White v. Hearst Corp., 81-1300

• Decision Date: 11 January 1982
• Docket Number: No. 81-1300,81-1300
• Citation: 669 F.2d 14
• Parties: 1982-1 Trade Cases 64,491, 8 Media L. Rep. 1119 Claire M. WHITE and John White t/a White's News, et al., Plaintiffs, Appellants, v. The HEARST CORPORATION and Old Colony News Corporation, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 14

669 F.2d 14

1982-1 Trade Cases 64,491, 8 Media L. Rep. 1119

Claire M. WHITE and John White t/a White's News, et al Plaintiffs, Appellants, v. The HEARST CORPORATION and Old Colony News Corporation Defendants, Appellees.

No. 81-1300.

United States Court of Appeals First Circuit.

Argued Sept. 18, 1981.

Decided Jan. 11, 1982.

Steven J. Greenfogel, Boston, Mass., with whom Bruce K. Cohen, and Meredith & Cohen, P.C., Boston, Mass., were on brief, for plaintiffs, appellants.

Andrew R. Laidlaw, Chicago, Ill., with whom Timothy F. Haley, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., Gerald May, and Rich, May, Bilodeau & Flaherty, Boston, Mass., were on brief, for defendants, appellees.

Before BOWNES and BREYER, Circuit Judges, and MURRAY, ^* Senior District Judge.

FRANK J. MURRAY, Senior District Judge.

This appeal puts in issue the propriety of the grant by the district court of summary judgment to defendants/appellees The Hearst Corporation (Hearst) and Old Colony News Corporation (Old Colony) in a treble-damage antitrust action pursuant to Section 4 of the Clayton Act (15 U.S.C. § 15). ¹ Hearst is the publisher of the Boston Herald American (the Herald ), a newspaper published in Boston, Massachusetts, and Old Colony is a wholly-owned subsidiary of Hearst and is responsible for distribution of the Herald. Appellants are nine independent news dealers who operated under franchise agreements with Old Colony in the purchase, resale and home delivery distribution of the Herald. On July 5, 1979 all franchised news dealers, including appellants, were notified that their franchise agreements upon expiration would not be renewed. This action was brought by the appellants on May 6, 1980 against Hearst and Old Colony to recover damages, costs and attorneys' fees for alleged illegal acts.

In the antitrust claims ² set out in Counts I and II of the complaint, it is alleged that:

6. For several years past defendants have distributed "The Boston Herald" through franchised dealers such as plaintiffs. Said dealers purchased the newspapers from defendants and, in turn, distributed the newspapers to consumers. In or about August, 1979 plaintiffs were informed by defendants that their franchises would be terminated.

7. Beginning at least as early as January, 1976, defendants have engaged in a contract, combination and conspiracy in restraint of interstate trade and commerce, in violation of Section 1 of the Sherman Act (15 U.S.C. Section 1). In furtherance thereof, defendants have fixed, maintained and stabilized the prices at which plaintiffs could resell the newspapers which they purchased from defendants.

12. The notice of termination received by each of the plaintiffs was in furtherance of defendants' illegal contract, combination or conspiracy as aforesaid.

(8. and) 13. The effect of the violation alleged herein has been that a not insubstantial amount of interstate commerce has been affected. ³

Appellees filed their motion for summary judgment with respect to Counts I and II on June 23, 1980, supported by affidavits and a copy of the written franchise agreements. ⁴ Appellants filed no affidavits or other factual responses to the motion, and their resistance to it was manifested solely by their memorandum of law and oral argument. The district court granted summary judgment for appellees on Counts I and II following a hearing on November 10, 1980.

