North Mississippi Communications, Inc. v. Jones

• Decision Date: 27 June 1986
• Docket Number: No. 85-4196,85-4196
• Citation: 792 F.2d 1330
• Parties: , 1986-1 Trade Cases 67,160 NORTH MISSISSIPPI COMMUNICATIONS, INC., et al., Plaintiffs-Appellants, v. Douglas W. JONES, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1330

792 F.2d 1330

55 USLW 2066, 1986-1 Trade Cases 67,160

NORTH MISSISSIPPI COMMUNICATIONS, INC., et al., Plaintiffs-Appellants, v. Douglas W. JONES, et al., Defendants-Appellees.

No. 85-4196.

United States Court of Appeals Fifth Circuit.

June 27, 1986.

David J. Cocke, Memphis, Tenn., for plaintiffs-appellants.

Nat G. Troutt, Senatobia, Miss., for Jones & DeSoto Co. Tribune.

Robert J. Kelly, Hernando, Miss., for DeSoto Co. Bd. Supervisor, Renfro, Robinson, Wallace, Riley and Lloyd.

Wm. W. Ballard, Hernando, Miss., Lawrence J. Franck, John C. Henegan, Allen W. Perry, Jackson, Miss., for Hernando Bank, Ballard & Burnett.

Appeal from the United States District Court for the Northern District of Mississippi.

Before GEE, RUBIN, and GARZA, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

A newspaper and two of its employees fired a broadside of antitrust, civil rights, and pendent state tort claims against a bank, a competing newspaper, and a County Board of Supervisors. After the plaintiffs had rested their case in the bench trial, the district court dismissed all of their claims. We hold that the record supports the trial court's judgment dismissing the antitrust charges, but that the factual findings on the civil rights claim are insufficient for us to determine the basis for the court's dismissal. We, therefore, vacate the judgment in part, and remand for further proceedings.

I.

Pamela McPhail Ivy was the editor of a newspaper, the North Mississippi Times, which was owned by North Mississippi Communications, Inc. After being displaced as the dominant newspaper in the county, allegedly as a result of the events related below, Ivy and North Mississippi Communications sued their rival, the DeSoto County Tribune, its owner and editor, Douglas W. Jones (the "Tribune defendants"); the Hernando Bank and two of its principals, Steve Ballard and Richie Burnette (the "Bank defendants"); and the DeSoto County Board of Supervisors and its members, Will Renfro, Floyd Robertson, Johnny Wallace, James Earl Riley, and Eulo Lloyd (the "Board defendants"). They alleged violations of Secs. 1 and 2 of the Sherman Act, civil rights claims under 42 U.S.C. Sec. 1983, and state-law tort claims.

The Times, which had its office in Hernando, Mississippi, was the first weekly newspaper in DeSoto County, Mississippi. Ivy testified that, at its peak in 1977, the Times had between 4,500 and 7,500 paying subscribers, mostly in the western half of the county. Several thousand additional copies were distributed free of charge. The defendants challenged these figures, and the record reflects a wide range of plausible subscription figures based on different sources and methods of calculation. The court made no finding on this conflicting evidence. The Tribune had a much smaller circulation of about 700 paying subscribers, most of whom lived in the eastern half of DeSoto County in the Olive Branch area. The actual number of Tribune subscribers was also contested and not resolved by the court. The testimony was consistent, however, that the Times was substantially larger than the Tribune, which the court described as a "fledgling newspaper." Because of their geographic separation, testimony suggested that the two newspapers may not have been in direct competition until this dispute arose.

Ross Franks purchased the Times in 1975, hired Ivy as editor and made her a shareholder. Two years later, the Hernando Bank began a publicity campaign to announce its new name, logo, and automatic teller machines. Although the Bank advertised in the Times, Franks, who owned an interest in a competing local bank, allegedly complained to state banking authorities about an impropriety in the ads. This angered the President of Hernando Bank, Steve Ballard, who stopped all further Bank advertising in the Times. The Bank then contracted with the Tribune to distribute free six-month subscriptions to all bank customers beginning January 1, 1978. The Bank would pay one-half of the subscription price for each free copy and in return would receive a free quarter-page ad each week. The value of the ads covered much of the cost of the free subscriptions. As part of their agreement, the bank required the Tribune, which had previously been called the Olive Branch Tribune, to change its name to the DeSoto County Tribune, and to provide distribution throughout the county. The Bank also loaned $60,000 to the Tribune for construction of a new building. No evidence suggested that the terms of the loan were more favorable than those given other borrowers.

