National Tire Wsle., Inc. v. Washington Post Co., Civ. A. No. 77-0348.

• Decision Date: 28 October 1977
• Docket Number: Civ. A. No. 77-0348.
• Citation: 441 F. Supp. 81
• Parties: NATIONAL TIRE WHOLESALE, INC., Plaintiff, v. The WASHINGTON POST COMPANY, Defendant.
• Court: U.S. District Court — District of Columbia

441 F. Supp. 81

NATIONAL TIRE WHOLESALE, INC., Plaintiff, v. The WASHINGTON POST COMPANY, Defendant.

Civ. A. No. 77-0348.

United States District Court, District of Columbia.

October 28, 1977.

COPYRIGHT MATERIAL OMITTED

Stuart C. Law, Law & Murphey, Washington, D. C., for plaintiff.

Gary D. Wilson, Wilmer, Cutler & Pickering, Washington, D. C., for defendant.

MEMORANDUM

GASCH, District Judge.

In this action, plaintiff National Tire Wholesale, Inc. alleges that the advertising practices of defendant The Washington Post Company violate the Robinson-Patman and Sherman Antitrust Acts. In addition, it alleges that these acts constitute a breach of the advertising contract between plaintiff and defendant. This case is now before the Court on defendant's motion for judgment on the pleadings.

BACKGROUND

Plaintiff National Tire Wholesale, Inc. (NTW), a retailer of tires and other related automobile accessories and services, brings this action for damages allegedly resulting from the advertising practices of the defendant Washington Post Company (Post). The gravamen of plaintiff's complaint is that the Post has consistently granted NTW's chief competitor, Market Tire Company (Market), preferential advertising positions. Plaintiff claims that the Post has continually refused to afford it "premium paid positions" purportedly on the ground that space was not available, while it has placed ads of its competitor, Market, in premium spots without requiring Market to pay any additional charge. Finally, it alleges that the Post admitted for the first time in September, 1976 that the position of ads was not randomly selected and the Post had and would continue to give Market favored treatment, because it was a preferred customer. Plaintiff asserts that these facts constitute (I) price discrimination in violation of the Robinson-Patman Act, 15 U.S.C. § 13 (1970), (II) a combination in restraint of trade in violation of section 1 of the Sherman Act, 15 U.S.C. § 1 (Supp. V 1975), and (III) a breach of contract.

As a basis for these allegations, plaintiff alleges that newspaper advertising is virtually the only practical advertising medium for plaintiff and its competitors in the retail tire sales business; the Post has a wider circulation than any other newspaper in Washington, D. C.; marketing studies reveal that men are the principal buyers of tires and that a high percentage of men read the Sports Section; the first page of the Sports Section is not available for advertisements, the second and third pages are the most effective spots for advertisement, and the later pages are substantially less valuable. Plaintiff claims that in 1971 it entered into a series of annual written agreements with the Post for advertising space. These agreements provided the Post with discretion to determine the placement of advertisements, except that an advertiser who pays an additional charge for a "premium paid position" may specify the pages on which the advertisement is to appear, if the Post determines that the selected space is available.¹

Defendant urges dismissal of the entire action. It argues that even assuming the truth of all allegations in the complaint, Counts I and II fail to state a claim upon which relief can be granted under the Robinson-Patman and Sherman Acts. It further argues that dismissal of these two jurisdiction-conferring claims² should lead to dismissal of the pendent breach of contract claim. Thus, defendant urges dismissal of the entire complaint.

MERITS

A. Legal Standard for Judgment on the Pleadings.

While courts should exercise caution in granting motions that dispose of the case before trial in complex antitrust actions, see, e.g., Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.E.2d 458 (1962), such motions are appropriate in antitrust actions when the legal standard applicable to a motion for a judgment on the pleadings is satisfied: Assuming all factual allegations of the nonmoving party to be true, including those specifically denied by the moving party, and drawing all reasonable inferences in favor of the nonmoving party, the nonmoving party fails to state a claim upon which relief may be granted. See generally C. Wright & A. Miller, 7 Federal Practice and Procedure §§ 1367-69 (1969). As the Supreme Court in First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968), noted:

To the extent that petitioner's burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support these allegations, we decline to accept it. While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

Indeed, both the District of Columbia Circuit and District Courts have recently granted summary judgment in favor of defendants in antitrust cases, where plaintiffs failed to establish an antitrust claim, even taking all plaintiffs' allegations as established. See Proctor v. State Farm Mutual Automobile Insurance Co., 561 F.2d 262 (D.C.Cir.1977); R. A. Weaver & Assoc., Inc. v. Haas & Haynie Corp, No. 75-2142 (D.D.C. May 19, 1977).

