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.

American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres Inc.

decided: August 10, 1971.

AMERICAN MANUFACTURERS MUTUAL INSURANCE CO., AMERICAN MOTORISTS INSURANCE CO., FEDERAL MUTUAL INSURANCE CO. AND LUMBERMENS MUTUAL CASUALTY CO.
v.
AMERICAN BROADCASTING-PARAMOUNT THEATRES, INC., DEFENDANT-APPELLEE



Moore, Kaufman and Timbers,*fn* Circuit Judges.

Author: Kaufman

KAUFMAN, Circuit Judge:

The single issue raised on this appeal from Judge Tenney's dismissal of this antitrust action brought by a group of insurers, commonly known as The Kemper Insurance Companies, was framed by an earlier decision of this Court, reported at 388 F.2d 272 (1967), reversing the district court's previous award of summary judgment to defendant-appellee, American Broadcasting-Paramount Theatres, Inc. (ABC), 270 F. Supp. 619 (1967), and remanding for a trial on the merits.

Although the previous reported opinions in this case together with the decision appealed from now consume nearly 200 pages in the record and together thoroughly recount every factual detail relevant to the issue presented to us, a further distilled account of those facts we consider decisive to set forth the issue and resolve it will be necessary.

On January 9, 1963, ABC instituted a proceeding in the Supreme Court of New York to recover damages based on Kemper's refusal to adhere to a contract which bound Kemper by its terms to sponsor one night each week for twenty-four weeks ABC's quarter hour early evening news program, the "Evening Report." Subsequently the state court struck from Kemper's answer to ABC's complaint, Kemper's defense that the contract constituted an illegal tying arrangement under Section 1 of the Sherman Act, 15 U.S.C. § 1. That allegation then became the basis for this present litigation. Kemper seeks to recover as its principal item of damages, to be trebled pursuant to 15 U.S.C. § 15, ABC's ultimate recovery in the state litigation of $328,865.03. Kemper has satisfied this judgment under protest that it represents enforcement of an unlawful agreement.

Plaintiff's antitrust theory is not complex, but due to the nature of the question that the district court found determinative, its resolution required a careful scrutiny of the convoluted negotiations that led to the final entry by the parties into the formal contract whose legality Kemper has put in question. Kemper's contention is that during a segment of those negotiations in the Spring and Summer of 1962, and sometime prior to the signing of the formal contract which is dated August 15, 1962, ABC exerted unlawful economic pressure and coerced Kemper to sponsor the Evening Report over several local television broadcasting stations affiliated with the ABC network. The details of the arrangements between ABC and the local stations are set forth in the earlier opinions in this case and shall not be repeated. In sum, it is Kemper's claim that it did not wish to sponsor the broadcasts over these local stations but was forced to do so as a condition to being permitted to sponsor broadcasts over other local affiliates of ABC whose sponsorship was desirable to Kemper.

Judge Tenney originally dismissed the complaint and granted summary judgment for ABC on several grounds, including the only one at issue on this appeal, viz., whether, as Judge Tenney concluded in each of his decisions, Kemper could not have been coerced as it claims because it did not seriously bargain for the elimination of the alleged unwanted sponsorships. Judge Tenney was of the view that Kemper had abandoned its initial attempt to exclude the "unwanted" stations from the agreement and that its judgment was not affected by any manner of "coercion" on the part of ABC, but was attributable entirely to Kemper's bargaining strategy. On the appeal from Judge Tenney's grant of summary judgment, we found a "genuine issue of fact" presented with respect to each of the rationales for the dismissal at that early stage of the litigation, and thus were required to remand for a full trial. On remand, Judge Tenney adopted the suggestion made, in our opinion which reversed the dismissal, that judicial economy would be served were he to try separately at the outset the question whether "Kemper's refusal to negotiate" further and more vigorously than it did the question of eliminating unwanted stations "was unreasonable," or whether to the contrary Kemper "reasonably" decided that any attempt to bargain further would have been futile.

Following a three-day trial on this question, Judge Tenney filed a thorough and careful opinion. He found that Kemper "acted unreasonably in failing to negotiate further with ABC in this regard after May 18, 1962," admittedly the last date that Kemper broached the idea of eliminating undesirable stations to ABC. With one exception which we deem immaterial,*fn1 Kemper does not now contend that any of Judge Tenney's subsidiary factual findings are "clearly erroneous," F.R. Civ. P. 52(a). Rather, its position is that Judge Tenney applied erroneous principles of law and that in any event his ultimate conclusion is unsupported by the underlying facts and findings.

We disagree and affirm the judgment below.

I.

A. Preliminary Negotiations

The negotiations that resulted in the August 15, 1962 contract unfolded in three stages. A period of primarily verbal and informal written communications began January 25, 1962, with a preliminary oral offer by a representative of ABC and ended May 4 when Kemper sent ABC a more detailed and formal "order letter." It is interesting that prior to the May 4 letter, the negotiations had not focused on the question whether Kemper would sponsor each of ninety-nine local affiliates of ABC which at that time had "cleared," i.e. agreed to carry, the "Evening Report." The incidental character of the question whether the ninety-nine stations "then going lineup" might be more extensive than optimally desirable to Kemper is indicated by the nature of a formal recommendation, known as the "Silver Report," prepared by Buckingham W. Gunn, senior vice-president and director of broadcasting services of Kemper's advertising agency, Clinton E. Frank, Inc. (the Frank Agency). Gunn prepared the Silver Report prior to an important meeting between ABC, Kemper and Frank representatives which was held on April 17, 1962. Appended to the report were three lists of broadcasting stations, one consisting of the ninety-nine stations cleared lineup, one of fifteen other stations whose clearance was then described as "pending," and the third of thirteen additional stations listed as "non-clear." The twenty-eight stations on the two supplemental lists were located in areas that Kemper had earlier identified internally as desirable advertising markets. Throughout the negotiations, Kemper bargained intensively to protect its interest in these twenty-eight stations and indeed succeeded in substantial part in doing so in the final contract.

The body of the Silver Report included an expression of hope that all of the twenty-eight desirable stations would be cleared, but indicated doubt that the thirteen "noncleared" stations would carry the news program. There was no mention in the body of the report of any unwanted stations, and thus, of course, no suggestion either that the existence of some superfluous outlets would render the sponsorship agreement materially less desirable to Kemper. Although twenty of the ninety-nine stations on the appended list of cleared stations were marked with asterisks as "markets Kemper does not want," those twenty outlets had apparently been identified by telephone to Gunn's secretary only a day or so before April 17 by Mr. DeMark, Kemper's advertising manager, after reviewing the cleared list and speaking "off the top of . . . [his] head." Thus, the Frank Agency seems to have formulated its initial recommendation considering it not an important factor, and indeed with only casually recognizing the issue that there were included some unwanted stations on ABC's then-going lineup.

Later events are entirely consistent with the conclusion that Kemper never viewed the exclusion of unwanted stations as material to the negotiations. Participants at the April 17 meeting were unclear in their testimony and in written submissions to Judge Tenney about the extent that undesirable stations were discussed at that time, although their presence in the ABC lineup was at least pointed out by ABC and Frank Agency officials. But it is agreed that the discussion at that meeting centered primarily on other issues that clearly were of major interest to Kemper, especially the ...


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.