Program Engineering, Inc. v. Triangle Publications, Inc.

Citation634 F.2d 1188
Decision Date01 January 1981
Docket NumberNo. 921,No. 78-2556,921,78-2556
Parties1980-81 Trade Cases 63,654 PROGRAM ENGINEERING, INC., a corporation, Ralph B. Akins, an individual, Plaintiffs-Appellants, v. TRIANGLE PUBLICATIONS, INC., a corporation, Daily Racing Form, Inc., a corporation, Los Angeles Turf Club, a corporation, Hollywood Turf Club, a corporation, California Jockey Club, a corporation, Newspaper and Periodical Drivers Localan unincorporated association, Jack Goldberger, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Maxwell P. Keith, San Francisco, Cal., for plaintiffs-appellants.

Joseph L. Golden, Los Angeles, Cal., David H. Weinstein, Philadelphia, Pa., F. B. Yoakum, Iverson, Yoakum, Papiano & Hatch, Los Angeles, Cal., Joel Linzner, Broad, Khourie & Schulz, San Francisco, Cal., argued for defendants-appellees; Kohn, Savett, Marion & Graf, Philadelphia, Pa., Martin Glenn, O'Melveny & Meyers, Los Angeles, Cal., Eugene C. Crew, San Francisco, Cal., on brief.

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

Before CHOY, ANDERSON and FARRIS, Circuit Judges.

CHOY, Circuit Judge:

Appellants initiated a private antitrust action alleging that appellees conspired to violate and that three of the appellees did violate sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, by unfairly restraining trade and by monopolizing the national publication, for sale to the public, of information of past performances of thoroughbred race horses. The district court granted summary judgment in favor of the appellees. We affirm in part and reverse and remand in part.

I. Facts

In 1972 Program Engineering began publishing horse racing information-linking the past performances of horses with current program information, thereby competing both with Daily Racing Form (Daily), a publisher of past performance information, and with programs sold by individual racetracks. Initially this publication was called "Super Racing Program" and then "Super Racing Guide" (Racing Guide). This publication was sold at Golden Gate Fields racetrack between February and June of 1973. By August 1973 the company was foundering.

In October 1973 Program Engineering attempted to sell the Racing Guide at Bay Meadows, a racetrack operated by California Jockey Club (CJC), but a dispute arose. On October 11, 1973 Program Engineering initiated a state court action seeking an injunction to prevent CJC from denying Program Engineering the right to compete in the marketplace. That case was settled by an agreement between CJC and Program Engineering allowing Program Engineering to sell the Racing Guide at Bay Meadows under certain conditions. About October 25 Ralph Akins (Akins), president of Program Engineering, was asked to leave Bay Meadows because of an alleged labor dispute. 1

Akins thereafter was granted permission to give away the Racing Guide on property near Bay Meadows that was leased by Foster Restaurants (Foster Restaurant property). People receiving the Racing Guide often would leave donations. On October 31, 1973 Akins was asked to get off the property because CJC had just purchased it. 2

Akins then obtained permission from Southern Pacific Railroad to sell the Racing Guide on a strip of land located inside the Bay Meadows racetrack (Southern Pacific property). On November 2, 1973 a representative of CJC went to Southern Pacific and, in effect, had that strip of land added to the existing Bay Meadows lease. 3 On that same day Akins was told to get off the land.

November 2, 1973 was the last day that the Racing Guide was published. Program Engineering went out of business on December 1, 1973.

On October 31, 1977 appellants Program Engineering and Akins filed a complaint against appellees Triangle Publications (Triangle), Daily (owned by Triangle Publications), Los Angeles Turf Club (LATC), Hollywood Turf Club (HTC), CJC, Newspaper and Periodical Drivers Local No. 921 (Local 921), and Jack Goldberger (Goldberger), president of Local No. 921. The complaint alleged that the appellees had conspired to restrain trade in and to monopolize the publication, for sale to the public, of information regarding past performances of thoroughbred race horses, in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. The complaint additionally alleged that Triangle and Daily used their allegedly monopolistic market positions to exclude appellants from the business of publishing horse race information for sale to the public and that CJC refused to deal with appellants.

