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Taxi Weekly Inc. v. Metropolitan Taxicab Board of Trade Inc.

decided: July 13, 1976.

TAXI WEEKLY, INC., PLAINTIFF-APPELLEE,
v.
METROPOLITAN TAXICAB BOARD OF TRADE, INC., HOSYND PUBLICATIONS, INC., JACK PLOTSKY, ESTATE OF MORRIS HEIT, ESTATE OF GEORGE MCINTYRE, ALFRED ZEFF, MORRIS LEFKOWITZ, MILTON MARKS, LEON MURSTEIN, GERALD NAREN, IRA SUCHMAN, LEONARD SCHAFFRAN AND BENJAMIN BOTWINICK, DEFENDANTS-APPELLANTS, AND TAXICAB BUREAU, INC., EMPIRE TAXICAB COOPERATIVE, INC., INDEPENDENT TAXICAB OWNERS GUILD, INC., UNITED TAXI OWNERS GUILD, INC., SALVATORE BARON, ESTATE OF ALFRED J. MARKS AND ESTATE OF NATHAN LEVINE, DEFENDANTS



Appeal from treble damage antitrust judgment on a jury verdict in the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, in favor of a taxi industry trade paper publisher against an organization of taxi fleet owners and some of its members and officials. Affirmed.

Smith, Hays and Meskill, Circuit Judges.

Author: Smith

SMITH, Circuit Judge:

Taxi Weekly, Inc. (hereinafter, "the corporation") is a publishing firm which produced two specialized publications, primarily for distribution to the New York City taxi industry. The corporation's larger publication, Taxi Weekly (which was sometimes also distributed under the label Taxi Age), was the leading trade newspaper of the New York taxi industry, until the events giving rise to this lawsuit. The demise of Taxi Weekly and the consequent insolvency of its parent corporation are at the core of this controversy and formed the basis for the action tried below.

Taxi Weekly was sold and distributed mainly in two ways. The large fleet owners of the New York City cab industry would buy Taxi Weekly in bulk and distribute copies free of charge to their driver-employees. Taxi Weekly was also purchased directly by those independent cab drivers who own their cars, rather than work as paid employees of the fleet owners.

With a partial change in the ownership of the corporation, there developed a certain amount of strain in the relationship between the corporation and some of the large fleet owners. In the summer of 1964, the fleet owners began canceling their subscriptions to Taxi Weekly. Soon thereafter, a rival trade paper was formed with the support of the fleet owners. Later, Taxi Weekly began losing its major advertisers. The upshot of these developments was the demise of Taxi Weekly as a commercially successful publication. Since Taxi Weekly was the major source of income for the parent corporation, the demise of Taxi Weekly quickly led to the financial failure of the corporation.

The corporation claims that the failure of Taxi Weekly was not the result of legitimate economic circumstances. Rather, the corporation asserts that Taxi Weekly lost the business of the fleet owners and major advertisers because certain of the fleet owners were determined to destroy Taxi Weekly and organized a successful group boycott of subscribers and advertisers to achieve that end.

Accordingly, the corporation began an antitrust action in the United States District Court for the Southern District of New York (Thomas P. Griesa, Judge), charging that the demise of Taxi Weekly was the result of a group boycott conducted in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and the New York Donnelly Act, Gen. Bus. Law § 340. Named as defendants were the fleet owners who allegedly organized and participated in the boycott of Taxi Weekly, the Metropolitan Taxicab Board of Trade, Inc. (hereinafter, the "MTBOT") which was the trade association of the New York City fleet owners, and the executive director and public relations man of MTBOT.

After a jury trial, the defendants were found liable to the corporation for antitrust damages of $225,000, before trebling.*fn1

The defendants appeal the decision of the district court on three grounds. First, they assert that the court below lacked jurisdiction to entertain the corporation's action. Second, the defendant-appellants argue that the evidence presented at the trial failed, as a matter of law, to establish their antitrust liability. Third, the defendant-appellants maintain that the damages awarded by the jury were excessive and without any basis in fact.

