts) and each is far and away the most widely circulated gazette of its genre within the market area.

The instant action was the second to have been instituted in this court challenging PJB's stern refusal to accept rental referral advertising in its classified columns. The predecessor action, to which the present plaintiffs were not parties, generated two trips to the Court of Appeals for the First Circuit. See Walker v. Providence Journal Co., 493 F.2d 82 (1st Cir. 1974), and Homefinders of America, Inc. v. Providence Journal Co., 471 F.Supp. 416 (D.R.I.1979), aff'd, 621 F.2d 441 (1st Cir.1980) ("Homefinders I"). The initial squall of litigation made clear, inter alia, that the defendant has monopolistic control over newspaper publication in the relevant market, e.g., Homefinders I, 621 F.2d at 443; but that "a newspaper, monopoly or not, armed with both the First Amendment and a reasonable business justification," could not be required to publish admittedly deceptive advertising. Id. at 444.

The case at bar, too, has sailed beyond the shallows of the district court. PJB has for many years (the memory of living man runneth not to the contrary) engaged in the business of providing information about rental real estate. PJB's modus operandi in this regard was standard fare for the medium: it would purvey advertising space (classified or display) to landlords desiring to attract tenants. HPS was a competitor, to the extent that the tenor of its business was to accumulate data anent residential vacancies from myriad sources (including the columns of the PJB), and in the wake of such efforts, to compile, edit, and sell the resultant lists. Such an endeavor is known in the trade as "rental referral."

Shortly after HPS was christened, the plaintiffs tacked across the defendant's bow: HPS sought to launch its business by the placement of classified advertisements in PJB's newspapers. These proposed commercial messages were patterned after, and similar to, those employed by a preexisting rental referral operator ("HOA-RI").¹ The plaintiffs, however, ran afoul of heavy weather. PJB, based on a plethora of complaints about the integrity of HOA-RI's advertising (or better put, the lack thereof), instituted a blanket ban on advertisements from rental referral firms. In the course of this embargo, PJB applied the prohibition to reject HPS's proffer. Stranded in this manner, HPS soon thereafter sank to the bottom. Its counter-attack on PJB's proscription was swift and stormy; HPS filed suit, branding the newspaper's black-out as violative of the antitrust laws.

Following a bench trial, this court (Boyle, Chief Judge) entered judgment in favor of the defendant. The Court of Appeals poured oil on these troubled waters and reversed, finding a Sherman Act transgression. Home Placement Service, Inc. v. Providence Journal Co., 682 F.2d 274 (1st Cir.1982) ("HPS I"). Certiorari was denied by the United States Supreme Court. ___ U.S. ___, 103 S.Ct. 1279, 75 L.Ed.2d 500 (1983). Unlike Homefinders I, where the plaintiff had conceded that its advertising had indeed been "deceptive" and "misleading," 621 F.2d at 442, HPS I involved a situation where the plaintiffs had only recently pushed off from shore, and "defendant failed to show ... that the representation as to specific advertised property was false or exaggerated, or that plaintiffs engaged in unauthorized listing." HPS I, 682 F.2d at 277. The action was accordingly remanded to this court for further proceedings consistent with the appellate mandate. Id. at 281. The language of the First Circuit opinion should be noted:

Plaintiff sought relief in the form of treble damages, attorney's fees, and an injunction. Further proceedings will be necessary to determine the appropriate form of injunctive relief, if any is needed, and the amount owing in damages and attorney's fees.

HPS I, 682 F.2d at 281 (footnote omitted). In a footnote to the passage quoted above the circuit court took pains to observe that "we offer no opinion on whether plaintiff's claim for damages might have been waived." Id. at n. 8. Pursuant to a further suggestion contained in Judge Aldrich's opinion, id. at 281, the case, on remand, was transferred to "another trier."

The defendant, seizing upon footnote 8 of HPS I, sought to cast the plaintiffs adrift and promptly moved for judgment as to the damage claim. This court, in an ora sponte bench decision (May 9, 1983), held that, under the circuit court mandate, "there shall be no new trial on the issue of damages and ... the court will pass upon the damage issue on the record as constituted during the original trial." Transcript of May 11, 1983 hearing at 7. The plaintiffs then moved in the Court of Appeals for clarification of the appellate mandate, and this court stayed proceedings pending a resolution of that petition. On June 16, 1983, the First Circuit issued its per curiam memorandum and order, thereby further illuminating the directives of HPS I.² At an ensuing chambers conference (June 24, 1983), this court dissolved its stay, permitted discovery to go forward limited to matters pertinent to the need for injunctive relief, and required the plaintiffs to specify, by offer of proof, any new evidence which they desired to introduce vis-a-vis damages, pursuant to paragraph 3 of the June 16 clarification order.

The plaintiffs' offer of proof, when filed, comprised exclusively "incremental evidence solely related to the computation of damages for the period 1981, 1982, 1983." Transcript of July 20, 1983 hearing at 2. Plaintiffs' counsel stipulated that the said offer of proof went only to the calculation of later-year damages (if any) and was irrelevant to the "threshold" damage issue, viz., whether the evidence of record at the original trial was sufficient vel non to support any award of damages. Id. at 2-3. A briefing schedule was implemented, and the court is now confronted with two issues for decision:

1. Should an injunction issue?

2. Is there a sufficient factual predicate in the record upon which any damage award to the plaintiffs may validly be premised?

II.

The plaintiffs seek to enjoin PJB from continuing to violate the antitrust laws. PJB contends, however, that because it has charted a new course and has changed the policy which the First Circuit found to be in derogation of the antitrust laws, there is no current need for the issuance of a restraining order. The availability of injunctive relief against violators of the antitrust laws is circumscribed by § 16 of the Clayton Act, 15 U.S.C. § 26, which provides in pertinent part:

Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, including sections 13, 14, 18, and 19 of this title, when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity....

The plaintiffs, pursuant to the Clayton Act, claim that they are entitled to equitable relief because PJB's approach has historically been hostile to rental referral advertisers; and further, that even the defendant's present policy shows signs of lingering antipathy.³ PJB's rejoinder is twin-masted. First, the defendant argues that it has, pursuant to HPS I, mended its ways and now accepts rental referral advertising. Thus, PJB reasons, it has reached safe harbor; there is no need for the court to order the defendant to do something that it is already doing voluntarily.

It is, of course, apodictic that "courts, after all, do not enjoin parties from violating the law without proof of a real likelihood that such will happen." Derwin v. General Dynamics Corp., 719 F.2d 484 at 491-92 (1st Cir.1983). Yet, in the case at bar, the voyage upon which PJB originally embarked has been judicially condemned, see HPS I; and, in such circumstances,

"when defendants are shown to have settled into a continuing practice or entered into a conspiracy violative of antitrust laws, courts will not assume that it has been abandoned without clear proof. Local 167 v. United States, 291 U.S. 293, 298 54 S.Ct. 396, 398, 78 L.Ed. 804. It is the duty of the courts to beware of efforts to defeat injunctive relief by protestations of repentance and reform, especially when abandonment seems timed to anticipate suit, and there is probability of resumption. Cf. United States v. United States Steel Corp., 251 U.S. 417, 445 40 S.Ct. 293, 297, 64 L.Ed. 343.

United States v. Oregon State Medical Society, 343 U.S. 326, 333, 72 S.Ct. 690, 695-696, 96 L.Ed. 978 (1952).

Subsequent to its opinion in Oregon State Medical Society, the Supreme Court has, on frequent occasions, reiterated that the voluntary cessation of illegal conduct does not moot an action for...