U.S. Supreme Court, (December 11, 1951)
Docket number: 26
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U.S. Supreme Court LORAIN JOURNAL v. UNITED STATES, 342 U.S. 143 (1951) 342 U.S. 143
LORAIN JOURNAL CO. ET AL. v. UNITED STATES. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO. No. 26. Argued October 17, 1951. Decided December 11, 1951. For 15 years a newspaper publisher enjoyed a substantial monopoly of the mass dissemination of local and national news and advertising in its community, and 99% coverage of the community's families. After the establishment of a competing radio station, the publisher refused to accept local advertising from those who advertised over the radio station. The purpose of the publisher was to destroy the broadcasting company. Held: The publisher was engaged in an attempt to monopolize interstate commerce, in violation of 2 of the Sherman Antitrust Act, and was properly enjoined under 4 from continuing the attempt. Pp. 144-157. 1. The conduct of the publisher was an attempt to monopolize interstate commerce. Pp. 149-152. (a) The distribution within the community of the news and advertising transmitted there in interstate commerce for the sole purpose of immediate and profitable reproduction and distribution to the reading public is an inseparable part of the flow of the interstate commerce involved. P. 152. (b) Without the protection of competition at the outlets of the flow of interstate commerce, the protection of its earlier stages is of little worth. P. 152. 2. The publisher's attempt to regain its monopoly of interstate commerce by forcing advertisers to boycott a competing radio station violated 2 of the Sherman Act. Pp. 152-155. (a) In order to establish this violation of 2, it was not necessary to show that the publisher's attempt to monopolize was successful. Pp. 153-154. (b) A lone newspaper, already enjoying a substantial monopoly in its area, violates the "attempt to monopolize" clause of 2 when it uses its monopoly to destroy threatened competition. P. 154. (c) The right claimed by the publisher as a private business concern to select its customers and to refuse to accept advertisements from whomever it pleases is neither absolute nor exempt from regulation. Its exercise as a purposeful means of monopolizing interstate commerce is prohibited by the Sherman Act. P. 155. [Page 342 U.S. 143, 144] 3. The injunction against the newspaper publisher's continuing to attempt to monopolize interstate commerce does not violate the First Amendment's guaranty of freedom of the press. Pp. 155-156. 4. There is no obvious error in the form or substance of the decree of the District Court; and, in the circumstances of the case, this Court relies upon that court's retention of jurisdiction over the cause for whatever modification the decree may need in the light of the entire proceedings and of subsequent events. Pp. 156-157. 92 F. Supp. 794, affirmed. In a civil action brought by the United States under the Sherman Act, the District Court enjoined appellants from violation of the Act. 92 F. Supp. 794. A direct appeal to this Court was taken under the Expediting Act. Affirmed, p. 157. William E. Leahy argued the cause for appellants. With him on the brief were William J. Hughes, Jr., Parker Fulton and King E. Fauver. Robert M. Weh was also of counsel. Solicitor General Perlman argued the cause for the United States. With him on the brief were Assistant Attorney General Morison, J. Roger Wollenberg, Robert L. Stern, Baddia J. Rashid and Victor H. Kramer. MR. JUSTICE BURTON delivered the opinion of the Court. The principal question here is whether a newspaper publisher's conduct constituted an attempt to monopolize interstate commerce, justifying the injunction issued against it under 2 and 4 of the Sherman Antitrust Act.[Footnote 1] For the reasons hereafter stated, we hold that the injunction was justified. [Page 342 U.S. 143, 145] This is a civil action, instituted by the United States in the District Court for the Northern District of Ohio, against The Lorain Journal Company, an Ohio corporation, publishing, daily except Sunday, in the City of Lorain, Ohio, a newspaper here called the Journal. The complaint alleged that the corporation, together with four of its officials, was engaging in a combination and conspiracy in restraint of interstate commerce in violation of 1 of the Sherman Antitrust Act, and in a combination and conspiracy to monopolize such commerce in violation of 2 of the Act, as well as attempting to monopolize such commerce in violation of 2.[Footnote 2] The District Court declined to issue a temporary injunction but, after trial, found that the parties were engaging in an attempt to monopolize as charged. Confining itself to that issue, the court enjoined them from continuing the attempt. 92 F. Supp. 794. They appealed to this Court under the Expediting Act of 1903, 32 Stat. 823, as amended, 62 Stat. 989, 15 U.S.C. (Supp. IV) 29, and the issues before us are those arising from that finding and the terms of the injunction. [Page 342 U.S. 143, 146] The appellant corporation, here called the publisher, has published the Journal in the City of Lorain since before 1932. In that year it, with others, purchased the Times-Herald which was the only competing daily paper published in that city. Later, without success, it sought a license to establish and operate a radio broadcasting station in Lorain. 92 F. Supp. 794, 796, and see Lorain Journal Co. v. Federal Communications Comm'n, 86 U.S. App. D.C. 102, 180 F.2d 28. The court below describes the position of the Journal, since 1933, as "a commanding and an overpowering one. It has a daily circulation in Lorain of over 13,000 copies and it reaches ninety-nine per cent of the families in the city." 92 F. Supp. at 796. Lorain is an industrial city on Lake Erie with a population of about 52,000 occupying 11,325 dwelling units. The Sunday News, appearing only on Sundays, is the only other newspaper published there.