The opinion of the court was delivered by: McLAREN, District Judge.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on defendants' motion for
summary judgment pursuant to Fed.R.Civ.P. 56. The motion is
The complaint alleges, inter alia, that Blackman, Ray &
Zuckerman, Inc., wholly owned by Howard J. Zuckerman, Stuart N.
Blackman and Joseph Ray, was formed for the purpose of conducting
business as a broker-dealer in securities in interstate commerce.
It is further alleged that plaintiffs introduced themselves to
potential customers in various cities and on information it is
alleged that some of these potential customers had previously
done business with or were customers of defendants Morton
Weinress, Leo Meiselman, David Y. Williams, and James C. Dougall,
Jr. It is alleged that the defendants conspired to (1) restrain
plaintiffs from securing said business by inducing the Midwest
Stock Exchange ("Exchange") to postpone, delay and deny
plaintiffs' membership on the Exchange and (2) prevent Stuart
Blackman from functioning as a specialist on the Exchange.
It is also alleged that in furtherance of the conspiracy, the
defendants caused false, derogatory and defamatory information
concerning the plaintiffs to be brought to the attention of the
Board of Governors, the Executive Committee and the Admissions
Committee of the Exchange. As a result thereof, plaintiffs
allegedly were prevented from obtaining full membership on the
Exchange although they met all membership requirements. The
Exchange is charged with furtherance of the conspiracy by its
refusal to admit the plaintiffs to membership.
The action allegedly arises under Sections 1 and 2 of the
Sherman Antitrust Act, 15 U.S.C. § 1 and 2, and jurisdiction
allegedly exists pursuant to Section 4 of the Clayton Act,
15 U.S.C. § 15.
In light of this Court's disposition of the motion, only a
brief statement of the facts is necessary. After Blackman's
application was rejected by the Exchange's Executive
Committee,*fn1 counsel for the Exchange gave Blackman notice of
the information upon which the Executive Committee acted and
informed him that he would be granted a hearing. It was charged
that Blackman, while employed by Weinress & Co., (1) made several
unnecessary and exaggerated requests to bid up for his own
account a certain stock in which he was a co-specialist, in
violation of Rule 9 of Article XXIV of the Midwest Rules; (2)
failed to maintain an orderly market in the same common stock by
reason of large spreads between bid and ask quotations and large
gaps between successive sales;*fn2 (3) used "strong and
offensive profanity" on the floor of the Exchange. It was also
stated that "[t]he general opinion of members of the Committee on
Floor Procedures is that during the period you [Blackman] were
active on the Floor of the Exchange, you displayed a gross
disregard for Exchange Rules, professional ethics and
The Exchange's Executive Committee held a hearing on Blackman's
application at which time witnesses with information adverse to
Blackman were heard first. Blackman was given the opportunity to
cross-examine these witnesses and present his own case.
Blackman's counsel was not permitted to participate in the
cross-examination, although counsel was allowed to be present to
advise Blackman throughout the proceeding. The Exchange
stipulated that the Executive Committee's decision on the
application would be made solely on the basis of the evidence
presented at the hearing.
The Executive Committee decided that the evidence was not
sufficient to deny membership to Blackman. The minutes of the
Executive Committee meeting of March 2, 1971 state, inter alia,
"[t]he Committee finds that because of the serious
questions that have been raised as to the knowledge
and experience as well as the character and integrity
of Mr. Blackman, he should be admitted to membership
subject to a six month probationary period during
which he would be under the active supervision of a
member of the Floor Procedure Committee."
During the probationary period Blackman was to be able to operate
without limitations, "except as may be found appropriate by the
Floor Procedure Committee as a result of conduct on the Floor
subsequent to his joining the Exchange. . . ."
When notified of the Executive Committee's action, Blackman
considered it adverse and requested review by the Exchange's
Board of Governors. The Board of Governors reviewed and
unanimously affirmed the Executive Committee's action at its
meeting of March 16, 1971. Blackman declined to accept this
probationary membership and filed this suit.