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INTERBOROUGH NEWS CO. v. CURTIS PUBL. CO.

September 8, 1954

INTERBOROUGH NEWS COMPANY, Plaintiff,
v.
The CURTIS PUBLISHING COMPANY, Curtis Circulation Company, Triangle Publications, Inc., S-M News Company, Inc., McCall Corporation, Popular Science Publishing Company, Inc., Meredith Publishing Company, Reader's Digest Association, Inc., Hearst Magazines, Inc., Fawcett Publications, Inc., Macfadden Publications, Inc., Hillman Periodicals, Inc., National Comics Publications, Inc., Independent News Co., Inc., Publishers Distributing Corporation, Field Enterprises, Inc., Pocket Books, Inc., Walter D. Fuller, Benjamin Allen, Ray C. McLarty, Victor E. Lance, Marvin Pierce, William A. Rogers, Robert E. Haig, Roscoe Fawcett, Allan Adams, O.J. Elder, Sol N. Himmelman, Alexander L. Hillman, Philip Keenan, Paul H. Sampliner, Harry Donenfeld, Irving S. Manheimer, Robert F. DeGraff, Wallis E. Howe, Jr., S. O. Shapiro and George B. Davis, Defendants, and Jules Stolz, Almond E. Booth, George P. Booth, and Herbert Meyer, Additional Defendants to the Counterclaims of Defendants Curtis Circulation Company, Triangle Publications, Inc., and Fawcett Publications, Inc.



The opinion of the court was delivered by: SUGARMAN

The defendants' motions to dismiss the complaint are granted.

In this opinion and appendix a number in parentheses ( ) denotes the page number of the printed trial record whereon testimony concerning the subject matter appears and a description and number in brackets ( ) denotes the identification mark of an exhibit received in evidence wherein the subject matter appears.

 On December 13, 1949 Interborough News Company (hereinafter Interborough) filed its complaint against Curtis Publishing Company, Curtis Circulation Company (Curtis), Triangle Publications, Inc., (Triangle), S-M News Company (S-M), McCall Corporation, Popular Science Publishing Co., Inc., Meredith Publishing Company, Reader's Digest Association, Inc., Hearst Magazines, Inc. (Hearst), Fawcett Publications, Inc. (Fawcett), Macfadden Publications, Inc. (Macfadden), Hillman Periodicals, Inc. (Hillman), National Comics Publications, Inc., Independent News Company (Independent), Publishers Distributing Corporation (PDC), Field Enterprises, Inc., Pocket Books, Inc. (Pocket Books), Walter D. Fuller, Benjamin Allen, Ray C. McLarty, Victor E. Lance, Marvin Pierce, William A. Rogers, Robert E. Haig, Roscoe Fawcett, Jr., Allan Adams, O. J. Elder, Sol N. Himmelman, Alexander L. Hillman, Philip Keenan, Paul H. Sampliner, Harry Donenfeld, Irving S. Manheimer, Robert F. DeGraff, Wallis E. Howe, Jr., S. O. Shapiro and George B. Davis.

 All said defendants were served with the summons and complaint or appeared herein except defendants Roscoe Fawcett, Allan Admas and Wallis E. Howe, Jr. (4). The defendant Ray C. McLarty died before trial and his estate has not been substituted herein (4). Independent News Co., Inc., appeared in place and stead of Independent News Company, and S-M News Company, Inc., Filed an answer for S-M News Company.

 The first amended answer of Curtis and the answers of Triangle and Fawcett each pleaded a counterclaim against the plaintiff and Jules Stolz, Alfred E. Booth, George P. Booth and Herbert Meyer, who were impleaded as additional defendants to the said counterclaims and who, with plaintiff replied thereto.

 After the other defendants answered, plaintiff filed an amended complaint to which defendants answered, Curtis, Triangle and Fawcett reasserting their several counterclaims against the plaintiff and the additional defendants and Independent asserting a counterclaim against only the plaintiff which it subsequently during trial voluntarily dismissed (2731).

 By stipulation filed herein on August 7, 1951, the plaintiff 'discontinued' its action against defendant Triangle Publications, Inc., which in turn 'discontinued' its counterclaim against the plaintiff and the said additional defendants. Thereupon some of the defendants filed supplemental answers asserting that the voluntary dismissal by the plaintiff of its suit against Triangle constituted a bar to the suit against said other defendants. The answers of the remaining defendants were, by a later pre-trial order deemed similarly amended.

 After other intermediate proceedings, including the filing of further amended pleadings, motions addressed thereto and interrogatories, depositions and production of documents, the parties came to pre-trial.

 When the pre-trial order was entered on August 13, 1953 the pleadings stood as follows: The complaint asserted a 'first separate claim' against all defendants for $ 4,860,000 ($ 1,620,000 trebled) 'for injury to its business and property by reason of the defendants' violation of Section 1 of the Sherman Act (15 U.S.C. § 1), and for the cost of the action, including a reasonable attorney's fee' (Emphasis supplied.) and a 'second separate claim' against all defendants, except S-M and certain other corporate and individual defendants connected with it, for $ 57,102 ($ 19,034 trebled), costs and attorney's fee upon the same grounds as those of the 'first separate claim' and finally it sought a permanent injunction against the continuance of the acts alleged in the first and second claims.

