Multivision Northwest, Inc. v. Jerrold Electronics Corp.

• Decision Date: 28 July 1972
• Docket Number: Civ. A. No. 14191.
• Citation: 356 F. Supp. 207
• Parties: MULTIVISION NORTHWEST, INC., Plaintiff, v. JERROLD ELECTRONICS CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Georgia

356 F. Supp. 207

MULTIVISION NORTHWEST, INC., Plaintiff, v. JERROLD ELECTRONICS CORPORATION, Defendant.

Civ. A. No. 14191.

United States District Court, N. D. Georgia, Atlanta Division.

July 28, 1972.

COPYRIGHT MATERIAL OMITTED

Warren N. Coppedge, Jr., Mitchell, Mitchell, Coppedge & Boyett, Dalton, Ga., for plaintiff.

J. D. Fleming, Jr., Sutherland, Asbill & Brennan, Atlanta, Ga., for defendant.

SIDNEY O. SMITH, Jr., Chief Judge.

This is a suit in which the plaintiff, Multivision Northwest, Inc. ("Multivision"), a CATV system owner in Dalton, Georgia, seeks to recover damages from the defendant Jerrold Electronics Corporation ("Jerrold"), a prime supplier of electronic components used in the system. Specifically, the plaintiff claims a breach of warranty, both express and implied,¹ arising out of its purchase of certain amplifying equipment, automatic gain controls and power supplies incorporated into the Dalton system. The case was tried non-jury and from the extensive evidence presented, the court makes the following

FINDINGS OF FACT

Plaintiff Multivision obtained a local franchise for a CATV system in March, 1965, from the government of the city of Dalton, Georgia, and immediately began preparations of its lay-out and construction. At the time, there was already an outstanding stale franchise, previously issued but not acted upon. Additionally, there was public knowledge to the effect that future CATV operators would be restricted to certain non-duplication regulations (whereby the same showings can emanate only from the nearest station) absent a history sufficient to establish "grandfather" rights. Because of these two factors, there was great need to rush into production and show a marketed product as soon as possible.

Some of the investors in Multivision had previous CATV managerial experience; though not technical. Unlike many new systems which contract the entire construction to manufacturers or to third party independent companies (each of which charges 15% or 20% profit for such services), Multivision determined to build its own system, purchasing its own materials and components but using a labor contractor for heavy construction of the main and feeder lines and its own personnel for installation of the electronic system. The source of technical advice in these early stages is not clear, but it is apparent that everything was done on a "rush" basis. Actual construction by the contractor commenced in June, 1965, and a tower, in essence of telephone poles, was completed in July, 1965.

Amongst the early purchases by Multivision were original orders from Jerrold, a recognized leader in the manufacture of system components for CATV systems. Insofar as the present controversy is concerned, these original purchases consisted of 16 TAGC's, 40 TBA-1's, 12 TBA-2's, 60 TML-1's, and 26 RPS-30's. All were shipped between July 1st and August 9th during 1965 and virtually all were placed into the early construction.

Essentially, a CATV operation, consists of three main parts: the "head-end" system, the "mixing" system, and the "distribution" system. The "head end" system embraces the antenna sites where each channel is received on its own antenna and fed into down leads or coaxial cable and individually tuned for the best picture. The "mixing" system consists of combining the several channel signals and placing all of them into one cable by having each on a different frequency. The "distribution" system, of course, is the transmission of these signals simultaneously to individual customers. Typically, the distribution system is laid out like a highway or street plan, with a trunk or main line to which feeder or side lines are connected which in turn support the individual drops or taps to each customer. The proper operation of each part is essential to a good end-product because of the cascading of the signal from beginning to end. It is impossible to have a better signal down the line from the one present at any point upstream.

The purpose of an amplifier is to boost the signal periodically in order to maintain the level of the signal which will weaken for practical purposes over approximately 1,400 feet of cable. Basically, it is indiscriminate in its function, boosting bad effects or "noise," i.e., "snow," "cross-hatch," "ghosts," "bars," etc., along with the signal proper and also producing "noise" itself. Accordingly, each amplifier has internal controls which are adjusted to boost the prime signal over its own noise and other devices to block out or filter the undesirable noise. Of prime use in this connection are sophisticated transistors or "capacitors" which perform the filtering action, siphoning off or grounding the noise, but permitting the prime signal to pass down stream on the line. If the capacitors fail to function properly, the resultant noise generated by the amplifier will be fed into the signal and transmitted downstream from each station to the end. The practical limitation of an amplifying system is some 32 amplifiers in any combination from the "head-end" to the end of any line.

