Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

METRO CABLE CO. v. CATV OF ROCKFORD

April 12, 1974

METRO CABLE CO., A DELAWARE CORPORATION, PLAINTIFF,
v.
CATV OF ROCKFORD, INC., AN ILLINOIS CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Bauer, District Judge.

MEMORANDUM OPINION AND ORDER

This cause comes on the defendants' motion to dismiss the second amended complaint because it fails to state a claim upon which relief can be granted, pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure.

This action seeks to redress alleged violations of the federal antitrust laws, specifically Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1 and 2. This Court allegedly has jurisdiction over the action under Sections 4 and 16 of the Clayton Act, 15 U.S.C. § 15 and 26.

Plaintiff, Metro Cable Company ("Metro") was chartered as a Delaware corporation on April 1, 1964, and prior to February 1, 1972, had the corporate name of Rockford Community Television, Inc. Metro operates a CATV system serving Loves Park, North Park Community and unincorporated areas of Winnebago County, Illinois, and is owned by local individual and business interests in the Rockford, Illinois, area. Defendant CATV of Rockford, Inc. ("CATV of Rockford") is an Illinois corporation, with its principal place of business located in Rockford, Illinois, and is presently installing a CATV system in parts of the City of Rockford, Illinois. Defendant Rock River Television, Inc. ("WCEE-TV") is an Illinois corporation, engaged in the business of television broadcasting with its principal place of business located in Rockford, Illinois. Defendant Harley Swanson is the President and a stockholder of CATV of Rockford, and is also Director of WCEE-TV. Mr. Swanson assists in the direction and operation of CATV of Rockford in the manner alleged herein. Defendant David S. Paddock is the Secretary and a stockholder of CATV of Rockford as well as the Secretary and a stockholder of WCEE-TV. Mr. Paddock assists in the direction and operation of CATV of Rockford and WCEE-TV. Defendant Earl W. Hickerson is the General Manager and a stockholder of CATV of Rockford and is Vice-President, General Manager and a stockholder of WCEE-TV. Hickerson assists in the direction and operation of CATV of Rockford and WCEE-TV. Defendant Harley W. Mullins is the Treasurer and a stockholder of WCEE-TV and a stockholder of CATV of Rockford. Mullins assists in the direction and operation of WCEE-TV. Defendant Benjamin T. Schleicher is the Mayor of the City of Rockford, Illinois. Defendant Dale M. Skolrood is an Alderman of the City Council of the City of Rockford, Illinois, and a former Chairman of the Planning and Finance Committee of that Council.

The plaintiff, in its amended complaint, alleges, inter alia, the following facts:

1. Defendant WCEE-TV is engaged in the commerce of disseminating broadcasting television signals, many of which originate outside the State of Illinois. Plaintiff, as the owner and operator of a CATV system in Loves Park, North Park Community and in unincorporated areas in Winnebago County, Illinois, receives television signals and FM by means of multiple antennae mounted on a high tower and then converts, processes and amplifies the signals, originates additional signals, and distributes them by cable to the premises of subscribers who pay a monthly fee for the service. Plaintiff's system offers the signals of all three local television stations and some independent educational television stations (both UHF and VHF) from Chicago, Illinois, and Madison, Wisconsin, and will offer the signals from other television stations originating both in Chicago, Illinois, and outside the State of Illinois. Defendant CATV of Rockford intends to offer similar signals to that of the plaintiff which will originate both from Chicago, Illinois, as well as from outside the State of Illinois. Plaintiff is in competition with WCEE-TV in the Loves Park — North Park Community — Winnebago County — suburban Rockford areas for viewing customers. Plaintiff has been for in excess of eight years, in competition with CATV of Rockford for a license from the City of Rockford, Illinois, to construct and expand its system into the City of Rockford, which is requisite to seeking viewing customers. Competition for the viewing customers in the City of Rockford, Illinois, now generates, and in the future will continue to generate, in excess of a million dollars per year.

2. Commencing sometime in 1964 or 1965, the exact date of which is unknown to plaintiff, and continuing uninterruptedly up to and through the date of the complaint, the defendants have combined, contracted and conspired among themselves, to restrain interstate trade and commerce and to monopolize commerce in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1 and 2. In furtherance of these violations, defendants have combined, contracted and conspired among themselves to boycott and foreclose the plaintiff from entering the (a) CATV market and (b) television market in Rockford, Illinois, and in certain unincorporated areas of Winnebago County, Illinois, thereby eliminating plaintiff as a potential competitor of the defendant WCEE-TV in said city and obtaining and maintaining for CATV of Rockford a total monopoly of the CATV industry in Rockford, Illinois. The defendant WCEE-TV's primary objective in entering and maintaining this conspiracy was effectively to foreclose any further competition in the television market in Rockford, Illinois. To this end, it and its stockholders were instrumental in creating CATV of Rockford for the purpose of obtaining a CATV franchise, and blocking the plaintiff as a potential competitor which was necessary to defendant WCEE-TV because it was a new entrant into the TV media market as of September, 1965.

