Opinion ID: 764884
Heading Depth: 2
Heading Rank: 4

Heading: Sherman Act Conspiracy Claims

Text: 59 AD/SAT claims that the AP and the remaining defendants -- the newspaper defendants, Newhouse, the NAA, and the NNN -- unlawfully conspired to boycott AD/SAT, in violation of section 1 of the Sherman Act, and to monopolize the market for delivery of newspaper advertisements, in violation of section 2 of the Sherman Act. 60 Section 1 states that [e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce . . . is hereby declared to be illegal. 15 U.S.C. § 1. A section 1 boycotting claim requires evidence of an illegal agreement that constitutes an unreasonable restraint of trade, either per se or under the rule of reason. See Capital Imaging Associates v. Mohawk Valley Medical Associates, Inc., 996 F.2d 537, 542 (2d Cir. 1993). Only after an agreement is established will a court consider whether the agreement constituted an unreasonable restraint of trade. See id. 61 Section 2 of the Sherman Act prohibits individuals from combin[ing] or conspir[ing] with any other person or persons, to monopolize any part of the trade or commerce among the several States . . . . 15 U.S.C. § 2. A successful conspiracy claim under section 2 requires (1) proof of a concerted action deliberately entered into with the specific intent to achieve an unlawful monopoly, and (2) the commission of an overt act in furtherance of the conspiracy. Walsh Trucking, 812 F.2d at 795 (internal quotation marks and citations omitted). 62 Critical to surviving a motion for summary judgment on these claims is the threshold showing that a reasonable jury could find that the defendants' actions were concerted rather than independent. In Monsanto, the Supreme Court held that the inference of concerted action can be drawn only where the plaintiff presents direct or circumstantial evidence that reasonably tends to prove that [each defendant] had a conscious commitment to a common scheme designed to achieve an unlawful objective. 465 U.S. at 764 (internal quotation marks and citation omitted). Furthermore, antitrust law limits the range of permissible inferences from ambiguous evidence. Matsushita, 475 U.S. at 588. Thus, conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. To survive a motion for summary judgment . . ., a plaintiff seeking damages . . . must present evidence 'that tends to exclude the possibility' that the alleged conspirators acted independently. Id. (citations omitted). Moreover, the absence of a rational motive to engage in the alleged conspiracy is highly relevant to whether a 'genuine issue for trial' exists within the meaning of Rule 56(e), id. at 596; if the defendants have no rational economic motive to conspire, and if their conduct is consistent with other, equally plausible explanations, the conduct does not give rise to an inference of conspiracy, id. at 596-97 (citation omitted). 63 Before examining AD/SAT's allegations against the various defendants, it is necessary to consider two threshold arguments that AD/SAT makes in support of its allegation of concerted action. First, AD/SAT argues that the AP is collaterally estopped from denying that any action taken by it is concerted action by its members, citing the Supreme Court's 1945 decision in Associated Press, 326 U.S. 1. In that case, the Supreme Court found that two AP bylaws, which had the effect of preventing non-AP member newspapers from buying news from the AP or its members and granting each AP member the power to block non-member competitors from becoming members, violated sections 1 and 2 of the Sherman Act. We agree with the District Court that the principle of collateral estoppel does not mandate a finding of concerted action in this case. The issue decided by the Court in Associated Press was whether two particular bylaws of the AP constituted a conspiratorial agreement in violation of the antitrust laws. Neither of those bylaws is at issue in this case. Associated Press did not determine that AP members are engaged in a conspiratorial agreement with respect to all actions of the AP. The defendants are not precluded from denying concerted action with respect to the allegations levied by AD/SAT. 64 Second, AD/SAT contends that, as a matter of stare decisis, Associated Press and other decisions finding the conduct of trade associations to be joint action of the association's members dispense with the need to inquire into the existence of a conspiratorial agreement among the members of such associations. In support of this argument, AD/SAT cites this Court's opinion in Phelps Dodge Refining Corp. v. Federal Trade Commission, 139 F.2d 393 (2d Cir. 1943). There, we