 The answers denied the allegations of wrongdoing in the complaint, set up certain separate defenses and in the cases of Curtis, Fawcett and Independent asserted the counterclaims as aforesaid.

 During the trial of the plaintiff's case its complaint was finally amended (2413) to plead in its first claim $ 5,996,556 ($ 1,998,852 trebled) damages 'by reason of the defendants' violation of Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2)' (Emphasis supplied.) and to plead in its second claim $ 38,070 ($ 12,690 trebled) damages upon the same grounds as those of the amended first claim.

 The earlier pre-trial hearings resulted in the order, filed as aforesaid on August 13, 1953, wherein the issues to be tried were formulated by Judge Conger. Because of the plaintiff's amendment of its complaint during trial it became necessary to amend the pretrial order appropriately and that was done (2486) so that the issues were finally formulated as follows:

 '8. The issues to be tried are formulated by the Court as follows:

 '(a) With respect to the First Claim of the Amended Complaint:

 '1. Whether, in or about 1947, defendants, or any of them, entered into and carried out, by the means alleged, a combination or conspiracy to withdraw from plaintiff, and transfer to others, the wholesale distribution of magazines, periodicals and reprints in the Greater New York Area;

 '2. Whether, in or about 1947, defendants, or any of them, entered into and carried out, by the means alleged, a combination or conspiracy to monopolize, or monopolized, or attempted to monopolize, the wholesale distribution of magazines, periodicals and reprints in the Greater New York Area;

 '3. If so, whether any such combination or conspiracy, monopolization, or attempt to monopolize, was

 (a) a violation of Section 1 of the Sherman Act, or

 (b) a violation of Section 2 of the Sherman Act, or

 (c) a violation of both said Sections.

 '4. If there was such a violation;

 (a) Which defendants were parties thereto;

 (b) Was plaintiff injured in its business or property by reason thereof; and

 (c) What, if any, damages were sustained by plaintiff by reason thereof.

 '(b) With respect to the Second Claim of the Amended Complaint:

 '1. Whether, during the period 1946 through 1949, any of the defendants (other than S-M News Company, Inc., McCall Corporation, Popular Science Publishing Company, Inc., Reader's Digest Association, Inc., Meredith Publishing Company, Marvin Pierce and William A. Rogers), or any of them, entered into and carried out, by the means alleged, a combination or conspiracy to withdraw from plaintiff the galley distribution of magazines and reprints in Ohio, Pennsylvania, New York, Massachusetts, Maine, Vermont, or New Hampshire;

 '2. Whether, in or about 1947, defendants, or any of them, entered into and carried out, by the means alleged, a combination or conspiracy to monopolize, or monopolized, or attempted to monopolize, the galley distribution of magazines, periodicals and reprints in Ohio, Pennsylvania, New York, Massachusetts, Maine, Vermont, or New Hampshire;

 '3. If so, whether any such combination or conspiracy, monopolization, or attempt to monopolize, was

 (a) a violation of Section 1 of the Sherman Act, or

 (b) a violation of Section 2 of the Sherman Act, or

 '(c) a violation of both said Sections.

 '4. If there was such a violation;

 '(a) Which defendants were parties thereto;

 (b) Was plaintiff injured in its business or property by reason thereof; and

 (c) What, if any, damages were sustained by plaintiff by reason thereof.'

 Later in the trial plaintiff's counsel conceded that plaintiff under its second claim had 'not put in evidence in respect of the galley situation except in the case of Ohio' (2655).

 The following facts concerning the present corporate parties to the suit, the substance of which is alleged in the complaint, are admitted by the answers.

 (In those instances where an allegation directly concerns one defendant and is admitted by that defendant, even though the other defendants deny or deny knowledge or information sufficient to form a belief as to that allegation it has been deemed to have been admitted by all defendants.

 Plaintiff Interborough News Company is a New York corporation.

 Defendant The Curtis Publishing Company is a Pennsylvania corporation, qualified to do business in New York with a regular and established place of business in the Southern District of New York.

 Defendant Curtis Circulation Company, a wholly-owned subsidiary of defendant The Curtis Publishing Company, is a Delaware corporation, qualified to do business in New York with a regular and established place of business in the Southern District of New York.

 Defendant S-M News Company, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York; is owned by defendants McCall Corporation, Popular Science Publishing Company, Inc., Meredith Publishing Company, The Reader's Digest Association, Inc. and one other corporation, all of which publish magazines and periodicals of which defendant S-M News Company, Inc., is the national distributor together with publications of other publishers who are not defendants.

 Defendant McCall Corporation is a Delaware corporation, qualified to do business in New York, with a regular and established place of business in the Southern District of New York.

 Defendant Popular Science Publishing, Company, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Meredith Publishing Company is an Iowa corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Reader's Digest Association, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Hearst Magazines, Inc., is a Delaware corporation, qualified to do business in New York, with a regular and established place of business in the Southern District of New York.

 Defendant Fawcett Publications, inc., is a Delaware corporation, qualified to do business in New York, with a regular and established place of business in the Southern District of New York.

