Thompson Everett, Inc. v. National Cable Adv.

• Decision Date: 18 April 1994
• Docket Number: Civ. A. No. 3:93CV452.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: THOMPSON EVERETT, INC., Plaintiff, v. NATIONAL CABLE ADVERTISING, L.P., et al., Defendants.

850 F. Supp. 470

THOMPSON EVERETT, INC., Plaintiff, v. NATIONAL CABLE ADVERTISING, L.P., et al., Defendants.

Civ. A. No. 3:93CV452.

United States District Court, E.D. Virginia, Richmond Division.

April 18, 1994.

COPYRIGHT MATERIAL OMITTED

Stephen Earl Baril, John Luther Walker, III, Curtis McKinley Hairston, Jr., Dana Duane McDaniel, Glen Andrew Lea, Williams, Mullen, Christian & Dobbins, Richmond, VA, for Thompson Everett, Inc.

Charles Manley Allen, Jr., Wright, Robinson, McCammon, Osthimer & Tatum, Richmond, VA, Daniel G. Swanson, Julia A. Dahlberg, Robert H. Wright, Gibson, Dunn & Crutcher, Washington, DC, for National Cable Advertising, Inc.

Stephen Atherton Northup, Robert Dale Seabolt, Mays & Valentine, Richmond, VA, Yvonne S. Quinn, Sullivan & Cromwell, New York City, for Cable Networks, Inc.

Thomas Edward Spahn, McGuire, Woods, Battle & Boothe, Richmond, VA, Gerald J. Fields, Battle Fowler, New York City, for Cable Media Corp.

Charles Manley Allen, Jr., David Ernest Boelzner, Wright, Robinson, McCammon, Osthimer & Tatum, Richmond, VA, Daniel G. Swanson, Julia A. Dahlberg, Robert H. Wright, Gibson, Dunn & Crutcher, Washington, DC, for National Cable Advertising, L.P.

Charles Manley Allen, Jr., Daniel G. Swanson, Julia A. Dahlberg, Gibson, Dunn & Crutcher, Washington, DC, for Cox Cable Communications.

MEMORANDUM OPINION

SPENCER, District Judge.

THIS MATTER comes before the Court on the defendants' Joint Motion for Summary Judgment. For the reasons stated herein, the defendants' motion will be GRANTED.

I.

Plaintiff Thompson Everett, Inc. ("TE"), is a corporation organized in Virginia with its principal place of business located in Glen Allen, Virginia. TE claims that it is a regional, independent cable television advertising representative and a full service advertising agency with affiliated offices in North Palm Beach, Florida and Louisville, Kentucky. The company is engaged in the business of buying broadcast, cable, radio, and print media advertising time for its clients, and offers consulting and television market research services to them as well.

The defendants are representatives of cable television systems ("cable rep firms") that sell advertising time ("spots") to national advertisers. The defendants seek out the advertisers, who are themselves represented by advertising agencies, and attempt to convince those agencies to buy time on the cable systems. The defendants are the three largest cable rep firms in the United States.

Defendant National Cable Advertising, L.P. ("NCA"), is a Massachusetts limited partnership with its principal place of business located in Boston, Massachusetts. NCA is a national cable rep firm that is owned by four of the largest national cable system owners and operators in the United States: Continental Cablevision, Inc., Comcast Cable Corp., Cox Cable Communications, and Time Warner Cable.

Defendant Cable Networks, Inc. ("CNI"), is a Delaware corporation with its principal place of business located in New York. CNI is a national cable rep firm owned by Cablevision Systems Corp., a cable system owner and operator.

Defendant Cable Media Corporation ("CMC") is a Michigan corporation with its principal place of business located in Farmington Hills, Michigan. CMC is a national cable rep firm owned by Katz Communications, Inc., a network television rep firm, and Barrett J. Harrison, the president of CMC.

The plaintiff filed this lawsuit to challenge the defendants' exclusive contractual arrangements with their represented cable systems ("exclusive rep contracts"), in which the cable system operator commits to use the cable rep firm exclusively in exchange for the cable rep firm's agreement to make sales of advertising time on the cable system's behalf. Plaintiff raises various antitrust claims and supplemental common law business tort claims.¹ In turn, all defendants have filed counterclaims against Thompson Everett, alleging tortious interference with contractual relations.

II.