stated that a member [of a trade association] who knows or should know that his association is engaged in an unlawful enterprise [restraining competition] and continues his membership without protest may be charged with complicity as a confederate. Id. at 396. The Supreme Court's decisions in Monsanto and Matsushita call into doubt the continued viability of Phelps' membership-ratification theory as a basis for antitrust conspirator liability. Other courts have held that this doctrine does not retain the force of law. See Wilk v. American Medical Ass'n, 671 F. Supp. 1465, 1492 (N.D. Ill. 1987), aff'd, 895 F.2d 352 (7th Cir. 1990). Furthermore, recent decisions of this Court demonstrate that we require a factual showing that each defendant conspired in violation of the antitrust laws, and have not adopted a walking conspiracy theory in place of such a showing. See Capital Imaging, 996 F.2d at 544-45 (holding that members of a physicians' practice association had the capacity to conspire among themselves but that [t]he mere opportunity to conspire does not by itself support the inference that such an illegal combination actually occurred); see also Vakerics, supra, § 6.13, at 6-37 to -38 (In situations where a trade association, its officers, employees or members are found to have violated the antitrust laws, membership in the association will not automatically involve all members in the violation. There must, instead, be some evidence of actual knowledge of, and participation in, the illegal scheme in order to establish a violation of the antitrust laws by a particular association member.) (emphasis added). 65 Thus, although the nature of trade associations is such that they are frequently the object of antitrust scrutiny, see Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500-01 (1988), every action by a trade association is not concerted action by the association's members. Indeed, the varying roles played by trade associations such as the AP call for careful consideration by courts faced with allegations of antitrust conspiracy. As has been properly noted, 66 [t]here seems no conceptual difficulty in treating organizations created to serve their member-competitors or to regulate their market behavior as continuing conspiracies of the members. Nor is there any practical problem when we focus on those improprieties reducing competition among the members or with their competitors. But what about the day-to-day operations of the organization? Must we also see the trade association's buying, selling, hiring, renting, or investing decisions as continuing conspiracies among the members? . . . . [A]ll of these decisions become subject to Sherman Act § 1 litigation if [trade associations] are conspiracies. . . . One might respond to this concern in three ways: ignore it, adjust the necessary allegations or proofs, or hold such organizations continuing conspiracies for some purposes but single entities for other purposes. 67 7 Areeda ¶ 1477, at 347. To avoid unwarranted regulation of legitimate conduct, Professor Areeda suggested that [t]o the extent that [trade associations] are buying and selling [products or services] in their own right, they can fairly be regarded as single entities whose selling decisions are not 'price-fixing conspiracies' and whose buying decisions are not 'boycott conspiracies' of rejected suppliers. Id. at 348. 68 Regardless of whether trade associations are ever continuing conspiracies of their members, we think it clear in this case that a finding of concerted action based on the defendants' status as members of the AP would seriously undermine the standards articulated by the Supreme Court in Matsushita and Monsanto. Consistent with those decisions, an antitrust plaintiff must present evidence tending to show that association members, in their individual capacities, consciously committed themselves to a common scheme designed to achieve an unlawful objective. Accordingly, we must examine the evidence submitted by AD/SAT pertaining to each defendant to determine whether, viewed in the light most favorable to AD/SAT, this evidence could give rise to a reasonable inference of concerted action by the defendants. 69 The District Court granted the defendants' motions for summary judgment dismissing the conspiracy claims because it found that (i) the other defendants had no rational motive to conspire with the AP to reduce competition in the market for delivery of newspaper advertisements to newspapers and (ii) their conduct was as consistent with the defendants' legitimate business interests as with a conspiracy to monopolize the advertising delivery market or to boycott AD/SAT.
