The opinion of the court was delivered by: DUFFY
Plaintiffs Michael Lepore and Vito Lepore seek an order preliminarily enjoining the defendant New York News Inc. (the News) from terminating their carrier agreements and from committing other acts of harassment. Before reaching the merits of this particular motion, it is necessary to place it in the context of previous developments both in this case and in a related case.
On May 11, 1972 the plaintiffs filed this action alleging that the News had violated both the Sherman Act and the Clayton Act. Plaintiffs asked for damages and injunctive relief, and on July 21, 1972 Judge Gurfein issued a preliminary injunction.
That injunction which, as modified, is still in effect prevents the defendant from terminating plaintiff Michael Lepore's carrier agreement and from committing other acts of harassment. However, Judge Gurfein's injunction is limited in two ways: first, it protects only the plaintiff Michael Lepore but does not protect the other plaintiff Vito Lepore; and second, it is limited to the Coop City franchise and does not extend to the remaining geographic areas in which plaintiffs operate.
Prior to the issuance of Judge Gurfein's injunction and, indeed, prior to the filing of this suit, thirty-one independent home delivery dealers of the News brought a separate and independent action in which all of the parties in this suit were named as defendants. Bowen v. New York News Inc., No. 67 Civ. 1030 (S.D.N.Y., filed August 27, 1973).
On June 29, 1973 Judge Bauman filed an opinion in the Bowen case in which he generally upheld the independent delivery dealers' contentions that the News' distribution system violates the federal antitrust laws. In an attempt to explain Judge Bauman's decision to its franchise dealers, the News sent a form letter dated July 13, 1973 to all of its franchise dealers, including both of the plaintiffs in this case. In that letter the News stated: "During the period of the appeal The News will not enforce the fair trade provisions of its contract with you." This letter was of an admittedly provisional nature and explicitly stated that there would be a need for future modifications of the franchise agreement. However, the letter was quite clear and unequivocal in stating that the fair trade provisions of the contract would not be enforced during the pendency of the appeal.
In reliance on this letter the plaintiff Vito Lepore, immediately after the presidential price freeze ended on August 12, 1973, raised his prices to his carrier boys in the Bay Shore-Brentwood area. He suggested to these carriers that they, in turn, raise the prices to their customers.
On August 27, 1973 Judge Bauman entered his judgment in the Bowen case. That judgment enjoined the defendant News from fixing the price at which wholesalers could resell the papers but the operation of the judgment was stayed pending the determination of an appeal.
Following the entry of the judgment and its stay, the News on September 5, 1973 sent another letter to all of its franchise dealers. This second letter informed the franchise dealers of the stay in the Bowen case and concluded by stating: "For the present we will continue doing business as usual." This represented a change from the News' position in its July 13, 1973 letter.
By this time the News had evidently learned of plaintiff's price increase and it contacted some of plaintiff's customers to verify the increase. On September 12, 1973 John White, Home Delivery Manager of the News, telephoned Vito Lepore and informed him that in view of Judge Bauman's stay in the Bowen case the News intended to adhere to the franchise contract and planned to enforce the price restrictions.
On September 14, 1973 plaintiffs brought an order to show cause why the defendant should not be preliminarily enjoined from terminating their carrier agreements and from committing other acts of harassment. Defendant opposed the issuance of the injunction and argument was held on this matter on September 21, 1973 during which the operative facts were stipulated.
In order to succeed on this motion the plaintiffs have, under the traditional standards of equity, the burden of proving both a strong likelihood of ultimate success on the merits and irreparable damage if the relief sought is not granted. See, e.g., Gulf & Western Indus. Inc. v. Great Atlantic & Pacific Tea Co., 476 F.2d 687, 692-93 (2d Cir. 1973); National Ass'n of Letter Carriers v. Sombrotto, 449 F.2d 915, 920-21 (2d Cir. 1971). See also ABA, Antitrust Developments: 1955-1968 94-97 (1968).
As to the first requirement, a strong likelihood of ultimate success, it is clear that the plaintiffs have met their burden. Plaintiffs' suit is based on a claim that the News is violating the federal antitrust laws. Only one month ago Judge Bauman, after a long, careful and thorough study of the entire News distribution system, reached the same basic conclusion. It is ...