NORTHEASTERN EDUC. TV, INC. v. EDUCATIONAL TV ASSOC.

• Decision Date: 26 November 1990
• Docket Number: No. C87-1666.,C87-1666.
• Citation: 758 F. Supp. 1560
• Parties: NORTHEASTERN EDUCATIONAL TELEVISION OF OHIO, INC., Plaintiff, v. EDUCATIONAL TELEVISION ASSOC. OF METROPOLITAN CLEVELAND, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

758 F. Supp. 1560

NORTHEASTERN EDUCATIONAL TELEVISION OF OHIO, INC., Plaintiff, v. EDUCATIONAL TELEVISION ASSOC. OF METROPOLITAN CLEVELAND, et al., Defendants.

No. C87-1666.

United States District Court, N.D. Ohio, E.D.

November 26, 1990.

David A. Lieberth, David A. Lieberth & Assoc., Akron, Ohio, for Northeastern Educational Television.

Stephen J. Squeri, Jones, Day, Reavis & Pogue, Cleveland, Ohio, for Educational Television Assoc. and Betty Cope.

Robert A. Burka, Knopf & Burka, Washington, D.C., for Eastern Educational Network Inc.

Anthony J. Damelio Jr., Arter & Hadden, Cleveland, Ohio, for Interregional Program Service.

Jan Schneider, Washington, D.C., Clair E. Dickinson, Brouse & McDowell, Akron, Ohio, for CBC Enterprises.

MEMORANDUM AND ORDER

WILLIAM K. THOMAS, Senior District Judge.

I.

This action involves alleged violations of Sections 1 and 2 of the Sherman Act (15 U.S.C. Sections 1 and 2), and Sections 1, 4, 5, 12 and 16 of the Clayton Act (15 U.S.C. Sections 12, 15, 16, 22 and 26). In its complaint plaintiff sues for "appropriate injunctive relief and to recover treble damages which Plaintiff has sustained because of the violations of above cited statutes." Complaint under the Sherman Antitrust Act at paragraph 1. On May 24, 1990 plaintiff's counsel by letter informed the court and all defendants that plaintiff "will elect not to present evidence as to specific monetary damages." Thus, it is proceeding only with its prayer for injunctive relief under 15 U.S.C. § 26. Although the plaintiff through a corporate officer has not signed such a waiver, the letter of plaintiff's counsel is deemed binding on the plaintiff.

The plaintiff is Northeastern Educational Television of Ohio, Inc. (hereinafter "NETO") which operates as WNEO-TV (Channel 45) out of Alliance, Ohio and WEAO-TV (Channel 49) out of Akron, Ohio. There are five different defendants. First, Educational Television Association of Metropolitan Cleveland (hereinafter "ETAMC") operates as WVIZ-TV (Channel 25) out of Cleveland, Ohio. Betty Cope, President and General Manager of WVIZ-TV, is a separate defendant. A third defendant is Eastern Educational Network, Inc. (hereinafter "EEN"), a Massachusetts corporation which prepares, produces, disseminates and cooperates with others in the broadcasting of educational television. Another defendant is the Interregional Program Service (hereinafter "IPS"), which is a management committee formed by one representative from each regional network with member stations electing the remaining ten members. The IPS was originally founded by EEN, and among other things, the service has policies and rules regarding exclusivity which are at the heart of this lawsuit. The last defendant is CBC Enterprises, an unincorporated program syndication service of the Canadian Broadcasting Company, with its principal office in New York City.

The allegations in plaintiff NETO's complaint include the following:

10. All of the Defendants have violated the provisions of the Sherman Act, as amended ... in that they are engaged in a combination and conspiracy to place unlawful restraints upon trade and commerce in Ohio.

11. Defendants have combined to destroy competition and to secure a monopoly by the institution of a policy known as Duplicate Market Criteria. This policy classifies WVIZ-TV as the "primary licensee" and WNEO-TV/WEAO-TV as the "secondary licensee", which allows the primary licensee the right to exclusive programming if it so chooses. Exclusivity of programming began on or about January 1, 1985 and continues as a policy promulgated by the Defendants Interregional Program Service and Eastern Educational Network, Inc.

....

13. Such exclusive practices engaged in by the Defendants injure competition and public television viewers throughout the coverage area of WNEO-TV and WEAO-TV. Since January 1, 1985, the Defendants have elected to deny WNEO-TV and WEAO-TV the right to purchase at least 130 programs offered by Interregional Program Service that otherwise could have been purchased by Plaintiff except for the unlawful actions of the Defendants, including the program, "Nature of Things." These practices denying substantial portions of the population of Northeast Ohio access to said programs constitute an unlawful restriction of competition as Plaintiff can no longer acquire these quality programs, even on a competitive basis with WVIZ-TV.