70 AD/SAT contends that the newspaper defendants were motivated to join the AP in a concerted refusal to deal with AD/SAT, and in a conspiracy to monopolize the market for delivery of advertisements, by the desire to benefit from AdSEND's monopoly profits in the form of lower annual dues for AP membership. 71 Like the District Court, we are not persuaded that the hope for lower AP dues can be said to be a rational motive for joining the conspiracies alleged in this case. We do not doubt that the newspaper defendants would be pleased to have their AP membership fees reduced, or that they may have seen lower fees as a possible fringe benefit of AdSEND. Nevertheless, in view of the importance of advertising revenue to the newspaper industry, we think it highly unlikely that the newspaper defendants would jeopardize that revenue by overcharging advertisers for delivery services in the hope that monopoly profits for such services eventually would lead to lower AP dues. Indeed, it is more likely that the newspaper defendants hoped that AdSEND would increase competition in the advertising delivery market, thereby lowering prices and making the newspaper medium more attractive to advertisers. 72 Allegedly anticompetitive conduct must be considered in its factual context. Where that context reveals that the conspiracy claim is one that simply makes no economic sense -- [the plaintiff] must come forward with more persuasive evidence to support [its] claim than would otherwise be necessary. Matsushita, 475 U.S. at 587. In this case, the factual context of each defendant's decision to terminate, or attempt to terminate, its relationship with AD/SAT strongly suggests that the newspaper defendants had no rational economic motive to join the alleged conspiracies. Furthermore, the challenged conduct of each newspaper defendant is as consistent with the defendant's legitimate, independent business interests as with an illegal combination in restraint of trade. Under these circumstances, AD/SAT was required to submit evidence tending to exclude the possibility that the defendants acted independently. See Matsushita, 475 U.S. at 588; see also Burlington Coat Factory Warehouse Corp. v. Esprit De Corp., 769 F.2d 919, 923 (2d Cir. 1985) (An antitrust plaintiff may not, therefore, in opposing a motion for summary judgment, rest on conclusory assertions of conspiracy when the defendants have proffered substantial evidence supporting a plausible and legitimate explanation of their conduct.) (citation omitted). As discussed in detail below, AD/SAT failed to submit such evidence. 73
74 The Lexington Herald-Leader started doing business with AD/SAT in 1987, when it entered into a five-year AD/SAT affiliation agreement. Under the terms of this agreement, the Lexington Herald-Leader paid a $7,500 affiliation fee, as well as a minimum usage charge of $12,500 each year. In the first years of its relationship with AD/SAT, the volume of ads transmitted via AD/SAT fell far below the paper's expectations. As a result, the Herald-Leader renegotiated its contract in 1989 to eliminate the $12,500 minimum usage fee. Nevertheless, the per-ad cost of the service remained extremely expensive for the paper. With the end of its contract approaching, the paper's national advertising manager prepared an analysis of the service in late 1991. His report recommended that the contract be terminated. Formal notice of termination was sent in May of 1992. In response, AD/SAT offered to halve the affiliation fee, and the Lexington Herald-Leader decided to continue using AD/SAT's service. Nevertheless, the service remained extremely expensive on a per-ad basis. On June 10, 1994, the Lexington Herald-Leader terminated its relationship with AD/SAT. 75 Despite this history, AD/SAT maintains that the Lexington Herald Leader terminated its relationship with AD/SAT not because of economic concerns but, instead, as part of a concerted refusal to deal with AD/SAT. In support of this argument, AD/SAT cites several circumstances that it contends reveal that the Lexington Herald-Leader was not acting independently in refusing to deal with AD/SAT. First, it points to the timing of the Lexington Herald-Leader's termination of its affiliation agreement with AD/SAT, which occurred approximately a month and a half after AdSEND was announced publicly. AD/SAT also points out that representatives of the Lexington Herald-Leader attended the NAA meeting where Newhouse purportedly invited newspaper executives to join in collective action to boycott AD/SAT. Finally, AD/SAT cites to a memorandum purporting to describe a conversation during which a representative of the Knight-Ridder group, the Lexington Herald-Leader's parent company, pledged its support for AdSEND. 76 This evidence does not tend to exclude the possibility that the Lexington Herald-Leader acted independently. First, AD/SAT may not rely on the memorandum describing Knight-Ridder's pledge of support because it is inadmissible hearsay. See Burlington Coat Factory, 769 F.2d at 924 (noting that it is well-settled that a party cannot rely on inadmissible hearsay in opposing a motion for summary judgment). Furthermore, AD/SAT's other evidence demonstrates, at most, parallel conduct following an invitation to conspire. Such evidence, without more, does not give rise to an inference of conspiracy. See Apex Oil Co. v. DiMauro, 822 F.2d 246, 253-54 (2d Cir. 1987). Accordingly, summary judgment in favor of this defendant was appropriate. 77
