Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

PERIODICAL DISTRIBS. v. AMERICAN NEWS CO.

October 15, 1968

Periodical Distributors, Inc., Plaintiff
v.
American News Co., Inc., Union News Co., Inc., Henry Garfinkle, Pacific News Co., Inc., and Manhattan News Co., Inc., Defendant


Graven, District Judge.


The opinion of the court was delivered by: GRAVEN

Memorandum

GRAVEN, District Judge.

 1. In this action the plaintiff seeks to recover damages and to secure injunctive relief because of the claimed violations by the defendants of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. Secs. 1 & 2, in connection with the distribution of periodicals in the New York Metropolitan area. The Greater Boston Distributors, Inc., was originally a defendant. The action was dismissed as to it for lack of jurisdiction. The trial was to the Court. For convenience, the words "The" and "Inc." will be omitted from the names of the corporate defendants.

 The particular area of the New York Metropolitan area involved consists of the Boroughs of Manhattan, Bronx, Queens, and Kings of New York City and Nassau and Suffolk Counties. In the testimony of the witnesses and in the exhibits and in the briefs of the attorneys the Borough of Manhattan is interchangeably referred to as New York County or Manhattan; the Borough of Queens is interchangeably referred to as Queens County or Queens; the Borough of Kings is interchangeably referred to as Kings County or Brooklyn. The area lying to the east of Queens is referred to as Long Island. The periodicals involved consisted in the main of magazines and pocket books. There is not involved the distribution of newspapers.

 2. The plaintiff was and is a local wholesale distributor of periodicals in the New York Metropolitan area. Its original corporate name was Periodical Distributors of Greater New York. It commenced this action on September 8, 1960. In its complaint it set forth three causes of action. In its first cause of action it alleged that the defendants had conspired and continued to conspire to deny it access in general to the retail newsstands operated by the defendant Union News Company. In its second cause of action it alleged that the defendants had conspired and continued to conspire to deny it access in particular to the retail newsstands operated by the defendant Union News Company at the La Guardia Airport. In its third cause of action it alleged that the defendants had conspired and continued to conspire to deny it access in particular to retail newsstands operated by the Union News Company at various stations of the Long Island Railroad and other places in Queens, Nassau and Suffolk Counties. The plaintiff alleged that the conspiracy referred to in the three causes of action commenced about June 24, 1957. On October 5, 1964, a Pretrial Order signed by a Judge of this Court was entered herein. That Order defined the issues based upon the allegations that the conspiracy commenced about June 24, 1957. In January, 1967, the plaintiff moved to amend the Pretrial Order in regard to the time of the commencement of the conspiracy, the parties to the conspiracy, and the scope of the conspiracy. The substance of the motion was that the plaintiff following the entering of the Pretrial Order on October 5, 1964, had discovered the existence of an over-all conspiracy commencing in 1947 on the part of the defendants and certain other alleged co-conspirators which had for its object and purpose the unlawful restraint and monopolization of the distribution of periodicals in the New York Metropolitan area. The alleged co-conspirators consisted of a number of distributors of periodicals and certain members of a union known as the Newspaper and Mail Deliverers Union. The plaintiff's motion to amend the Pretrial Order was granted on January 23, 1967. The plaintiff did not ask, nor has it asked, that the alleged co-conspirators be made parties to this action.

 3. The plaintiff is a New York corporation with its principal place of business at Long Island City, Borough of Queens. It was founded in 1951 and since 1952 it has been engaged in the wholesale distribution of periodicals in the New York Metropolitan area. The defendant American News Company formed in 1894. Its principal place of business is in the Borough of Manhattan. The defendant Union News Company, referred to in the plaintiff's complaint, is a New York corporation formed in 1894 which up until 1960 was a wholly owned subsidiary of the defendant American News Company. In 1960 it was dissolved as a corporation and has since that time been operated as a division of that defendant. The defendant Manhattan News Company is a New York corporation formed in 1947. Its principal place of business is in the Borough of Manhattan. The defendant Pacific News Company is a New York corporation formed in 1955 with its principal place of business in the Borough of Kings. The defendant Henry Garfinkle is a resident of the State of New York. Up until 1955 he was the president of the defendant Manhattan News Company. All of the stock of that corporation was and is owned by his wife and trustees for his two sons. In 1955 he resigned as president of the defendant Manhattan News Company and became the president of the defendant American News Company. He was the owner of the stock of a New York corporation, the Garfield News Company, one of the alleged conspirators.

