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Alpert's Newspaper Delivery Inc. v. New York Times Co.

decided: May 17, 1989.

ALPERT'S NEWSPAPER DELIVERY INCORPORATED, F & M NEWS SERVICES (A PARTNERSHIP OF ROBERT SOLTESZ AND FRANK DICENZO), GREYSTONE NEWS SERVICE INC., JERICHO NEWS INC., MITCHELL'S THE WORLDS FINEST NEWSPAPER DELIVERY SERVICES INCORPORATED AND YELLOWSTONE HOME DELIVERY INC. ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS, JERICHO NEWS, INC., PLAINTIFF-APPELLANT,
v.
THE NEW YORK TIMES COMPANY, DEFENDANT-APPELLEE



Jericho News Inc., a newspaper home delivery service, appeals from a summary judgment in favor of The New York Times Co. in the Eastern District of New York, Glasser, J., in an antitrust action brought against the Times by independent newspaper deliverers on Long Island, New York. The district court held that most of the issues raised by the deliverers were subject to the res judicata effect of the dispositions of the identical claims adjudicated in Belfiore v. The New York Times Co., 654 F. Supp. 842 (D.Conn. 1986), aff'd, 826 F.2d 177 (2d Cir. 1987), cert. denied, 484 U.S. 1067, 108 S. Ct. 1030, 98 L. Ed. 2d 994 (1988), because both lawsuits were controlled by the Metropolitan Routedealers Association, an association of independent newspaper deliverers. The district court also found insufficient support for the remaining allegations. Affirmed.

Oakes, Chief Judge, Lumbard, and Feinberg, Circuit Judges.

Author: Lumbard

LUMBARD, Circuit Judge

Jericho News Inc., a newspaper home delivery service doing business in Long Island, New York, appeals from a judgment of the District Court for the Eastern District of New York, Glasser, J., granting the motion for summary judgment of defendant The New York Times Co. in an anti-trust action brought against it by Jericho News and other newspaper delivery companies located within the Eastern District. The deliverers, all of whom deliver the Times and other newspapers on Long Island, allege that the establishment by the Times of its own home delivery routes (T-Routes) violates the Sherman Antitrust Act, 15 U.S.C. §§ 1 et seq., and unlawfully discriminates against the independent deliverers.

The district court found that the judgment of the District Court for the District of Connecticut, Zampano, J., in Belfiore v. The New York Times Co., 654 F. Supp. 842 (D.Conn. 1986), aff'd, 826 F.2d 177 (2d Cir. 1987), cert. denied, 484 U.S. 1067, 108 S. Ct. 1030, 98 L. Ed. 2d 994 (1988), precludes the antitrust claims of the plaintiffs in the present case on most of their claims and that the Times is entitled to summary judgment on the merits of the remaining claims. Jericho News Inc. alone appeals, arguing that the principles of preclusion do not apply when the only "identity" between the plaintiffs in this action and those in Belfiore is the fact that all of the delivery companies were members in the Metropolitan Routedealers Association (MRA), an organization composed of newspaper delivery services including all those named in this case and in Belfiore. The MRA, although a named party in neither suit, has provided much of the money and strategy for both, and has been sufficiently active in both suits to support a finding of identity of parties. We therefore affirm.

I.

This action, like Belfiore before it, involves delivery of the New York Times in the New York City metropolitan area. For many years, home and business deliveries of the Times were effected exclusively through delivery companies independent of the Times and of any other publication. The informal arrangement under which the Times was delivered, and under which it and its competitors are to a large extent still delivered, was established during the 1930s by a publishers' association composed of the Times and the numerous other morning dailies existing at the time. The association made territorial assignments to the various independent deliverers, each of whom delivered all of the papers in its respective territory. As the number of morning dailies of general circulation dwindled, the publishers' association has ceased to be a viable entity, but the informal delivery agreement has generally survived.