Complaint Under the Sherman Antitrust Act at 4-6. Turning then to the relevant statutory law, Section 1 of the Sherman Act provides in pertinent part:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

15 U.S.C. Section 1. Section 2 of the Sherman Act provides:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony....

15 U.S.C. Section 2.

CBC filed a Motion to Dismiss on September 9, 1987. In that motion CBC moved to dismiss pursuant to Fed.R.Civ.P. 12 for "lack of personal jurisdiction, improper venue, failure to state a claim upon which relief can be granted and defective service of process." Id. The memorandum supporting that motion, as well as the subsequent briefing, focussed primarily on the issue of personal jurisdiction. The briefing did address, to a lesser extent, CBC's assertion that NETO's complaint fails to state a claim upon which relief can be granted. In an Order filed December 18, 1987, Judge Bell ruled as follows:

Accordingly, defendant's motion to dismiss on the basis of improper venue and lack of personal jurisdiction is denied. Defendant's motion in relation to service is granted in that defective service on CBC is quashed and leave of twenty days is granted to effect proper service. Defendant's motion to dismiss pursuant to Rule 12(b)(6) will be treated as a motion for summary judgment and ruling deferred pursuant to the schedule provided in this order.

December 18, 1987 Order at 14-15.

On May 9, 1990, this case was transferred to the docket of Judge William K. Thomas. With the jurisdiction and venue issues having been resolved by Judge Bell, the only remaining motion as to defendant CBC is its motion for summary judgment.

II.

In support of the original Motion to Dismiss, CBC makes the following argument:

The sole complaint that NETO raises against CBC is that defendant EEN licensed at least one CBC series, Nature of Things, on an exclusive basis in the Alliance-Akron area. Again, even if EEN's actions were to be imputed to CBC, exclusivity alone is not prohibited by the antitrust laws, and it is clear that exclusive licensing is an acceptable practice in the television industry.

Memorandum in Support of CBC Motion to Dismiss at 19-20. Attached to the memorandum is an affidavit of Jean-Louis Arcand, Director of United States Operations for CBC and formerly responsible for special projects in the office of the president of CBC. This affidavit states in pertinent part:

8. CBC has not dealt with plaintiff Northeastern Educational Television of Ohio, Inc. ("NETO").... All dealings with plaintiff NETO and its stations herein relevant concerning CBC programs have been by defendant Eastern Educational Network, Inc. ("EEN").

....

10. Any and all CBC programs broadcast in Ohio are licensed by EEN (or by the Central Educational Network, "CEN"). Pursuant to CBC's contractual arrangements with EEN, it is solely up to EEN to decide whether a given program or series will be licensed on an exclusive basis in any area. CBC has nothing to do with this decision. CBC has nothing to do with choice of stations licensed to broadcast CBC programs in the Cleveland metropolitan or Akron-Alliance area, nor any responsibility therefor.

Affidavit of Jean-Louis Arcand, September 3, 1987, at 3-4.

Plaintiff's Response to Defendant, CBC's Motion to Dismiss, in turn, states the following:

The exclusivity policy was adopted by Defendant EEN and IPS.... The policy is first triggered by the program supplier itself. In this case by CBC. As set forth in the Affidavit of Gerald Schumacher, a program supplier may deny exclusivity and at least three suppliers of programs through IPS have elected to modify their contracts with IPS so as not to participate in this unlawful policy; namely, Lionheart Television International, Inc., Devillier Donegan Enterprises, and Robert Keeshan Associates, the producers of "Captain Kangaroo."

Id. at 2. CBC counters that "no one at NETO has ever asked anyone at CBC or CBC Enterprises to try to induce defendants Eastern Educational Network or its Interregional Program Service to waive exclusivity." Supplemental Memorandum in Support of CBC Motion to Dismiss at 3. CBC attaches to its Supplemental Memorandum deposition excerpts from the deposition testimony of Jerry Schumacher, plaintiff NETO's director of programming, and Torey Southwick, NETO's president. Both Schumacher and Southwick admit that their only claim against CBC is that it failed to opt out of IPS's exclusivity policy, and they both further admit that neither they nor anyone at NETO ever approached CBC about waiving exclusivity. See Deposition of Jerry Schumacher at 8, 10-11 and 21; Deposition of Torey Southwick at 7-11. While not attempting to supplement any of the referenced testimony of either Mr. Schumacher or Mr. Southwick, in its supplemental brief of January 19, 1988, NETO argues:

CBC is a supplier of programming to EEN/IPS. However, by not denying exclusivity, CBC has precluded WNEO/WEAO from purchasing a number of popular programs. (See paragraph 10 of Exhibit H) CBC has failed to deny exclusivity even though other suppliers and distributors have done so. (See paragraph 8 and 9 of Exhibit H) For example Devillier, Donegan Enterprises refused to

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