United States Court of Appeals

Fifth Circuit

FILED

September 18, 2007

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 05-20710

WILLIAM T. NORRIS, EDWARD ROSSI, STEVE HALPERN, JIMMY O.

PAYNE, SUE PACKWOOD, AND THOMAS STOVALL,

Plaintiffs-Appellants,

versus

THE HEARST TRUST, THE HEARST CORPORATION, AND HEARST

NEWSPAPERS PARTNERSHIP, L.P.,

Defendants-Appellees.

Appeals from the United States District Court

for the Southern District of Texas

Before GARWOOD, DENNIS, and OWEN, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiffs appeal the district court’s order dismissing their

suit under Rule 12(b)(6). Plaintiffs, six former distributors of

the Houston Chronicle, a newspaper owned by defendants (Hearst),

brought this suit against Hearst alleging breach of contract,

wrongful termination under Sabine Pilot Service Inc. v. Hauck, 687
1Sabine Pilot grants a cause of action for at-will employees terminated

solely because they refuse to commit a crime. Id. at 735. 

2

S.W.2d 733 (Tex. 1985),1 and antitrust claims. Five of the six

plaintiffs (all except for Stovall) had previously sued Hearst on

some similar state law claims in Texas state court. They argue

that they had nonsuited the presently relevant claims prior to the

final judgment dismissing that state court suit. Hearst moved to

dismiss the instant complaint under Rule 12(b)(6) on two grounds:

(1) plaintiffs’ claims were barred by res judicata and collateral

estoppel and (2) plaintiffs had not alleged antitrust injury and

lacked antitrust standing. On September 29, 2004, the district

court granted Hearst’s motion, dismissing the antitrust claims of

the five original plaintiffs on those latter grounds and also

dismissing all of their claims on res judicata grounds. Stoval’s

antitrust claims were then dismissed on the same antitrust grounds

applicable to the original plaintiffs. Subsequently, on Stoval’s

motion, his state law claims (other than antitrust) were dismissed

without prejudice. All six plaintiffs have timely appealed. We

affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs are six former distributors of the Houston

Chronicle, a Houston, Texas, daily newspaper published by Hearst.

On June 28, 2002, plaintiffs Payne, Norris, Rossi, Halpern, and

Packwood (collectively, the original plaintiffs) filed a suit
2The asserted criminal activity consists of Hearst’s alleged effort to

force distributors to fraudulently increase their circulation numbers in their

report to Hearst, ostensibly so that Hearst could pass on the falsely augmented

numbers to the Audit Bureau of Circulation (ABC) which in turn furnished them to

advertisers, whose rates are affected or influenced by them.

The state court second amended original petition also arguably included a

separate claim for fraud. However, no such claim is included in the federal

complaint which includes only antitrust, Sabine Pilot and breach of contract

claims. 

3

asserting state law claims against Hearst in the 127th District

Court of Harris County, Texas (the state court). In their original

petition or first amended original petition in state court, the

original plaintiffs claimed that Hearst wrongfully cancelled their

distributor contracts in retaliation for “blowing the whistle” on,

or complaining about, Hearst’s alleged coercion of its distributors

to produce fraudulent Houston Chronicle circulation reports. The

state court sustained a special exception to the whistle-blower

claim, leading the original plaintiffs to file a second amended

original petition alleging breach of contract and wrongful

termination under Sabine Pilot.

2

Hearst moved for summary judgment on all claims and a hearing

was held on November 7, 2003, in state court where the court orally

granted defendants’ summary judgment motion and specifically stated

that the Sabine Pilot cause of action could not stand because the

original plaintiffs were independent contractors, not employees,

and therefore were outside the scope of Sabine Pilot. 

It is undisputed that the defendants’ state court summary

judgment motion covered all claims alleged in the second amended

original petition and this was specifically stated at oral argument
3The motion was supported by excerpts from some 10 depositions in the case

and by affidavits.

4The court observed, inter alia: “Let’s assume high-handed tactics with

regard to contracting with independent contractors, what is your cause of action

there;” “The question we have here is what is the remedy under the law, if any,

with the circumstances you described;” “you can’t sue for tortious interference

with regards to people within a corporation;” “you seek here to recover damages

not to avoid the contract;” “the law does not recognize contorts or whatever they

are called, contractual torts in this instance.” The court further expressed the

view that to the extent it were to grant summary judgment on a pleading basis

which could have been reached by a failure to state a claim special exception,

it would have to grant leave to amend before dismissing the case on that basis.

Defendants also argued, inter alia, that the distributorship contracts had

expired by their terms and/or renewal had been tendered and refused (and, in one

case of early termination, liquidated damages, presumably those called for by the

contract, had been tendered and refused).

5The court also stated “And so on December the 8th plead a breach of

contract case with damages that are sustainable . . . And so I give you that 30

days . . . it’s to plead a valid cause of action with a measure of damages that

is recognized by the law that you have, or I’ll dismiss it.” 

4

on the motion.3 Although the parties and the court focused on the

Sabine Pilot claim, the court also plainly indicated its

determination that no other cause of action had been adequately

alleged.4 The court went on to state that it did “grant the

defendant’s summary judgment that there is no standing by these

plaintiffs to raise a Sabine Pilot cause of action” and then stated

that “I think the law requires that I grant the plaintiffs an

opportunity to plead any other causes of action you may have . . .

and I will do so, and give you until December the 8th. . . . If you

have any other causes of action to plead for breach of contract,

you should make those pleadings. Otherwise, I will dismiss the

case and enter a judgment on the summary judgment dismissing the

case.” (emphasis added).5 The court concluded the November 7, 2003

hearing by stating: “I grant the summary judgment for the Sabine
5

Pilot cause of action as plaintiffs are independent contractors,

not employees at will. Plaintiff granted leave to amend by

December 8 as to any breach-of-contract theory. Otherwise, the

case will be dismissed.” 