 Defendant Macfadden Publications, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Hillman Periodicals, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant National Comics Publications, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Independent News Co., Inc., a wholly-owned subsidiary of defendant National Comics Publications, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Publishers Distributing Corporation is a New York corporation, with a regular and established place of business in the Southern District of New York.

 Defendant Field Enterprises, Inc., is a Delaware corporation.

 Defendant Pocket Books, Inc., a wholly-owned subsidiary of defendant Field Enterprises, Inc., is a New York corporation, with a regular and established place of business in the Southern District of New York.

 When this suit was commenced the status of the individual defendants was admitted by the answers to have been as follows:

 Walter D. Fuller was President of The Curtis Publishing Company;

 Benjamin Allen was Director and President of Curtis Circulation Company;

 Ray C. McLarty was Director, Vice President and Director of Sales of Curtis Circulation Company;

 Victor E. Lance was District Sales Manager for New York of Curtis Circulation Company;

 Marvin Pierce was Chairman of the Board of Directors of S-M News Company, Inc., and President of McCall Corporation;

 William A. Rogers was Director, Vice President and General Manager of S-M News Company, Inc.;

 Robert E. Haig was General Manager of International Circulation Division, Hearst Magazines, Inc., and Vice President and Circulation Director of Hearst Magazines, Inc.;

 O. J. Elder was President of Macfadden Publications, Inc.;

 Sol N. Himmelman was Vice President and Circulation Director of Macfadden Publications, Inc.;

 Alexander L. Hillman was Director and President of Hillman Periodicals, Inc.;

 Philip Keenan was Director, Vice President and Circulation Director of Hillman Periodicals, Inc.;

 Paul H. Sampliner was Director and President of Independent News Co., Inc.;

 Harry Donenfeld was Director and Vice President of Independent News Co., Inc.;

 Irving S. Manheimer was Director and President of Publishers Distributing Corporation;

 Robert F. De Graff was Director and President of Pocket Books, Inc.;

 S. O. Shapiro was, until November, 1948, Vice President and Director of Circulation of Macfadden Publications, Inc.; and

 George B. Davis was, until May 6, 1949, Director of Sales of Publishers Distributing Corporation.

 When this suit was commenced the status of the additional defendants was admitted by the replies to have been as follows:

 Jules Stolz had been President of Interborough until January 29, 1949 and thereafter vice chairman of the board of directors of Interborough;

 Almond E. Booth was a Vice President and a director of Interborough;

 George P. Booth was a Vice President and a director of Interborough;

 Herbert Meyer was Treasurer and a director of Interborough.

 The pleadings establish that the publication and distribution in interstate commerce of magazines, other periodicals and paper bound reprints is a large and important industry. The corporate defendants are publishers or distributors of both of such publications.

 The pleadings further establish that as to some of the corporate defendants their dealings with Interborough were as follows:

 Curtis

 Curtis' publishers severally shipped their publications to Interborough's New York offices in bulk in accordance with instructions from Curtis where, until June, 1947, Interborough distributed said publications to and in the New York counties of New York, Bronx, Queens, Kings, Richmond, Westchester, Nassau and Suffolk and to and in Hudson and Bergen Counties, New Jersey, by trucks owned and operated by Interborough; and to and in and throughout the New England States, Pennsylvania, Delaware, Maryland, Ohio and in a few places in New Jersey and Westchester and Suffolk Counties, New York, by mail and express, a method known as 'galley distribution.' Interborough's interstate distribution for Curtis included among other services, promotion of its publications, checking of sales, collections and the pickup and return of unsold copies. In April, 1947, Curtis transferred, effective thereafter, its distribution in areas in New York and New Jersey served by Interborough's trucks to other distributing agencies made up in part by former employees of Interborough and Curtis who were encouraged and assisted in organization and financing by Curtis. On May 19, 1947 Curtis notified Pilgrim News Company that it would after June 21, 1947 cease using the wholesale distribution facilities of Pilgrim News Company. In October, 1947 Curtis ceased to do galley business with Interborough with respect to the State of Ohio.

 S-M

 Until about August, 1948, Interborough was wholesale distributor to retail outlets in the New York counties of New York, Bronx, Queens, Kings, Richmond and in parts of the New York counties of Westchester, Nassau and Suffolk and in the New Jersey counties of Hudson and Bergen of publications of which S-M was national distributor which publications were delivered to Interborough in New York for such distribution. In August of 1948 said distribution was transferred by S-M from Interborough to thirteen wholesale distributors.

 Hearst

 Between April, 1932, and July, 1948, Interborough distributed by truck in the New York area, pursuant to agreements with Hearst and its predecessors or affiliates, magazines distributed but not published by Hearst and between April, 1946 and July, 1948 Interborough distributed by truck in the New York area, pursuant to agreements with Hearst and its predecessors or affiliates magazines published and distributed by Hearst. Since April, 1946 Interborough has distributed for Hearst and its predecessors and affiliates on galley by mail and express to out-of-town places not served by truck. In July, 1948 Hearst transferred its truck distribution from Interborough to other wholesalers and in January, 1949 it retransferred 50% of its truck distribution from the competing wholesalers back to Interborough and in June, 1949 retransferred said 50% of its truck distribution from Interborough back to the competing wholesalers. The magazines distributed by Interborough for Hearst were in the greater part shipped in bulk to Interborough's New York offices from out-of-state places and then distributed by Interborough. Interborough's agreements with Hearst and its predecessors and affiliates required that Interborough, in addition to distribution render other services including checking on sales, making collections and picking up and returning unsold copies. In September, 1947 and in the summer of 1948 Hearst terminated its contracts with Pilgrim News Company and Long Island News Company respectively.

