Jerrold Electronics Corporation and Jerrold-Northwest, Inc. v. Wescoast Broadcasting Company, Inc., a Washington Corporation, D/B/A Kpq Radio

341 F.2d 653
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 1, 1965
Docket19343_1
StatusPublished
Cited by13 cases

This text of 341 F.2d 653 (Jerrold Electronics Corporation and Jerrold-Northwest, Inc. v. Wescoast Broadcasting Company, Inc., a Washington Corporation, D/B/A Kpq Radio) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jerrold Electronics Corporation and Jerrold-Northwest, Inc. v. Wescoast Broadcasting Company, Inc., a Washington Corporation, D/B/A Kpq Radio, 341 F.2d 653 (9th Cir. 1965).

Opinion

POPE, Circuit Judge.

This is a private antitrust action wherein the plaintiff Wescoast Broadcasting Company, Inc., alleged that the defendants Jerrold Electronics Corporation and Jerrold-Northwest, Inc., had been guilty of violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 1px solid var(--green-border)">2. 1 After trial the jury returned a verdict in favor of the plaintiff assessing plaintiff’s damages in the sum of $97,500 which was trebled, and .judgment, including an award of $32,500 as attorneys’ fees, was awarded plaintiff in the sum of $.325,000. The defendants have perfected this appeal from that judgment.

About the end of 1950 Jerrold Electronics Corporation (here called Jerrold) began the manufacture and sale of community television antenna systems. The parties stipulated that the following is a description of the nature and purpose of such systems. “Community television antenna systems are constructed in communities remote from television broadcasting stations and enable inhabitants of such communities to view television programs emanating from said television broadcasting stations. Television signals travel in straight lines. At a distance remote from a television broadcasting station the curvature of the earth causes The path of the signal to lead off into space. In order to capture the signal, a community antenna, which is a giant receiving tower, is usually, constructed on the highest point near the area to be served. The signals picked up by the antenna ar.e amplified and transmitted by cable to the com-v munity. This cable is normally strung along telephone and power company poles throughout the community and connected by smaller cable or feeder lines to television sets located in the homes of those persons desiring to be served by the system. The operators of community television systems usually charge those desiring service from the system an initial hook-up fee and a smaller monthly service charge payable as long as they are served by the system.” It was also stipulated that Jerrold manufactured and sold such systems in interstate commerce throughout the United States.

By July, 1953, somewhere between two-thirds and four-fifths of all such systems in the United States were supplied exclusively with Jerrold equipment. At that time, which is the time relevant to this controversy, Jerrold had thus become a dominant figure in the manufacture of such community antenna systems. One feature of the Jerrold system was a component known as its AGO (automatic gain control) device. This component, during the time hereafter referred to, was as a practical matter'essential to the construction of a fully effective antenna system. It was not obtainable elsewhere. 2

In selling its systems Jerrold had followed a general policy under which none of its equipment would be sold to a community television antenna operator unless the buyer agreed to purchase all of the eauipment of his system from Jerrold. The buyer was also required as a condition of such purchase to enter into a service contract with Jerrold. This *656 contract provided that Jerrold would perform engineering services with respect to the layout, installation and operation of the system, for which services it was to receive fixed sums and installment '"payments payable out of the income receipts of the system operator. 3 Distribution of Jerrold equipment in the Northwest (Washington, Oregon, Idaho and Western Montana) was handled through Jerrold-Northwest, Inc., here called Jerrold-Northwest. Sixty-five percent of the stock ownership of Jerrold-Northwest was in the control of Jerrold. The remainder of said stock was owned by Phillip D. Hamlin and Ron Merritt who were officers of the company. Shapp, president of Jerrold, was president of Jerrold-Northwest. 4 Elsewhere throughout the United States similar subsidiary corporations were established for the purpose of controlling the distribution of Jerrold’s manufactured equipment and components.

In 1952 a television broadcasting station was established at Spokane, Wash. In consequence of this it became feasible to operate a community antenna system at Wenatchee, Washington, and early in 1953, Wescoast Broadcasting Company, Inc., (here called Wescoast) prepared to establish such a system at Wenatchee. At that time Wescoast was operating a radio station at Wenatchee using the call letters KPQ. James W. Wallace, a stockholder, was president of Wescoast, and Rogan Jones of Bellingham, Wash., was the majority stockholder. Jones had constructed a community television antenna system at Bellingham which was then in operation. In anticipation of the establishment of the Wenatchee system, Wescoast contacted Video Associates, predecessor of Jerrold-Northwest, the distributors of Jerrold equipment, for the purpose of procuring Jerrold equipment and components for its We-natchee system.

At first Wescoast received a communication from the distributor indicating its willingness to supply the complete Jerrold system. This was by a letter dated February 16, 1953. Wescoast submitted a purchase order for this equipment. While this order was waiting to be filled, Merritt was in the East having a conference with Shapp, president of Jerrold. Shapp and Merritt discussed among themselves and also with representatives of J. H. Whitney & Co., here called Whitney, of New York, the possibility of putting into effect in the Northwest area an arrangement which Shapp had made with Whitney in March, 1952. The matter was also discussed at the same time, by telephone, with Hamlin, with one Brown, representing Whitney, and one Tucker, representing Jerrold. At that March, 1952, date, Shapp had proposed to Whitney that the latter assist in the development of community television antenna systems in a number of different sections of the country. The agreement was that Shapp, representing Jerrold, and Whitney would mutually agree upon a list of communities in which the establishment of such systems appeared to be feasible. Whitney would pay for preliminary surveys and field tests; Shapp would assist in the survey and prepare reports, and then Whitney would decide whether to proceed with an installation of a system in a given community. If such a decision were made Whitney would cause a corporation to be organized to install and operate-the system. In that event Whitney would supply the necessary funds to finance the system, Whitney and its associates would acquire a 75% common-stock interest in the corporation, and Shapp and his associates would receive-a 25% common stock interest. The- *657 agreement was to cover the entire United States with the exception of the State of Maine.

This was the investment plan which Shapp and Merritt and the others mentioned discussed while the Wescoast order for the Jerrold equipment was still pending and not yet filled. In that discussion Merritt, the Whitney interests, Shapp and Hamlin considered a program whereby they would malee a survey of some 12 to 15 communities in the Northwest with a view to carrying out the Shapp-Whitney plan.

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Bluebook (online)
341 F.2d 653, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jerrold-electronics-corporation-and-jerrold-northwest-inc-v-wescoast-ca9-1965.