Crimpers Promotions, Inc. v. Home Box Office, Inc.

554 F. Supp. 838, 1982 U.S. Dist. LEXIS 16830
CourtDistrict Court, S.D. New York
DecidedDecember 30, 1982
Docket81 Civ. 7325 (LBS)
StatusPublished
Cited by13 cases

This text of 554 F. Supp. 838 (Crimpers Promotions, Inc. v. Home Box Office, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crimpers Promotions, Inc. v. Home Box Office, Inc., 554 F. Supp. 838, 1982 U.S. Dist. LEXIS 16830 (S.D.N.Y. 1982).

Opinion

OPINION

SAND, District Judge.

Defendants Home Box Office Inc. (“HBO”) and Showtime Entertainment Corporation (“Showtime”) move to dismiss the claims of plaintiff Crimpers Promotions Inc. (“Crimpers”) pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Crimpers alleges violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1,2, and Section 3 of the Clayton Act, 15 U.S.C. § 14, as well as a number of violations of New York tort and unfair competition law. We find that plaintiff’s complaint states a valid cause of action for conspiracy to restrain trade and attempted monopolization under Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act, and therefore deny defendants’ motion with respect to Counts I and II of the complaint. We find, however, that plaintiff fails to plead adequately a tying claim under Section 1 of the Sherman Act and Section 3 of the Clayton Act and therefore grant defendants’ motion with respect to this claim without prejudice to the filing of an amended complaint. With respect to the state claims, we find that plaintiff has stated valid causes of action for tortious interference with prospective business advantage and contractual relations. We dismiss plaintiff’s unfair competition and prima facie tort claims.

FACTS

Plaintiff is a New York corporation organized in 1980 for the initial purpose of producing, managing and operating a cable television trade show known as Catel Expo-Programming Sources ’81 (“Catel”) that was to take place in Las Vegas, Nevada in September, 1981. The purpose of the Catel show, as set forth in plaintiff’s complaint, was to provide a forum in which independent producers and suppliers of cable television programming could meet and transact business with prospective purchasers of such programming, such as cable television networks. 1

*841 The defendants, HBO and Showtime, are two of the leading companies in the cable television industry. Both HBO and Showtime purchase programming from independent producers and suppliers and package this programming into a complete network format for sale to cable system operators. The cable operators, in turn, transmit the HBO and Showtime network programming to their home television subscribers. (HBO and Showtime also produce some of their own programming.) Plaintiff alleges that HBO and Showtime are the dominant forces in the cable pay-television industry, with thousands of affiliate networks and over ten million subscribers throughout the United States. Complaint ¶¶ 7(c)-(f); 8(c)-(e); 9(c).

The essence of plaintiff’s complaint is that HBO and Showtime have monopolized or attempted to monopolize the cable television industry, and have used this monopoly power to cause plaintiff’s trade show to be a financial failure. The complaint alleges that HBO and Showtime conspired to boycott plaintiff’s trade show, and exerted their monopoly power in the cable industry to coerce other independent programmers, suppliers, and potential purchasers of programming to do likewise. 2 According to Crimpers, HBO and Showtime boycotted and attempted to ruin the Catel show for fear that its success would provide a forum in which independent buyers and sellers of cable programming could transact business face-to-face, reducing or eliminating much of defendants’ economic power in the cable industry. HBO and Showtime are alleged to act as middlemen in the cable industry, purchasing large amounts of programming from independent producers at artificially low prices, arranging the programming into a network format, and then reselling it as a package to cable networks for transmission to subscribers. Plaintiff alleges that independent buyers and sellers of programming are kept from trading on a “stand-alone” basis (see fn. 1, supra) because of defendants’ power as middlemen. Complaint ¶¶ 9(d); 19; 24(g).

More specifically, plaintiff alleges that HBO and Showtime, after expressing initial interest in the Catel show, decided to withdraw from participation. According to the complaint, the defendants informed independent suppliers and systems operators that plaintiff’s show was a “rip-off” and a “fraud on the public,” and that they should not attend. More importantly for our purposes, Crimpers alleges that the defendants conspired together and exerted their individual monopoly power to coerce independent suppliers of programming not to appear at Catel by threatening that were they to do so, defendants would no longer purchase their programming. Complaint ¶¶ 13, 14, 19-22.

Plaintiff contends that, as a result of these actions, defendants have reduced competition in the markets for the sale and purchase of programming for cable television, and have prevented independent producers and suppliers from transacting business with potential purchasers on a standalone basis at trade shows like the one organized by the plaintiff. Prior to defendants’ alleged conspiracy, Crimpers anticipated that more than 250 companies would participate in its trade show. Plaintiff contends that as a result of defendants’ ac *842 tions, only 200 people attended and only 55 companies participated, occupying fewer than one hundred booths. Plaintiff was unable to obtain sufficient exhibitors and attendees for its trade show, continues to be unable to do so, and has been forced to cease business. Plaintiff seeks injunctive relief and treble damages.

' STANDING

Defendants argue that, even if we assume plaintiff’s allegations to be true as we must on this motion to dismiss, Crimpers is not a proper party to bring these antitrust claims because it lacks standing. To sue under Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act plaintiff must meet the requirements of Section 4 of the Clayton Act, 15 U.S.C. § 15. Section 4 provides that “[a]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws” shall have a cause of action for treble damages. Despite this sweeping language, the courts have been unwilling to grant relief to all plaintiffs alleging injury resulting from an antitrust violation. Rather, the courts have grafted a doctrine of standing onto the statute that requires that the defendant’s violations have been the proximate or legal cause of plaintiff’s injury.

Although the language employed to describe the standing requirement differs among the Courts of Appeals, compare, e.g., Calderone Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292 (2d Cir.1971) (“target area” test), with Bravman v. Bassett Furniture Industries, Inc., 552 F.2d 90 (3d Cir.1977) (“totality of the facts” test), and remains somewhat in flux,

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Bluebook (online)
554 F. Supp. 838, 1982 U.S. Dist. LEXIS 16830, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crimpers-promotions-inc-v-home-box-office-inc-nysd-1982.