[Footnote 3] While but 165 out of the Journal's daily circulation of over 20,000 copies are sent out of Ohio, it publishes not only Lorain news but substantial quantities of state, national and international news. It pays substantial sums for such news and for feature material shipped to it from various parts of the United States and the rest of the world. It carries a substantial quantity of national advertising [Page 342 U.S. 143, 147] sent to it from throughout the United States. Shipments and payments incidental to the above matters, as well as the publisher's purchases of paper and ink, involve many transactions in interstate or foreign commerce. From 1933 to 1948 the publisher enjoyed a substantial monopoly in Lorain of the mass dissemination of news and advertising, both of a local and national character. However, in 1948 the Elyria-Lorain Broadcasting Company, a corporation independent of the publisher, was licensed by the Federal Communications Commission to establish and operate in Elyria, Ohio, eight miles south of Lorain, a radio station whose call letters, WEOL, stand for Elyria, Oberlin and Lorain.[Footnote 4] Since then it has operated its principal studio in Elyria and a branch studio in Lorain. Lorain has about twice the population of Elyria and is by far the largest community in the station's immediate area. Oberlin is much smaller than Elyria and eight miles south of it. While the station is not affiliated with a national network it disseminates both intrastate and interstate news and advertising. About 65% of its program consists of music broadcast from electrical transcriptions. These are shipped and leased to the station by out-of-state suppliers. Most of them are copyrighted and the station pays royalties to the out-of-state holders of the copyrights. [Page 342 U.S. 143, 148] From 10 to 12% of the station's program consists of news, world-wide in coverage, gathered by United Press Associations. The news is received from outside of Ohio and relayed to Elyria through Columbus or Cleveland. From April, 1949, to March, 1950, the station broadcast over 100 sponsored sports events originating in various states. Substantially all of the station's income is derived from its broadcasts of advertisements of goods or services. About 16% of its income comes from national advertising under contracts with advertisers outside of Ohio. This produces a continuous flow of copy, payments and materials moving across state lines.[Footnote 5] The court below found that appellants knew that a substantial number of Journal advertisers wished to use the facilities of the radio station as well. For some of them it found that advertising in the Journal was essential for the promotion of their sales in Lorain County. It found that at all times since WEOL commenced broadcasting, appellants had executed a plan conceived to eliminate the threat of competition from the station. Under this plan the publisher refused to accept local advertisements in the Journal from any Lorain County advertiser who advertised or who appellants believed to be about to advertise over WEOL. The court found expressly that the [Page 342 U.S. 143, 149] purpose and intent of this procedure was to destroy the broadcasting company. The court characterized all this as "bold, relentless, and predatory commercial behavior." 92 F. Supp. at 796. To carry out appellants' plan, the publisher monitored WEOL programs to determine the identity of the station's local Lorain advertisers. Those using the station's facilities had their contracts with the publisher terminated and were able to renew them only after ceasing to advertise through WEOL. The program was effective. Numerous Lorain County merchants testified that, as a result of the publisher's policy, they either ceased or abandoned their plans to advertise over WEOL."Having the plan and desire to injure the radio station, no more effective and more direct device to impede the operations and to restrain the commerce of WEOL could be found by the Journal than to cut off its bloodstream of existence - the advertising revenues which control its life or demise. . . . . . ". . . the very existence of WEOL is imperiled by this attack upon one of its principal sources of business and income." Id., at 798, 799. The principal provisions of the injunction issued by the District Court are not set forth in the published report of the case below but are printed in an Appendix, infra, pp. 157-159. Sections IV and V B of the decree, relating to notices, are stayed pending final disposition of this appeal. 1. The conduct complained of was an attempt to monopolize interstate commerce. It consisted of the publisher's practice of refusing to accept local Lorain advertising from parties using WEOL for local advertising. Because of the Journal's complete daily newspaper monopoly of local advertising in Lorain and its practically [Page 342 U.S. 143, 150] indispensable coverage of 99% of the Lorain families, this practice forced numerous advertisers to refrain from using WEOL for local advertising. That result not only reduced the number of customers available to WEOL in the field of local Lorain advertising and strengthened the Journal's monopoly in that field, but more significantly tended to destroy and eliminate WEOL altogether. Attainment of that sought-for elimination would automatically restore to the publisher of the Journal its substantial monopoly in Lorain of the mass dissemination of all news and advertising, interstate and national, as well as local. It would deprive not merely Lorain but Elyria and all surrounding communities of their only nearby radio station. There is a suggestion that the out-of-state distribution of some copies of the Journal, coupled with the considerable interstate commerce engaged