Arnold Chevrolet LLC v. Tribune Co.

418 F. Supp. 2d 172, 2006 U.S. Dist. LEXIS 7873, 2006 WL 497202
CourtDistrict Court, E.D. New York
DecidedMarch 2, 2006
Docket04-CV-3097 (DRH)(WDW)
StatusPublished
Cited by6 cases

This text of 418 F. Supp. 2d 172 (Arnold Chevrolet LLC v. Tribune Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arnold Chevrolet LLC v. Tribune Co., 418 F. Supp. 2d 172, 2006 U.S. Dist. LEXIS 7873, 2006 WL 497202 (E.D.N.Y. 2006).

Opinion

MEMORANDUM OF DECISION AND ORDER

HURLEY, District Judge.

Plaintiffs Arnold Chevrolet LLC, et al. (“Plaintiffs”) filed the instant action alleging that defendants Tribune Company (“Tribune”), Newsday, Inc. (“Newsday”), and Staluppi Holding Company, Inc. (“Sta-luppi”) (collectively, “Defendants”) engaged in a conspiracy, inter alia, to charge Plaintiffs higher prices for newspaper advertising than Plaintiffs’ competitors. Defendants move to dismiss the Complaint pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). For the reasons that follow, Defendants’ motions are granted in part and denied in part.

BACKGROUND

The following facts are drawn from the Amended Complaint. Plaintiffs are owners and operators of automobile dealerships on Long Island who purchased newspaper advertising from Newsday for publication in its newspaper. (Am. Compile 8, 15.) The ads ran from September 1995 through July 30, 2004. (Id. ¶ 15.) Newsday is “the most widely circulated and read daily newspaper in Nassau and Suffolk Counties, the two counties which comprise that area of New York known as Long Island.” (Id. ¶ 10.)

Plaintiffs allege that the rates they paid Newsday for advertising were based on artificially inflated circulation figures represented by Newsday and its distributors to an auditing company known as ABC. (Id. ¶ 18 at 6.) 1 Plaintiffs contend that, independently and through its distributors, Newsday falsified the circulation volumes it reported to ABC. (See id. ¶¶ 20, 21.) As a result, Plaintiffs claim to have paid at least ten percent more than they should have for advertising. (Id. ¶¶ 26-28.)

Staluppi owns and operates a number of automobile dealerships on Long Island that “are in direct competition” with those owned and operated by Plaintiffs. (Id. ¶ 11.) Staluppi was part of what the pleading refers to as the “Preferred Group,” a group of large automotive dealers located in Long Island who became “disenchanted with Newsday’s advertising prices and/or practices.” (Id. ¶ 53.) Sta-luppi created a competing publication for the purpose of advertising automobiles for sale entitled “Price Finder.” (Id. ¶ 54.) Newsday, recognizing the potential threat of such a publication to its “dominance of the Long Island automobile advertising market,” sought to eliminate Price Finder. (Id. ¶ 55.) To effectuate this goal, News-day allegedly entered into an agreement with the Preferred Group whereby News-day provided the Group with discounted advertising rates in return for Staluppi’s promise to cease publication of Price Finder. (Id. ¶ 56.) Pursuant to this agreement, Newsday specifically agreed “not to provide such deep discounts for advertising to Plaintiffs and any other dealer not a member of the Preferred Group for advertisements in Newsday.” (Id. ¶ 57.) Upon information and belief, Plaintiffs allege that “dealers who are not members of the Preferred Group pay amounts in excess of eight times the amounts paid by members *177 of the Preferred Group for advertisements placed in Newsday.” (Id. ¶ 58.)

In addition to the foregoing, Plaintiffs charge Newsday with a variety of anticom-petitive conduct, including the acquisition of publications that were actual or potential competitors, (id. ¶ 48), and refusing to accept advertisements from any merchant who advertised in a competing publication known as “Suffolk Life.” (Id. ¶ 51.)

Plaintiffs allege that “Newsday is the only meaningful avenue' by which automobile dealers including the Plaintiffs may advertise, in the print media or otherwise.” (Id. ¶ 89.) In this regard, Plaintiffs claim that “[njewspaper advertising for automobile sales is the single most, and in many cases the sole source, of advertising for car sales dealerships.” (Id. ¶ 72.) As for the other area newspapers, Plaintiffs allege that “Long Island businesses will not generally seek advertising in the New York Post, New York Times and/or New York Daily News, as these publications are considered ‘city papers’ and cover too broad a geographic area to be a meaningful source of advertising for Long Island merchants.” (Id. ¶ 67.)

Plaintiffs commenced this action on July 21, 2004. On August 12, 2004, Plaintiffs brought a motion for a temporary restraining order and preliminary injunction, seeking to prevent Newsday from not running Plaintiffs’ advertisements as a result of this litigation. On September 1, 2004, the parties entered into a stipulation pursuant to which Plaintiffs would be permitted to advertise in Newsday during the pendency of this litigation.

Plaintiffs filed their Amended Complaint on August 23, 2006. The Amended Complaint asserts fifteen causes of action. Specifically, Plaintiffs bring claims under the Sherman Act for (1) unlawful conspiracy/restraint of trade; (2) conspiracy to monopolize; (3) attempt to monopolize; (4) monopolization; and (5) predatory pricing in the “Long Island Automobile Advertising Market,” and (6) unlawful conspiracy/restraint of trade; (7) conspiracy to monopolize; and (8) attempt to monopolize the “Long Island New Automobile Sales Market.” These claims, as well as Plaintiffs’ state law antitrust claims brought pursuant to the Donnelly Act, are asserted against all Defendants. Plaintiffs also bring one claim for false advertising under the Lanham Act and state-law claims for fraud, unjust enrichment, negligent misrepresentation and breach of contract. This latter group of claims is asserted against Newsday and Tribune only. (See Pis.’ Mem. in Opp’n to Staluppi’s Mot. at 17.)

DISCUSSION

I. Standard of Review

The court may not dismiss a complaint under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. King v. Simpson, 189 F.3d 284, 286 (2d Cir.1999); Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir.1996). The Court must accept all factual allegations in the proposed complaint as true and draw all reasonable inferences in favor of the plaintiff. King, 189 F.3d at 287; Jaghory v. New York State Dep’t of Educ., 131 F.3d 326, 329 (2d Cir.1997).

II. All Antitrust Claims Against Tribune (Counts One through Ten) are Dismissed

Tribune argues that all claims against it should be dismissed because the Amended Complaint is devoid of any factual allegations that Tribune participated in or controlled Newsday’s allegedly wrongful conduct. In response, Plaintiffs contend that Tribune “overlooks” Plaintiffs’ allegations that Tribune, the parent company of its wholly-owned subsidiary Newsday, “has *178

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418 F. Supp. 2d 172, 2006 U.S. Dist. LEXIS 7873, 2006 WL 497202, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arnold-chevrolet-llc-v-tribune-co-nyed-2006.