The opinion of the court was delivered by: NEAHER
In these consolidated cases, plaintiffs challenge the legality of a newspaper publisher's pricing schedule as violative of § 1 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 4 and 15.The following facts are not in dispute.
The plaintiffs distributed copies of the New York Post to home delivery carriers. Until the Fall of 1978, defendant News Group Publications, Inc., the successor to the New York Post Corp., sold the Post to wholesale distributors, defendants Long Island News Corp., Crescent News Distributors, Inc., and Woodhaven News Company, which in turn sold the newspaper to plaintiffs, the Post suggested a home delivery retail price of $.75, raised to $1.00 in May 1978, for a six-day delivery week. The Post claims that seven of the plaintiffs were charging in excess of $1.00 per week by the summer of 1978.
On October 30, 1978 the Post changed its method of distribution. It appointed the wholesalers as agents for delivery to and collection of payment from the plaintiffs and increased the suggested retail home delivery price to $1.25 per week as follows:
"1. The suggested retail price for the Monday through Saturday home delivered issues will be increased to $1.25.
"2. The Price to be charged to each individual Dealer by the New York Post Corporation for the Monday through Saturday issues will be (a) $.77 to the extent that the total price charged by such Dealer to his home delivery subscribers does not exceed $1.25, plus (b) 60% of the total price in excess of $1.25 charged by such Dealer." Exh. B, letter from News Group Publications to its distributors, in support of defendant's motion in limine.
Under this schedule, plaintiffs, who are free to charge any price they desire, split the gross, approximately 60/40, if they charge the suggested retail price or any higher price for the Post. The suggested retail price rose to $1.65 per week by March 1980.
The case is before the Court upon defendant News Group's motion in limine,
which presents one issue: whether the Post's home delivery pricing schedule is lawful under § of the Sherman Act.
"The traditional framework of analysis under § 1 of the Sherman Act is familiar and does not require extended discussion. Section 1 prohibits "[e]very contract, combination . . . or conspiracy, in restraint of trade or commerce." Since the early years of this century a judicial gloss on this statutory language has established the "rule of reason" as the prevailing standard of analysis. Standard Oil Co. v. United States, 221 U.S. 1, 31, 55 L. Ed. 619, 31 S. Ct. 502 (1911). Under this rule, the fact finder weighs all of the circumstances of a case in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition. Per se rules of illegality are approximate only when they relate to conduct that is manifestly anticompetitive. As the Court explained in Northern Pac. R. Co. v. United States, 356 U.S. 1, 5, 2 L. Ed. 2d 545, 78 S. Ct. 514 (1958), "there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49-50, 53 L. Ed. 2d 568, 97 S. Ct. 2549 (1977) (footnotes omitted).
Although News Group contends that its pricing schedule should not be measured by the per se rule of illegality, neither party has addressed whether it is "manifestly anticompetitive." They have, instead, disputed whether the pricing schedule constitutes resale price fixing, a practice prohibited by the Sherman Act. Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 647-48, 64 L. Ed. 2d 580, 100 S. Ct. 1925 (1980) (per curiam); Yentsch v. Texaco, Inc., 630 F.2d 46, 51 (2d Cir. 1980) (cases cited therein).
Defendant contends that a similar arrangement has been upheld in Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690 (5th Cir. 1975), cert. denied, 424 U.S. 943, 47 L. Ed. 2d 349, 96 S. Ct. 1412 (1976).In Kestenbaum, the Court found that plaintiff had failed to offer any evidence to show injury attributable to defendant's wrongful price fixing activity. Id. at 694. At this juncture, the Court has nothing before it concerning issues of evidence of injury. More importantly, News Group's pricing schedule contains none of the indicia of illegal price fixing.
"[A] case of illegal resale price maintenance is made out when a price is announced and some course of action is undertaken or threatened contingent on the willingness or unwillingness of the retailer to adopt the price. The action need not necessarily fit under the rubric "coercion", but it must involve making a meaningful event depend on compliance or noncompliance with the "suggested" or stated price. The dealers in [United States v. Parke, Davis & Co., 362 U.S. 29, 4 L. Ed. 2d 505, 80 S. Ct. 503 (1960)] and [Albrecht v. Herald Co., 390 U.S. 145, 19 L. Ed. 2d 998, 88 S. Ct. 869 (1968)] were told that the harassment directed against them would end as soon as they acceded to the manufacturer's price desires. The cancellation of the lease in [Simpson v. Union Oil Co., 377 U.S. 13, 12 L. Ed. 2d 98, 84 S. Ct. 1051 (1964)] was a direct consequence of the refusal to charge the manufacturer's desired price. The other cases adhere to the same pattern. Cf. Lehrman v. Gulf Oil ...