Poller v. Columbia Broadcasting System, Inc.

• Decision Date: 10 November 1960
• Docket Number: No. 15379.,15379.
• Citation: 284 F.2d 599
• Parties: Lou POLLER, Appellant v. COLUMBIA BROADCASTING SYSTEM, INC., et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

284 F.2d 599 (1960)

Lou POLLER, Appellant v. COLUMBIA BROADCASTING SYSTEM, INC., et al., Appellees.

No. 15379.

United States Court of Appeals District of Columbia Circuit.

Argued May 23, 1960.

Decided November 10, 1960.

Mr. Abraham L. Freedman, Philadelphia, Pa., of the bar of the Supreme Court of Pennsylvania, pro hac vice, by special leave of court, with whom Mr. George R. Beneman, Washington, D. C., was on the brief, for appellant. Mr. Wm. Montgomery Smith, Washington, D. C., also entered an appearance for appellant.

Mr. Samuel I. Rosenman, New York City, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, with whom Mr. Leon R. Brooks, Washington, D. C., was on the brief, for appellees.

Before WILBUR K. MILLER, Chief Judge, and PRETTYMAN and WASHINGTON, Circuit Judges.

WILBUR K. MILLER, Chief Judge.

This is a civil suit for threefold damages under Section 4 of the Clayton Act^* brought by the appellant, Lou Poller, against the appellee, Columbia Broadcasting System, and others. He charged them with combining and conspiring to restrain trade and commerce in the television industry in violation of Section 1 of the Sherman Act,^** and with monopolizing and attempting to monopolize trade and commerce in that industry in violation of Section 2 of the Sherman Act,^† and alleged he had thereby been injured in his business and property.

Poller sued as assignee of Midwest Broadcasting Company, a dissolved corporation of which he had been president and in which he had been the dominant figure. Midwest had been the owner and operator of a UHF television broadcast station in Milwaukee from the time of construction in 1953 until February 27, 1955. Poller claimed CBS, in violation of the antitrust laws, had conspired with others to acquire his station at a price below its actual value. He states the basis of his suit as being that the alleged conspirators frustrated the efforts of others to acquire his station, secretly obtained an option on a competing station, and then cancelled the affiliation agreement CBS had had with Midwest. As a result of what he calls "this three-pronged maneuver," Poller says the conspirators purchased his equipment from him at a price far less than its real value, although he admits the purchase was "on plaintiff's entreaty."

More specifically, the facts are these: Under a construction permit granted February 4, 1953, Midwest Broadcasting Company began the construction of a UHF television broadcast station in Milwaukee, where there was already a VHF station affiliated with NBC. On August 21, 1953, as its station neared completion, Midwest made an affiliation agreement with CBS, subject to the latter's unilateral right to cancel at any time on six months' notice.¹ A short time later Bartell Broadcasters began operating another UHF station — WOKY — in Milwaukee. The Bartell station was neither as elaborate nor as successful as Midwest's.

In January, 1954, Midwest was informed by a broker that, if and when the Federal Communications Commission adopted a multiple ownership rule which would permit George B. Storer to add a UHF station to the others owned by him, Storer would pay $2,000,000 for Midwest's station. About that time the latter began adding substantial improvements to its facilities.

CBS says it had faith in UHF, although general opinion in the industry was that it could not successfully compete with VHF. It therefore determined, later in 1954, to acquire a UHF station in Milwaukee, if and when the Commission should adopt the "5 and 2" rule,² which would permit it to do so. CBS had learned of Poller's efforts to sell the Midwest station for approximately $2,000,000 — a price it considered to be substantially more than the property was worth, and "completely out of line." Because of this, CBS chose not "to enter into any kind of trading" with Poller, but decided to attempt to acquire the other UHF station in Milwaukee. To that end, it employed one Thad Holt, an independent consultant, to obtain from Bartell an assignable option to purchase station WOKY. On July 29, 1954, Holt obtained such an option in his own name, without disclosing the identity of his principal. The option price was $335,000, which Holt said was arrived at by adding $50,000 to Bartell's investment. This option, which endured until October 1, 1954, was extended to February 1, 1955. On September 17, 1954, the Commission adopted the 5 and 2 rule, effective October 22. On October 25, 1954, Holt assigned the option to CBS, which immediately exercised it.