The next state court hearing was December 8, 2003, at which

time the state court plaintiffs presented and tendered for filing

their Third Amended Original Petition. This again asserted breach

of contract and Sabine Pilot claims – substantially the same as in

the Second Amended Original Petition – and, for the first time in

the lawsuit, also asserted claims under the Texas and Federal

antitrust laws. Having reviewed the proposed Third Amended

Original Petition, the state court denied leave to amend, the

defense then inquired “would the Court intend to enter a final

appealable order at this time,” and the court responded, “Just did.

The Clerk will give everybody a copy.” 

The order in question, which was signed and filed by the judge

on December 8, 2003, recites that the case came on to be heard on

the defendant’s motion for summary judgment, that the court had

previously sustained that motion and granted plaintiffs leave to

amend by December 8, that the court, after review of plaintiffs’

Third Amended Original Petition, would not grant leave to file it,
6The entire text is as follows:

“CAME ON TO BE HEARD Defendant’s Summary Judgment in the above

styled and numbered cause, wherein WILLIAM T. NORRIS, ET AL. are

Plaintiffs and HOUSTON CHRONICLE PUBLISHING COMPANY is Defendant.

The Court, having previously sustained Defendant’s Special

Exceptions and Summary Judgment and having granted Plaintiffs leave

to amend, set December 8, 2003 as the deadline for the Plaintiffs to

replead. After review of Plaintiffs’ Third Amended Petition, the

Court will not grant leave to amend to add a new cause of action and

dismisses this claim. It is therefore

ORDERED, ADJUDGED, and DECREED that this case is DISMISSED.

Costs are taxed to Plaintiffs.

SIGNED this 8th day of December, 2003.”

6

and that “it is therefore ORDERED, ADJUDGED and DECREED that this

case is DISMISSED” and “Costs are taxed to Plaintiffs.”6

On December 11, 2003, defendants wrote the court and requested

certain clarifying formal changes in the December 8 judgment

(enclosing a suggested form of judgment) and a hearing was held

thereon on December 19, 2003. At the beginning of the December 19

hearing, plaintiffs’ counsel announced that plaintiffs were taking

a non-suit “as to everything,” “all causes of action,” and advised

that the day before he had filed the instant suit in federal court.

Defendants objected on the basis that the court had already

disposed of the case by its December 8 order. The court then

signed the defendants’ suggested corrected final judgment form,

stating that it was doing so because “I believe this corrected

final judgment clearly sets out the Court’s prior rulings.” The

court stated that it added the time of signing (9:45 a.m.) to the

corrected final judgment so it would be clear that this was after

the plaintiffs’ non-suit earlier that same day. The December 19

“Corrected Final Judgment” concludes by stating that it is: 
7The judgment is entitled “Corrected Final Judgment” and its full text is

as follows:

“CAME ON TO BE HEARD in regular order the motion of Defendant

Houston Chronicle Publishing Company for summary judgment on all

claims, pursuant to TEX. R. CIV. P. 166a [sic]. Due notice having

been given, the Court on November 7, 2003, considered the motion,

the response, all exhibits and affidavits filed in connection

therewith, the pleadings and argument of counsel, and all other

matters properly before it. After due consideration, the Court is

of the opinion and finds that Defendant’s Motion for Summary

Judgment is well taken and should be granted, that there is no

genuine issue as to any material fact, and that Defendant Houston

Chronicle Publishing Company is entitled to judgment as a matter of

law. It is accordingly

ORDERED, ADJUDGED AND DECREED that Defendant’s Motion for

Summary Judgment be and is hereby GRANTED in all respects. It is

further 

ORDERED, ADJUDGED AND DECREED that Plaintiffs take nothing of

and from Defendant, and that Defendant is entitled to recover all

costs taxed herein, for which let execution issue if not timely

paid.

After hearing on the Motion for Summary Judgment on November

7, 2003, the Court entertained Plaintiffs’ request for leave to

amend their petition, and set a subsequent hearing for December 8,

2003. All parties appeared in court on December 8, and Plaintiffs

presented their proposed third amended petition, which the Court

construed as a motion by Plaintiffs for leave to amend and replead.

After due consideration of same, the Court DENIES leave to amend the

petition to add new causes of action, and orders that this case be

and is hereby finally DISMISSED WITH PREJUDICE. It is accordingly

ORDERED, ADJUDGED AND DECREED that this case be and is hereby

FINALLY DISMISSED with prejudice to the refiling of same. All

relief not expressly granted is denied. The Court’s previous orders

of November 7 and December 8 are brought forward, merged herein and

made final. THIS IS A FINAL JUDGMENT, which disposes of all claims

and all parties before the Court.

SIGNED at Houston, Texas this 19th day of December, 2003. at

9:45.”

7

“ORDERED, ADJUDGED AND DECREED that this case be and is

hereby FINALLY DISMISSED with prejudice to the refiling

of same. All relief not expressly granted in denied.

The Court’s previous orders of November 7 and December 8

are brought forward, merged herein and made final. THIS

IS A FINAL JUDGMENT, which disposes of all claims and all

parties before the Court.”7
8The state court plaintiffs on January 16, 2004, filed a motion for new

trial in the state suit, requesting that, in light of the federal suit and to

avoid unnecessary duplication, a new trial be granted conditional on “plaintiffs’

non-suit[ing] the balance of their case within 30 days of the granting of the new

trial.” The state court denied the motion March 1, 2004. The state court

plaintiffs gave notice of appeal to the state Fourteenth Court of Appeals, but

that Court ultimately dismissed the appeal as untimely on June 10, 2004. 

