Opposition — National Educational Advertising Services, Inc. v. Cass Student Advertising, Inc.

Supreme Court, U. &

FILED

OCT 24 1975

:

MICHAEL RODAK, JR., CLERK

IN THE

Supreme Court of the GAnited States

OcTOBER TERM, 1975

No. 75-480

NATIONAL EDUCATIONAL ADVERTISING

SERVICES, INC.,

Petitioner,

vs.

CASS STUDENT ADVERTISING INCORPORATED,

* Respondent.

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

JERALD P. Esrick

One IBM Plaza

Suite 3000

Chicago, Illinois 60611

Attorney for Respondent

Of Counsel:

WILDMAN, HARROLD, ALLEN & DIxOn

One IBM Plaza

Suite 3000

Chicago, Illinois 60611

312-222-0400

Gunthorp-Warren Printing Company, Chicago e Financial 6-6565

TABLE OF CONTENTS

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Question Presented for Review ................0-

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Reasons Why the Writ Should Be Denied ............

A. The Case Turns Wholly Upon Application of

Well Established Legal Standards to Uncontro-

verted Facts and Presents No Special or

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B. The Reasons for Granting the Writ Stated in

the Petition Present Questions Which Have No

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TABLE OF AUTHORITIES

Cases

Brown Shoe Co. v. United States, 370 U. S. 294 (1962)

Cass Student Advertising, Inc. v. National Educational

Advertising Services, Inc., 374 F. Supp. 796 (N. D. Ill.

1974), reversed 516 F. 2d 1092 (7th Cir. 1975)...1, 2,4, 5

Credit Bureau Reports, Inc. v. Retail Credit Co., 358 F.

Supp. 780 (S. D. Tex. 1971), affd 476 F. 2d 989 (Sth

Cee Te. ovecscucevecueseecesegeseuebsbanes 5

International Boxing Club, Inc. v. United States, 358 U. S.

i, BPevrrivirirrire Te ere Tre 5

Marnell v. United Parcel Service of America, 1971 Trade

+ Be) 8 Se B- 8 oo arr 5

United States v. Connecticut National Bank, 418 U. S.

GRE CIBNE) cc cctvcdsccesctarcesececssétsuces 3

United States v. E. I. Dupont de Nemours & Co., 351 U. S.

SFE CHRD hécectuccecéececeeseepssunvesses 3,4, 5

United States v. Grinnell Corp., 384 U. S. 563 (1966). ..3, 5, 6

United States v. Phillipsburg National Bank, 399 U. S. 350

CEE: 660 66-0edé-tvavedess oewaneeeatenseanse 3

Rules

Federal Rules of Civil Procedure, Rule 52({a) 28

a Oe Ee Ose5 80th kesdednced usu easedendeseee 3, 4,7

Supreme Court of the Gnited States

OCTOBER TERM, 1975.

No. 75-480

NATIONAL EDUCATIONAL ADVERTISING

SERVICE, INC.,

Petitioner,

vs.

CASS STUDENT ADVERTISING INCORPORATED,

Respondent.

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the Court of Appeals is reported at 516 F. 2d

1092. Otherwise, Opinions Below, Jurisdiction and Statutes

Involved are as stated in the Petition.

QUESTION PRESENTED FOR REVIEW

The questions presented for review in the Petition are in-

accurate. The sole question which could properly be presented

for review is:

Whether the Court of Appeals applied the proper legal

standards to essentially uncontroverted facts in defining

the relevant market to be “the service of representing col-

lege newspapers in the placement of national advertising”?

STATEMENT OF THE CASE

The relevant facts and proceedings below are fairly sum-

marized in the Opinion of the Court of Appeals, appended to the

Petition at pages la-16a, reported at 516 F. 2d 1092, and in the

Opinion of the District Court, appended to the Petition at pages

1b-14b, reported at 374 F. Supp. 796. The Statement of the

Case in the Petitionycontains numerous misstatements of facts,

misrepresentations of the record, and unwarranted argumenta-

tion, most of which are not germane to the question presented

for review. As recognized by both Courts below and admitted by

the Petitioner itself in its Brief to the Court of Appeals (Brief

of Defendant-Appellee, p. 27), the evidence in the record re-

lating to the determination of the relevant market issue is

essentially uncontroverted.

Without belaboring or refuting Petitioner's misstatements in

detail, the record provides io support for Petitionez’s irrelevant

and all inclusive assertions that “the advertising representative,

whether for college newspapers, metropolitan dailies or broad-

cast media works on an exclusive basis” (Petition p. 3) and

“[iJn college newspapers carrying both local and national ad-

vertising, most advertising is local advertising” (Petition, p. 3).