78 Similarly, AD/SAT failed to adduce any evidence tending to show that the Oakland Press was not acting independently when it decided to terminate its affiliation agreement with AD/SAT. The Oakland Press signed an affiliation agreement with AD/SAT in October 1993; under the terms of that agreement, AD/SAT was required to install reception equipment at the paper's offices. The affiliation agreement also provided that either party could terminate the agreement without penalty if the other was in material default of its obligations under the agreement. During negotiations, Atkins, AD/SAT's then-president, promised to install the reception equipment within thirty days from the date of the agreement. And, in an October 20, 1993, letter to Alfred Derusha, the advertising director of the Oakland Press, Atkins said that AD/SAT would get to work right away on installation of the equipment. Seven months later, in May 1994, the equipment still had not been installed, and AD/SAT informed the Oakland Press for the first time that the Macintosh interface it had promised to install was not available. At that point, Derusha wrote to AD/SAT, informing it that the Oakland Press was exercising its right to terminate the affiliation agreement because AD/SAT was in material default. AD/SAT responded that the Oakland Press had no right to terminate and that the equipment was being delivered. 79 AD/SAT contends that the Oakland Press's stated reasons for its termination of the affiliation agreement were pretextual, and that the paper's real motivation was its desire to boycott AD/SAT and support AdSEND. This inference cannot reasonably be drawn from the evidence. At the time the Oakland Press terminated its affiliation with AD/SAT, AdSEND was not even operational. The Oakland Press did not test AdSEND at its site until January of 1995, when an advertiser requested the service. Furthermore, AD/SAT has not produced any evidence tending to show that Derusha or anyone at the Oakland Press discussed the paper's relationship with AD/SAT with anyone from the AP or another paper. Finally, the facts belie AD/SAT's claim that the Oakland Press refused to deal with it; up to the time this action was commenced, the Oakland Press was attempting to negotiate a new affiliation agreement with AD/SAT. This conduct is clearly as consistent with legitimate business activity as with an unlawful conspiracy in restraint of trade. AD/SAT's claim against the Oakland Press cannot survive summary judgment. 80
81 The News & Observer entered into its affiliation agreement with AD/SAT on August 15, 1986; in February 1993, the paper decided to temporarily unplug its AD/SAT recorder due to renovations at the paper that caused space constraints. After disconnecting the equipment, Richard Lee Henderson, the vice-president in charge of sales and marketing, noticed that the paper had received no complaints from advertisers regarding the unavailability of AD/SAT's delivery service. In the fall of 1993, Henderson learned that AD/SAT's corporate parent was filing for bankruptcy. Believing that this prospect was grounds for terminating the News & Observer's affiliation agreement with AD/SAT, Henderson, advertising director James McClure, and W.L. Mack McCormick, the local sales manager, decided to terminate the agreement. This decision was communicated to AD/SAT by letter dated November 24, 1993. 82 AD/SAT's then-president, Atkins, told the paper that AD/SAT did not consider bankruptcy a valid grounds for termination under the contract; nevertheless, the paper reiterated its intention to exercise its right to terminate the agreement in a letter dated January 20, 1994. This letter was written five days after Lawrence Blasko of the AP visited the paper and introduced AdSEND. AD/SAT continued to contest the News & Observer's right to terminate the affiliation agreement and, after consulting with its lawyers, the paper decided that paying the $7,500 annual affiliation fee would be less costly than a legal battle. Upon AD/SAT's insistence that the affiliation agreement so required, the paper re-installed the AD/SAT recorder at its offices. 