8

The state district court’s orders of December 8 and December

19, 2003, have never been set aside, by appeal, mandamus, bill of

review, or otherwise.8

Meanwhile, on December 18, 2003, the original plaintiffs

joined by Stovall, a distributor in the same position and with the

same claims as the original plaintiffs, filed the instant case in

federal district court below, the case that is now before us on

this appeal. The claims in the complaint here are essentially the

same as those filed in the state court case, with the addition of

essentially the same state and federal antitrust claims as those

the original plaintiffs attempted to add in their third amended

state court petition. 

In the present case, the district court below on September 29,

2004, granted Hearst’s Rule 12(b)(6) motion to dismiss. The

district court determined that all claims of the original

plaintiffs were barred by res judicata and collateral estoppel due

to the previous state court judgment. The district court also

dismissed the antitrust claims of all six plaintiffs on the grounds

that they failed to allege antitrust injury and lacked antitrust

standing. The September 29, 2004 memorandum opinion essentially

disposed of all claims and parties except for Stoval’s state law
9

claims which were subsequently dismissed without prejudice on his

motion. 

II. DISCUSSION

On appeal, the original plaintiffs argue that the district

court erroneously concluded that res judicata and collateral

estoppel barred all the claims of the original plaintiffs because

they effectively nonsuited all their claims in state court. They

assert that Texas law provides that a nonsuit prior to final

judgment relieves the state court of jurisdiction over any causes

of action, pleaded or not, and thereby prevents application of res

judicata or collateral estoppel in this case. They do not,

however, challenge the res judicata dismissal of their Sabine Pilot

claim. Plaintiffs further argue that the allegations set forth in

the complaint are sufficient to allege antitrust violations,

damages and standing. 

Hearst argues that all claims of the original plaintiffs are

barred by res judicata and collateral estoppel. Hearst further

contends that the original plaintiffs’ effort to nonsuit the nonantitrust claims in state court cannot avoid the preclusive effects

of the state court suit since the purported nonsuit came after the

state court had heard and granted Hearst’s summary judgment motion

and dismissed the suit. Hearst also claims that the original

plaintiffs could not have nonsuited their antitrust claims because

those claims were never actually filed in state court. Therefore,
10

according to Hearst, the original plaintiffs’ antitrust claims are

precluded because they are based on the same subject matter and

could have been litigated in the prior case.

Hearst also argues that all the plaintiffs lack standing to

bring the antitrust claims. Hearst claims that the alleged conduct

does not amount to anticompetitive behavior and the plaintiffs are

neither consumers nor competitors in a relevant market.

Furthermore, Hearst contends the distributors can neither plead nor

prove any direct causal link between the claimed injuries and the

alleged wrongful antitrust act, and that the alleged injuries are

of a personal nature rather than anti-competitive, and are not the

type of injuries the antitrust laws were designed to remedy.

Because the anti-trust claims of Stovall (who was not a party to

the state court suit and is not subject to res judicata) and those

of the original plaintiffs are identical, and we conclude that the

district court properly dismissed all those antitrust claims on the

above stated grounds, we do not address whether the antitrust

claims of the original plaintiffs are also barred by res judicata

or collateral estoppel.

A. Res judicata dismissal of state law contract and Sabine

Pilot claims.

As the parties and the district court have recognized, the

preclusive effect of prior state court proceedings on federal

proceedings is determined by the treatment those state court

proceedings would receive in the courts of the state – here, Texas
9That is appellants’ sole argument in this connection. They make no

contention (and apparently did not contend below) that a Rule 12(b)(6) motion is

an improper vehicle to support a res judicata (or collateral estoppel) dismissal.

While we have said that “generally a res judicata contention cannot be brought

in a motion to dismiss,” we have likewise held that any such contention is waived

by failure to properly raise it on appeal. See Test Masters Educational

Services, Inc. v. Singh, 428 F.3d 559, 570 n.2 (5th Cir. 2005). See also Moch

v. East Baton Rouge Parish School, 548 F.2d 594, 596 n.3 (5th Cir. 1977). But

see Wright & Miller, Federal Practice and Procedure: Civil 3rd § 1357 at 721, 728

(“. . . affirmative defenses that have been considered on a motion to dismiss

under Rule 12(b)(6) include . . . the barring effect of res judicata and related

preclusion principles”, citing numerous decisions). And, it is clearly proper

in deciding a 12(b)(6) motion to take judicial notice of matters of public

record. See Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994).

11

– in which those prior proceedings were held. Production Supply

Co., Inc. v. Fry Steel Inc., 74 F.3d 76, 78 (5th Cir. 1996). We

understand the Texas rule on res judicata to be that stated in

Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996), as

follows:

“Res judicata precludes relitigation of claims that have

been finally adjudicated, or that arise out of the same

subject matter and that could have been litigated in the

prior action. . . . It requires proof of the following

elements: (1) a prior final judgment on the merits by a

court of competent jurisdiction; (2) identity of parties

or those in privity with them; and (3) a second action

based on the same claims as were raised or could have

been raised in the first action.”

