Source: http://www.law.cornell.edu/supremecourt/text/368/464
Timestamp: 2013-12-22 08:36:05
Document Index: 198133516

Matched Legal Cases: ['§ 2', '§ 1', '§ 4', '§ 1', '§ 2', '§ 1', '§ 1', '§ 1', '§ 2', '§ 15']

Lou POLLER, Petitioner, v. COLUMBIA BROADCASTING SYSTEM, INC., et al. | Supreme Court | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews Lou POLLER, Petitioner, v. COLUMBIA BROADCASTING SYSTEM, INC., et al.
368 U.S. 464 (82 S.Ct. 486, 7 L.Ed.2d 458)
Argued: Nov. 13 and 14, 1961.
[HTML] Morris Wolf, Philadelphia, Pa., for petitioner.
broadcasting station located in Milwaukee. The station was affiliated with the Columbia Broadcasting System network and was of the alleged value of $2,000,000. Poller charged that the respondents in 1954 entered into an unlawful conspiracy to eliminate WCAN from the broadcast field in Milwaukee.
It was a part of the conspiracy that respondent Holt was to secure in his name an option to purchase WOKY, a competing but inferior UHF broadcaster in Milwaukee. When and if the Federal Communications Commission amended its multiple ownership rules, then under consideration, so as to permit CBS to own UHF stations in addition to its VHF ones, Holt was to assign his option to CBS if it so elected. In that event, it was agreed CBS would cancel its affiliation agreement with WCAN pursuant to its option in that contract and in due course consummate its purchase of WOKY. This would place WCAN in the precarious position of competing with the two major national networks with stations in Milwaukee. Being unable to survive such competition, its only course would be to liquidate at distressed prices its valuable equipment and facilities only recently acquired. CBS might then acquire them at its own price for use in its new operation which was necessary because of the inferior quality of those of WOKY. CBS would then have Midwest's superior facilities and equipment which with the WOKY license would enable it to start broadcasting at a minimum expense and the least possible delay. Poller further claimed that the overall purpose of CBS was to destroy UHF broadcasting, which had only been permitted to enter the field in 1952, in order to protect its vast interest in VHF stations throughout the United States. Finally, he alleged the conspiracy was so successful that CBS not only acquired WCAN at a loss of $1,450,000 to Midwest but that the latter was obliged to buy the facilities and equipment of WOKY at exorbitant prices and to agree to continue broadcasting from the latter's premiseswhich was done 'in order to pretend that there was no restraint of trade or elimination of competition * * *.' However, WCAN continued in business only 10 days after CBS started its broadcasts on February 17, 1955. CBS discontinued UHF broadcasting in 1959 when it became affiliated with a Milwaukee VHF station.
Respondents appear to place most reliance on the Salant testimony, and we shall, therefore, take it up in some detail. It projects three defenses, the first being that there was no conspiracy for the following reasons: CBSTV was not a separate entity but only a division of CBS, and therefore there could be no conspiracy between the two; Holt, the cover man in securing the option and purchase of WOKY, 'had been given the particular job' by CBS and therefore was not a conspirator; and Bartell never shared in any illegal purpose that would bring him into the conspiracy. Secondly, in any event, the only issue in the case is the legality of the cancellation of the affiliation agreement by CBS which was merely the legal exercise by CBS of 'the normal right of a producer to select the outlet for its product.' And, finally, the monopoly charges are entirely 'frivolous.' The trial judge accepted the second defense.
It may be that CBS by independent action could have exercised its granted right to cancel WCAN's affiliation upon six months' notice and independently purchased its own outlet in Milwaukee. However, if such a cancellation and purchase were part and parcel of unlawful conduct or agreement with others or were conceived in a purpose to unreasonably restrain trade, control a market, or monopolize, then such conduct might well run afoul of the Sherman Law. See Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 624625, 73 S.Ct. 872, 889, 97 L.Ed. 1277 (1953); Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 375, 47 S.Ct. 400, 404, 71 L.Ed. 684 (1927). Poller alleges and the affidavits, depositions, and exhibits indicate much more than the free exercise by CBS of the granted right of cancellation. A conspiracy is alleged to restrain trade in the Milwaukee television market; to eliminate WCAN from that market; to secure its facilities at depressed prices; and to occupy the UHF band in that market exclusively. The right of cancellation was merely one of the means used to effectuate this conspiracy. Moreover, 'in its wider sense' Poller claims that a part of their conspiracy was 'to wipe out the most outstanding UHF operator in the county (WCAN) and by wiping him out they destroyed the UHF industry, which was a threat to them, despite their protestations, because of the enormous economic investment they had in VHF.'
