Municipal Bond Reporting Antitrust Litigation, In re

Decision Date05 April 1982
Docket NumberNo. 80-2013,80-2013
Citation672 F.2d 436
Parties1982-1 Trade Cases 64,656 In re MUNICIPAL BOND REPORTING ANTITRUST LITIGATION. MUNITRAD SYSTEMS, INC., Plaintiffs-Appellants, v. STANDARD AND POOR'S CORPORATION, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Marion J. Craig, III, Earnest Langley, Hereford, Tex., Alioto & Alioto, Joseph M. Alioto, San Francisco, Cal., for plaintiffs-appellants.

Marshall M. Searcy, Jr., Dallas, Tex., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Texas

Before POLITZ and RANDALL, Circuit Judges, and PARKER *, District Judge.

POLITZ, Circuit Judge:

Munitrad Systems, Inc. instituted this antitrust action in the Northern District of Texas in July, 1975. Following an initial severance and transfer of the claim against Brenton W. Harries, 1 the two cases were consolidated with a third 2 and the action proceeded in the Northern District of Texas. After more than four years of discovery, the defendants sought summary judgment. With no indication of a need for further discovery, 3 the motions were heard and granted. Munitrad appeals, challenging the use of the summary judgment vehicle, maintaining that genuine factual disputes exist regarding the defendants' efforts at monopolization and the damages it suffered. The plaintiff also complains of the trial court's conclusion that the suit was not timely filed. For the reasons assigned, we affirm.

Munitrad Systems, Inc., incorporated in Texas in May of 1970, was conceived as a computerized on-line information retrieval system. The service was designed to provide information to one discrete part of the national investment community, the secondary municipal bond market. 4 When Munitrad was formed, information pertinent to the secondary bond market was provided daily by Standard & Poor's The Blue List of Current Municipal Offerings (The Blue List), The Bond Buyer, and The Munifacts Wire Service, in combination with financial information in major daily newspapers and in major periodicals. In addition, security and bond dealers disseminated information on a daily, in-house basis. 5

The business of providing municipal securities data to the financial community is a wide open field with virtually no barriers to entry. Furnishing such information generally is not a capital intensive enterprise. In this case, Munitrad entered the arena with only a minimum amount of capitalization, seeking to provide a speedier, computerized on-line information service, making data changes throughout the course of the trading day. By comparison, The Blue List, published every business day, only contains information submitted prior to 3:00 p. m. Eastern Standard Time of the preceding day. As a general proposition, the same limitations apply to all print publications. The variant Munitrad offered was the course of day adjustments and updates.

In a not unusual approach to beginning a new business, Munitrad priced its service on a "loss leader" basis in the fall of 1970. Munitrad began operating at a loss; it continued to operate at a loss in 1970, into 1971, through a reorganization in the fall of 1971, and until it ceased doing business sometime thereafter.

In April of 1971, Standard & Poor's inaugurated its Blue List Retrieval System, a computerized on-line access connection to The Blue List information base, which furnishes data similar to that provided by Munitrad. In seven years of operation, the service generated sufficient net profits in three years to offset the net losses during the other four.

Munitrad's antitrust complaint alleged that the defendants, Standard & Poor's Corporation, its president Brenton W. Harries, and The Blue List Publishing Company, Inc., entered into an unlawful combination to restrain its business dealings with the intention to eliminate it as a competitor, in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. This assertion, however, has been abandoned. 6 In addition, Munitrad claimed that the defendants monopolized the municipal bond reporting industry and employed illegal tactics, by virtue of their monopoly position, to eliminate a competitor in contravention of section 2 of the Sherman Act, 15 U.S.C. § 2. Damages in excess of 60 million dollars were sought.

Propriety of Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure directs that a summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See, e.g., Volyrakis v. M/V Isabelle, 668 F.2d 863 (5th Cir. 1982); Ortego v. Union Oil Co. of California, 667 F.2d 1241 (5th Cir. 1982); Murphy v. Georgia-Pacific Corp., 628 F.2d 862 (5th Cir. 1980); Cubbage v. Averett, 626 F.2d 1307 (5th Cir. 1980); Keiser v. Coliseum Properties, Inc., 614 F.2d 406 (5th Cir. 1980). While in considering a motion for summary judgment, a court must inspect the entire record and draw all reasonable inferences in favor of the party opposing the motion, see AT&T v. Delta Communications Corp., 590 F.2d 100 (5th Cir.), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979), the nonmoving litigant is required to bring forward "significant probative evidence" demonstrating the existence of a triable issue of fact. Ferguson v. National Broadcasting Co., Inc., 584 F.2d 111, 114 (5th Cir. 1978).