The original plaintiffs do not contend on appeal that, at least

respecting their state law contract and Sabine Pilot claims, the

above identified second and third res judicata elements are

unsatisfied. Rather, they contend that they took a nonsuit in the

state court case on December 19, 2003, before the judgment of that

date (see note 7 supra) was pronounced or entered, and that hence

the state court proceedings do not give rise to res judicata or

collateral estoppel.9
10See also, e.g., Collins v. Waldo, 291 S.W.2d 360, 361-62 (Tex. Civ. App.,

Eastland, 1956, n.w.h.) (plaintiff sued the Waldos and an insurance company; the

Waldos on June 23 filed a mtoion for summary judgment, the court had a hearing

on the motion on July 29 and took it under advisement, on August 4 the court

wrote all counsel a letter advising that the motion for summary judgment would

be granted and “requested the preparation of a form of judgment for entry,” on

August 17 plaintiff filed a motion for nonsuit without prejudice as to all

defendants and that motion was heard August 23 and it was then granted as to the

insurance company but denied as to the Waldos, as to whom the court rendered

judgment sustaining their motion for summary judgment and rendering judgment that

plaintiffs take nothing against them; on plaintiff’s appeal, the Eastland Court

of Civil Appeals held this was proper, rejecting plaintiff’s claim that she was

entitled to a nonsuit of her claims against the Waldos). 

12

It is recognized that under Texas law “[s]ubject to certain

conditions, a plaintiff who takes a nonsuit is not precluded from

filing a subsequent suit seeking the same relief,” Aetna Casualty

& Surety Co. v. Specia, 849 S.W.2d 805, 806 (Tex. 1993), and “a

nonsuit may have the effect of vitiating earlier interlocutory

orders.” Hyundai Motor Co. v. Alvarado, 892 S.W.2d 853, 854 (Tex.

1995). However, “[o]nce a judge announces a decision that

adjudicates a claim, that claim is no longer subject to the

plaintiff’s right to nonsuit,” and that applies to a judge’s

announcement of decision on a partial summary judgment motion which

seeks relief on less than all of the plaintiff’s pending claims.

Id. at 855.10

As noted, the state court on November 7 heard argument on the

defendants’ summary judgment motion, which sought judgment on all

claims alleged in the original plaintiffs’ only live pleading,

their second amended original petition. The court at that hearing

“granted summary judgment for the Sabine Pilot cause of action”

because plaintiffs were independent contractors rather than at will
13

employees, ruled that no legally valid contract claim had been

adequately alleged, and gave the plaintiffs until December 8, 2003,

to replead, stating “if you [plaintiffs ]have any other causes of

action to plead for breach of contract, you should make those

pleadings. Otherwise, I will dismiss the case and enter a judgment

on the summary judgment dismissing the case.” At the December 8,

2003, hearing, plaintiffs tendered their third amended original

petition, which for the first time added Texas and federal

antitrust claims (and otherwise was largely the same as the second

amended original petition), and the court denied leave to file it.

The defense then asked if “the court intended to enter a final

appealable order at this time” and the court replied “Just did.

The Clerk will give everybody a copy,” referring to the order of

December 8, 2003 (see note 6 supra), signed by the judge and filed

that date. This order recites that the court had “sustained

Defendant’s Special Exceptions and Summary Judgment,” granted

plaintiffs leave to amend with a December 8, 2003 deadline,

reviewed plaintiffs’ tendered third amended petition and denied

leave to file it, and that “ it is therefore . . . ORDERED,

ADJUDGED, and DECREED that this case is DISMISSED” and “Costs are

taxed to Plaintiffs.” We hold that the state court rendered final

judgment on the merits on December 8, 2003, and hence the original

plaintiffs’ attempted nonsuit on December 19, 2003, was not

effective with respect to the claims disposed of by the December 8,

2003 order. This follows from Hyundai and Collins v. Waldo, as
11And see, e.g., Lehmann v. Har-Con Corp., 39 S.W.3d 191, 204 (Tex. 2001)

(“granting more relief than the movant is entitled to makes the order reversible,

but not interlocutory,” citing Young v. Hodde, 682 S.W.2d 236, 237 (Tex. 1984),

205 (the finality requirement for appeal that there “be some clear indication

that the trial court intended the order to completely dispose of the entire case”

is satisfied by “[l]anguage . . . that the case is dismissed . . . if there are

no other claims by other parties”); Young, 682 S.W.2d at 237 (“erroneous

rendition of a final judgment is not fundamental error” and is not

“jurisdictional in nature”).

Moreover, the original plaintiffs do not contend that the December 19, 2003

judgment would not have been res judicata if it had been entered before – rather

than immediately after – the nonsuit had been orally requested earlier that

morning. Thus, it is significant that the state court, in open court at the

December 19, 2003, hearing, stated that she was signing the December 19, 2003

judgment because “this corrected final judgment clearly sets out the Court’s

prior rulings.” This can only mean that the state court intended and understood

its December 8, 2003 order to constitute a final judgment on the merits as to the

entire case and all claims therein.

12We merely assume, arguendo only, that the December 19, 2003 judgment

could not, of itself, support a res judicata determination since it was entered

after the nonsuit announcement earlier that day. However, we note the December

19, 2003 judgment has never been set aside, whether by appeal, mandamus, bill of

review or otherwise. In essence, the argument of the original plaintiffs

constitutes a collateral attack on the December 19, 2003 judgment, and such an

attack can succeed only if the December 19 judgment was wholly void, not merely

voidable or erroneous. See 48 Tex. Jur. 3d, Judgments § 356 (“where a judgment

is collaterally attacked, the party attacking it bears the burden of proving the

judgment void . . . It must also be proved that, for the reason claimed, the

judgment was rendered without jurisdiction.”); § 357 (such “must be established

14

well as other authorities. See also, e.g., Peek v. Berry, 184

S.W.2d 272, 274 (Tex. 1945) (“where the trial court sustains

exceptions which leaves no cause of action pending, and the

plaintiff refuses to amend, a final judgment of dismissal for this

reason is res adjudicata of another suit upon the same cause of

action”); Jones v. City of Uvalde, 144 S.W.2d 932 (Tex. Civ. App.