The TML-1 is a main or trunk line amplifier; the TBA-1 is a regular bridging amplifier used alongside a TML-1 at the beginning of a feeder-line, which together with a 24-volt AC power unit, the RPS-30, constitute a "station." The TBA-2 is an intermediate bridging amplifier installed at some point other than a TML-1 station (less than 1400 feet) to commence a feeder line. The TAGC is used as a slope control apparatus to balance the signal with either. With the exception of the RPS-30 power unit,² all of these products incorporate capacitors which perform essentially the same function in each unit.

On or around September 2, 1965, defendant Jerrold began receiving reports from the field of capacitor failures in its T-line series of amplifying equipment. The capacitor was subsequently identified as Jerrold Part No. 127-065 and it was determined that the manufacturer of the capacitors (Aerovox) had experienced a "bad run" of approximately one-third of those capacitors produced during the early part of the summer of 1965. Since Jerrold had no way of knowing at that time how many capacitors might be involved or how many of its previously shipped amplifiers and gain controls might have been equipped with the suspect capacitors, Jerrold issued an internal quality hold on September 9, 1965, on all TBA-1, TBA-2, and TML-1 amplifiers and also on TAGC-213 automatic gain controls, all of which were using capacitor 127-065. The quality hold was followed on September 13, 1965, by Jerrold Deviation No. 0117, terminating the use of 127-065 capacitors in the T-line amplifying and gain control equipment and specifying the replacement of the 127-065 capacitor with Jerrold Part No. 127-042. The quality hold and deviation together were sufficient to terminate any further use of the suspected capacitors. It is improbable that any substantial amount of equipment would have been shipped with 127-065 capacitors following the deviation.

At that time, Jerrold also began to replace capacitors in its current stock of amplifying and gain control equipment. In addition, Jerrold prepared Service Bulletin No. 50 to be distributed to Jerrold customers for the purpose of alerting them as to the possible capacitor problem and recommending the capacitor change reflected in Deviation No. 0117. Subsequently, the formal engineering change, superseding Deviation No. 0117, issued on November 14, 1966. The suspect capacitor, 127-065, was a small yellow plastic capacitor. Its replacement part, 127-042, is metal and comes in a small and large size and was substantially used by Jerrold from 1966-1971.

Meanwhile, in August, 1965, Multivision had employed a competent engineer, Emerson, from California, to report to Dalton and "take charge" of the situation which was apparently proceeding without direction. When he arrived, Emerson in effect became the general manager with responsibilities in all phases of the operation—office, sales and promotions, construction, training, and technical performance. As such, he was extremely busy endeavoring to produce a saleable picture as quickly as possible, upgrade the existing system's performance, supervise the new line installation and customer service lines and work on sales and public relations. In fact, all functions except finance, which was managed by Fryman for Multivision out of Ohio, fell to him.

Shortly after his arrival the initial segment of the system, consisting of 16.2 miles of cable and 99 subscribers, was placed into operation. At best, it performed poorly. Along with the myriad other duties, Emerson undertook to isolate the causes of such poor performance. Specifically, Emerson found that the head-end and main antenna tower were in an undesirable location, that the arrays and configurations on the master antenna had been improperly located and aligned and that there were numerous head-end reception problems, resulting both from construction deficiencies in the head-end itself and from off-cable interference. Emerson also found that the amplifiers on the existing system had been improperly spaced and located and that the feeder lines carrying signals to individual subscriber locations were "too long" (i. e. that amplification of signals along the feeder line was insufficient). Emerson made numerous changes in the head-end equipment and also began to realign and rebalance the system, although there were no system maps available to assist him in this job. Emerson also experienced some problems with "noisy" amplifiers but did not consider this to be a serious difficulty compared to the numerous other problems existing on the system. Emerson testified that there was no way to determine the extent to which the amplifiers may have been contributing to system problems when compared to the other difficulties being experienced on the system at that time.

Simultaneously, Emerson was pushing...