Even in antitrust actions, although sparingly used, summary judgment may be appropriate. See, e.g., Mid-West Paper Products Co. v. Continental Group, 596 F.2d 573 (3d Cir. 1979). The mere allegations of a contract, a combination, or a conspiracy, for the purpose of restraining trade or commerce, and resulting damages, once rebutted, will not withstand summary judgment. Solomon v. Houston Corrugated Box Co., Inc., 526 F.2d 389 (5th Cir. 1976). It is now established that "simply because a suit is brought under the antitrust laws does not foreclose a summary judgment." Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1112 (5th Cir. 1979). See, e.g., Pan-Islamic Trade Corp. v. Exxon, 632 F.2d 539 (5th Cir. 1980); Daniels v. All Steel Equipment, Inc., 590 F.2d 111 (5th Cir. 1979); Scranton Constr. Co. v. Litton Industries Leasing Corp., 494 F.2d 778 (5th Cir. 1974), cert. denied, 419 U.S. 1105, 95 S.Ct. 774, 42 L.Ed.2d 800 (1975). See also First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968). In short, the requirements of Rule 56 are no less applicable in antitrust actions. Indeed, a strong argument can be made, in an appropriate case, for the particular applicability of the summary procedure in antitrust litigation. 7

Munitrad maintains that summary judgment was improper because discovery was still ongoing. We find no merit in this contention for several reasons: the record reflects extensive discovery, spanning more than four years; a Rule 56(f) request for additional discovery was not made; and counsel for Munitrad advised the court that the motions had been met and the matter was ready for argument. We conclude that the summary judgment vehicle was available, which brings into focus the issue of the correctness of the disposition regarding the claimed monopoly and damages.

Monopoly and the Market

Munitrad submits that the evidence developed during the discovery process revealed the exercise of monopoly power by The Blue List and The Blue List Retrieval System over the relevant market. From this linchpin, Munitrad suggests that it has raised a viable, triable issue of monopolization, proscribed by section 2 of the Sherman Act.

An analysis of section 2 monopolization requires a division of the subject into "two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen or historical accident." United States v. Grinnel Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04, 16 L.Ed.2d 778 (1966). The complainant bears the burden of producing evidence establishing the existence of a monopoly.

To succeed in claiming monopolization, a plaintiff must show the defendant has achieved a monopoly, or, for attempt, demonstrate a "dangerous probability of success." Yoder Bros. Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1366-1369 (5th Cir. 1976), cert. denied, 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977).

H & B Equip. Co., Inc. v. International Harvester Co., 577 F.2d 239, 242 (5th Cir. 1978).

Monopoly is in essence the power to fix prices and exclude competition. See, e.g., United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). The relevant market establishes the backdrop against which to measure economic power. It necessarily follows that "defining the product and geographic markets is a threshold requirement under § 2." Spectrofuge Corp. v. Beckman Instruments, Inc., 575 F.2d 256, 276 (5th Cir. 1978), cert. denied, 440 U.S. 939, 99 S.Ct. 1289, 59 L.Ed.2d 499 (1979). See Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d 964 (5th Cir. 1977), cert. denied, 434 U.S. 1087, 98 S.Ct. 1282, 55 L.Ed.2d 792 (1978); Yoder Bros., Inc. v. California-Florida Plant Corp., 537 F.2d 1347 (5th Cir. 1976), cert. denied, 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977); Sulmeyer v. Coca Cola Co., 515 F.2d 835 (5th Cir. 1975), cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed. 341 (1976).

There is no question that the relevant geographic market for the dissemination of information about municipal securities is the entire United States. Munitrad defined the product and market as: "The day-to-day commercial publishing of advertising of municipal securities within the secondary market for such securities within the...

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