San Antonio 1940, writ ref’d) (same).11

We do not address whether res judicata bars any of appellants’

state or federal anti-trust claims. We reject appellants’

complaints as to the district court’s holding that all of their

other claims were barred by res judicata.12
with manifest certainty”). We need not decide whether the original plaintiffs

have made such a showing of voidness with respect to the December 19, 2003

judgment. 

13The Clayton Act, 15 U.S.C. § 15(a), provides a private damage action

(treble damages) for any person “injured in his business or property by reason

of anything forbidden in the antitrust laws.”

The Robinson Patman Act makes it unlawful under certain circumstances “to

discriminate in price between different purchasers of commodities of like grade

and quantity” (15 U.S.C. § 13(a)). Other provisions of the Robinson Patman Act

also in general denounce similar discrimination between purchasers of goods in

respect to commissions or allowances regarding such purchases, or in services

rendered in respect thereto, or in the payment for or furnishing of services or

facilities in respect there (15 U.S.C. §§ 13(c), (d) & (e)). No such price (or

commission or services or facilities) discrimination is alleged in the complaint

and appellants make no Robinson Patman Act argument on appeal, so we do not

further consider or address it. 

The Complaint also invokes “the Texas Free Enterprise and Antitrust Act of

1983 (15 Tex. Bus. & Comm. Code § 15.01, § 15.05(a), (b)).” As stated in Scott

v. Galusha, 890 S.W.2d 945, 950 (Tex. App. Ft. Worth 1994, writ denied), Texas

courts construe this act “in harmony with federal judicial interpretations of

comparable federal antitrust statutes”, citing Tex. Bus. & Comm. Code § 15.04,

which in part provides that “. . . this Act . . . shall be construed in harmony

with federal judicial interpretations of comparable federal antitrust statutes.

. . .” This includes following federal judicial interpretations requiring and

identifying antitrust injury and antitrust standing. Scott at 950. Nor do

appellants urge on appeal any particular Texas law rule distinct or departing

from federal judicial interpretations of federal antitrust statutes.

Accordingly, we do not further notice the Texas law in this respect.

15

B. Antitrust claims; all plaintiffs lack antitrust injury and

standing.

The complaint invokes “the Sherman Act (15 U.S.C. § 1 & § 2)

the Clayton Act (15 U.S.C. § 15(a)) and the Robinson Patman Act (15

U.S.C. § 13(a)).”13

The complaint alleges that the plaintiffs, until their here

complained of termination “in the late 1990s”, were and for many

years had been, pursuant to contracts with Hearst, distributors of

the Houston Chronicle, a daily newspaper of general circulation in

the greater Houston, metropolitan area, owned by Hearst.

Plaintiffs further alleged that in 1995 the Justice Department
14Plaintiffs also allege a confused melange of actions on the part of

Hearst which appear to have no relationship whatever to plaintiffs or their

claimed injury or the relevant market (alleged to be metropolitan Houston), such

as circa 1970 “arm-twisting” by Hearst of President Nixon to support the

“Newspaper Preservation Act” which passed in that year, or activities by Hearst

in Seattle or San Francisco or other places clearly well removed from the alleged

relevant market here, in none of which other areas is it alleged that any

plaintiff ever had any actual, potential, attempted or intended relationship. 

16

approved Hearst’s acquisition of the Houston Post, the only

competitor daily newspaper in the greater Houston metropolitan

area, and that – at least after Hearst subsequently closed the Post

– the Chronicle became a monopoly in the “relevant market,” namely

“the greater Houston metropolitan area.” Though the relevant

product is not expressly identified as such, it is obviously the

Chronicle and only the Chronicle. The only consumers or users of

that product identifiable from the Complaint are the Chronicle’s

subscribers (or readers) and those who advertise in it. There is

no allegation of any harm – or increased price or cost to –

subscribers (or readers).

The only harm or injury to plaintiffs alleged in the complaint

is that Hearst terminated them as distributors of the Chronicle

because they refused (or complained of) its requests that they

certify to the Audit Bureau of Circulations falsely inflated

numbers of “Home Delivery Subscribers,” it being alleged that this

was desired by Hearst to increase the Chronicle’s advertising sales

and revenue in that “Advertisers rely on Defendant’s claims of paid

subscribers in deciding whether to buy space in Defendant’s

newspapers.”14
15Appellants’ brief appears to assume that they may expand their complaint

on appeal because the district court denied them leave to amend. However,

appellants’ brief has no point of error complaining of the denial of leave to

amend, it contains no argument that the trial court erred in denying leave to

amend, and it does not reference the content of any proposed amended pleading.

Moreover, examination of the record reveals that over a month after appellants

had filed their response to appellees’ motion to dismiss, appellants filed a

motion to add an additional party plaintiff (another former Chronicle

distributor, stated to be similarly situated to the other six) and a proposed

amended complaint which was no different than the existing complaint except only

for the addition of the name of the proposed new plaintiff. Appellees opposed

17

Our review of the district court’s determination of a Rule

12(b)(6) motion is de novo. For purposes of ruling on such a

motion, the court “must assume that the . . [plaintiff] can prove

the facts alleged in its . . . complaint. It is not, however,

proper to assume that the . . . [plaintiff] can prove facts that it

has not alleged or that the defendants have violated the antitrust

laws in ways that have not been alleged.” Assoc. Gen. Contractors

of Cal. v. Cal. St. Council, 103 S.Ct. 897, 902 (1983). And, on

such a motion, courts “are not bound to accept as true a legal

conclusion couched as a factual allegation,” Papasan v. Allain, 106

S.Ct. 2932, 2944 (1986). A naked allegation of conspiracy or

agreement, without more specific factual allegations, is not to be

accepted as sufficient to state a claim under Section 1 of the

Sherman Act. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1966

(2007). To withstand a Rule 12(b)(6) motion, the complaint must

allege “more than labels and conclusions,” “a formulaic recitation

of the elements of a cause of action will not do” and “[F]actual

allegations must be enough to raise a right to relief above the

speculative level . . .” Id. at 1965.15
the motion to add the additional party plaintiff, and the district court denied