It is argued that CBS cannot conspire with itself. However, this begs the question for the allegation is that independent parties, i.e., Holt and Bartell, conspired with CBS and its officers.
While respondents' affidavits assert that Holt acted in good faith as a special agent or employee for CBS and that Bartell was completely free of any evil motives directed toward WCAN, the trial judge indicated a belief that Holt was 'an independent actor' and would have submitted the question of his status to the jury had he not disposed of the case on other grounds. Furthermore, Poller submitted a deposition of Holt, an exhibit to which showed CBS had furnished Holt a complete analysis in writing of the Milwaukee market and the ownership and affiliation of the TV stations there, including WCAN. The deposition revealed that Holt had knowledge that the obvious purpose and necessary effect of the plan would be to eliminate independent UHF in Milwaukee and that he had a personal stake in its success. This included, inter alia, Holt's statements that he met with top CBS officials in New York for a briefing on his role, that he was a close friend of these officials, and that he would have retained the option for himself if unused by CBS. The latter admissions, when coupled with the uncertainty at that time of a Federal Communications Commission rule permitting CBS to purchase WCAN, suggest that the alternative plan was to let Holt exercise the option and take the affiliation if CBS could not. Likewise, Bartell's affidavit, barely a page and a half in the record, does not negative the allegations of conspiracy. Unquestionably, after knowing that Holt had in truth been acting for CBS and that the sale would prove disastrous to WCAN, he did file certain papers with the Federal Communications Commission requesting approval of the sale of WOKY. Poller had no opportunity to cross-examine him although he was a key witness to respondents' theory of the case. And it is noted that even though the transfer was uncontested before the Federal Communications Commission it received approval by a vote of only three Commissioners with the remaining two strongly dissenting.
Respondents' answer to the charge that one of the purposes of the alleged conspiracy was to exert a restraining effect upon the development of UHF is that this is a 'fantastic assumptionfor which there is not a shred of evidence.' An analysis of the record seems to indicate that in 1954 prior to the purchase of WOKY there were three UHF channls assigned to Milwaukee by the Federal Communications Commission, two of which (WCAN and WOKY) were operating; that since December 1953 CBS had been studying UHF markets preparatory to an expected change in Commission rules that would allow it to purchase two UHF stations in addition to its five VHF ones; that its staff rated Pittsburgh, St. Louis, New Haven-Hartford, and Milwaukee, in that order, as the most attractive; that CBS chose to enter the latter market and buy WOKY rather than to operate in Milwaukee on the third available channel; that WCAN's profitable operation in 1954, even with lower rates and competition from WOKY, was 'immediately converted to a losing' one, although in 1955 WOKY was out of business; and that this reported loss of about $130,000 under CBS operation in 1955 contrasted sharply with the 66% increase in its profits nationally. Furthermore, reports in the record from CBS itself show that it always had recognized 'a VHF station * * * would be preferable to a UHF * * *.' but that the latter had 'specially good short-term prospects' (emphasis supplied) in Milwaukee because it had 'the characteristic of being at present' (1954) a 'single station' market. CBS further recognized that since its programing was 'already working to build up UHF population * * * (through WCAN) (t)here would be no short-term loss to the network in continuing to give the support of CBS programing to the buildup of a UHF population * * * at least until more VHF stations come in.' (Emphasis supplied.)
The record indicates that Poller had built up a profitable UHF operation, which was recognized as 'the most successful' in the United States. Even CBS officials pointed to it as an example of how 'a vigorously and aggressively managed new UHF station in that community can do well.' In the short period of a year its public acceptance in Milwaukee was so great that 90% of the 260,000 TV sets in the area had been modified, at an expense of some $20 to each owner, so as to be able to receive UHF signals. While CBS had refused to enlarge the six-month cancellation clause, at no time prior to the alleged conspiracy did it indicate an intention to cancel the WCAN affiliation.
It was, Poller claims, only pursuant to the conspiracy that CBS came into the Milwaukee market and eliminated both WCAN and WOKY. Since that time the total number of commercial UHF stations in the United States has steadily declined from 121 at the end of 1953 to 94 by midyear 1956. At the close of 1957 the number was only 88. In 1958 CBS itself abandoned a UHF station in Hartford, and in 1959 the very station in controversy here was likewise abandoned, leaving Milwaukee with no commercial UHF service. Instead, CBS has switched to VHF, affiliating with a Storer Broadcasting Company station which was authorized there the same year. It will be remembered that Mr. Storer is the same prospect who, Poller claims, indicated he would pay $2,000,000 for WCAN when the multiple rule was adopted but who cooled after a CBS warning. All of this may not be sufficient to warrant the finding that Poller contends for on this charge, but it does indicate more than fantasy, particularly in the light of the testimony of CBS Vice President Salant in his deposition that 'it would be the kiss of death to UHF if either NBC or CBS abandoned a UHF station.'