Meantime, on October 21, CBS notified Midwest that its affiliation agreement would be cancelled as of April 22, 1955. The day after the notice of cancellation was given, Poller flew to New York and pleaded with officials of CBS to reconsider the termination of his company's affiliation, stating he had gone to great expense for a new studio and equipment, far more elaborate than that he would have required for a station which did not have a CBS affiliation. He stated he intended to continue television broadcasting in Milwaukee but that he would not require for that purpose the expensive equipment he had contracted to purchase.

It was suggested that CBS might protect Midwest against the loss Poller feared by purchasing the physical equipment for which it had contracted and by taking over its studio lease. CBS agreed. It took over the studio and equipment, transferred to Midwest the equipment it had bought from Bartell, and paid Midwest the sum of $500,000. Midwest acknowledged that CBS had assumed liability for the work in progress and had paid it in full for the sums it had spent. Midwest also agreed to operate its station with the equipment formerly owned by Bartell, but failed to do so.

On February 17, 1955, CBS began operating its UHF station in Milwaukee, having paid Midwest $1,000 a day for advancing the cancellation date from April 22, 1955; but on March 21, 1959, the station was closed because its operation was marginal or unprofitable.³ Midwest ceased broadcasting February 27, 1955, and in December, 1955, its corporate existence was terminated and all its assets were transferred to Lou Poller, who had been its president and sole stockholder.

In September, 1956, Poller filed this suit in the United States District Court against Columbia Broadcasting System, CBS-TV, an unincorporated division of CBS, J. L. Van Volkenburg and H. K. Akerburg, respectively president and vice president of CBS-TV, Bartell Broadcasters, and Thad Holt. As we have said, he charged them with conspiring to acquire the Midwest station in violation of the antitrust laws and at a price below its actual value, and charged CBS with monopolization and an attempt to monopolize.

Poller prayed for damages which he computed as follows: he sold the Midwest property, which he says was worth $2,000,000 to CBS for $500,000 and the transfer of the Bartell equipment, which he says was worth no more than $50,000; therefore he claimed damages of $1,450,000, trebled in accordance with the statute.

After extensive filings of interrogatories, depositions and affidavits, the District Court on June 9, 1959, entered an order granting the defendants' motion for summary judgment and dismissing the complaint as to CBS, Van Volkenburg and Akerburg. The opinion of the District Court is reported at 1959, 174 F.Supp. 802. Poller appeals.

The first question is — assuming without deciding that Midwest received less than the fair value of its station — whether Midwest was forced to sell by anything CBS did. Poller admits that the large value he placed on the Midwest station — greatly in excess of its cost — depended upon a CBS affiliation not subject to cancellation on six months' notice. Midwest did not have such an affiliation, and from the beginning CBS had refused to grant it. Poller realized from the outset the shakiness of his position and used the CBS insignia "with trepidation." His sale to CBS was not sought by the latter. On the contrary, CBS bought Poller's equipment only at his importunity and to save him from the loss he thought he was about to suffer because he had improvidently contracted for construction of elaborate facilities which he would need only if he had the firm affiliation CBS had consistently refused to give him.

We are of the opinion that Poller's entreaty to CBS to buy his equipment was brought about by his own act of investing too heavily in the UHF equipment without having a firm network affiliation. Certainly he sought the sale and entered into it voluntarily.

If it be assumed, however, that Poller was forced to sacrifice his station by the acts of the alleged conspirators, other questions remain. Was there a conspiracy? If so, did the acts of the conspirators restrain trade or commerce in the television industry?

We turn to a consideration of the first of these questions: Did CBS and the individual appellees enter into a conspiracy in restraint of trade or commerce among the several States? The purpose of Section 1 is to prohibit joint action of two or more persons in combining their economic power and restricting competition. Poller's charge that CBS conspired with one of its unincorporated divisions and two of its employees is obviously unsound. It is in reality a charge that CBS conspired with itself. As the Fifth Circuit said in Nelson Radio & Supply Co. v. Motorola:⁴

"* * * It is basic in the law of conspiracy that you must have two persons or entities to have a conspiracy. A corporation cannot conspire with itself any more than a private individual can, and it is the general rule that the acts of the agent are the acts of the corporation. * * * A corporation and its subsidiaries can be guilty of a conspiracy in restraint of trade but that involves separate corporate entities. * *"

We conclude that CBS, its unincorporated division, and its employees were incapable of conspiring to restrain trade or commerce. The question becomes,...