it. This proposed amendment makes no changes in any allegations except party

names. On September 29, 2004, the district court filed its opinion and entered

its Rule 54(b) judgment dismissing all claims of the original plaintiffs; on

October 12, 2004, appellants (other than Stoval) filed their motion for new trial

(which states no grounds); on December 21, 2004, appellants moved for leave to

file an amended complaint but neither tendered any such complaint nor stated

anything about what sort of new allegations were contemplated beyond saying they

would “plead with more specificity as to facts and explanation of their

components and theories relating to monopoly and antitrust claim;” requesting 45

days after the court’s ruling on the motion for new trial in which to do so.

Appellees opposed the motion for new trial and the motion to file an amended

complaint. The district court ultimately denied both motions in July 2005. No

proposed amended complaint has ever been tendered. In these circumstances, there

is no basis for us to treat appellants any differently than if they had never

sought to amend the complaint. 

16See, e.g., Atlantic Richfield Co. v. USA Petroleum Co., 110 S.Ct. 1884,

1893 (1990) (antitrust injury requirement applicable where underlying violation

is per se violation of Section 1 of the Sherman Act); Doctor’s Hosp. of Jefferson

v. S.E. Med. Alliance, 123 F.3d 301, 305 (5th Cir. 1997) (“Antitrust injury must

be established for the plaintiff to have standing under section 1 or section 2

of the Sherman Act.”); Walker v. U-Haul Co. of Mississippi, 747 F.2d 1011, 1014-

15 (5th Cir. 1984); Bayou Bottling, Inc. v. Dr. Pepper Co., 725 F.2d 300, 303

(5th Cir. 1984). 

18

The Supreme Court has long held that suits under section 4 of

the Clayton Action (15 U.S.C. § 15(a)) for violation of either

Section 1 or Section 2 of the Sherman Act require not only injury

to the plaintiff’s business or property resulting from the alleged

violation, but also a showing of antitrust injury and standing.16

Thus, in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 97 S.Ct. 690,

697 (1977), the Court, observing that “[t]he antitrust laws . . .

were enacted for ‘the protection of competition not competitors’”,

went on to state that a plaintiff “must prove more than injury

causally linked to” an antitrust violation, namely: 

“Plaintiffs must prove antitrust injury, which is to say

injury of the type the antitrust laws were intended to

prevent and that flows from that which makes defendants’

acts unlawful. The injury should reflect the

anticompetitive effect either of the violation or of
19

anticompetitive acts made possible by the violation.”

Id. at 697.

Brunswick also observed that although the plaintiffs’ “loss

occurred ‘by reason of’ the unlawful acquisition, it did not occur

‘by reason of’ that which made the acquisition unlawful” and hence

did not constitute antitrust injury. Id. And, in Assoc. Gen.

Contractors the court reaffirmed Brunswick, in holding that union’s

antitrust complaint was properly dismissed under Rule 12(b)(6) for

lack of antitrust injury, despite adequate allegation of “a causal

connection between an antitrust violation and harm to the Union and

. . . that the defendants intended to cause that harm.” Id., 103

S.Ct. at 908. The Court also observed that “the Union was neither

a consumer nor a competitor in the market in which trade was

restrained,” id. at 909, and that the existence of businesses

directly injured by the same alleged antitrust violations “whose

self-interest would normally motivate them to vindicate the public

interest in antitrust enforcement” weighed against the Union’s

antitrust standing. Id. at 909. As we summarized in McCormack v.

National Collegiate Athletic Ass’n, 845 F.2d 1338, 1341 (5th Cir.

1988):

“Even a plaintiff injured in his business or property

must, in order to sue for damages, show ‘antitrust

injury,’ that is, ‘injury of the type the antitrust laws

were designed to prevent and that flows from that which

makes defendants’ acts unlawful.’ Finally, even if the

plaintiff meets these requirements, the court must

consider whether he is a ‘proper plaintiff’ to sue for

damages, examining such facts as (1) whether the

plaintiff’s injuries or their causal link to the
17We note that the complaint does not appear to allege a conspiracy and may

well be insufficient in that respect to state a Section 1 claim. See, e.g.,

Johnson v. Hospital Corporation of America, 95 F.3d 383, 392 (5th Cir. 1995)

(“Section one applies only to concerted action. . .”); Dillard v. Merrill Lylnch,

Pierce, Fenner Inc., 961 F.2d 1148, 1158 (5th Cir. 1992) (“In order to state a

claim for a violation of Section 1, a plaintiff must allege (1) the existence of

a conspiracy . . .”). A manufacturer’s unilateral termination of a distributor

does not violate Section 1. Doctor’s Hosp. of Jefferson at 307. However, we

assume, arguendo, that the complaint adequately alleges a Sherman Act violation

in this respect. 

20

defendant are speculative, (2) whether other parties have

been more directly harmed, and (3) whether allowing this

plaintiff to sue would risk multiple lawsuits,

duplicative recoveries, or complex damage apportionment.”