83 AD/SAT points to the following facts in its attempt to implicate the News & Observer in the alleged conspiracies: (i) the paper's president, Frank Daniels, Jr., was chairman of the board of the AP during the development, approval, and implementation of AdSEND; (ii) five days after Blasko's visit, the paper reconfirmed its intention to terminate its relationship with AD/SAT; and (iii) during a conversation between AD/SAT president Hilton and Daniels on June 15, 1994, Daniels purportedly stated, I don't think that we will be doing business together, we're a beta [test] site for Ad/Send. 84 Contrary to AD/SAT's arguments, this evidence does not support the inference that the News & Observer joined in a concerted refusal to deal with AD/SAT. Rather, the evidence shows that the paper -- because it was dissatisfied with AD/SAT's service -- expressed its desire to terminate its affiliation agreement well before anyone at the paper had heard of AdSEND and before the conspiracies alleged by AD/SAT supposedly came into existence. Furthermore, the outcome would be no different even if the paper had decided to terminate its AD/SAT affiliation after the paper's employees learned of AdSEND; the decision to terminate a service that was both costing the paper money and not bringing in additional revenue, and to install an alternative, cost-free service, does not give rise to an inference of an unlawful conspiracy in restraint of trade. 85 The District Court properly granted summary judgment in favor of this defendant. 86
87 CEI and its subsidiary, Cox Newspapers, own over fifteen newspapers; of those papers, only four entered into affiliation agreements with AD/SAT. These include the Dayton Daily News (owned by DNI), the Atlanta Journal/Constitution, the Palm Beach Post, and the Austin-American Statesman. The Atlanta Journal-Constitution and the Palm Beach Post remained AD/SAT affiliates until AD/SAT ceased operations, and AD/SAT acknowledges that the Austin-American Statesman's decision to terminate its agreement with AD/SAT was not the product of any conspiratorial agreement. However, AD/SAT does contend that the Dayton Daily News's decision to terminate its relationship with AD/SAT in August of 1994 was the result of its participation in the alleged conspiracy to boycott AD/SAT and secure a monopoly position for AP's AdSEND. 88 In support of this argument, AD/SAT points to the following facts: (i) Cox's president, David Easterly, was a member of the ad hoc committee overseeing the AdSEND program for the AP; (ii) on June 16, 1994, AP officers met with Cox advertising executives and, at the conclusion of the meeting, Cathleen Coffey of Cox directed the Cox newspapers affiliated with AD/SAT to review their contracts; (iii) the Dayton Daily News gave AD/SAT notice of its intent to terminate its contract two months later, in August 1994; and (iv) notes taken by AD/SAT president Hilton indicate that the paper's advertising director, Pat Keil, told him that the paper's decision to use AdSEND was a corporate one. 89 This evidence does not tend to exclude the possibility that the Dayton Daily News was acting independently in terminating its relationship with AD/SAT. First, the record reveals that Keil, the person who made the decision not to renew the paper's affiliation agreement, did not attend the June 16 session on AdSEND. Furthermore, the fact that two Cox papers continued to use AD/SAT undermines AD/SAT's claim that the Cox papers made a corporate decision to boycott AD/SAT. Refusing to renew a contract that had proved very costly and opting to use a similar, free service is at least as consistent with a paper's legitimate business interests as with an unlawful conspiracy. Summary judgment in favor of the Cox defendants was appropriate. 90
91 The Oklahoma Publishing Company publishes the Daily Oklahoman, which entered into an affiliation agreement with AD/SAT in 1986. In 1993, the Daily Oklahoman received approximately 159 ads over the AD/SAT system; the affiliation and per-transmission fees resulted in a per-ad cost to the paper of approximately $68. That same year, the paper received approximately 400 ads over its own internal electronic bulletin board. The Daily Oklahoman's advertising department conducts an annual budget review each October. After the October 1993 review, the paper's advertising director, David Thompson, decided to terminate the paper's relationship with AD/SAT as a way to reduce operational costs. Thompson consulted with other members of the department to ascertain whether terminating the paper's AD/SAT service would harm operations; they reported it would not. On November 1, 1993, the Daily Oklahoman notified AD/SAT in writing that it was terminating its affiliation agreement with AD/SAT. AD/SAT did not respond to this notice of termination until September 28, 1994, when it wrote to the Daily Oklahoman asking it to reconsider its decision. There is no evidence that Thompson had even heard of the AdSEND program until several weeks after the AP's formal announcement of the program in April 1994 -- six months after the Daily Oklahoman terminated its relationship with AD/SAT. 92 Nevertheless, AD/SAT contends that the Daily Oklahoman's decision was the product of its involvement in the alleged conspiracy to boycott AD/SAT. In support of this argument, AD/SAT points to the fact that in the summer and fall of 1994, the paper informed some of its larger advertisers that it had both terminated its relationship with AD/SAT and installed AdSEND at its offices. AD/SAT also contends that the paper's failure to renegotiate its agreement with AD/SAT is evidence of its involvement in the conspiracy. Finally, AD/SAT reports that one employee at the Daily Oklahoman told an AD/SAT executive that she would prefer that the paper stay on the AD/SAT network because of the speed of the service. 