It may be that upon all of the evidence a jury would be with the respondents. But we cannot say on this record that 'it is quite clear what the truth is.' Certainly there is no conclusive evidence supporting the respondents' theory. We look at the record on summary judgment in the light most favorable to Poller, the party opposing the motion, and conclude here that it should not have been granted. We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot.
It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of 'even handed justice.'
CBS contends that the monopolization charges are frivolous. We find the record unclear on these claims. In view of our remand for a trial on the merits, we forego any comment thereon. The complaint does not allege the relevant market involved. In the trial court it was argued that UHF broadcasting in Milwaukee was the market, but on the record here we are unable to determine that issue. It may well be that on a trial appropriate allegations and proof can be adduced showing violations of § 2. See generally International Boxing Club v. United States, 358 U.S. 242, 249252, 79 S.Ct. 245, 249251, 3 L.Ed.2d 270 (1959); United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 648654, 77 S.Ct. 872, 906909, 1 L.Ed.2d 1057 (1957) (dissenting opinion). We believe it to be good judicial administration to withhold decision on these issues.
The litigation arises out of CBS' cancellation of an affiliation arrangement with WCAN, a UHF television broadcasting station in Milwaukee, owned by Midwest Broadcasting Company of whose property Poller is assignee. CBS maintains that such cancellation was but the legitimate exercise of a contractual right. Poller says that it was part of a conspiracy to restrain and monopolize trade in the television broadcasting business, violative of §§ 1 and 2 of the Sherman Act. Suing under § 4 of the Clayton Act,
I assume that Poller would be entitled to proceed to trial if the record before the District Court had left open a genuine question of fact as to whether the alleged conspiracy had as its object the elimination of all UHF stations in the Milwaukee area, or even if it appeared that petitioner might prove that the respondents entered upon this course in order to reduce the number of UHF stations in Milwaukee from two to one, which was to be owned outright by CBS.
What did remain open to proof was an alleged arrangement among CBS, its television division, and its officers and agents whereby CBS canceled an affiliation with one UHF station and purchased the facilities of a competing station. Even if somewhere among those sought to be drawn into petitioner's net there can be found two independent actors whose meeting of minds would satisfy the usual conspiracy requirement of 'plurality of parties,'
their agreement to carry out that design would not, in my view, of itself offend anything proscribed by §§ 1 or 2 of the Sherman Act.
In passing on the motion for summary judgment, the District Court had before it more than the four affidavits of interested parties to which the Court's opinion seems especially to refer (ante, 368 U.S., pp. 468, 473, 82 S.Ct., pp. 488, 491). In the record was the testimony of four key witnesses taken by pretrial depositions. Petitioner's counsel had examined Frank Stanton, President of CBS; Richard Salant, a Vice-President of CBS; and Thad Holt, who acted for CBS in procuring the option on the Bartell station.
Neither his cross-examination of hostile witnesses nor his own direct testimony by way of deposition and affidavit produced any evidence which would indicate that the respondents sought to accomplish anything more than to purchase for CBS a UHF station in Milwaukee. As the Court's opinion seems to recognize, such a purchase (accompanied by a cancellation of petitioner's station affiliation) would be unlawful only if 'conceived in a purpose to unreasonably restrain trade, control a market, or monopolize.' (Ante, 368 U.S., p. 469, 82 S.Ct., p. 489.) (Emphasis added.) In other words, unless a purpose to cancel petitioner's affiliation and purchase the Bartell station would, by itself, be unlawful, petitioner could prevail in this suit only if he proved that the respondents intended to stifle competition in, or monopolize, television broadcasting, either by closing down his station or, more broadly, by destroying the UHF business in whole or in part.
Despite the ample opportunity afforded him by the availability of pretrial discovery procedures, petitioner, as will be shown, was able to produce no evidence to support his charges that a conspiracy, narrow or far-reaching, had been hatched. He should not be permitted to proceed to trial just on the hope that in the more formal atmosphere of the courtroom witnesses will revise their testimony or that a clever trial tactic will produce helpful evidence. Courts do not exist to afford opportunities for such litigating gambles. See Radio City Music Hall Corp. v. United States, 2 Cir., 135 F.2d 715; Schneider v. McKesson & Robbins, Inc., supra; cf. Orvis v. Brickman, 90 U.S.App.D.C. 266, 270, 196 F.2d 762, 765766; Lavine v. Shapiro, 7 Cir., 257 F.2d 14, 2021.