 In the amended Pretrial Order the contentions of the plaintiff are stated as follows:

 
"3. (b) Plaintiff contends that all defendants, together with various other co-conspirators (some of whom are hereinafter described, but not named as parties), entered into a continuing unlawful combination, plan and conspiracy to control, and restrict the persons by whom and terms on which distribution of periodicals could be made, and to attempt to monopolize and to monopolize the wholesale and retail distribution of periodicals, in the Metropolitan New York area and elsewhere, and pursuant to such combination, plan and conspiracy, the defendants and co-conspirators did, in fact, restrict free access to, and trade in the fields of wholesale and retail periodical distribution, and attempted to and did in fact monopolize the aforesaid fields.
 
"The aforesaid combination, plan, and conspiracy is alleged to have commenced in or about 1947, to have substantially continued to date, to have affected, impaired and restrained the free flow of periodicals among the several states and to have injured plaintiff's business and trade. It is alleged that all the defendants were originally party or became party thereto, together with various other co-conspirators not named as parties to this action, including (1) various members of the Newspaper and Mail Deliverers Union, such as Carmine Pellegrino, Victor Pellegrino, William Walsh, Harry Walzer, Joseph Simons, William Fello, Rocco Fello, also known as Barney Fello, Angelo Lospinuso, John Lawrence, Jr., Sam Feldman, Michael Spozate, Leon Braunstein, Joseph Baer, and others to plaintiff presently unknown; (2) Bronx County News Corp. and individual principals thereof; (3) Bi-County News Corp. and the successors in interest thereto including G. & S. Corporation and the individual principals thereof; (4) Seljan News Co., Inc. and individual principals thereof, including Joseph Weinstein and Morris Cohen; (5) Imperial News Co., Inc. and its predecessors in interest and the individual principals thereof; (6) Brooklyn News Co., Inc. and individual principals thereof; (7) Solomon Levine; (8) William Levine; (9) Charles Gordon, formerly known as Abraham Goldberg; (10) Selig Goldberg; (11) Irving Bitz, also known as Morris Grossman; (12) Curtis Publishing Company and its subsidiary companies, including Curtis Circulation Company and the other so-called 'Curtis Distributors' not specifically hereinabove named, who were organized as such in or about 1947; (13) Victor Lance; (14) Select Magazines, Inc. (to date, by operation of law, as an unwilling participant); (15) G.I. Distributors, Inc. and individual principals thereof; (16) The Garfield News Company ('Garfield'); and (17) The Greater Boston Distributing Co., Inc. ('Boston'); and others to plaintiff presently unknown.
 
"Pursuant to and in furtherance of the aforesaid conspiracy, defendants, inter alia, conspired among themselves and with various of the co-conspirators to deny plaintiff access to certain retail newsstands, to deprive plaintiff of profitable business and to otherwise interfere with and hinder plaintiff's operations. These and other acts of defendants done in concert with various of the above-named co-conspirators had the effect of and, at least in part, the purpose of restraining, interfering with and making it more costly for plaintiff to conduct its business as a wholesale distributor of periodicals and to compete with defendants Manhattan, Pacific and with other of the co-conspirators.
 
"Plaintiff further contends that defendant HENRY GARFINKLE, individually, together with American, Union, Manhattan, Garfield and Boston (all of which companies are owned or controlled by defendant Garfinkle), have violated Sections 1 and 2 of the Sherman Act by monopolizing or attempting to monopolize commerce and trade in so-called 'terminal ' newsstands, and in the wholesale distribution of magazines in New York County, Boston and elsewhere; that Henry Garfinkle, American, Union and Garfield, because of their dominance over and monopoly position in such terminal newsstands, are guilty of violating the antitrust laws merely by virtue of their arbitrary and unjustified refusals to deal with plaintiff, exclusive of the existence of the combination, plan or conspiracy hereinabove described; and that defendant Garfinkle and companies with which he is associated and/or controls, including defendants Manhattan, American and Union, and co-conspirators Boston and Garfield, have violated Section 1 of the Sherman Act by virtue of reciprocal buying and selling arrangements."

