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AD/SAT v. AP

April 24, 1995

AD/SAT, a division of Skylight, Inc., Plaintiff, against ASSOCIATED PRESS, NEWSPAPER, ASSOCIATION OF AMERICA, NATIONAL NEWSPAPER NETWORK, THE NEWARK STAR-LEDGER, THE BIRMINGHAM NEWS COMPANY, THE OAKLAND PRESS CO., THE NEWS & OBSERVER PUBLISHING COMPANY, OKLAHOMA PUBLISHING COMPANY, THE LEXINGTON HERALD-LEADER, DAYTON NEWSPAPERS, INC., COX ENTERPRISES, INC., BALTIMORE SUN, CO., INC., and ADVANCE PUBLICATIONS, INC., Defendants.

Peter K. Leisure, U.S.D.J.


The opinion of the court was delivered by: PETER K. LEISURE

LEISURE, District Judge:

 This is an action brought by AD/SAT, a division of Skylight, Inc. ("AD/SAT") against the Associated Press ("AP"), the Newspaper Association of America ("NAA"), the National Newspaper Network ("NNN"), and a number of individual newspapers, including The Lexington Herald-Leader (the "Herald-Leader" or "defendant"). AD/SAT asserts that defendants have conspired to monopolize the alleged market of transmitting advertising copy and graphics to newspapers, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 (1982) ("Sherman Act § 2"), and that they have conspired together to boycott plaintiff, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1982) ("Sherman Act § 1").

 Defendant now moves this Court for judgment on the pleadings, pursuant to Fed. R. Civ. P. 12(c). Alternatively, defendant moves for summary judgment, pursuant to Fed R. Civ. P. 56. For the reasons stated below, defendant's motions are each granted in part.

 BACKGROUND

 AD/SAT has been engaged in the satellite and electronic delivery of newspaper advertising since 1987. Electronic delivery of newspaper advertising involves the transmission of copy from advertisers to newspapers via satellite as well as by other electronic means of delivery. During 1993, AD/SAT delivered advertisements worth approximately $ 400 million in advertising revenue for the newspapers served. Advertisers pay AD/SAT a transmission fee based on volume, and newspapers pay a fee for the equipment necessary to receive the electronic advertisements and for each advertisement received.

 AP is a cooperative association engaged in the collection, assembly and distribution to newspapers of news and photographs. AP also provides satellite uplink and downlink services used to transmit data to its member newspapers. Prior to the events giving rise to the instant action, plaintiff had paid AP, for a number of years, to use AP's satellite network for the transmission of advertising to AP member newspapers.

 NNN is an unincorporated subdivision of NAA, a trade association of newspapers, and is a joint venture among NAA members to offer advertising packages to advertisers. Herald-Leader, along with the other newspaper defendants, are newspapers that have stopped or have tried to stop doing business with AD/SAT.

 The Herald-Leader is a general-interest broadsheet newspaper published seven days a week in Lexington, Kentucky. See Memorandum of Law in Support of Motion of Defendant Lexington Herald-Leader for Judgment on the Pleadings or for Summary Judgment ("Defendant Mem.") at 4. A portion of Herald-Leader's advertisers are national or regional companies located outside of the Lexington area, and some of these advertisers have available to them as a means of delivering their advertisements to the Herald-Leader the AD/SAT network. Id. at 5. The Herald-Leader started doing business with AD/SAT in 1987, at which time the two entered into a five-year contract. Id. at 6. The AD/SAT network is only one method, among many, available to the Herald-Leader's advertisers, and apparently it has been utilized by only a few of them. *fn1" Id.

 The AdSEND program is a program through which AP has entered the electronic newspaper advertising transmission business. AP's service enables advertisers to transmit advertising copy to United States newspapers in a digital, computer-usable format, and it competes directly with AD/SAT.

 Plaintiff appeared before this Court on September 14, 1994 seeking a temporary restraining order preventing AP from initiating its AdSEND program. The Court neither granted nor denied the TRO, and the parties next appeared before this Court on September 23, 1994, at which time plaintiff's application for a preliminary injunction barring AP and those in active concert with it from initiating, providing, supplying, engaging in, contributing to or participating in the AdSEND program was denied.

 DISCUSSION

 I. Judgment on the Pleadings

 A. Standard

 Federal Rule of Civil Procedure 12(c) provides for judgment on the pleadings. "In deciding a Rule 12(c) motion, [the Court] appl[ies] the same standard as that applicable to a motion under Rule 12(b)(6)." Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir. 1994). Therefore, in reviewing a motion for a judgment on the pleadings, a court must assume the facts alleged by the plaintiff to be true and must liberally construe them in the light most favorable to the plaintiff. See Easton v. Sundram, 947 F.2d 1011, 1014 (2d Cir. 1991), cert. denied, 504 U.S. 911, 118 L. Ed. 2d 548, 112 S. Ct. 1943 (1992). A motion to dismiss on the pleadings may be granted only if it appears certain that no relief could be granted under any set of facts that could be proved consistent with the allegations. See Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984). "The court should not dismiss the complaint for failure to state a claim 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Ricciuti v. N.Y.C. Transit Authority, 941 F.2d 119, 123 (2d Cir. 1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). "The court's task on a Rule 12(b)(6) motion is not to rule on the merits of plaintiffs' claims, but to decide whether, presuming all factual allegations of the complaint to be true, and drawing all reasonable inferences in the plaintiff's favor, the plaintiff could prove any set of facts which would entitle him to relief." Weiss v. Wittcoff, 966 F.2d 109, 112 (2d Cir. 1992) (citations omitted).

 The Federal Rules of Civil Procedure mandate that a complaint must only satisfy the minimum requirements of "notice pleading." See Conley v. Gibson, 355 U.S. 41, 47-48, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Anderson v. Coughlin, 700 F.2d 37, 43 (2d Cir. 1983); Wade v. Johnson Controls, Inc., 693 F.2d 19, 21 (2d Cir. 1982). Moreover, "dismissals on the pleadings are especially disfavored in antitrust cases." Schwartz v. Jamesway Corp., 660 F. Supp. 138, 141 (E.D.N.Y. 1987). *fn2" This Court finds that plaintiff has met the minimum notice requirements dictated by the Rules as regards its Sherman Act § 1 claim but not its Sherman Act § 2 claim.

 B. The Amended Complaint

 This Court notes that while it is true that the Herald-Leader is identified by name only in the caption of the Complaint, it is identified as a defendant, and the Complaint sets out numerous acts by the "defendants," "defendant newspapers," and "newspaper defendants" in furtherance of the alleged conspiracy. Consequently, this Court finds that on the facts of the instant action, the Complaint should not be dismissed summarily as to the Herald-Leader solely on the grounds that it is not specifically named outside of the caption. The Court must determine whether, viewing the claims alleged against "defendants," "newspaper defendants," and "defendant newspapers" as specifically alleging claims against defendant Herald-Leader, plaintiff has satisfied the requirements of notice pleading. *fn3"

 C. Sherman Act § 1

 In order to recover under Sherman Act § 1, AD/SAT must plead and establish that defendants (1) entered into a contract, combination or conspiracy, which was (2) an unreasonable restraint of trade or commerce, and (3) that injury to competition ...


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