93 As the District Court ruled, none of these facts would allow a reasonable juror to conclude that the Daily Oklahoman was a member of a conspiracy to boycott AD/SAT. Antitrust law is not violated when a newspaper informs its advertisers that it has terminated its relationship with one delivery service and subsequently informs them that it has elected to use another service. The alleged statement of one employee who preferred AD/SAT is not sufficient to support an inference of conspiracy. Finally, the paper's refusal to renegotiate its contract with AD/SAT is not evidence of conspiratorial conduct, especially since AD/SAT's offer to renegotiate came more than ten months after the Daily Oklahoman terminated its relationship with AD/SAT and the offer did not include a marked reduction in cost. The grant of summary judgment in favor of the Oklahoma Publishing Co. was proper. 94
95 Advance Publications, Inc. owns, through subsidiaries, Newark Morning Ledger Co., which publishes the Newark Star-Ledger, and Birmingham News Company, which publishes the Birmingham News. AD/SAT's attempt to implicate these three companies -- which are part of the Newhouse group -- is also unsuccessful. 96 The Star-Ledger became AD/SAT's first affiliate in 1986. The paper is published in Newark, New Jersey, within close proximity of New York City's strong advertising base. Thus, although receiving some ads from overnight couriers and electronic delivery systems, the Star-Ledger also receives many of its ads via messenger services. While the prices paid for these services vary, all are substantially less expensive for the paper than receiving ads over AD/SAT's network. After receiving an invoice for the $7,500 annual affiliation fee in January 1993, Mark Herrick, the Star-Ledger's director of marketing and advertising, decided not to pay the fee. In his deposition, Herrick stated that he felt the fee was too expensive and wanted to renegotiate with AD/SAT. In a meeting with AD/SAT representatives in August 1993, Herrick stated that he believed the service was too expensive, and asked that the affiliation agreement be renegotiated and the unpaid 1993 fee waived. In response, AD/SAT's then-president Atkins stated that AD/SAT intended to increase the Star-Ledger's annual affiliation fee to $12,500. 97 At the same meeting, however, Atkins proposed a group discount for all the Newhouse newspapers. Herrick stated that he did not have the authority to consider such proposals but that he would pass the proposal on to his superiors. The proposal was ultimately rejected by the Newhouse group. 98 No further discussions took place until the summer of 1994, when Hilton and the new owners of AD/SAT realized that the Star-Ledger had not paid its 1993 or 1994 affiliation fees. After an exchange of letters, Herrick submitted proposed amendments to the affiliation agreement to Hilton on August 19, 1994. Herrick proposed that the unpaid fees be forgiven, future affiliation fees be eliminated, and the notice period for termination be reduced from nine months to seven days. On December 28, 1994, after this lawsuit was filed, AD/SAT rejected the proposal and demanded that the outstanding fees be paid, but also promised to provide a new proposal to the paper in the near future. At the time the Star-Ledger filed its motion for summary judgment, no proposal had been made. The Star-Ledger eventually paid the outstanding fees and remained an AD/SAT affiliate until AD/SAT ceased operations. 99 The only evidence AD/SAT offers to support its claim that the Star-Ledger was a member of the alleged conspiracy is that Newhouse, the president of the company that indirectly owns the Star-Ledger, knew about the AP's plan to enter the ad delivery business several months before Herrick's August 1993 meeting with AD/SAT representatives. AD/SAT contends that this fact explains why the Star-Ledger refused to deal with AD/SAT and why its group discount offer to the Newhouse papers was rejected. 100 This evidence does not give rise to an inference of a concerted refusal to deal on the part of the Star-Ledger. To the contrary, the evidence shows that the Star-Ledger sought not to terminate its relationship with AD/SAT, but rather to renegotiate the terms of that relationship. Although Herrick's refusal to pay the affiliation fees owed under the contract may have been an unreasonable negotiating tactic, it is not evidence of a conscious commitment to an unlawful scheme in restraint of trade. Moreover, even if the actions taken by Herrick had constituted a refusal to deal with AD/SAT, the paper had valid business reasons for ending its relationship with AD/SAT because of the availability of other, more cost-effective means of receiving ads. The fact that Newhouse knew about the AP's plans to develop AdSEND before the August 1993 meeting does not tend to exclude the possibility that Herrick's decision on behalf of the Star-Ledger was an independent one. Indeed, AD/SAT has submitted no evidence tending to show that Herrick discussed his actions with Newhouse. 