On December 7, 1977 Triangle and Daily moved to dismiss the case pursuant to Fed.R.Civ.P. 12(b)(6). In March 1978 the district court dismissed the complaint with respect to Akins on the ground that he lacked standing to sue. The district court also found that any cause of action that accrued before October 31, 1973 was barred by the statute of limitation and limited discovery "to determining whether any overt act committed pursuant to the alleged conspiracy occurred between October 31 and December 1, 1973. Fed.R.Civ.P. 26(c)(4)."

In June 1978 Triangle, Daily, LATC, HTC, and CJC moved for summary judgment. Program Engineering responded by moving to strike those portions of the summary judgment motions relating to the issues of conspiracy and damages on the ground that those issues had been excluded from discovery by the district court's earlier order.

On July 14, 1980 the district court entered a final judgment, nunc pro tunc, as of June 30, 1978, granting summary judgment to all appellees. Program Engineering and Akins appeal.

II. Akins's Standing

Appellants assert that Akins has standing to pursue his claim for relief not only because he was President of Program Engineering but also because he was the originator of the Racing Guide and a contracting party with Program Engineering.

To have standing to sue under the antitrust laws, an individual must be within the target area of the antitrust violation, not merely incidentally injured thereby. Perkins v. Standard Oil Co., 395 U.S. 642, 89 S.Ct. 1871, 23 L.Ed.2d 599 (1969). Shareholders, officers, and employees of corporations generally do not have standing to sue; the loss of salary is "merely incidental to the alleged antitrust violation and was not within the area of the economy that the defendants should have foreseen would be affected by its violation." Solinger v. A&M Records, Inc., 586 F.2d 1304, 1311 & n.8 to 1312 (9th Cir. 1978), cert. denied, 441 U.S. 908, 99 S.Ct. 1999, 60 L.Ed.2d 377 (1979); see, Bosse v. Crowell Collier and Macmillan, 565 F.2d 602 (9th Cir. 1977).

In the complaint appellants allege that the object of the conspiracy was "to eliminate the business of the plaintiff Program Engineering" (emphasis added) and that Akins was injured only because of his loss of salary. The complaint does not mention that Akins was the originator of the Racing Guide or that he had a contractual arrangement with Program Engineering. Furthermore, there are no factual allegations demonstrating that Akins was in the target area of the alleged violations or that he was injured in any way other than as an employee of Program Engineering. Thus, Akins failed to establish standing to sue, and the district court properly dismissed the complaint as to him.

III. Jurisdiction

Appellee HTC contends that in the complaint Program Engineering failed adequately to allege that the antitrust violations affected interstate commerce. This contention is meritless.

A complaint should not be dismissed for lack of jurisdiction unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." McLain v. Real Estate Board, 444 U.S. 232, 246, 100 S.Ct. 502, 511, 62 L.Ed.2d 441 (1980) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101, 2 L.Ed.2d 80 (1957)). "(T)he jurisdictional requirement of the Sherman Act may be satisfied under either the 'in commerce' or the 'effect on commerce' theory." Id. 444 U.S. at 242, 100 S.Ct. at 509. Initially a plaintiff must allege the critical relationship to interstate commerce. Id. Only if these allegations are disputed must the plaintiff submit evidence that the defendant's activity is in interstate commerce or that it has some effect on another activity in interstate commerce. Id.

The complaint herein alleges that Triangle owns Daily which publishes past performance racing information that Daily sells to the public nationally, including at appellees' racetracks. Furthermore, according to the complaint, such publication "involves a constant and continuous stream of interstate commerce ... because thoroughbreds race at tracks throughout the United States and information concerning their workouts and performances at meets in the various states are (sic) collected for use by the publishers" by means of interstate communications. These allegations are not controverted by any of the appellees.

At this stage of the proceedings there are sufficient allegations to allow Program Engineering to proceed to trial. Both racetracks and publishers of racing information, of necessity, are involved in and have some effect on the commerce of racehorses that are bred, raised, and raced throughout the United States. Unless the proof at trial establishes the contrary, the district court does not lack jurisdiction.

IV. Summary Judgment

Program Engineering contends that summary judgment was inappropriate in this case on the grounds that discovery had been limited to the threshold issue "whether any overt act committed pursuant to the alleged conspiracy occurred between October 31 and December 1, 1973"; that there were material issues of fact; and that the statute of limitation did not commence running until Program Engineering was out of business. 4

As a general rule summary judgment is disfavored in complex...

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