It is not true that Respondent had exclusive contracts with all or

even a significant number of Chicago-area high school and

college newspapers for the placement of local advertising. Re-

spondent’s stetement carefully overlooks a key finding of the

Court of Appeals that:

. Since the college newspapers cannot practically as-

sume the sclicitation of national advertisers themselves and

since other wdvertising representatives specialize by medium,

college newspapers have little alternative to CASS or NEAS

if they wish to secure national advertising. Cf. Telex Corp.

v. International Business Machines Corp., ...¥F. 2d...

(10th Cir. 1-24-75, slip opinion at 47-59).” (emphasis

added) (Petition, p. 16a.)

REASONS WHY THE WRIT SHOULD BE DENIED

A. The Case Turns Wholly Upon Application of Well Estab-

lished Legal Standards to Uncontroverted Facts and Pre-

sents No Special or Important Questions

The Petition is plainly insubstantial and presents no special

or important reasons for considering it. Petitioner does not

suggest that the Court of Appeals announced new or novel legal

standards for determining the relevant market, which are in con-

flict with those well established by this Court. Indeed, Petitioner

concedes that the Court of Appeals made its decision based

upon an application of the controlling legal standards established

by United States v. E. 1. DuPont de Nemours & Co., 351 U. S.

377 (1956) and Brown Shoe Company v. United States, 370

U. S. 294 (1962).

Petitioner seeks review because it disputes the Court of Ap-

peals’ application of those standards to the instant facts. In

addition, inconsistently with its agreement before the Court of

Appeals that all essential facts were uncontroverted, it now

argues that the Court of Appeals overruled the District Court’s

findings of fact in violation of Federal Rule 52(a).

Neither argument is well founded. However, even if it were

assumed arguendo that the Court of Appeals erred in its applica-

tion of the proper legal standards to the facts or reversed a

finding of fact of the District Court, such errors would not be

of sufficient magnitude to warrant the granting of the Writ.

The legal standards by which the relevant market issue should

be determined are well settled by this Court’s decisions in

DuPont, Brown Shoe and more recently in United States v.

Grinnell Corp., 384 U. S. 563 (1966), United States v. Phillips-

burg National Bank, 399 U. S. 350 (1970), and United States

v. Connecticut National Bank, 418 U. S. 656 (1974). These

decisions were recognized and applied by the Court of Appeals,

4

which was conscious of this Court’s admonition in DuPont that

relevant market determinations could be reversed only upon a

showing

“that erroneous legal tests were applied to essential find-

ings of fact or that the findings themselves were ‘clearly

erroneous’ within our rulings on Rule 52(a) of the Rules

of Civil Procedure,” (351 U. S. at 381) (emphasis added).

The Court of Appeals, in accord with that admonition, re-

versed based upon its conclusion that the District Court had

“misapplied the appropriate legal standards” (Petition, p. 3a).

The Court found it unnecessary to set aside the District Court’s

findings of fact under the “clearly erroneous” standard since the

facts essential to the relevant market determination were un-

controverted.

The Court of Appeals’ opinion analyzed the uncontroverted

facts, measured them against the reasonable interchangeability

standard of DuPont, and applied with precise detail the Brown

Shoe submarket indicia, in reaching its conclusion.

This Court's relevant market standards do not focus upon

an abstract theoretical judgment as to whether the market

under review is “narrow” or “broad”. What is critical is

whether the service claimed to be the market is reasonably

interchangeable, from the purchaser’s standpoint, with other

available services. As recognized by the Court of Appeals, the

college newspapers, the purchasers of the service at issue here,

have no reasonable alternative but to use the services of a

representative specializing in college newspaper national ad-

vertising, due to the fact that advertising representatives spe-

cialize by medium. (Petition, pp. 15a.-16a.)*

* Petitioner’s repeated reference to Mr. Hanson’s earlier duties as

a space salesman for the Ladies Home Journal (Petition, pp. 3, 18)

are a perfect illustration of Petitioner’s basic failure to understand the

interchangeability test applied by the Court of Appeals. Just be-

cause every salesman performs the same physical tasks in selling his

product is irrelevant to whether the service of selling a particular

type of product is interchangeable with available substitutes for that

service. The decisions of this Court and others have repeatedly

a

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5

The District Court erroneously failed to focus on the service

at issue, as required by Grinnell (384 U. S. at 573). Rather,

it held the relevant market to include “all modes of competition

used to present national advertising to college students” (Pe-

tition, p. 14b), which in its view included:

“television, AM and FM radio, commercial newspapers,

magazines such as Playboy, Penthouse, Oui and Sports

Illustrated, the college editions of Time and Newsweek

magazines, other college publications, and billboards . . .

direct mail advertisments, posters located on campus,

student directory ads, advertising samples distributed on

campus, commercial magazines distributed predominantly

on campus, and ‘Beetleboards’ . . .” (Petition, pp. 9b-10b).