 Fawcett

 Interborough built up, maintained and operated facilities for the distribution of the publications of Fawcett and others in the New England States, New York, New Jersey, Pennsylvania, Delaware, Maryland and Ohio. Some, but not all of the publications which Interborough thus distributed for Fawcett were shipped in bulk to Interborough's New York offices and thereafter distributed by Interborough. Interborough's distribution for Fawcett was by truck in the counties of New York, Bronx, Queens, Kings, Richmond, Westchester, Nassau, Suffolk, Hudson and Bergen. Interborough's distribution for Fawcett was by mail and express, i.e., galley, in the New England States, other parts of New York and New Jersey and Pennsylvania, Delaware, Maryland and Ohio. Interborough also performed other services for Fawcett including promotion of Fawcett's publications, checking of sales, collections, and the pickup and return of unsold publications. In October, 1948 Fawcett withdrew from Interborough distribution in certain areas, part of which was shortly thereafter, for a period of time, returned to Interborough. Distribution, when withdrawn from Interborough by Fawcett, was turned over to other agencies in the same area. On February 10, 1948 and on September 10, 1948 Fawcett gave notice to Interborough of cancellation of contracts covering North Wilbraham, Massachusetts and Riverhead, L.I., respectively.

 Macfadden

 For may years Interborough distributed for Macfadden, its publications and others which were shipped to Interborough in bulk. Interborough's interstate distribution for Macfadden included among other services, promotion of its publications, checking of sales, collections and the pickup and return of unsold copies. About October, 1948 Macfadden ceased to do business with Interborough in certain areas and transferred that business to distributing agencies serving Curtis.

 Independent

 For many years Interborough was a distributor for Independent. Interborough distributed in the New York counties of New York, Bronx, Queens, Kings, Richmond, Westchester, Nassau and Suffolk and in the New Jersey counties of Hudson and Bergen all of the publications of which Independent was the distributor. Interborough's distribution in interstate commerce included among other services, the promotion of Independent's publications, the checking of sales, collections, and the pickup and return to Independent of unsold publications. In September, 1947 Independent withdrew its business from Pilgrim News Company. In November, 1948, May, 1949 and July, 1949 Independent cancelled certain distribution contracts between it and Interborough.

  Pocket Books

  For many years Interborough was a distributor for Pocket Books in portions of the New England States, New York, New Jersey, Pennsylvania, Delaware, Maryland and Ohio. Interborough distributed Pocket Books' publications by trucks owned and operated by Interborough to and in the New York counties of New York, Bronx, Kings, Queens, Richmond, Westchester, Nassau and Suffolk and to and in the New Jersey counties of Hudson and Bergen. Interborough distributed Pocket Books' publications by mail and express, a method known as galley distribution to parts of New Jersey, New York, the New England States, Pennsylvania, Delaware, Maryland and Ohio. In 1947 Pocket Books withdrew galley business from Interborough in Ohio. Between May, 1947 and May, 1948 Pocket Books withdrew its truck distribution from Pilgrim News Company, a Massachusetts subsidiary of Interborough and, in the summer of 1948, withdrew its truck distribution from Long Island News Company, a Suffolk County subsidiary of Interborough. In September, 1948 Pocket Books withdrew its Greater New York truck distribution service from Interborough and turned over most of that business to other wholesale distributors.

  PDC

  For a number of years Interborough was a distributor of magazines distributed by PDC and built up, maintained and operated facilities for distribution of PDC's publications in the New England States, New York, New Jersey, Pennsylvania, Delaware, Maryland and Ohio. Some of PDC's magazines were shipped in bulk to Interborough's New York offices and thereafter distributed by Interborough to and in said places. Interborough distributed PDC's publications by truck to various places in the counties of New York, Bronx, Queens, Kings, Richmond, Westchester, Nassau and Suffolk and in Hudson and Bergen counties, New Jersey. Interborough distributed PDC's publications by the mail and express method of galley distribution to places in New Jersey, New York, the New England States, Pennsylvania, Delaware, Maryland and Ohio. Interborough, when it distributed PDC's publications performed for PDC certain services including the promotion of PDC's publications, the checking of sales, collections and the pickup and return of unsold publications of PDC. Effective October, 1, 1948, January 1, 1949 and April 1, 1949, PDC withdrew from Interborough certain distribution business in New York and New Jersey and transferred same to other distribution agencies operated in those areas. PDC in September 1948 notified Interborough of cancellation of their contract for Riverhead, Long Island, i.e., Long Island News Company. PDC notified Interborough of the transfer of distribution in the North Wilbraham, Massachusetts area to other wholesalers.