In 1977 the Times began prorating its subscriptions so that all renewals would fall due the same day. Renewals could then be solicited through annual ads in the paper, avoiding the cost of individual bills. The Times chose January 1, 1978 as its renewal date, and announced its decision several months in advance. The Bank's free subscription campaign began on the same date. The plaintiffs contend that this timing was intended to prevent renewals and evidences an intent to monopolize the newspaper market by driving the Times out of business. This is the basis for their Sherman Act claim against the Bank and Tribune.

The effect of the free-subscription campaign was vigorously contested. The Times attempted to prove that the campaign reduced the number of its paid subscribers by sixty-five percent, its advertising revenues by thirty percent, and its value as a going concern by sixty percent. The Tribune offered financial statements showing that the Times' subscription income actually increased in 1978, and other evidence that any drop in the number of paid subscribers was attributable to factors other than the free Tribune campaign.

The only conclusion that can be drawn with assurance from the record is that the Times' financial statements, postal filings, tax returns, and estimates of paid subscribers are thoroughly inconsistent and unreliable. The trial court found "that not one scintilla of evidence was presented that any person stopped subscribing to the Plaintiff Times because of this alleged illegal agreement; nor did anyone testify they stopped advertising in the Times because of this agreement."

The Times also brings Sherman Act and Sec. 1983 claims against the DeSoto County Board of Supervisors, based on a different set of facts. The county's general legal advertising, awarded by bid and paid for by the Board, had gone largely to the Times before 1977. In fact, the Times once sued to prevent the Tribune from being allowed to bid on these legal ads because the Tribune was not a "paper of general circulation." North Mississippi contends that the Board developed ill will towards the Times because of critical editorials and news stories concerning several Board members. Allegedly in retaliation, the Board switched its advertising in large part to the Tribune and threatened other Times advertisers with a loss of county business unless they withdrew their ads. For the four years ending in September 1981, the county advertising favored the Tribune by almost six to one.

Soon after the Bank switched its advertising to the Tribune, unknown persons mailed a libelous letter to subscribers of both papers accusing Ivy of homosexual proclivities, Ross Franks of trying to gain control of the county, and the Times itself of trying to ruin the county.

The withdrawal of county advertising, the threats to other Times advertisers, and the libelous letter are the basis for the plaintiffs' charges that the Board conspired to violate the Sherman Act and retaliated against the Times for the exercise of its first amendment rights in violation of Sec. 1983.

After four and one-half days of trial, the plaintiffs rested their case. All defendants moved for a dismissal or directed verdict, and the district court granted their motion. The court found that the address labels on the envelopes in which the libelous letters were mailed came from a subscriber list that the Times had given to the Board of Supervisors in order to qualify to bid for legal ads. The court specifically held, however, that the Times had failed to prove that any of the defendants had furnished the list to the author of the letter or were responsible for the mailing. The court made no finding concerning reasons for the shift in the Board's advertising or the testimony that certain Board members had threatened the Times' other advertisers. Without discussing the Sec. 1983 claims, the court dismissed all of the claims against all of the defendants, stating only that the plaintiffs had failed to prove the existence of a conspiracy, or of a specific intent to monopolize, on the part of any of the defendants.

II.

The district court granted a directed verdict, "viewing the evidence in a light most favorable to the plaintiffs and giving the plaintiffs the benefit of all favorable inferences." However, when a court renders judgment in a bench trial at the close of the plaintiffs' case, the judgment is properly denominated a dismissal under Federal Rule of Civil Procedure 41(b) because "upon the facts and the law the plaintiff has shown no right to relief." ¹ On appeal, we may review it as a dismissal, however, even if the district court referred to it as a directed verdict. ²

Under Rule 41(b) the district court need not have applied as lenient a standard as it did but, as the ultimate trier of fact, it was entitled to weigh evidence, make credibility judgments, and draw inferences unfavorable to the plaintiffs. ³ Its findings of fact are shielded by Federal Rule of Civil Procedure 52(a) and must be accepted unless clearly erroneous.

The plaintiffs seize on language in the trial court's oral opinion to argue that the court applied a standard requiring "clear and convincing evidence," rather than merely a preponderance of the evidence. Although the trial court used this phrase at one point, it appears that the court was simply trying to emphasize its specific...