 4. The general structure of the distribution of periodicals will first be noted. The term "periodicals" as used in the industry does not include newspapers. It does include paperback books and comic books. In the industry there are what are referred to as national distributors, local wholesale distributors, and retailers. The national distributors distribute periodicals nationwide. The national distributors send the periodicals distributed by them to local wholesale distributors for distribution by them to the newsstands and other retail outlets. In some cases the publishers of periodicals function as national distributors of the periodicals published by them. In some cases such distributors also distribute periodicals published by others. Some national distributors distribute only periodicals published by others. In some instances a national distributor functions as a local wholesaler in a certain area or areas.

 It is estimated that there are over 100,000 retail outlets for periodicals in the country. There are numerous types of retail outlets. The greater number of such retail outlets sell periodicals in connection with and as a part of their regular businesses. A substantial number of retail outlets consist of newsstands operated independently of other businesses. Newsstand space in areas under public control is usually put up for bidding at certain intervals. Newsstand space in areas under private control may be obtained either by bidding or by negotiation. Newsstands and other retail outlets obtain the periodicals to be retailed from one or more local wholesalers. In most areas of the country there is only one local wholesaler. In some areas, including the New York Metropolitan area, there is more than one local wholesale distributor. Where there are two or more local wholesale distributors in an area there are two matters which are of prime importance to them. The first is the securing of distribution rights from the national distributors. Those rights are commonly referred to as franchises. A franchise consists of an agreement between a national distributor and a local wholesaler in which the latter is granted the right to distribute in a certain area or areas for some or all of the periodicals for which the former has distribution rights. The titles of the periodicals being distributed by national distributors are in excess of one thousand. Some of the titles have only a limited sale and the franchises for them are not particularly sought after by local wholesalers. In the New York Metropolitan area there are a number of local wholesalers who only have franchises for such periodicals. They are commonly referred to as secondary local wholesalers. There are several periodicals with a large national circulation for which there is a large demand at the retail outlets. These are commonly referred to as major periodicals or prime periodicals. Franchises for such periodicals are particularly sought after by local wholesalers.

 In the New York Metropolitan area there are several thousand retail outlets for periodicals. Many of such outlets sell only a limited number of periodicals. A number of such outlets are so situated that they have a very large volume of sales of periodicals. Typical of such outlets are railroad stations, airports, certain subway stations, bus depots, large hotels and large business and office buildings.

 5. For some time prior to 1947 one of the largest local wholesalers in the New York Metropolitan area was the Interborough News Company. It encountered business difficulties and in 1947 it went out of business. In 1949 it instituted an action in this Court against a number of national distributors and local wholesalers seeking treble damages under the Sherman Act. It alleged that the defendants had unlawfully conspired to restrain and monopolize the distribution of periodicals in the New York Metropolitan area. In the District Court it was denied recovery. Interborough News Co. v. Curtis Publishing Co., et al. (D.C.S.D.N.Y. 1954), 127 F. Supp. 286. On appeal the denial was affirmed. Interborough News Co. v. Curtis Publishing Co. (2d Cir. 1955), 225 F.2d 289. See, also, Interborough News Co. v. Curtis Pub. Co., et al. (D.C.S.D.N.Y. 1952), 108 F. Supp. 768.

 It is the claim of the plaintiff that the conspiracy referred to by it in the amended Pretrial Order had its origin in 1947 in connection with and following the breaking up of the Interborough News Company and that such conspiracy has continued up to the present time. In the present case there were numerous references to that litigation and situations and events connected therewith. The Court is of the view that the evidence in this case does not adequately connect the events and situations portrayed in that litigation with the events and situations which are of possible pertinence in the present litigation. The Court is of the view that the events and situations which are of possible pertinence in this litigation are the events occurring and the situations arising from and after 1951.