The factual details of the affidavits set forth inter alia that neither Hearst nor Old Colony nor the Herald conspired among themselves or with any other person concerning any of the purposes referred to in the complaint. Further, Hearst, a Delaware corporation, acquired Old Colony, a Massachusetts corporation, and the Boston Herald Traveler (predecessor to the Herald ) on June 19, 1972. Since Old Colony became a wholly-owned subsidiary of Hearst, the officers and directors of Old Colony have always been employees of Hearst or of the Herald. Beginning with the acquisition, Hearst, Old Colony and the Herald have operated as a single business enterprise with Old Colony an integral part of the Herald's circulation department, and with all decisions concerning franchise agreements of news dealers, including franchise renewals and terminations, made for Old Colony by the Herald. There has not been any time since the acquisition in 1972 that Hearst, Old Colony and the Herald have held themselves out as competitors of one another. In June 1979 Hearst decided to replace the existing franchised independent news dealer home delivery distribution system of the Herald with a system of employee home delivery distribution. Invoking the notice provision of the franchise agreements, Hearst notified all Old Colony dealers, including appellants, on July 5, 1979 that their franchise agreements would not be renewed upon their expiration. ⁵ The appellants distributed the Herald in cities and towns in the eastern part of Massachusetts. The Herald is published in Boston, Massachusetts, and its news and advertising content, local and national, is edited and produced to meet the needs of the Metropolitan Boston market. Newsprint and ink are obtained outside Massachusetts and are stored at the Herald premises in Boston until used in the production of the newspaper.

In the district court appellants argued that a parent corporation and its subsidiary are capable of conspiracy with one another, and that their complaint "alleges a vertical conspiracy between (appellees) and their independent news dealers." In granting the motion for summary judgment, the district court found on the unrebutted affidavits that since the appellees functioned as a single business entity the appellants' conspiracy claims failed as matter of law.

On appeal, appellants have produced new strings for their bow, for they urge that "summary dismissal is especially inappropriate in antitrust actions," and that the complaint states a cause of action under Section 1 of the Sherman Act. We first address this argument. It appears appellants place great reliance on the language of Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962), that "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot." The citation to this language in Poller does not surprise; one court has put it that "(t)he often cited Poller case ... has become a magic wand waved indiscriminately by those opposing summary judgment motions in antitrust actions." Mutual Fund Investors v. Putnam Management Co., 553 F.2d 620, 624 (9th Cir. 1977). We have carefully examined the arguments of appellants, urged in the district court and here, seeking reference to any peculiar characteristics of their case alleged in the complaint which arguably might make the holding in Poller controlling, and we find none. The thrust of their argument is simply that this is an antitrust case and that summary judgment is inappropriate.

Appellants misperceive the reach of Fed.R.Civ.P. 56(e) ⁶ in advancing this argument. The rule clearly permits summary judgment in any case. Whether summary judgment is appropriate in the particular antitrust case depends upon the peculiar circumstances of the case. The Supreme Court rejected an argument similar to that of appellants in First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569, reh. denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968), saying: "To the extent that petitioner's burden-of-proof argument can be interpreted to suggest that Rule 56(e) should, in effect, be read out of antitrust cases and permit plaintiffs to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence ..., we decline to accept it."

From what can be gleaned of appellants' case as revealed in the complaint, the case appears relatively simple. Moreover, appellants have not argued that this is a case involving complex antitrust litigation. They do not assert that they cannot present by affidavit facts essential to justify their opposition to summary judgment. Nor do they claim that the state of mind of the alleged conspirators plays a leading part in proving their case. Even assuming that state of mind might be involved, which we need not decide, "that does not mean that a party against whom summary judgment is sought is entitled to a trial simply because he has asserted a cause of action to which state of mind is a material element. There must be some indication that he can produce the requisite quantum of evidence to enable him to reach the jury with his claim." Hahn v. Sargent, 523 F.2d 461, 468 (1st Cir. 1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 54 (1976) (citation omitted). Appellants have presented no "probative evidence tending to support the complaint," First National Bank of Arizona v. Cities Service Co., supra, 391 U.S. at 290, 88 S.Ct. at 1593, and we reject their argument that this appeal should be resolved by applying the "motion to dismiss" test of Fed.R.Civ.P. 12(b)(6) to their antitrust complaint. We confine ourselves to a consideration only of the summary judgment issues on appeal.

The purpose of summary judgment is "to discover whether one side has no real support for its version of the facts," Community of Roquefort v. William Faehndrich, Inc., 303 F.2d 494, 498 (2d Cir. 1962), and "to determine whether further exploration of the facts is necessary," Hahn v. Sargent, supra at 464 (citation omitted). As the parties moving for summary judgment, Hearst and Old Colony "assumed the burden of demonstrating that there was no genuine issue of material fact." Over the Road Drivers, Inc. v. Transport Insurance Co., 637 F.2d 816, 819 n.4 (1st Cir. 1980). The...