101 Nor can a concerted refusal to deal be inferred from the Newhouse papers' rejection of AD/SAT's group proposal; AD/SAT has not contradicted the evidence indicating that the Newhouse papers do not enter into such group arrangements. Furthermore, the allegation of a group boycott by the Newhouse papers is undermined by the fact that other Newhouse papers continued to use AD/SAT. Conspiracy claims cannot be based on speculation. The District Court properly granted summary judgment in favor of the Newark Morning Ledger Company. 102 Likewise, the evidence pertaining to the Birmingham News Company, which publishes the Birmingham News, does not support the inference that this paper joined in an unlawful conspiracy in violation of the Sherman Act. In 1990, the Birmingham News entered into a five-year AD/SAT affiliation agreement. On April 11, 1994, AD/SAT sent the paper an invoice for its annual $10,000 affiliation fee. In the third or fourth week of May, Tom Lager, the director of sales and marketing at the Birmingham News, reviewed this invoice. Lager had joined the paper in January 1994 and was responsible for approving expenditures such as the affiliation fee. 103 Lager was familiar with AD/SAT because his former employer, the Omaha World Herald, had been affiliated with AD/SAT until Lager made the decision not to renew that paper's affiliation at the end of 1991. That decision was made after Lager and others at the World Herald reviewed the paper's level of usage in relation to the cost of the service and after Office Depot, the primary user of AD/SAT's delivery service, agreed to shift its deliveries to the World Herald to other carriers such as Federal Express. From his earlier experience, Lager thought to check whether the Birmingham News's use of AD/SAT justified its cost. A review of the log of ads received over AD/SAT revealed that the volume of ads delivered by AD/SAT was low and that most of the ads received via AD/SAT were from Office Depot. Concluding that the paper's continued affiliation with AD/SAT was not financially prudent, Lager consulted with his supervisor, Victor Hanson, who accepted Lager's recommendation not to renew the contract. On June 6, 1994, Lager sent a letter notifying AD/SAT that the Birmingham News would not be renewing its AD/SAT contract. Lager concedes that he had seen documents discussing AdSEND before he sent the termination letter. 104 In its appellate brief, AD/SAT asserts that Donald Newhouse's ownership of the paper and the paper's termination of its affiliation after the announcement of AdSEND give rise to the inference that the Birmingham News participated in the alleged conspiracies. As discussed above, the fact that Newhouse owned the newspaper, in the absence of any evidence tending to show that he was involved in its decision to terminate its AD/SAT affiliation, does not support an inference of conspiracy. Likewise, the fact that the paper terminated its relationship after the introduction of AdSEND does not give rise to an inference of concerted action. Rather, it shows, at best, parallel conduct following an invitation to conspire. Since the Birmingham News's conduct was at least as -- if not more -- consistent with legitimate business concerns as with unlawful conspiracy, AD/SAT was required to submit evidence tending to exclude the possibility that the Birmingham News acted independently. Because it failed to do so, summary judgment was appropriate. 4
105 AD/SAT alleges that Donald Newhouse -- as a member of the AP board of directors and chairman of the NAA board of directors during the planning, approval, and implementation of AdSEND -- was at the center of the alleged conspiracies to boycott AD/SAT and allow AdSEND to monopolize the ad delivery market. Though it is true that Newhouse, who is also the president and part owner of Advance, had the opportunity to join in a conspiracy with the AP to destroy competition in the ad delivery market, it is also true that, like the newspaper defendants, the NAA, and the NNN, Newhouse had no rational motive to do so. As both a newspaper owner and chairman of the NAA, a primary interest for Newhouse is making newspapers a more attractive medium for advertisers. As the District Court noted, Encouraging and assisting AP in its effort to enter the delivery market is certainly consistent with this interest[,] while [j]oining a conspiracy to refuse to deal with AD/SAT in an effort to drive it out of business is not. AD/SAT II, 920 F. Supp. at 1316. 106 Furthermore, none of the evidence submitted by AD/SAT tends to exclude the possibility that Newhouse was acting in an independent effort to further the interests of his own newspapers and the organization he represented, the NAA. AD/SAT points to a letter, dated August 2, 1993, to AP president Louis Boccardi, in which Newhouse stated that the AP should move quickly if it planned to get into the ad delivery business because there is a window of opportunity now which AdSat [sic] might close if too much time goes by. Far from demonstrating the existence of a conscious commitment to an unlawful scheme, this statement encourages competition by urging the AP to act quickly before AD/SAT forecloses competition. AD/SAT also asserts that Newhouse was instrumental in securing the NAA's exclusive support for AP's AdSEND. As discussed below, the NAA never endorsed AdSEND to the exclusion of other firms involved in the electronic ad delivery market. 