Summary judgment is proper if, viewed in the light most favorable to the nonmoving party, "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). Federal Rule of Civil Procedure 56(c) requires that the court enter judgment against a party who, "after adequate time for discovery ... fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The essence of the inquiry that the court must make is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). Summary judgment is proper "if the evidence is such that a reasonable jury could not return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. at 2510.

"Summary judgment is an important tool for dealing with antitrust cases." Oksanen v. Page Memorial Hosp., 945 F.2d 696 (4th Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 973, 117 L.Ed.2d 137 (1992). In fact, "the very nature of antitrust litigation encourages summary disposition of such cases when permissible." Id. (quoting Collins v. Associated Pathologists, Ltd., 844 F.2d 473, 475 (7th Cir.1988)). As the Supreme Court stated in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), a party opposing summary judgment in the antitrust context "must do more than simply show that there is some metaphysical doubt as to the material facts ...; the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Id. at 586-87, 106 S.Ct. at 1356; see also Capital Imaging Assocs. v. Mohawk Valley Medical Assocs., 996 F.2d 537, 542 (2d Cir.), cert. denied, ___ U.S. ___, 114 S.Ct. 388, 126 L.Ed.2d 337 (1993).

III.

The defendants' main argument in support of their motion for summary judgment focuses on the Plaintiff's role in the advertising business. To consider this argument, some background material on the industry will be helpful.

In addition to the actual buyers and sellers of advertising, the advertising business includes a variety of entities with roles in facilitating the purchase or sale of the advertisements. These entities generally fit either of two categories: (i) buyer representatives that create and purchase advertising for advertisers, and (ii) seller representatives that sell ads for the different advertising media. The buyer reps include "advertising agencies," such as full service advertising agencies, "creative boutiques," and media buying services. (Joseph Michael Everett Tr. 96-108; Peter J. Moran Tr. 80-81.) The seller reps include "representative firms," such as radio representatives, cable television representatives and broadcast television representatives. (See Juliane Arena Tr. 183-84; Jane F. Berry Tr. 69-71.)

Although some advertisers create their own advertisements and then purchase their advertising directly from the desired media, many hire an agency to perform this task. A "full-service" agency typically studies an advertiser's product, creates a strategy for advertising the product, designs ads to implement that approach, selects the media to distribute the ads, and then negotiates and purchases the time or space from the selected media. (See Everett Tr. 97-100; Jon Sanders Tr. 131-33; Bunny Tiner Tr. 6; John R. Klein Tr. 30-31.)

Over time, two general types of advertising agencies have evolved. "Creative boutiques" concentrate on designing an advertising approach and creating and producing the advertisements but do not actually select or purchase the advertising media. (See Moran Tr. 80-81.) In contrast, "media buying services" focus upon selecting the mix of advertising to be used in an advertising campaign that has been created and designed elsewhere and upon negotiating with and purchasing advertising from the various media. (Everett Tr. 101, 103-104; Robert Fennimore Tr. 71; Susanne Moore Tr. 48; Kay Franks Tr. 87-88; Sanders Tr. 192-93; Robert Williams Tr. 362.) Advertising agencies, whether full service agencies, creative boutiques, or media buying services, are all hired by the advertiser and thus work for and represent the interests of that advertiser. (Everett Tr. 97-98; Fennimore Tr. 71; Williams Tr. 362, 795; Sanders Tr. 213-14.)

Most advertising media retain sales staffs to sell ads to advertisers or advertising agencies. Most media have in-house advertising staffs that focus on sales to advertisers in the immediately surrounding geographic areas, and arrange for nationally based representatives to sell advertising to national and regional advertisers on their behalf. (See, e.g., Albin J. Seethaler Tr. 52.) These representatives are agents of the media and act as an extension of the media's own sales staff. (Moore Tr. 79-80, 85; Klein Tr. 49.) They traditionally have been paid a percentage commission based on the amount of advertising revenues they generate on behalf the cable system operator. (Barrett J. Harrison Tr. 52-53.)

The instant litigation focuses on a particular advertising medium — spot cable. Spot cable is advertising time sold by cable television operators throughout the country on the cable programming that they deliver to the homes of their subscribers. (Moran Aff. ¶ 3; Harrison Decl. ¶ 3.) Cable systems sell most of their spot cable advertising time through their own sales staffs to local advertisers, but a portion of the...