McBeath v. Inter-American Citizens for Decency Com.

• Decision Date: 20 April 1967
• Docket Number: No. 23372.,23372.
• Citation: 374 F.2d 359
• Parties: Andy W. McBEATH, Appellant, v. INTER-AMERICAN CITIZENS FOR DECENCY COMMITTEE et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

374 F.2d 359 (1967)

Andy W. McBEATH, Appellant, v. INTER-AMERICAN CITIZENS FOR DECENCY COMMITTEE et al., Appellees.

No. 23372.

United States Court of Appeals Fifth Circuit.

March 13, 1967.

Rehearing Denied April 20, 1967.

E. Eugene Palmer and Osorio & Palmer, Austin, Tex., for appellant.

Jeremiah Ingels Rhodes, Eagle Pass, Tex., for appellees.

Before TUTTLE, Chief Judge, and AINSWORTH and DYER, Circuit Judges.

AINSWORTH, Circuit Judge:

This private civil antitrust action alleges a violation of the Sherman Act, 15 U.S.C. § 1, by defendants, acting in concert with one another to restrain interstate and foreign trade unlawfully, which actions are said to have injured and continue to injure plaintiff-appellant McBeath. Jurisdiction is invoked under 28 U.S.C. § 1337 which confers jurisdiction on district courts of any civil action arising under any Act of Congress protecting trade and commerce against restraints, and under the Clayton Act, 15 U.S.C. § 15, which also authorizes such a suit and provides for treble damages sustained by reason of injury resulting from violations of antitrust laws. McBeath seeks injunctive relief as provided by 15 U.S.C. § 26, and treble damages as provided by 15 U.S.C. § 15. Defendants moved to dismiss for lack of jurisdiction, and after a hearing on the motion, the district court, without assigning reasons, ordered the suit dismissed. We reverse and remand.

McBeath is the owner, editor and publisher of a weekly newspaper, the Eagle Pass News Guide, published in Eagle Pass, Texas, and circulated principally in Eagle Pass and Piedras Negras, Coahuila, Mexico. Eagle Pass and Piedras Negras are separated by the international boundary line of the United States and Mexico. The complaint alleges that the individual defendants have organized the defendant organization "Inter-American Citizens for Decency Committee" and that the organization and the individual defendants have conspired and are conspiring to exert pressures upon persons who advertise with plaintiff; that such pressure is in the nature of an organized boycott against plaintiff's advertisers designed to intimidate, coerce and prevent them from doing business with him; that as a result of the boycott, lawful foreign trade has been restrained, plaintiff has been damaged in the present sum of $3,000, and destruction of his business is threatened. McBeath alleges that the coercive campaign is being carried on by the publication of inflammatory statements in two newspapers published in Piedras Negras, by messages broadcast daily over KEPS Radio Station in Eagle Pass, of which one defendant, Wheeler, is an employee, and by handbills and circulars. It is also alleged that KEPS Radio Station and the two newspapers published in Piedras Negras are in competition with him with respect to advertising purchased by various businesses in the two communities.

Interrogatories were propounded to the four individual defendants, the answers to which show the following: Three of the defendants, Wheeler, Mijarez and Miguel, are officers of the Inter-American Citizens for Decency (sued here, however, as "Inter-American Citizens for Decency Committee"); Hume, the remaining individual defendant, was employed by the organization to represent it as counsel. The organization was formed on August 4, 1965. Hume feared that the criticism of McBeath and various statements might be construed as a boycott and warned the President of the organization, Wheeler, and others against the use of such statements. Statements were in fact issued to the press on behalf of the organization, the nature of which is not of record. The organization also purchased radio time for announcements on Radio Station KEPS. The record also fails to disclose the nature of the announcements.

At the hearing on October 27, 1965 of the motion to dismiss, proof was made that the Eagle Pass News Guide is operating in interstate and foreign commerce. Out of a total of 2,100 newspapers, approximately 200 are sold out of state, 26 or 27 of which are mailed to foreign countries. National as well as local advertising is published. The allegations that McBeath has suffered pecuniary loss were corroborated at the hearing. Losses in advertising occurred. McBeath formerly printed a maximum of 50 inches of Mexican advertising weekly. In June 1965 this advertising dwindled to approximately 12 inches, and in July to 8 inches. At the time of the hearing he had only one 2-inch Mexican advertisement. Advertising sells for a maximum of 84 cents an inch.

The question which we are called upon to decide is the correctness of the district court's ruling in dismissing the suit for lack of jurisdiction without hearing the merits of the case, where allegations of a violation of the Sherman Act and resultant damages have been made but no proof has been offered as to the alleged violation and the causal connection between the violation and the damages sustained.

For an aggrieved party to state a claim for relief under the Sherman Act it is necessary to allege only a per se violation of the Act. In a treble damage action, allegations of a per se violation plus resultant damages must be made. In Radiant Burners, Inc. v. Peoples Gas Lgt. & Coke Co., 364 U.S. 656, 660, 81 S.Ct. 365, 367, 5 L.Ed.2d 358 (1961), in reversing the Seventh Circuit which had affirmed the district court's dismissal of a suit alleging a conspiracy designed to exclude the sale of plaintiff's gas heaters from the public market, the Supreme Court held that by Section 1 of the Sherman Act "* * * Congress has made illegal: `Every contract, combination * * * or conspiracy, in restraint of trade or commerce among the several States * * *.' Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 515, 55 L.Ed. 619. Congress having thus prescribed the criteria of the prohibitions, the courts may not expand them. Therefore, to state a claim upon which relief can be granted under that section, allegations adequate to show a violation and, in a private treble damage action, that plaintiff was damaged thereby are all the law requires." (Emphasis supplied.) The complaint of McBeath clearly meets the test applied in Radiant Burners, Inc. He has alleged a conspiracy in the form of a boycott in restraint of trade and the substance of these allegations indicates a secondary boycott. He has also alleged damages resulting from the unlawful acts. It is well established that conspiracies and boycotts are proscribed activities under Section 1 of the Sherman Act. In Klor's Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959), the Supreme Court, in reversing the Ninth Circuit which had affirmed the district court's dismissal by summary judgment of a complaint alleging a boycott, said (359 U.S. 212, 79 S.Ct. 709) that "Group boycotts * * * have long been held to be in the forbidden category," citing as authority Eastern...