3. In order to foreclose further television competition, including CATV competition, in Rockford, Illinois, the defendant WCEE-TV, by and through its officers, directors and stockholders, kept control of CATV of Rockford, the only corporation that was granted a franchise to build a cable system in Rockford. Through this control, WCEE-TV was able to determine when and in what areas of Rockford, Illinois, cable television would be introduced in Rockford, Illinois. Individuals owning or controlling approximately 65% of the capital stock of WCEE-TV own or control over 60% of the capital stock of CATV of Rockford. Every officer and director of WCEE-TV is also an officer, director, or stockholder in CATV of Rockford. Every officer and director of CATV of Rockford is also an officer, director or stockholder of WCEE-TV. The Vice-President and General Manager of WCEE-TV is also the General Manager of CATV of Rockford. As a result, there is 100% cross-management and 100% cross-corporate control between WCEE-TV and CATV of Rockford.

4. Pursuant to the above conspiracy and to accomplish the objectives sought, defendants have committed the following acts with the predatory intent and purpose of eliminating plaintiff as a viable competitor:

  a. Defendants CATV of Rockford, WCEE-TV, Swanson,
     Paddock, Hickerson and Mullins met in 1965 and
     agreed to take steps to prevent plaintiff from
     obtaining a franchise from the City Council of
     Rockford, Illinois, to operate a CATV system in
     that city.
  b. Defendant Mullins met with the defendant
     Schleicher, Mayor of the City of Rockford, on or
     about March 12, 1965, and numerous times
     thereafter, and obtained from him an agreement
     that the latter would take steps to foreclose
     plaintiff from obtaining a franchise from the City
     Council. Defendant Mullins, in exchange for this
     agreement of the defendant Schleicher, paid him a
     substantial sum of money as a "campaign"
     contribution for his reelection.
  c. Subsequently, a similar agreement was entered into
     with the defendant Skolrood, an alderman who was
     Chairman of the Planning and Finance Committee,
     and other parties as yet unknown. A substantial
     sum of money was also paid to the defendant
     Skolrood as a "campaign" contribution.
  d. In 1965 and 1966, defendant Swanson succeeded in
     obtaining an agreement from defendant Schleicher,
     and subsequently, a similar agreement from
     defendant Skolrood, whereby Schleicher and
     Skolrood agreed to, and did, use their best
     efforts to foreclose plaintiff from obtaining a
     CATV franchise from the City of Rockford.

5. As a result of the conspiracy between all defendants, including the defendants Schleicher and Skolrood, plaintiff was foreclosed from obtaining a CATV franchise or from even obtaining a hearing on its merits before the City Council, which was necessary in order to obtain a valid franchise. The following occurred:

  a. On April 5, 1966, the License Committee of the
     Rockford City Council recommended that plaintiff
     Metro be granted a franchise for cable television
     in view of the fact that it could have an
     operative system installed within two years.
     However, CATV of Rockford was awarded the
     franchise on April 14, 1966, because of pressure
     brought on the Council by defendant Schleicher who
     was acting pursuant to his agreement with the
     other defendants.
  b. On October 19, 1970, the plaintiff again applied
     for a cable franchise for the City of Rockford and
     deposited the sum of $100,000.00 with the Rockford
     City Treasurer guaranteeing to start construction
     of a quality cable television system within the
     corporate limits of Rockford within 6 months after
     the City approved the construction plans for said
     system, at which time plaintiff submitted a legal
     opinion to the City of Rockford from outside
     independent legal counsel of Chicago, Illinois,
     wherein the defendants Schleicher and Skolrood
     were advised that the City of Rockford could not
     grant an exclusive franchise for cable television.
     Subsequently, defendants Schleicher and Skolrood
     refused to grant plaintiff even a hearing on its
     petition for a second franchise notwithstanding
     said legal opinion.
  c. On October 26, 1970, the defendants Swanson and
     Paddock on behalf of themselves and the defendant
     corporation CATV of Rockford, willfully
     misrepresented unto the Planning and Finance
     Committee of the City Council of the City of
     Rockford, of which the defendant Skolrood was a
     member, that CATV of Rockford had expended
     $100,000.00 to purchase a parcel of land south and
     east of Elgin, Illinois, and had constructed a
     tower on said premises for the purpose of
     receiving and transmitting microwave signals for
     cable television to Rockford when in fact it was
     the defendant WCEE-TV which purchased said land
     and erected said tower. Notwithstanding said
     willful misrepresentation and fully knowing the
     same to be a misrepresentation, the defendant
     Skolrood refused the plaintiff a hearing on its
     application for a cable franchise for the City of
     Rockford.
  d. In September, 1971, plaintiff filed a third
     application for a cable license and, even though
     the Rockford Assistant City Attorney rendered a
     legal opinion that the City had no right to grant
     an exclusive CATV franchise to the defendant CATV
     of Rockford, yet the City Council again refused to
     grant even a hearing on plaintiff's application.
     Furthermore, the Planning and Finance Committee,
     headed by the defendant Skolrood, appointed a
     subcommittee chaired by Alderman David Ingrassia
     and with Skolrood as a participating member of
     said subcommittee, for the publicly announced
     purpose of establishing hearing procedures to be
     followed by the City Council in

     awaiting a second franchise under the February 12,
     1972 rules of the Federal Communications
     Commission but which subcommittee subsequently,
     contrary to its procedural instructions, decided
     in a secret meeting to conduct no hearings on the
     matter and to allow only CATV of Rockford to
     operate its CATV system in the City of Rockford.
  e. On May 8, 1972, at the insistence of the
     defendants, Skolrood voted not to grant any
     additional ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.