in by its publisher in the purchase of its operating supplies, provided, in any event, a sufficient basis for classifying the publisher's entire operation as one in interstate commerce. It is pointed out also that the Journal's daily publication of local news and advertising was so inseparably integrated with its publication of interstate news and national advertising that any coercion used by it in securing local advertising inevitably operated to strengthen its entire operation, including its monopoly of interstate news and national advertising. It is not necessary, however, to rely on the above suggestions. The findings go further. They expressly and unequivocally state that the publisher's conduct was aimed at a larger target - the complete destruction and elimination of WEOL. The court found that the publisher, before 1948, enjoyed a substantial monopoly in Lorain of the mass dissemination not only of local news and advertising, but of news of out-of-state events transmitted to Lorain for immediate dissemination, and of [Page 342 U.S. 143, 151] advertising of out-of-state products for sale in Lorain. WEOL offered competition by radio in all these fields so that the publisher's attempt to destroy WEOL was in fact an attempt to end the invasion by radio of the Lorain newspaper's monopoly of interstate as well as local commerce.[Footnote 6] There can be little doubt today that the immediate dissemination of news gathered from throughout the nation or the world by agencies specially organized for that purpose is a part of interstate commerce. Associated Press v. United States, 326 U.S. 1, 14; Associated Press v. Labor Board, . The same is true of national advertising originating throughout the nation and offering products for sale on a national scale. The local dissemination of such news and advertising requires continuous interstate transmission of materials and payments, to say nothing of the interstate commerce involved in the sale and delivery of products sold. The decision in Blumenstock Bros. v. Curtis Pub. Co., 252 U.S. 436, related to the making of contracts for advertising rather than to the preparation and dissemination of advertising. Moreover, the view there stated, that the making of contracts by parties outside of a state for the insertion of advertising material in periodicals of nationwide circulation did not amount to interstate commerce, rested expressly [Page 342 U.S. 143, 152] on a line of cases holding "that policies of insurance are not articles of commerce, and that the making of such contracts is a mere incident of commercial intercourse." Id., at 443. See Paul v. Virginia, 8 Wall. 168, and New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495. That line of cases no longer stands in the way. United States v. South-Eastern Underwriters Assn., 322 U.S. 533. See also, North American Co. v. Securities & Exchange Comm'n, 327 U.S. 686; Indiana Farmer's Guide Pub. Co. v. Prairie Farmer Pub. Co., 293 U.S. 268. The distribution within Lorain of the news and advertisements transmitted to Lorain in interstate commerce for the sole purpose of immediate and profitable reproduction and distribution to the reading public is an inseparable part of the flow of the interstate commerce involved. See Binderup v. Pathe Exchange, 263 U.S. 291, 309; Stafford v. Wallace, 258 U.S. 495, 516; Illinois Central R. Co. v. Louisiana R. Comm'n, 236 U.S. 157, 163; Swift & Co. v. United States, 196 U.S. 375, 398. Unless protected by law, the consuming public is at the mercy of restraints and monopolizations of interstate commerce at whatever points they occur. Without the protection of competition at the outlets of the flow of interstate commerce, the protection of its earlier stages is of little worth. 2. The publisher's attempt to regain its monopoly of interstate commerce by forcing advertisers to boycott a competing radio station violated 2. The findings and opinion of the trial court describe the conduct of the publisher upon which the Government relies. The surrounding circumstances are important. The most illuminating of these is the substantial monopoly which was enjoyed in Lorain by the publisher from 1933 to 1948, together with a 99% coverage of Lorain families. Those factors made the Journal an indispensable medium of advertising for many Lorain concerns. Accordingly, its [Page 342 U.S. 143, 153] publisher's refusals to print Lorain advertising for those using WEOL for like advertising often amounted to an effective prohibition of the use of WEOL for that purpose. Numerous Lorain advertisers wished to supplement their local newspaper advertising with local radio advertising but could not afford to discontinue their newspaper advertising in order to use the radio. WEOL's greatest potential source of income was local Lorain advertising. Loss of that was a major threat to its existence. The court below found unequivocally that appellants' conduct amounted to an attempt by the publisher to destroy WEOL and, at the same time, to regain the publisher's pre-1948 substantial monopoly over the mass dissemination of all news and advertising. To establish this violation of 2 as charged, it was not necessary to show that success rewarded appellants' attempt to monopolize. The injunctive relief under 4 sought to forestall that success. While appellants' attempt to monopolize did succeed insofar as it deprived WEOL of income, WEOL has not yet been eliminated. The injunction may save it. "[W]hen that intent [to monopolize] and the consequent dangerous probability exist, this statute [the Sherman Act], like many others and like the common law in some cases, directs itself against that dangerous probability as well as against the completed result." Swift & Co. v. United States, 196 U.S. 375, 396. See also, American Tobacco Co. v. United States, ; United States v. 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