B. Robinson-Patman Claim.

The Robinson-Patman Act provides:

It shall be unlawful . . . to discriminate in price between different purchasers of commodities of like grade and quality, . . . where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition

. . ..

Clayton Act § 2, 15 U.S.C. § 13(a) (1970) (emphasis added). Defendant claims that the Act does not apply to the instant case because newspaper advertising is not a "commodity" within the meaning of the Robinson-Patman Act. Plaintiff contends that while nonprint advertising is not governed by the Act, printed advertising is a tangible product and therefore a commodity under the Robinson-Patman Act.

The term "commodity" is commonly defined by courts to include "goods, wares, merchandise, machinery and supplies." See, e.g., Baum v. Investors Diversified Services, Inc., 409 F.2d 872, 875 (7th Cir. 1969); Columbia Broadcast System, Inc. v. Amana Refrigeration, Inc., 295 F.2d 375, 378 (7th Cir. 1961), cert. denied, 369 U.S. 812, 82 S.Ct. 689, 7 L.Ed.2d 612 (1962). In other words, "commodity" within the meaning of both the Robinson-Patman Act and section 3 of the Clayton Act is "restricted to products, merchandise, or other tangible goods." Baum v. Investors Diversified Services, Inc., 409 F.2d at 875. Indeed, one of the sponsors of the Act, Representative Patman, has interpreted "commodity" as "used in the commercial sense" and in the "application of the Robinson-Patman Act" to include "any moveable or tangible thing that is produced or used as the subject of barter." W. Patman, Complete Guide to the Robinson-Patman Act 33 (1963).

There is little legal authority on the issue whether newspaper advertising is a "commodity" governed by the Robinson-Patman Act. While the Supreme Court explicitly declined to address the issue in Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 609-10 n. 27, 73 S.Ct. 872, 97 L.Ed. 1277 (1953), the District Court for the Southern District of New York held that the "Robinson-Patman Act is inapplicable to the sale of advertising by publications." National Auto Brokers Corp. v. General Mtrs. Corps., 1974-2 Trade Cas. 97,856, 97,858 (S.D.N.Y.1974). The holding applies to trade publications as well as newspapers of general circulation. At least two prominent commentators have adopted this position. Professor Areeda flatly states that "Section 2(a), like Clayton Act § 3, applies only to transactions in "commodities" which are customarily understood to exclude services and such intangibles as newspaper or broadcast advertising," P. Areeda, Antitrust Analysis 846 (1974), implying that for purposes of the Robinson-Patman Act, broadcast and newspaper services are indistinguishable. Another commentator maintains that "what is being sold is in the nature of a service, the circulation of ideas to the newspaper's readers. The printed paper is merely a tangible vehicle for the conveyance of these ideas. It is only incidental to the dominant intangible nature of the transaction." E. Kitner, A Robinson-Patman Primer 49 (1970).

Although the characterization of newspaper advertising is not clearly established, it is well-settled that broadcast advertising is not included within the term "commodity" under the Robinson-Patman Act. See Baum v. Investors Diversified Services, Inc., supra; Syracuse Broadcasting Corp. v. Newhouse, 319 F.2d 683 (2d Cir. 1963); Columbia Broadcasting System, Inc. v. Amana Refrigeration, Inc., supra; cf. Tri-State Broadcasting Co. v. United Press International, Inc., 369 F.2d 268 (5th Cir. 1966). This categorization provides support for defendant's position that newspaper advertising is not a "commodity," since newspaper advertising, like broadcast advertising, is essentially an intangible service. See E. Kitner, supra, at 49. Plaintiff's argument to the contrary, that print advertising may be distinguished from other advertising, because newspaper advertising is a tangible product while radio and television advertising involves a "fleeting visual or auditory image," Plaintiff's Opposition to Defendant's Motion at 2, is unpersuasive. In support, plaintiff cites United States v. Wichita Publishing Co., 1959 Trade Cas. 75,535, 75,536 (D.Kan.1959), in...