  Hillman

  Interborough distributed magazines for Hillman for a considerable period of time prior to the commencement of this action in the New England States, New York, New Jersey, Pennsylvania, Delaware, Maryland and Ohio. In some of these places distribution was by galley. In connection with Interborough's distribution for Hillman, Interborough was required to promote sales, check sales and collections and pick up and return unsold magazines. On August 9, 1948 Hillman notified Interborough that distribution of Hillman's magazines would be handled by other distributors. Prior to commencement of this action Hillman withdrew its business from Long Island News Company and Pilgrim News Company.

  The defendants are unanimous in resisting Paragraph 22 of the complaint which charges 'each of said individual defendants participated in the conspiracy herein alleged'; and those paragraphs of the first separate claim of the complaint, as finally amended, which charge:

  in Paragraph 23 that 'this is an action authorized by Section 4 of the Clayton Act (15 U.S.C. § 15) for threefold the damages sustained by the plaintiff for injury to its business and property by reason of the defendants' violation of Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2), and for the cost of the action, including a reasonable attorney's fee';

  in Paragraph 28 that 'in or about 1947 the defendants entered into, and at all times since 1947 have maintained, continued and carried out, a contract, combination, and conspiracy in restraint of, and they have monopolized, attempted to monopolize, and combined and conspired to monopolize, the trade and commerce among the several states in the distribution of magazines, other periodicals, and paper-bound reprints described herein';

  in Paragraph 29 that 'the conspiracy and monopolization alleged consisted in a continuing agreement and concert of action among the defendants to boycott Interborough, to cancel defendants' contracts with and to withdraw their business from Interborough, to induce and conspire with Interborough's employees to leave its employ and to organize new distribution agencies supported by defendants, to disparage and slander Interborough, its distribution facilities and services, and to monopolize independent wholesale distribution of magazines, other periodicals, and paper-bound reprints in the Greater New York area and in other areas served by Interborough, and thus to destroy Interborough's business and property; and the defendants did monopolize the independent wholesale distribution herein described.';

  in Paragraph 35 that 'by reason of the conspiracy and monopolization described in this first claim Interborough has been injured in its property in the sum of $ 1,998,852.' Curtis denies also Paragraph 32 which charges that 'at or about the time of said withdrawals and during the period thereof the Curtis Company engaged in a campaign to disparage and slander and to spread false rumors concerning Interborough, its facilities and services, and thus to injure Interborough's reputation, credit, and business.'

  The defendants (other than S-M News Company, Inc., McCall Corporation, Popular Science Publishing Company, Inc., Meredith Publishing Company, Reader's Digest Association, Inc., Marvin Pierce and William A. Rogers who are excepted therefrom) also deny those paragraphs of the second separate claim of the complaint, as finally amended, which charge:

  in Paragraph 36 that 'in or about the years 1946 through 1949 the defendants * * * in combination and by unlawful agreement among themselves, withdrew galley business from Interborough in Ohio * * * these withdrawals were made in the same pattern as that of the conspiracy and monopolization against Interborough and its subsidiaries set forth in the first claim herein and in accordance with practices of long standing established by the defendants to control distributors and distribution generally in the United States, and to restrain and monopolize interstate trade and commerce in the distribution of magazines and paperbound reprints';

  in Paragraph 37 that 'by reason of the conspiracy and monopolization described in this second claim Interborough has been injured in its galley business and property in the sum of $ 12,690.'

  At pre-trial Interborough withdrew a third separate claim based upon the New York General Business and Stock Corporation Laws.

  As hereinabove indicated, the defendants, in addition to their admissions and denials aforesaid, set forth specific defenses in their answers (other than that predicated upon the voluntary dismissal of the suit against Triangle) but no purpose will be served in analysing them or the two surviving counterclaims of Curtis and Fawcett and replies thereto in this decision on defendants' motions to dismiss the complaint made at the end of the plaintiff's case.

  From the foregoing it appears that plaintiff's claims against the defendants may be briefly summarized as follows:

  The First Claim

  1. Defendants agreed between and among themselves to unlawfully restrain the interstate distribution of magazines, periodicals and paper-bound reprints from defendant independent national distributors to retailers in the Greater New York area by eliminating Interborough as an independent wholesaler thereof. Plaintiff was so eliminated through a boycott, expressly or tacitly agreed on by defendants, resulting in the destruction of plaintiff's City Department.

  2. Defendants acquired or attempted to acquire a monopoly in the same interstate activity of distributing magazines, periodicals and paper-bound reprints in the Greater New York area by agreeing between and among themselves to exclude plaintiff from any opportunity to compete with the thirteen newly organized independent wholesalers, on any terms, for the defendants' business. This monopoly resulted from the same concerted action claimed to sustain the charge of restraint of trade in 1. above.

  The Second Claim

  Plaintiff makes similar charges with respect to the destruction of its Ohio galley business.

  The parties went to trial to the court, a previously demanded jury having been waived and Interborough put in its proof. Thereupon all defendants moved to dismiss Interborough's complaint. The issue on such motion is -- has plaintiff proven by a fair preponderance* of the evidence that such an agreement was made and (a) that it was a contract, combination or conspiracy in restraint of trade or commerce within the meaning of that phrase in the Sherman Act and hence a conspiracy condemned by Section 1 of that Act of (b) that it was an agreement resulting in a monopoly or attempt to monopolize within the meaning of Section 2 thereof or (c) that it was both.