(footnotes omitted)

See also Atlantic Richfield Co., 110 S.Ct. at 1892 (“Antitrust

injury does not arise for purposes of § 4 of the Clayton Act . . .

until a private party is adversely affected by an anticompetitive

aspect of the defendant’s conduct”); Hughes v. Tobacco Institute

Inc., 278 F.3d 417, 423 (5th Cir. 2001) (“Parties whose injuries,

though flowing from that which makes the defendant’s conduct

unlawful, are experienced in another market do not suffer antitrust

injury.”)

Plaintiffs were not consumers of the Chronicle or its

advertising services, and they were not producers or sellers of

competing publications or media. Hearst’s conduct in causing, or

attempting to cause, falsely enhanced Chronicle subscriber numbers

to be furnished to the Audit Bureau in order to increase sales of,

and/or rates charged for, advertising in the Chronicle, to the

extent violative of Section 1

17 and/or Section 2 of the Sherman Act,

would be so because such conduct would tend to cause injury either
21

to those desiring to use the Chronicle to advertise in, the

consumers (of the paper’s advertising services) – or to other media

selling advertising, the paper’s competitors (in the sale of

advertising). Moreover, unlike plaintiffs, such parties are the

only ones directly injured by the harm to competition caused or

posed by the asserted antitrust violations and they are hence the

appropriate parties to sue for any such violation. Plaintiffs are

neither consumers (buyers of advertising, or users of advertising

such as subscribers) nor competitors (sellers of advertising) in

the relevant market. Plaintiffs have not suffered antitrust

injury. See also, e.g., Mathias v. Daily News, LP, 152 F.Supp. 2d

465, 479 (S.D.N.Y. 2001); Volmar Distrib. v. New York Post Co., 825

F.Supp. 1153,1158 (S.D.N.Y. 1993). 

Plaintiffs contend that they have sustained antitrust injury

because they were terminated due to their refusal to participate in

the antitrust violations. We have rejected that approach. See,

e.g., Feeney v. Chamberlain Mfg. Co., 831 F.2d 93 (5th Cir. 1987)

(commission salesman terminated by defendant for protesting

defendant’s giving one large customer, whom plaintiff did not

service, greater discounts than other of its customers, including

those serviced by plaintiff, in violation of the Robinson Patman

Act, 15 U.S.C. § 13(a), has not suffered antitrust injury, even

though the result of the conduct was fewer sales to customers

plaintiff serviced and hence fewer commissions to him). Other
22

courts are in accord. See, e.g., Gregory Marketing Corp. v.

Wakefern Food Corp., 787 F.3d 92 (3d Cir. 1986) (plaintiff,

distributor for defendant manufacturer, terminated by defendant for

protesting and refusing to fabricate explanation for, special

discounts given by manufacturer to one large customer in violation

of the Robinson Patman Act; complaint properly dismissed on Rule

12(b)(6) motion for lack of antitrust injury); In re Industrial Gas

Antitrust Litigation, 681 F.2d 514 (7th Cir. 1982).

Plaintiffs’ reliance on Blue Shield of Virginia v. McCready,

102 S.Ct. 2540 (1982), is plainly misplaced. There McCready, who

subscribed to her employer’s Blue Shield of Virginia prepaid group

health plan, was treated by a psychologist but Blue Shield declined

to pay any of the costs thereof (and so McCready had to pay)

because its plan reimbursed subscribers only for psychotherapy

services provided by psychiatrists but not for those provided by

psychologists. McCready sued Blue Shield under Section 4 of the

Clayton Act alleging that the Blue Shield plan’s provision in

question was the result of a conspiracy and agreement between Blue

Shield and the Neuropsychiatric Society of Virginia (psychiatrists)

contrary to Section 1 of the Sherman Act. The Court held that the

district court erred in dismissing McCready’s suit for lack of

antitrust injury. The Court noted that McCready was an appropriate

plaintiff:

“McCready has paid her psychologist’s bills; her injury

consists of Blue Shield’s failure to pay her. Her

psychologist can link no claim of injury to himself
18See, e.g., SAS of Puerto Rico v. Puerto Rico Telephone Co., 48 F.3d 39,

48 (1st Cir. 1995), reading McCready “as a case in which the plaintiff was a

purchaser in the very market distorted by the antitrust violation.” With respect

to the “inextricably intertwined” language in McCready, the SAS Court noted that:

23

arising from his treatment of McCready; he has been fully

paid for his service and has not been injured by Blue

Shield’s refusal to reimburse her for the cost of his

services. And whatever the adverse effect of Blue

Shield’s action on McCready’s employer, who purchased the

plan, it is not the employer as purchaser, but its

employees as subscribers, who are out of pocket as a

consequence of the plan’s failure to pay benefits.” Id.

at 2548.

It went on to hold that:

“As a consumer of psychotherapy services entitled to

financial benefits under the Blue Shield plan, we think

it clear that McCready was ‘within that area of the

economy . . . endangered by [that] breakdown of

competitive conditions’ resulting from Blue Shield’s

selective refusal to reimburse.” Id. at 2549. (citation

omitted).

This, we believe, is the key to McCready. In Assoc. Gen.

Contractors, the Court distinguished McCready, noting that “the

Sherman Act was enacted to assure customers the benefits of price

competition” and that “McCready . . . was a consumer of

psychotherapeutic services . . . injured by defendants’ conspiracy

to restrain competition in the market for such services,” id., 103

S.Ct. at 908, while “[in] this case, however, the [plaintiff] Union

was neither a consumer nor a competitor in the market in which

trade was restrained.” Id., 103 S.Ct. at 909. That is likewise

the present situation as plaintiffs here are neither consumers nor

competitors in the market attempted to be restrained. Other courts

have similarly construed McCready.

