Poller v. Columbia Broadcasting System, Inc./Opinion of the Court

by Tom C. Clark

United States Supreme Court

368 U.S. 464

Poller  v.  Columbia Broadcasting System, Inc.

 Argued: Nov. 13 and 14, 1961. --- Decided: Feb 19, 1962

The question involved here is whether this treble damage action based on alleged violations of the restraint of trade and monopoly sections of the Sherman Law ^[1] was rightly terminated by a summary judgment of dismissal. The petitioner, Lou Poller, is the assignee of the Midwest Broadcasting Company, a dissolved corporation. In 1954 Midwest was the owner and operator of WCAN, an ultra high frequency (UHF) ^[2] 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. ^[3] 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.

At the hearing on the motion for summary judgment the trial judge held that the injury suffered was damnum absque injuria, stating that CBS had a right to purchase WOKY, subject to Federal Communications Commission approval, and to cancel its affiliation contract with WCAN. 174 F.Supp 802. The Court of Appeals affirmed with Judge Washington dissenting, 109 U.S.App.D.C. 170, 284 F.2d 599, and we granted certiorari, 365 U.S. 840, 81 S.Ct. 804, 5 L.Ed.2d 807. We now conclude that there was a genuine issue as to material facts and that summary judgment was not therefore in order.

Summary judgment should be entered only when the pleadings, depositions, affidavits, and admissions filed in the case 'show that (except as to the amount of diamages) there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' Rule 56(c), Fed.Rules Civ.Proc., 28 U.S.C.A. This rule authorizes summary judgment 'only where the moving party is entitled to judgment as a matter of law, where it is quite clear what the truth is, * * * (and where) no genuine issue remains for trial * * * (for) the purpose of the rule is not to cut litigants off from their right of trial by jury if they really have issues to try.' Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 728, 88 L.Ed. 967 (1944). We now examine the contentions of the parties to determine whether under the rule summary judgment was proper.

The respondents in their motion for summary judgment depended upon the affidavits of four persons. The first is Richard Salant, Vice President of CBS; another, Jay Eliasberg, Director of its Research Division; a third, Lee Bartell, who made the sale of WOKY to CBS at a $50,000 profit; finally, Thad Holt, a codefendant who received $10,000 from the transaction. These were supplemented by material taken from petitioner's depositions of Salant and CBS President Stanton. It is readily apparent that each of these persons was an interested party.

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. ^[4] 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. ^[5] It might be that on a trial Poller could substantiate his claims of conspiracy even against Bartell, although this would not be necessary to his case.

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. ^[6] 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. ^[7] 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.'

Other contentions of respondents are subject to ready disposition. They say that no restraint of trade resulted from CBS' termination of its affiliation with WCAN for this enabled it to support WOKY, the other UHF station in the Milwaukee area, which based upon Poller's own allegations was doomed without an affiliation. To the extent that this argument suggests that there is no violation of the antitrust laws because the public will still receive the same service, it has been foreclosed by this Court's decision in Klor's, Inc., v. Broadway-Hale Stores, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959). And if it is meant to say that there was no restraint because CBS in canceling its affiliation with WCAN was merely doing what it had a right to do and the resulting demise of WCAN followed from normal market conditions, it erroneously assumes that CBS had an absolute right despite violations of the antitrust laws to exercise its contractual privilege. See Part III, supra. A further answer to the respondents' contention in this regard is that Poller has an additional claim that part of the conspiracy was the destruction of UHF broadcasting entirely. The sole answer of CBS to that is 'there is not a shred of evidence' to support such a charge. However, there has been no trial as yet, and the issue remains a factual one disputed under the pleadings and still undetermined.

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.

Reversed and remanded.

Mr. Justice HARLAN, with whom Mr. Justice FRANKFURTER, Mr. Justice WHITTAKER and Mr. Justice STEWART join, dissenting.

Notes

1. 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.
2. The terms ultra high frequency (UHF) and very high frequency (VHF) refer to the wave lengths of the electrical impulses which are projected by broadcasting stations to carry programs to receiving sets. Prior to 1952 only the VHF portion of the spectrum was authorized. Generally TV receivers are manufactured only to receive VHF signals and must be modified by an owner to receive UHF.
3. 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.
4. We do not pass upon the point urged by Pollar that under the CBS corporate arrangement of divisions, with separate officers and autonomy in each, the divisions came within the rule as to corporate subsidiaries.
5. 11 Pike and Fischer Radio Reg. 913, 914.
6. Indeed, such action would be unreasonable in light of the success of Midwest's initial operation and its highly favorable prospects with the expanded facilities and new equipment.
7. 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).