  The existence or not of an agreement between or among the defendants amounting to a contract, combination or conspiracy in restraint of trade or resulting in a monopoly or attempt to monopolize can be resolved only by detailed analysis of the plaintiff's proof oral and documentary and such has been attempted in the appendix annexed. Based thereon I conclude that plaintiff has failed to prove by a fair preponderance of the credible evidence the existence of such an agreement and for that reason grant the defendants' motions to dismiss the complaint.

  The Sherman Act is designed to assure to the public at large the benefits which accrue from the flow of commerce and trade unrestricted by unreasonable restraints thereon. The public interest is sought to be protected; private interests are only incidentally within its protective force in that private rights encroached upon by violations of the Act may be vindicated through the processes of Sections 4 and 16 of the Clayton Act in order to protect the paramount public interest. *fn1"

  To establish a violation of the Sherman Act, a plaintiff must prove conduct of defendants resulting in or at least tending toward the regulation by defendants, directly or indirectly, of interstate commerce, the regulation of such commerce by private parties being unlawful by reason of the constitutional reservation of that power exclusively to the Congress. *fn2"

  Absent proof of such effect on the commerce among that states, a plaintiff cannot prevail. There is nothing in the statute or the cases which indicates that Congress in enacting the Sherman Act, intended to condemn by Federal legislation practices that do not adversely affect interstate commerce by regulation of such commerce either (a) through concerted action resulting in a restraint of trade, or (b) monopolistic practices.

  It must be kept in mind that the Sherman Act guarantees to the plaintiff no more than the right to compete on equal terms with its competitors for so much of the distribution market as it can capture and hold by legitimate business means. It does not guarantee to any person an unchanging status quo, i.e., the enjoyment of a trade built up over the years despite changing conditions.

  The acts of defendants in this case, allegedly constituting the claimed conspiracy are, of course, to be considered in the light of all the surrounding circumstances, including the condition of the industry at the time and the forces bearing on the parties, to determine the true meaning to be attributed to the defendants' conduct and to ascertain the probable effects of the defendants' acts on free competition in that industry. In other words, the alleged conspiracy is to be judged by viewing it as a whole, not by dismembering it and viewing its separate parts. *fn3"

  The interstate trade or commerce which plaintiff accuses defendants of conspiring to restrain and monopolize and in fact restraining and monopolizing is the wholesale independent distribution of magazines, periodicals, etc., i.e., the distribution thereof from defendants or other publishers to the retailers.

  The First Separate Claim -- Interborough's City Department

  Treating first the charge of monopoly, *fn4" it must be kept in mind that the defendants as independent national distributors were not engaged in the business, wholesale distribution from distributors to retailers, which plaintiff claims was the object of the conspiracy to monopolize. *fn5" Plaintiff's new competitors, the thirteen so-called Curtis wholesalers, were. *fn6" Therefore, the gravamen of plaintiff's charges in this respect must be that the defendants sought to perfect a monopoly of that business for those new competitors of plaintiff. This allegation is not sustained by the evidence. The evidence fails to show an intent on the part of any defendant to monopolize, nor does it show the creation of a monopoly of such business. The defendants were not interested in the gathering of that business for the new wholesalers to the exclusion of substantially all other competitors, actual and potential. The evidence does show at most a bare refusal by defendants to deal with one competitor of the Curtis-sponsored newcomers, namely, Interborough, because of Interborough's real or imagined deficiencies in operation. This exclusion of a single person from competition is not monopoly. The essence of monopoly is power to effect the exclusion of competition generally in a field for the benefit of a particular person or class. *fn7"

  Neither Curtis nor any other defendant had the intent or the power to garner for the thirteen new so-called Curtis wholesalers a monopoly of any segment of the wholesale business in the area served by plaintiff's City Department in the anti-trust sense of the word 'monopoly.' Of course, in the wordroot meaning of monopoly, each new wholesaler was a monopolist, i.e., the 'only seller' of the various publications of a defendant in his particular district. But this is necessary for the financially successful distribution of each of the defendants' publications and the distribution agreements entered into between defendants and the new wholesalers are clearly the "normal and usual agreements in aid of trade and commerce which may be found not to be within the * * * Act." *fn8"

  The fact that Curtis actively and aggressively sought the other defendants' patronage for its subsidized wholesalers was not unusual under the circumstances presented. Curtis was no mere interloper intruding into plaintiff's field of endeavor for nefarious purposes, particularly after it gave plaintiff the opportunity of continuing in Manhattan, Brooklyn, Bronx and Queens, which plaintiff rejected. Curtis had a legitimate economic interest in seeking the other defendants' patronage for the newcomers, viz., the lightening of its subsidy payments as fresh business tended to raise the new wholesalers' profit level.

