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WEBER v. WYNNE

February 24, 1977

William Weber t/a Garden State Press Clipping Bureau, Plaintiff
v.
Arthur V. Wynne, Sr., Arthur V. Wynne, Jr., Harold E. Wynne, and Frederick J. Wynne, t/a Burrelle's Press Clipping Service & New Jersey Press Clipping Service, Defendants


Lacey, D.J.


The opinion of the court was delivered by: LACEY

This is an antitrust action brought under the jurisdictional grant of 15 U.S.C. § 15, charging a violation of the anti-monopoly provisions of the Sherman Act. 15 U.S.C. § 2. *fn1" Weber conducts in Red Bank, New Jersey, a press clipping bureau under the name of Garden State Press Clipping Bureau (hereinafter Garden State), and sues his competitor, Burrelle's Press Clipping Bureau, a New Jersey partnership (hereinafter Burrelle's), and New Jersey Press Clipping Bureau (hereinafter New Jersey Clipping), a regional division of Burrelle's, and, as well, individual officers and partners of each (Arthur Wynne, Sr., Arthur Wynne, Jr., Harold Wynne, and Frederick Wynne). Plaintiff initially charged violations of 15 U.S.C. §§ 1, 2 and 13(a), and unfair competition under the law of New Jersey. At pre-trial plaintiff formally abandoned Counts I, III and IV of the complaint and now simply charges a violation of 15 U.S.C. § 2 (hereinafter sometimes Section 2). *fn2"

 Just prior to trial the defendants moved to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim under Fed. R. Civ. P. 12(b)(1) and (6); for judgment on the pleadings under Fed. R. Civ. P. 12(c); and for summary judgment under Fed. R. Civ. P. 56(b). After argument, the court, mindful of the nearness of trial, reserved decision on the motions and ordered trial on the merits. Cf., Mortensen v. First Federal Savings & Loan Ass'n, 549 F.2d 884 (3d Cir., 1977). Now, after trial, I hold that this court has federal subject matter jurisdiction over the controversy. *fn3" On the other hand, I hold that plaintiff has failed to prove his claim on the merits.

 I.

 Jurisdiction

 The plaintiff and the defendants run press clipping bureaus. Businesses, institutions, governmental agencies, and individuals place orders with these bureaus to read newspapers and to cut out and supply to them clippings referring to these customers or to a topic or topics selected by them. There are two types of clipping bureaus, national and regional. The defendant Burrelle's operates both a national and a regional bureau. Under its own name it supplies to its customers clippings from newspapers published throughout the United States. Its New Jersey division, New Jersey Clipping, however, supplies customers only with regional service, and for these customers reads and obtains clippings only from New Jersey papers, and publications from New York City and Philadelphia. *fn4" For this service, be it national or regional, the customer is usually billed a monthly reading charge, or a charge per clip, or a combination of both.

 The process by which the plaintiff and defendants provide clips to customers is as follows: the publications are delivered to the premises and are then distributed to readers. They read the publications and mark the clips, according to customer. The clips are then passed to a stamping machine which stamps the slips on which the clippings are mounted. From there the clips go to the cutting room, are cut from newspapers, pasted on the slips, and then sent to the filing room and filed by customer name. Thereafter, they are shipped out by the shippers.

 Prior to the plaintiff's entry into the New Jersey market in 1965, if anyone wanted press clipping service with only New Jersey coverage, he had no alternative but to take Burrelle's national service, with nationwide coverage of newspapers, see n. 4, supra, and pay a national rate. *fn5" Thus he was paying for "reading" he did not want.

 Seizing this competitive opportunity, Garden State, purchased for $1.00 by Weber in 1965, began to offer a specialized New Jersey service, founded upon reading New Jersey newspapers almost exclusively, at a rate less than half of what Burrelle's was then charging its New Jersey customers for its national service.

 Faced with the loss of business to Garden State, Burrelle's in October 1970, responded to this competition by forming a New Jersey operating division (New Jersey Clipping), and in its name began to offer its New Jersey customers a regional service, much like plaintiff's, covering primarily only New Jersey newspapers. Since that time, defendants, through New Jersey Clipping have engaged in competition with Garden State on this basis in the New Jersey market as hereinafter defined. *fn6"

 As is well settled, plaintiff must demonstrate that the activity complained of occurred in or substantially affects interstate commerce for jurisdiction over the subject matter of this action to vest in this court. See Goldfarb v. Virginia State Bar, 497 F.2d 1, 15-16 (4th Cir. 1974), rev'd on other grounds, 421 U.S. 773, 780, 44 L. Ed. 2d 572, 95 S. Ct. 2004 (1975). See also Doctors, Inc. v. Blue Cross of Greater Philadelphia, 490 F.2d 48, 50 (3d Cir. 1973); Mortensen v. First Federal Savings & Loan Ass'n, supra, slip opinion at 21-22; Evans v. S. S. Kresge Co., 544 F.2d 1184 (3d Cir., 1976). See also Taxi Weekly, Inc. v. Metropolitan Taxicab Bd. of Trade, Inc., 539 F.2d 907, 909 (2d Cir. 1976).

 The plaintiff argues that because Burrelle's is in interstate commerce and is allegedly using its profits therefrom to implement and sustain, through New Jersey Clipping, the alleged predatory pricing designed to injure or destroy plaintiff in the New Jersey market, the activity complained of is actually "in interstate commerce," notwithstanding its limited local impact. Also, in what is essentially a refinement of the same argument, plaintiff claims the activity complained of is "in interstate commerce" because New Jersey Clipping, the alleged predator, is merely an intrastate division of an entity engaged in interstate commerce. Finally, plaintiff contends that, even if the activity in question is held to be solely intrastate, it has a "substantial effect" on interstate commerce.

 Defendants contend that because the relevant market is an intrastate market, this court has jurisdiction under Section 2 only if the alleged wrongful conduct had a substantial effect on interstate commerce. They further assert that, to ascertain whether there is such a "substantial effect," you look to the plaintiff's position to see whether, if he is eliminated or weakened as a competitor, this will result in a substantial reduction of the flow of supplies in interstate commerce, as in Hospital Bldg. Co. v. Trustees of Rex Hospital, 425 U.S. 738, 48 L. ...


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