Nor is there any evidence in the record to indicate that the respondents anticipated petitioner's offer to sell his facilities to CBS. It is clear from the affidavits and depositions, and is, in fact, conceded in petitioner's brief before this Court, that it was petitioner who initiated the negotiations and 'importuned CBS to take his equipment off his hands.' Petitioner contends that the respondents knew he would have no use for the recently enlarged plant once his CBS affiliation was canceled, so that his offer of sale was a necessary consequence of the disaffiliation. But this proves only that petitioner's injury may as readily have been the result of CBS' lawful program of expansion as of an invidious scheme to restrain competition. It buttresses the conclusion reached by the Court of Appeals (109 U.S.App.D.C. 170, 173, 176, 284 F.2d 599, 602, 605) that the diminution in the value of petitioner's property was attributable to petitioner's imprudent investment
rather than to any antitrust conspiracy by the respondents in addition, petitioner's surmise that the respondents must have known that the cancellation of Poller's affiliation would result in his offering his equipment to CBS is hardly consistent with the fact, sworn to by Salant and never traversed, that CBS had its engineering department draw up complete plans as to how the Bartell facilities could be expanded to make them suitable for CBS' intended use.
It was only after this representation was made, albeit, as petitioner now claims, with only 'about a 5 per cent hope' that he would be able to continue, that the exchange of facilities was consummated. The transaction was in all ways consistent with the parties' written intention to maintain two operating UHF stations in Milwaukee. For it was surely much more likely that petitioner could survive as an independent by using the smaller Bartell plant than by remaining in his enlarged studio, which had absorbed a large amount of capital that could not, at least immediately, be put to fruitful use.
To the extent that the 'leverage' complained of charges CBS with monopolizing a market, petitioner's claim falls under § 2, a matter to which I will revert in a moment. Infra, 368 U.S., pp. 485486, 82 S.Ct., pp. 497498. Apart from monopoly power, the respondents could have violated the antitrust laws only by conspiring in some manner to use CBS' 'leverage' to restrain trade. Clearly, the disaffiliation alone was not an unlawful use of the network's power. Having built up the value of his station substantially because of its CBS affiliation, petitioner is hardly in a position to claim that by depriving him, in the exercise of a contract right, of the benefit of such an affiliation CBS was unreasonably exercising its superior power to restrain trade. And there is no indication in the record that this 'leverage' in any way affected the purchase price of petitioner's equipment, even were it to be assumed that the respondents foresaw that petitioner would be willing to sell. The charges here are unlike those in United States v. Radio Corporation of America, 158 F.Supp. 333, reversed, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354, in which the Government sought to enjoin, as violating § 1, a network's attempt to coerce an independent owner into selling his station to the network under threat of canceling the network's affiliation with other stations under the same ownership. In this case there is no claim made that CBS conditioned the continuation of some network service upon petitioner's consent to sell his equipment, or on his willingness to reduce his price.
This Court has also been reluctant to hold that vertical expansion alone can amount to an unreasonable restraint prohibited by § 1 of the Sherman Act. United States v. Paramount Pictures, Inc., 334 U.S. 131, 173174, 68 S.Ct. 915, 936937, 92 L.Ed. 1260; United States v. Columbia Steel Co., 334 U.S. 495, 525, 68 S.Ct. 1107, 1123, 92 L.Ed. 1533. Without of course suggesting that the Federal Communications Commission has authority to alleviate an applicant for a station license from the requirements of the antitrust laws, United States v. Radio Corporation of America, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354, in light of the uniform course of decisions by the agency familiar with the field, and in the absence of any indication that this particular purchase in fact restrained trade, I think it is clear that petitioner's injury, even if it be assumed partially attributable to CBS' purchase, may not be made the basis of a treble-damage action.
Section 1 of the Sherman Act provides that: 'Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. * * *' 26 Stat. 209, as amended, 15 U.S.C. 1, 15 U.S.C.A. § 1.
Section 2 of the Sherman Act provides that: 'Every person who shall monopolize or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor * * *.' 26 Stat. 209, as amended, 15 U.S.C. 2, 15 U.S.C.A. § 2.
The conspirators were alleged to be Columbia Broadcasting System, Inc.; CBSTV; J. L. Van. Volkenburg, President of CBSTV; H. K. Akerberg, Vice President of CBSTV; Bartell Broadcasters, Inc., owners of WOKY; and Thad Holt, a management consultant.
Compare Kennedy v. Silas Mason Co., 334 U.S. 249, 256257, 68 S.Ct. 1031, 1034, 92 L.Ed. 1347 (1948); Arenas v. United States, 322 U.S. 419, 434, 64 S.Ct. 1090, 1096, 88 L.Ed. 1363 (1944).
Under 15 U.S.C. 15, 15 U.S.C.A. § 15 'Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws is given a private right of action.'