  Curtis having been long dissatisfied with plaintiff's services, set up the thirteen newcomers as competitors of plaintiff. At great expense to itself, more than it anticipated, Curtis agreed to subsidize its proteges and certainly had the right (and duty to its stockholders) to solicit the other defendants' patronage for them. That there was no agreement binding the other defendants to support Curtis' wholesalers is adequately demonstrated by the vacillating course of conduct pursued by several of the major defendants. Nothing in the record indicates that had plaintiff or any wholesaler other than the Curtis group offered to serve defendants on terms and performance equal to or better than those of the newcomers, the defendants would have refused to deal with them. In fact just the opposite occurred in Richmond with respect to defendant PDC. If anything, the record demonstrates that all the defendants, including Curtis, avidly sought the local wholesaler offering the best terms for the distribution of its periodicals.

  If there was any sinister arrangement between the defendants and the wholesalers or between any defendants whereby the Greater New York distribution of defendants' publications was to be handled by the new wholesalers to the exclusion of other competition generally and without regard to the play of normal competitive forces, it has not been brought out by plaintiff's evidence.

  In the absence of either (a) the existence of monopoly power and intent to exercise it or (b) conduct intended to result in monopoly or monopoly power, there is no violation of § 2. *fn9" Plaintiff has not proved the defendants to have held such unlawful power nor to have acted with intent to achieve it in this case.

  The evidence shows that the new wholesalers were not mere tools in the hands of the defendants in furtherance of a design to control that segment of trade and commerce. Each defendant independently negotiated its agreements with its respective wholesalers. Each new wholesaler was in spirited competition with plaintiff and each other.

  There remains the question of defendants' violation of § 1 of the Act with respect to the Greater New York area. The plaintiff charges that Curtis brought pressure to bear on the other defendants to deal with the new wholesalers instead of with plaintiff, that the other defendants acceded thereto thus knowingly co-operating in plaintiff's destruction and so became co-conspirators. That such pressure was exerted and that at least some of the defendants yielded to it seems clear. Was this conduct unlawful under § 1? It was if (1) the conduct was unlawful per se, (2) the defendants' purpose was to accomplish a forbidden result or (3) a forbidden result was the natural effect of the defendants' acts. *fn10"

  Plaintiff contends defendants' acts were a 'per se' violation of the Act, i.e., a 'boycott' condemned by the cases. *fn11"

  Plaintiff's abstract proposition of law urged in this case that a 'boycott' by others of even one person engaged in interstate commerce is now to be deemed a per se violation of § 1 of the Act, and that no inquiry need be made in such case as to the substantiality of the restraint imposed by the boycott on the affected commerce, appears, at first glance, to be supported by the more recent decisions of the Supreme Court. *fn12" However, I have doubt that such all-encompassing condemnation of group refusals to deal, as plaintiff urges, was intended by those cases. On analysis, it seems that the boycott itself was not condemned as an unreasonable restraint of trade in each of those cases, but rather the Court condemned either what was sought to be accomplished by the concerted refusals to deal or what was the necessary result thereof. *fn13" Hence, branding of defendants' acts a 'boycott' and therefore a per se violation of the Act is not justified by a mere showing of the refusal by defendants to deal with plaintiff and their choice to deal with the 13 competing wholesalers. *fn14"

  The 'purpose' of the accused agreement, i.e., the result sought to be achieved, is decisive in determining liability to a party claiming to be injured by reason of the claimed violation of § 1. *fn15"

  Testing defendant's conduct in this light, the record shows no convincing evidence that the defendants sought to acquire by their concerted action the power to control collectively the independent local wholesaling of their respective publications.

  Rather the defendants in the instant case each acting on its own independent judgment in the light of existing realities, although under much persuasion from Curtis, decided that its best interests lay in transferring its respective business from Interborough to the new wholesalers and in some instances back to Interborough. The mere fact that under the circumstances presented, each knew what the others were doing and in some instances nearly contemporaneously did the same thing, does not, without more, make out an unlawful conspiracy. *fn16"

  The 'conscious parallel action' of the defendants in taking their business elsewhere was no more unlawful than the action of any group of persons who take their patronage from a common dealer to another or others who promise to give them a better product of better services.

  The instant case is thus distinguishable from Butterick Pub. Co. v. Federal Trade Commission *fn17" cited by plaintiff where the court said at page 526 '* * * the business of selling secondhand magazines had been seriously curtailed by the agreement of the publishers and the action taken thereunder; and * * * the action was plainly for the purpose of stifling competition.'

  Undoubtedly, plaintiff's strength was sapped by the inroads on its business made by the new competition under the leadership and the active financial assistance of defendant Curtis. However, plaintiff's unfortunate plight is merely an incidental result of the operation of those competitive forces that the Sherman Act was designed to foster.

  The final test to be applied to plaintiff's First Separate Claim to determine whether § 1 of the Sherman Act was violated is whether the defendants' several refusals to deal with plaintiff necessarily had or will have any substantial pernicious effect on the commerce concerned in the sense that an adverse effect therefrom will be felt by the public. No such element of public injury is proven by the testimony and exhibits in the case. *fn18" I am not persuaded that as a result of defendants' conduct, the purchasing public had to pay any increase in price, suffered any diminution in the quality or kind of service prevalent in the market prior to the defendants' acts complained of, or that there was any effect resultant from defendants' act detrimental to any person but the plaintiff.