Such a definition by its terms included virtually all national

advertising to the public at large, rather than merely national

advertising to college students since all national advertising to

some degree reaches college students. By no reasonable basis

could a market definition which included all national advertis-

ing be justified under the sub-market standards of Brown Shoe,

given the undisputed facts of this case.

The Court of Appeals ruling here is yet another example of

this Court’s statement in DuPont that in relevant market cases,

“(T]he varying circumstances of each case determine the re-

sult.” (351 U. S. at 395.) Were the Court to grant the Writ,

every losing party in a relevant market case would be equally

justified in pressing a Petition for Certiorari on this issue. The

geometric increase in cases prophesied by the Petition if the

Writ is denied (Petition, p. 11), will surely be realized if the

Petition is granted. This Court does not sit to review the

recognized that neither similarity nor even identity of function creates

reasonably interchangeable products or services within a relevant line

of commerce. E.g., United States v. Grinnell Corp., 384 U. S. 563,

573-576 (1966); International Boxing Club, Inc. v. United States,

358 U. S. 242, 249-251 (1959); Marnell v. United Parcel Service of

America, 1971 Trade Cas. § 73,761 at pp. 91,212-91,213 (N. D.

Cal. 1971); Credit Bureau Reports, Inc. v. Retail Credit Co., 358

F. Supp. 780, 790 (S. D. Tex. 1971), aff'd. 476 F. 2d 989 (Sth

Cir. 1973).

6

unique facts of individual cases. A decision by this Court on

the relevant market appropriate to the facts at bar, would have

no impact beyond the limits of this specific case.

B. The Reasons for Granting the Writ Stated in the Petition

Present Questions Which Have No Basis in the Record

Point II of the Petition begs the question, in assuming that

“college newspaper advertising” cannot be a relevant market.

Such an argument misses the point of the Court of Appeals’

decision, which properly focused on the service at issue as re-

quired by this Court's Grinnell decision. In doing so, the

Court of Appeals properly reversed the District Court, which

had failed to analyze whether that service was reasonably inter-

changeable with other services available to college newspapers

to secure national advertising. The Court of Appeals properly

concluded, upon a review of all uncontroverted facts, that

there were no reasonable alternatives. The Petition attempts to

confuse this Court into focusing on “college newspaper ad-

vertising” rather than upon the service at issue.

The supposed conflict (claimed in Point III of The Petition)

of the decision below with the decisions of other Circuits is

nonexistent. The Court below applied the same legal standards

utilized by the cases cited by Petitioner. Each court applied

these standards to the unique facts before it. No conflict be-

tween Circuits can exist when the only purported distinction

between decisions is whether the market defined is “narrow”

or “broad”, a matter dictated solely by the facts of each case.

The important point is that the standards utilized by all Cir-

cuits deciding the relevant market issue were those mandated

by this Court’s decisions.

The Petition attempts to categorize the relevant market

found by the Court of Appeals to be “narrow”. The relevant

market found herein is no more narrow than that found in

Grinnell which properly analyzed the cluster of services at

7

issue. What Petitioner is really saying is that the service at issue

is a relatively small part of the nation’s commerce and, there-

fore, not entitled to be dignified with classification as a rele-

vant market. The short answer is that neither the Sherman Act

nor this Court’s decisions provide any basis for applying differ-

ent standards to relevant lines of commerce based upon their

size. |

Finally, Point IV of the Petition is simply an effort, without

saying so, to have this Court decide whether the Court of

Appeals improperly overruled the District Court under Rule

52(a). This Court’s function, respectfully, is not to review

findings of fact, all the more so where both courts below and

Petitioner have agreed that the essential facts are uncontro-

verted.

CONCLUSION

For all of the foregoing reasons, the Petition for a Writ of

Certiorari should be denied.

Respectfully submitted,

JERALD P. EsrIck

One IBM Plaza

Suite 3000

Chicago, Illinois 60611

Attorney for Respondent

Of Counsel:

WILDMAN, HARROLD, ALLEN & DIXON

One IBM Plaza

Suite 3000

Chicago, Illinois 60611

312-222-0400