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02/24/89 Michigan Citizens For An v. Richard Thornburgh

February 24, 1989

MICHIGAN CITIZENS FOR AN INDEPENDENT PRESS, ET AL., APPELLANTS

v.

RICHARD THORNBURGH, UNITED STATES ATTORNEY GENERAL, ET AL. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, C.A. NO. 88-02322. PREVIOUS REPORTED AT 868 F.2D 1285. 1989.CDC.68



UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

APPELLATE PANEL:

Wald, Chief Judge; Robinson, Mikva, Edwards, Ruth B. Ginsburg, Starr, Silberman, Buckley, Williams, D.H. Ginsburg and Sentelle, Circuit Judges. Silberman, Circuit Judge, with whom Robinson, Circuit Judge, joins, concurring in the denial of rehearing en banc. Wald, Chief Judge, with whom Mikva and Edwards, Circuit Judges, concur, dissenting from denial of rehearing en banc. Chief Judge Wald and Circuit Judges Mikva, Edwards and Ruth B. Ginsburg would grant the suggestion for rehearing en banc.

A concurring statement of Circuit Judge Silberman, joined by Circuit Judge Robinson, is attached.

A dissenting statement of Chief Judge Wald, joined by Circuit Judges Mikva and Edwards, is attached.

Circuit Judges Starr and D. H. Ginsburg did not participate in this matter.

On Appellants' Suggestion for Rehearing En Banc.

ORDER

Appellants' Suggestion for Rehearing En Banc has been circulated to the full court. The taking of a vote was requested. Thereafter, a majority of the judges of the court in regular active service did not vote in favor of the suggestion. Upon consideration of the foregoing it is

ORDERED, by the court en banc, that the suggestion is denied. It is

FURTHER ORDERED, by the court en banc, on its own motion, that the stay of implementation of the joint operating agreement reimposed by the order of February 2, 1989, shall remain in effect until 5:00 p.m. E.S.T. on March 6, 1989, to afford appellants an opportunity to apply to the Supreme Court for a stay beyond that date. IN AGREEMENT

SILBERMAN, Circuit Judge, with whom ROBINSON, Circuit Judge, joins, concurring in the denial of rehearing en banc:

The Chief Judge offers two justifications to slip Chevron's restraining leash. Neither is grounded on an actual construction of the statutory language (which she concedes is ambiguous) nor its legislative history. Instead, the Chief Judge first interposes a theoretical economic argument to challenge the reasonableness of the Attorney General's interpretation of the statute. The Attorney General's conclusion that the Detroit Free Press is in "probable danger of financial failure" is unreasonable, we are told, because it is based on an economically unreasonable prediction--that the Detroit News is willing to continue to price below its costs in order to drive the Free Press to close its doors.1 This is unreasonable because sophisticated firms do not--over a significant period of time--cut prices in order to drive a competitor out of the market, unless entry barriers prevent new competitors from emerging. If new competitors could emerge, the costs incurred in driving the old competitor out of the market would be wasted. See Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 121, 93 L. Ed. 2d 427, 107 S. Ct. 484 n.17 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 589, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).

I quite agree with that proposition. But I cannot see its relevance to this case. Congress obviously would not have passed the Newspaper Preservation Act unless it had perceived entry barriers that prevented an effective challenge to a monopoly newspaper. And, although it is not up to us to question Congress' judgment, surely we have seen nothing in this case to suggest Congress was misinformed. Whether those entry barriers, as a theoretical matter, are properly analyzed as due to a natural monopoly2 or a variation on that classic economic theme (I am beginning to doubt that anyone truly understands the newspaper market) is beside the point. Congress authorized the Attorney General to prevent a city newspaper editorial monopoly--even at the risk of a shared economic monopoly--because it thought the unusual economics of the newspaper industry compelled that exception to the antitrust laws. Otherwise, one newspaper may achieve a stunning fusion of economic and editorial (political) power due to the loss of actual and potential competition. The Chief Judge's basic quarrel thus is with the premise of the statute itself.

Although the appellants did not present the theoretical gloss that the Chief Judge puts on their argument, they did rely--as does the Chief Judge--on the Attorney General's statement that hypothetically Detroit could support both papers. That would be so if--and this is a big if--both papers raised their prices. The Attorney General, however, never predicted how long that hypothetical situation would last or how it might be enforced.3 There is the rub. As Congress realized, see S. REP. No. 535, 91st Cong., 1st Sess. 2-4 (1969), one of the competing newspapers in any American city seems all too often to achieve a dominant position, which means that a newspaper owner who holds an advantage in a two newspaper city might be irrational if he did not attempt to drive his competitor out of business. Otherwise, he might wake up one day to realize that he had lost the superior position and was already himself in the downward spiral. In other words, an unregulated long-term two newspaper competitive equilibrium may well be a rarity (if not a chimera), and surely no newspaper owner in such a market can be confident that he and his competitor are in that exceptional city. See 116 Cong. Rec. 1788 (1970) (Statement of Sen. Fong) ("It [is] increasingly difficult for many newspapers to coexist in the same community under conditions of all-out economic competition."). Accordingly, the ALJ found that the "strategies pursued by the Free Press and News . . . ...


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