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United States v. Bitz

decided: August 26, 1960.

UNITED STATES
v.
IRVING BITZ, ET AL.



Author: Hamlin

Before WATERMAN, MOORE and HAMLIN, Circuit Judges.

HAMLIN, Circuit Judge: This is an appeal from a decision of the District Court for the Southern District of New York dismissing Count 1 of a six-count indictment filed therein on January 23, 1959.*fn1 Count 1 charges eleven individual defendants and one corporate defendant with engaging in an unlawful combination and conspiracy in restraint of interstate trade and commerce in the wholesale distribution and sale of newspapers and magazines in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Count 2 charges nine of the individual defendants and the corporate defendant with violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. The remaining four counts charge a number of the individual defendants with violation of, or conspiracy to violate, the Hobbs Act, 18 U.S.C. § 1951. The latter five counts are not involved in this appeal.

Count 1 alleges that six of the individual defendants were officers of the Newspaper and Mail Deliverers' Union of New York and Vicinity (the Union) and that the remaining five were officers, employees or stockholders in various corporations. Defendant Bi-County News Corporation is one such corporation. The business or purpose of these corporations is not set forth, but they are apparently engaged in wholesale distribution of newspapers and magazines.

The indictment recites that Suburban Wholesalers Association, Inc. (Suburban Wholesalers), is a New York membership corporation consisting of twelve members who purchase newspapers and magazines from publishers and sell them at wholesale to news stands and other outlets for resale by those outlets to consumers.

The members of Suburban Wholesalers service substantially the Suburban Area of New York, which is defined as the area included within approximately a 50-mile radius of Columbus Circle, New York, New York, with the exception of New York City. The members of Suburban Wholesalers distribute, in specified areas which do not overlap, all the principal New York City newspapers and all the principal magazines published throughout various states, as well as local newspapers published in their respective areas. There is thus a continuous and regular flow of interstate commerce of newspapers and magazines from various states in the United States to members of Suburban Wholesalers located in New York, New Jersey, and Connecticut. The total gross sales of newspapers and magazines by the members of Suburban Wholesalers amounted to more than $30,000,000 in 1958.

Suburban Wholesalers acts as joint bargaining agent for all its members in negotiating labor contracts with the Union. Individual contracts are thereafter executed between the Union and the members. The Union, exclusively, by agreement, supplies the members of Suburban Wholesalers with all their employees engaged in the handling and delivery of magazines. It is vital, because of the nature of the newspaper and magazine industry, that distribution be unhindered since delays in delivery, even for a day in the case of newspapers and several days in the case of magazines, render the merchandise unsalable. Strikes and threats of strikes have a coercive effect upon the members of Suburban Wholesalers, since, by provision in labor contracts between the Union and the newspaper and magazine publishers covering their employees engaged in the handling of newspapers and magazines, such publishers can use as wholesalers only such distributors as are themselves under labor contractual relation with the Union.

After setting forth the above, the indictment continues:

"COMBINATION AND CONSPIRACY IN RESTRAINT OF TRADE

"22. Beginning on or about January 1, 1955, and continuing to and including the date of the return of this indictment, the defendants and co-conspirators have engaged in an unlawful combination and conspiracy in restraint of the aforesaid interstate trade and commerce in the wholesale distribution and sale of newspapers and magazines in violation of Section 1 of the Act of Congress of July 2, 1890, entitled "An Act to protect trade and commerce against unlawful restraints and monopolies" as amended, c. 647, 26 Stat. 209, 15 U.S.C. Section 1, commonly known as the Sherman Act.

"23. The aforesaid combination and conspiracy has consisted of a continuing agreement and concert of action among the defendants and co-conspirators, the substantial terms of which have been and are:

"a. To restrain the members of Suburban Wholesalers in their wholesale distribution of newspapers and magazines by coercing and compelling said members to pay to the conspirators various sums of money, as a prerequisite to obtaining labor contracts with the Union to avoid strikes or the continuation of strikes already called by said Union;

"b. To prevent the shipment of newspapers and magazines in interstate commerce to members of Suburban Wholesalers not acceding to the demands of the conspirators; and

"c. To hinder and exclude or attempt to hinder and exclude actual or potential competitors of defendants Irving Bitz, Charles Gordon and Bi-County.

"24. During the period covered by the indictment, the said combination and conspiracy has been effectuated by various means and methods including, but not limited to, the use of union influence, ...


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