18
“. . . such a test would certainly be very hard to square with the

longstanding limitations on claims by stockholders, employees and

even indirect purchasers. Nothing in McCready suggests that it

intended to overrule those limitations even though it would be very

easy to describe such injuries as inextricably intertwined in the

ordinary suggestive sense of the phrase.

In all events, the Supreme Court simply reinterpreted the

phrase as a legal conclusion in Associated General Contractors,

saying (after a reference to the phrase): ‘In this case [Associated

General Contractors] however, the Union was neither a consumer nor

a competitor in the [restrained] market. . . .’ 459 U.S. at 539,

103 S.Ct. at 909. It did the same thing more recently in Atlantic

Richfield v. USA Petroleum Co., 495 U.S. 328, 345, 110 S.Ct. 1884,

1895, 109 L.Ed.2d 333 (1990) (injury not ‘inextricably intertwined’

because competitor not injured by ‘the anticompetitive effects’ of

the challenged conduct). We do not think that anything more need be

said about the matter.” Id.

See also Serpa Corp. v. McWane, Inc., 199 F.3d 6, 13 (1st Cir. 1999) (“. . . we

decline to interpret McCready broadly,” noting that there “the plaintiff was a

consumer in the market directly affected by the antitrust violation” and that the

Supreme Court had applied McCready’s “inextricably intertwined” language “as a

legal conclusion” applicable “to the consumers and competitors”). 

24

Finally, antitrust standing is not achieved by the bare

allegation, untied to anything else, that Hearst “has integrated

vertically into the distribution of its paper in the relevant

market” and “has become a competitor of its distributors.” There

is no allegation suggesting that this had anything to do with, or

even came about before, plaintiffs were, as alleged in the

complaint, “either terminated or resigned because Plaintiffs either

refused to participate in or complained about” the demanded false

overstating of paid subscribers in their reports to the Audit

Bureau. As previously observed, no facts are alleged tending to

indicate any Robinson Patman Act violation and no such violation

has been argued on appeal (see note 13 supra). Nor – apart from

the mentioned allegations concerning falsely inflating the number

of paid subscribers in order to enhance advertising revenue (which
19In G.K.A. Beverage, the court affirmed a Rule 12(b)(6) dismissal of the

plaintiffs’ distributors’ antitrust claims, approving an earlier decision (A.G.S.

Electronics v. B.S.R., 460 F.Supp. 707, 710 (S.D.N.Y.), aff’d, 591 F.2d 1329 (2d

Cir. 1978) (table), holding that where the defendant manufacturer of record

players acquired another manufacturer thereof thus monopolizing record player

manufacturing, and the defendant acquiring manufacturer then terminated the

distributorship the plaintiff had had with the acquired manufacturer, the

plaintiff “lacked standing to assert an antitrust claim” because its injuries all

flowed from the termination of its distributorship “‘rather than any

anticompetitive effects of the defendant’s acquisition of’ [the acquired

manufacturer].” C.K.A. Beverage goes on to note that in the case before it the

plaintiffs were distributors of bottled soft drinks and defendant Honickman was

a bottler distributing its own product, and plaintiffs complained, inter alia,

that Honickman wrongfully achieved a bottling monopoly and “they suffered

antitrust injury in the elimination of competition in retail distribution between

themselves and Honickman.” The Second Circuit concluded this did not amount to

antitrust injury, stating:

“However, the so-called ‘distribution monopoly’ is derived entirely

from Honickman’s share of the bottling market. Honickman’s

‘distribution monopoly’ thus involves only his product. Moreover,

a vertically structured monopoly can take only one monopoly profit.

. . . If, as alleged, appellees successfully conspired to monopolize

soft drink bottling in the New York area, they could reap no

additional gain from monopolizing the retail distribution of soft

drinks. . . . Once having achieved the alleged bottling monopoly,

25

we have already addressed) – is there any allegation that the

termination of the plaintiffs had any adverse effect on anyone

else, either by increasing the price or decreasing the availability

of the Chronicle to its subscribers or other readers or by damaging

competitors or otherwise. As alleged, the Chronicle has a monopoly

of the product in question, being the only daily newspaper of

general circulation throughout the greater Houston area. For the

Chronicle to terminate a distributor and itself take over the

Chronicle distribution previously performed by the terminated

distributor is not in these circumstances some separate antitrust

violation on account of which the terminated distributor has

antitrust injury and antitrust standing. See G.K.A. Beverage Corp.

v. Honickman, 55 F.3d 762, 767 (2d Cir. 1995).19 See also, e.g.,
therefore, appellees’ sole incentive is to select the cheapest

method of distribution.”

20We further note the Supreme Court’s frequent reminders that “the primary

purpose of the antitrust laws is to protect interbrand competition.” State Oil

Co. v. Khan, 118 S.Ct. 275, 282 (1997). Essentially the same statements appear

in Leegin Creative Leather Products v. PSKS, Inc., 127 S.Ct. 2705, 2715 (2007);

Business Electronics Corp. v. Sharp Electronics, 108 S.Ct. 1515, 1521 (1988); and

Continental TV Inc. v. GTE Sylvania Inc., 97 S.Ct. 2548, 2558 n.19 (1977).

26

RSA Media Inc. v. AK Media Group, Inc., 260 F.3d 10, 14 (1st Cir.

2001) (“distributor lacks antitrust standing because it cannot have

suffered antitrust injury”); Serpa, 199 F.3d at 14 (same).20

We hold that the district court properly dismissed the

antitrust claims for lack of antitrust injury and antitrust

standing.

III. CONCLUSION

The judgment of the district court is 

AFFIRMED.