107 Nor is the fact that Newhouse introduced the AdSEND service to several major advertisers indicative of an unlawful conspiracy. With a position on the board of the AP and holding the view that AdSEND was a good product of general benefit to the newspaper industry, Newhouse had entirely legitimate reasons for promoting AdSEND. Moreover, introducing a new competitor to a market's customers is conduct which the antitrust laws are designed to protect. AD/SAT II, 920 F. Supp at 1317. 108 AD/SAT relies heavily on Newhouse's retirement speech at the April 1994 NAA convention, which it contends constituted an invitation to boycott AD/SAT and to assist AdSEND's effort to monopolize the market for ad delivery. In the speech, Newhouse encouraged NAA members to work with the Associated Press and help our cooperative perfect its ability to transmit ads digitally from the advertisers' computer to our computer. Newhouse also stated that NAA is working with the Associated Press as AP develops a computer to computer advertising transmission system which will . . . remove a barrier to the use of newspapers. Newhouse stressed the importance of collective action within the newspaper industry. 109 Newhouse's statements simply do not support the inference that AD/SAT proposes. Perhaps most telling is the fact that AD/SAT was never mentioned during the speech. AD/SAT's attempt to construe the statement, We must not let our competitors have the advantage of creating the playing field and controlling the gateway, as a reference to AD/SAT is unavailing. The context of this statement strongly suggests that Newhouse was not referring to any deliverers of ads, much less AD/SAT in particular, but to the array of entities vying to develop new technologies to gather and deliver news. 110 In sum, the evidence provided by AD/SAT would not permit a reasonable juror to infer that the actions of Newhouse in support of the AP's development and marketing of AdSEND constituted participation in a concerted refusal to deal with AD/SAT in restraint of trade.
111 Unlike the other defendants, the NAA and NNN are not direct participants in the advertising delivery business. Rather, the NAA was established with the goal of encouraging technological development in the newspaper industry in order to increase the profitability of newspapers; the NNN has the more specific goal of increasing the newspaper industry's declining share of advertising dollars. Thus, neither organization -- as long as they were acting in accordance with these goals -- had a rational motivation to join the conspiracies alleged by AD/SAT. Indeed, it would be counter to the goals of both organizations to eliminate a competitor in the market for delivery of ads in order to facilitate an attempt to monopolize the market by a newcomer that was not yet operational, especially since competition among delivery mechanisms would promote both technological innovation and fair pricing. 112 AD/SAT concedes that the NAA, after an initial meeting with AP executives in August 1993, made it clear that, while it would cooperate with the AP in its efforts to develop an electronic ad delivery system, it could not exclude other groups providing this service. Nevertheless, AD/SAT contends that the NAA reversed its position and, along with the NNN, began to boycott AD/SAT after certain meetings arranged by Newhouse between top AP executives and NAA president Cathie Black. 113 It is not seriously disputed that the NAA and NNN encouraged and assisted the AP when it was developing AdSEND. Indeed, after the AP's public announcement of AdSEND, these organizations allowed the AP to give presentations about AdSEND at NNN regional meetings. Despite this, and other evidence of the NAA's and the NNN's encouragement, AD/SAT's claim against these defendants cannot survive summary judgment because AD/SAT has failed to submit evidence tending to show that the NAA and the NNN participated in an anticompetitive refusal to deal with it. To the contrary, the evidence reveals that the NAA and NNN continued to promote other electronic delivery services beyond AP's AdSEND, including AD/SAT itself. Furthermore, even if the NAA and NNN endorsed AP's service, a conspiracy could not be inferred from such an endorsement. See Consolidated Metal Products, Inc. v. American Petroleum Institute, 846 F.2d 284, 292 (5th Cir. 1988) (holding that trade association's seal of approval for particular product, without constraining others to follow the recommendation, does not violate antitrust laws). Under these circumstances, summary judgment in favor of the NAA and NNN was appropriate. 114 Having ruled that summary judgment in favor of all other defendants with respect to AD/SAT's conspiracy claims was appropriate, we conclude that summary judgment in favor of the AP was also appropriate.