 6. The plaintiff was organized in 1951. It commenced its operations in 1952. It was formed to distribute periodicals in the New York Metropolitan area and has always held itself as such. However, except for a period of time when it distributed in Nassau and Suffolk Counties, its distribution has been largely in Manhattan and in Queens. It appears that in recent years around 70 per cent of its sales are made in Manhattan and 30 per cent in Queens. At the present time it serves around 600 retail outlets in Manhattan. The number of retail outlets it serves in Queens does not appear.

 The defendant American News Company from the time of its formation in 1894 and until around June, 1957, functioned both as a national distributor and as a local wholesaler of periodicals. It also carried on other activities. It was a large corporation with 5400 stockholders. Its stock was and is listed on the New York Stock Exchange. It had over 300 branches in the country. It employed several thousand employees in connection with its periodical distribution activities. The defendant Union News Company, its wholly owned subsidiary, operated around 900 newsstands in the country. The defendant American News Company was the local wholesaler for those newsstands. It appears that the number of Union News Company newsstands in the country has declined to around 700. A substantial number of the Union News Company newsstands were and are located in the Metropolitan area of New York. At the present time there are around 130 Union News Company newsstands in Manhattan, a few in Queens, a few in Kings, and a few in Nassau and Suffolk Counties. Up until about June, 1957, the Union News Company newsstands in the New York Metropolitan area were served by the American News Company as a local wholesaler.

 The defendant Manhattan News Company, founded in 1947, was and is a local wholesaler in Manhattan. Up until 1957 it was a competitor of the American News Company in the wholesale distribution of periodicals in Manhattan. Commencing with its formation, it was and since has been the local wholesaler for the Garfield News Company owned by the defendant Henry Garfinkle. The Garfield News Company operated and operates six or seven newsstands in Manhattan. It operates newsstands at the Newark, New Jersey, Airport and at least one in Bronx.

 In 1955 the defendant Henry Garfinkle and the members of his family acquired 11 per cent of the stock in the defendant American News Company. Soon thereafter he became its president. Upon becoming its president he resigned as president of the defendant Manhattan News Company. The defendant American News Company, notwithstanding its great size and notwithstanding its apparent dominance in the periodical distribution field, commencing in the fifties began to encounter difficulties. It lost franchise after franchise and began sustaining heavy losses. By 1957 it had sustained losses in connection with its distribution of periodicals in excess of $8,000,000.00. In 1957 it decided to cease its activities as a national distributor and local wholesaler. It laid off around 8,000 of its employees and sold all of the equipment used in connection with its distribution activities. By June, 1957, it was entirely out of business as a national distributor and as a local wholesaler. It still retained its stock ownership of the defendant Union News Company. It still has a number of activities unrelated to periodical distribution.

 For some years prior to 1957 the defendant Manhattan News Company had the franchises for most of the major periodicals for Manhattan. However, the defendant Union News Company's newsstands were excluded from those franchises. The defendant Union News Company's newsstands in Manhattan were served by the defendant American News Company. When the defendant American News Company went out of business as a local wholesaler, the defendant Manhattan News Company secured the right to serve the defendant Union News Company's newsstands in Manhattan and has continued to serve them. It has never served the defendant Union News Company's newsstands outside of Manhattan. It was heretofore noted that the plaintiff in its complaint alleged that the conspiracy referred to commenced on or about June 24, 1957. That was the time the American News Company went out of business as a national distributor and local wholesaler.

 7. Select Magazines Incorporated is a national distributor owned by the publishers of several major periodicals. Those publishers were Time, Inc., publisher of "Time," "Life," "Sports Illustrated," and "Fortune"; Readers Digest Association, publisher of "Readers Digest"; McCall Corporation, publisher of "McCall's" and "Redbook"; Meredith Publishing Company, publisher of "Better Homes and Gardens." It also distributed periodicals not published by the owners. Among such periodicals ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.