  What occurred with respect to Long Island News Company and Pilgrim News Company, the Interborough subsidiaries mentioned in the plaintiff's First Separate Claim, offers nothing to alter the above conclusion.

  The Second Separate Claim -- The Ohio Galley

  The above discussion of the law applies equally to the plaintiff's second claim and need not be repeated.

  The record on this score similarly fails to expose more than a common effort to substitute the admittedly more desirable methods of reshipment and truck delivery for its archaic, expensive and unsatisfactory forerunner, strict galley. Interborough having declined to progress to the more effective method of operation lost the business by force of economic pressure, not by reason of any conspiracy to restrain or monopolize interstate commerce.

  In summary of the plaintiff's whole case I do not find that common design and understanding or unity of purpose of defendants or any of them to do anything that did or tended to or was intended to monopolize the Greater New York or Ohio wholesaling of publications or otherwise unlawfully restrain that segment of interstate trade and commerce within the meaning of the Sherman Act.

  This conclusion makes it unnecessary to analyze plaintiff's proof of damages or to pass upon defendants' several motions to strike which accompanied their motions to dismiss.

  Pursuant to F.R.Civ.P. 52, 28 U.S.C.A., this decision and the appendix hereto shall constitute the court's findings of fact and conclusions of law unless the parties desire more formal findings and conclusions in which event the settlement of same will await the conclusion of the trial.

  The court will notify counsel when they will convene for the purpose of fixing time and place for the trial of the remaining counterclaims.

  Settle order.

  APPENDIX

  I The Industry Generally

  II The Interborough Operation Generally

  A -- The Plant

  B -- Managerial Personnel

  C -- Sources of Income

  III The Interborough City Department Generally

  IV The Interborough City Department Operating Technique

  A -- Distribution

  B -- Redistribution

  C -- Promotional Services

  D -- Clerical Work

  E -- Handling of Returns

  F -- City Department Employees

  V The Interborough City Department Demise

  A -- Dealings Between Interborough and Curtis

  B -- Dealings Between Interborough and Triangle

  C -- Dealings Between Interborough and S-M

  D -- Dealings Between Interborough and Hearst

  E -- Dealings Between Interborough and Fawcett

  F -- Dealings Between Interborough and Macfadden

  G -- Dealings Between Interborough and Hillman

  H -- Dealings Between Interborough and Independent

  I -- Dealings Between Interborough and PDC

  J -- Dealings Between Interborough and Pocket Books

  K -- Dealings Between Interborough and Non-Defendants Kable, Poplar and Leader

  VI Dealings Between the Independent National Distributors and the So-Called Curtis Wholesalers

  A -- Dealings Between Curtis and the New Wholesalers

  B -- Dealings Between the Other National Distributors and the New Wholesalers

  VII Meetings, etc., of Independent National Distributors

  A -- Meetings, etc., for undisclosed purposes

  B -- Meetings, etc., for disclosed purposes

  VIII The Interborough Country Department

  A -- Generally

  B -- Pilgrim News Company

  C -- Long Island News Company, Inc.

  D -- The Interborough Ohio Galley

  I

  The Industry Generally

  There are various categories of nationally distributed magazines. Some are known as 'pulp,' some are 'comic' and some are 'flat' or 'slick.' The last class includes, among others, Good Housekeeping, Cosmopolitan, Today's Woman and True, and get their description 'slick' from the smooth varnish cover (582).

  They are distributed in varying ways, i.e., 'single copy sales,' 'bulk' and 'subscription.' 'Single copy sales' represent those sold by a publisher through a national distributor, wholesaler such as Interborough and retail dealer. 'Bulk' sales are those sold in multiple numbers directly to advertising agencies, etc. 'Subscription' sales are those sold and mailed directly to the consumer or subscriber usually on an annual basis (156).

  This case deals with the 'single copy sales' class of distribution of magazines, periodicals and re-prints, the last being pocket size, paper-bound reprints or original editions of full stories, etc.

  The publishers of these magazines and reprints in the main market them through national distributors. National distribution is divided between American News Company on the one hand and thirteen independent national distributors on the other. Nine of the thirteen independent national distributors are among the remaining defendants in this suit.

  American News Company, which is not here involved, distributes nationally only for those publications which grant it an exclusive franchise and it delivers to the retail dealers through its own branches throughout the country. It also owns subsidiaries such as Union News Company which operate retail outlets such as newsstands, cigar stands, restaurants and various other types of retail enterprises (86).

  None of the thirteen independent national distributors engages in wholesale operations (133). These independent national distributors (except S-M (916)) are an outgrowth of and successors to the circulation departments which the publishers at one time maintained. The independent national distributors do not actually handle the periodicals. They regulate the allotment of magazines either sent by the publishers to the wholesaler who distributes them by truck, or reshipment to the retailer or sent by the publisher to the retailer under the strict galley system (truck, reshipment and galley are elsewhere herein explained). The independent national distributors do all their own billing, crediting and book-keeping necessary in collecting the wholesalers' accounts (131).

  A 'franchise' is an arrangement under which an independent national distributor gives a wholesaler exclusive right in a given territory to distribute to retail outlets the products of the publishers whom that distributor ...


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