During several years prior to 1982, the Times began to deliver its paper itself in certain areas not served by independent dealers pursuant to the informal distribution arrangement. Beginning in 1982, the Times began expanding its network of these T-Routes to various parts of the tri-state area that historically had been served by independent deliverers. The T-Routes were established first in Fairfield County, Connecticut, the place of business of the Belfiore plaintiffs, and, by 1985, they had been introduced to the Long Island territories of Jericho News and its co-plaintiffs. These T-Routes, which the Times alleges were created to provide cheaper delivery of its paper and thereby arrest a four-year decline in its home delivery circulation, created direct competition within each affected territory between the incumbent independent and the new T-Route operated by the Times. The Times has also discontinued its policy of referring new home delivery subscribers to the independents; it instead assigns new subscribers to its T-Route deliverers. The Times still permits the independents to enroll subscribers, but they maintain that commercial realities prevent them from doing so because the Times offers its paper to its T-Route subscribers at a price below its own costs.

This is the third lawsuit filed by independent deliverers in the aftermath of the Times' establishment of the T-Route system across the New York region. The first action was filed in 1984 in the District of New Jersey but was never litigated, Metropolitan Routedealers' Association v. The New York Times Co., C.A. No. 84-187 (D.N.J.). The second was Belfiore, in which a number of independents alleged that the Times' practice is designed to run them out of business by depriving them of the subscriber density necessary to remain viable. Both Belfiore and this action were brought with the assistance of the MRA.

Before considering the merits, it is first necessary to revisit Belfiore. That case, decided in the District of Connecticut in 1986 and affirmed by us in 1987, forms the basis of the claim and issue preclusion findings upon which the summary judgment appealed from is based.

Belfiore was brought in the District of Connecticut by independent newspaper deliverers in Fairfield County when the Times expanded its T-Route system into that county. They alleged that the Times had abused monopoly power, conspired to monopolize and attempted to monopolize under Section 2 of the Sherman Act, 15 U.S.C. § 2, and had fixed prices and conspired with others in restraint of trade under Section 1 of the Sherman Act. In addition to damages, the deliverers sought an injunction prohibiting the Times from using any persons or businesses other than themselves to provide home delivery of the paper in Fairfield County and enjoining the Times from providing home delivery of the paper at a price below that which the independents could provide.

The district court, granting the Times' summary judgment motion in all respects, found that the Times did not possess a monopoly in the relevant market of "general circulation daily newspapers." The court also rejected the deliverers' attempt to exclude from the relevant market the Times' two principal competitors, the New York Daily News and the New York Post, by defining that market more narrowly as "general interest daily newspapers directed primarily at upscale readers." The court also found that there was insufficient evidence to support a claim of attempt to monopolize, that no coerced pricing had occurred and that the Times had not conspired with co-defendants MCI Corporation (which ran the Times' toll-free telephone subscription service) and several wholesale deliverers either to restrain trade or to monopolize.

The district court expressly noted that the "admitted sponsor and orchestrator" of the action was the MRA, which had, since at least 1977, been amassing a "'legal fund' to challenge the Times should it ever attempt to modify or eliminate the independent dealer system of home delivery." Belfiore, 654 F. Supp. at 844 n. 2. The MRA was, by admission of counsel for the Belfiore plaintiffs both in the district court and during argument before us, supervising the strategy of the litigation, had actually filed the complaint, had furnished legal assistance and was paying the independents' counsel in Belfiore. Judge Zampano denied the MRA leave to intervene, however, reasoning that the MRA's intervention would overbroaden discovery; we interlocutory affirmed by unpublished order, Belfiore, et al. v. The New York Times Co., et al., No. 83-7640 (2d Cir. Nov. 23, 1983). In that order, we held that the district court had not abused its discretion by basing its decision in part on the fact that attorneys for the MRA were representing the plaintiffs and that the MRA's interests were therefore adequately protected.

In affirming the final judgment in favor of the Times, Belfiore v. The New York Times Co., 826 F.Zd 177 (2d Cir. 1987), cert. denied, 484 U.S. 1067, 108 S. Ct. 1030, 98 L. Ed. 2d 994 (1988), we rejected the independents' proposal to redefine the market definition as the market for the sale of newspaper advertising throughout the New York metropolitan area. The independents based this proposed revised definition upon the premise that the Times appeals to an "upscale" readership and is therefore able to charge more for advertising lineage than its cheaper, yet more widely circulated, sisters. They alleged that once the independents were gone, this monopoly would be entrenched and the competitors could be forced to relinquish a greater share of the market. We rejected this definition primarily because no evidence was ...


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