The executive director of the MTBOT, defendant-appellant Botwinick, also raises certain evidentiary and procedural claims which apply only to his position.

Finding no merit in any of the asserted grounds for appeal, we affirm the decision of the district court as to jurisdiction, liability and damages.

I. Jurisdiction

It is well-established that, for jurisdiction under the Sherman Act, it is necessary for the conduct complained of to have "occurred in . . . or substantially affect . . . interstate commerce." Lieberthal v. North Country Lanes, Inc., 332 F.2d 269, 270 (2d Cir. 1964). See also Burke v. Ford, 389 U.S. 320, 321, 19 L. Ed. 2d 554, 88 S. Ct. 443 (1967). The defendant-appellant fleet owners argue that Taxi Weekly was merely a local newspaper with no substantial participation in or effect upon interstate commerce. Because the impact of Taxi Weekly was purely intrastate in nature, the fleet owners argue, the demise of that paper did not have the requisite interstate consequences for Sherman Act jurisdiction.

Judge Griesa, relying on Lorain Journal Co. v. United States, 342 U.S. 143, 72 S. Ct. 181, 96 L. Ed. 162 (1951), rejected this argument, holding that Taxi Weekly did have sufficient interstate impact to establish Sherman Act jurisdiction. We agree with Judge Griesa.

In Lorain Journal, a local, small city newspaper (the Journal) was held to have violated the Sherman Act by refusing to carry advertising for those merchants in the area who also purchased advertising from a local radio station. In rejecting the argument that the conduct complained of was purely intrastate in character, the Supreme Court held that the Journal's actions vis-a-vis the local radio station had sufficient interstate implications for invocation of the Sherman Act. Because the Journal and the radio station disseminated significant amounts of news from out-of-state and advertised many goods manufactured out-of-state, the Journal's actions were held to have sufficient interstate impact for the Sherman Act to have been violated. Lorain Journal, supra at 150-52.

The facts in the instant setting are indistinguishable. Taxi Weekly frequently ran out-of-state stories of interest to the taxi industry in New York City. The advertisers of Taxi Weekly were largely manufacturers of cars and automotive parts who produced at and delivered from plants outside of New York state. Thus, under the standards of Lorain Journal, Taxi Weekly was an instrument of interstate commerce whose improper demise had sufficient interstate implications to establish jurisdiction under the Sherman Act. See also Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. 738, 96 S. Ct. 1848, 48 L. Ed. 2d 338, 44 U.S.L.W. 4683 (1976); Greenville Publishing Co., Inc. v. Daily Reflector, Inc., 496 F.2d 391, 395 (4th Cir. 1974).

The fleet owners attempt to avoid the implications of Lorain Journal by arguing that, in that decision, the Supreme Court was defining the quantum of interstate impact necessary for a substantive violation of the Sherman Act, but not the level of interstate involvement necessary for Sherman Act jurisdiction.

Such an argument is without merit.

"Congress, in passing the Sherman Act, left no area of its constitutional power unoccupied; it 'exercised all the power it possessed.'" United States v. Frankfort Distilleries, 324 U.S. 293, 298, 89 L. Ed. 951, 65 S. Ct. 661 (1945). In other words, interstate commerce for the purposes of the Sherman Act is coterminous with interstate commerce under the Constitution.

Nevertheless, the fleet owners imply that, notwithstanding the teaching of Frankfort Distilleries, interstate commerce for the purposes of Sherman Act jurisdiction is to be defined less expansively than interstate commerce for the substantive purposes of the Sherman Act. Such a construction of the Act implies that certain restrictions in interstate commerce may violate the Sherman Act substantively, but fall outside the Act's jurisdiction.

The conflict between this restrictive construction of the Act and the expansive construction compelled by Frankfort Distilleries is apparent. If the Act constituted an exercise of "all the power" Congress constitutionally possessed to regulate interstate commerce, the jurisdictional definition of interstate commerce cannot be more restrictive than the substantive ...


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