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Contos et al. v. Capital Wrestling Corporation, et al.
(1963 Trade Cas. (CCH) P70,737)
Vince McMahon and company stop suppling wrestlers to the Contos family, who in turn charge that McMahon and friends are engaging in monopolistic practices ...
Contos et al. v. Capital Wrestling Corporation, et al.
Civil Action No. 576-60.
United States District Court for the District of Columbia.
1963 Trade Cas. (CCH) P70,737
April 10, 1963.
MCLAUGHLIN, Judge: This case came on for trial before the Court on Plaintiff's claim for damages sustained as a result of alleged violations of Section 2 and Section 1 of Title 15 U.S.C.A., commonly known as the Sherman Anti-Trust Act, and for assessement of civil claim for damages under Section 15 of said Title, commonly known as the Clayton Act.
The Court determines that the essential facts proved at trial are as follows:
Defendant, Capital Wrestling Corporation (hereinafter referred to as Defendant Capital) is engaged primarily in the booking of wrestlers. Defendant is engaged in interstate commerce booking wrestlers to promoters in an area extending from Virginia to Connectitcut and including Virginia, District of Columbia, Maryland, eastern Pennsylvania, Delaware, New Jersey, southeastern New York, Connecticut and Rhode Island. With at least one salient exception to be discussed infra , Capital has booked or arranged for the booking of substantially all of the wrestlers for exhibitions conducted within these areas since at least 1958.
Defendants Mondt and McMahon are the owners of Defendant Capital with each owning 50% of the shares of said corporation. Defendant McMahon is the President of Capital and the active partner in this enterprise. McMahon had sole ownership in and control of another corporation called the Maryland Wrestling Corporation.
Plaintiffs Edward A. Contos, Jr. and Alta Contos are the son and wife respectively of the late Edward A. Contos, Sr., who had been the sole promoter of wrestling exhibitions in the City of Baltimore, Maryland, for approximately twenty years prior to his death in March, 1959. Contos, Sr., the decedent, had obtained his wrestlers for his weekly exhibitions in Baltimore exclusively from Defendant Capital from the time Defendant started booking operations in the area above-described until his death. The wrestling entertainment market in the City of Baltimore is such that it will support only one promoter.
After the death of Contos, Sr., in March, 1959, Plaintiffs continued to promote the weekly wrestling show in Baltimore, having been granted a week-to-week, show-basis or temporary license from the Maryland State Athletic Commission. A regular license was later granted Plaintiffs in August, 1959, which was to expire on April 1, 1960. Inasmuch as the activity of the promotion operation was carried on by Plaintiff Contos, Jr., Plaintiffs will hereinafter be referred to in the singular. Athletic Commission had declared that the promoting license for the City of Baltimore was open and, pursuant to a meeting of the Commission on June 10, 1959, Defendant McMahon as well as one Philip Zacko, the two officers of the Maryland Wrestling Corporation, were invited by the Commission to file an application for said license, as were others not connected with this suit. The Maryland Wrestling Corporation did apply for the license on July 17, 1959. Subsequently, on January 26, 1960, the license was awarded to one Smyth, a former referee for Defendant Capital, who promoted his first show in the first week of March, 1960. In a meeting on the same date, January 26, 1960, the Commission had expressed dissatisfaction with the operation of the wrestling shows by Plaintiff and had determined to allow his license to expire in April, 1960.
Plaintiff continued to receive his wrestlers from Defendant Capital after the death of Contos, Sr. from March, 1959 until July 14, 1959.
In June, 1959, Defendant Capital demanded a greater percentage of the gate receipts. The agreement had been a 50-50% split of net gate receipts after taxes and in a meeting with Plaintiff on June 18th Defendant Capital demanded an arrangement whereby it would receive 10% from the top and then a 50-50% split of the balance. At that time, Plaintiff objected to the increase and said he would get wrestlers from a different booking office.
Plaintiff then attempted within the following week to secure wrestlers from bookers in Columbus, Ohio and Charlotte, North Carolina, respectively, but the responses to these efforts were refusals to supply wrestlers to Plaintiff. Thereupon Plaintiff sought to obtain wrestlers for his weekly shows from one Martinez, a booker having his main office in Buffalo, New York and Martinez agreed, sometime during the first two weeks of July, to supply said wrestlers. The 10% from the top and 50-50% split of the balance arrangement went into effect for two shows on June 23rd and June 30, 1959, but on the nights of the last two shows sponsored by Plaintiff and using Defendant Capital's talent, July 7th and July 14, 1959, the parties had returned to the usual 50-50% split after taxes arrangement. The latter arrangement was also to have been in effect for the show scheduled for the night of July 21, 1959, but after the show on July 14, 1959, despite the fact that the card had been announced for the show of July 21, 1959 featuring Defendants' wrestlers, a representative of the Maryland State Athletic Commission was informed by Plaintiff that the show of July 21st would in fact feature Martinez's wrestlers. Martinez supplied wrestlers from July 21, 1959 until the second week of January, 1960.
A television show featuring Plaintiff's wrestling matches, which had publicity value for the live matches, was canceled by the Baltimore TV station in the third week of December, 1959, and this loss, together with substantial traveling expense for the wrestlers from Buffalo to Baltimore prompted Martinez to terminate his supply of wrestlers to Plaintiff. Martinez paid $2,000 to Plaintiff as consideration for the termination of the contract with Plaintiff which was to have been in effect until July, 1960.
Plaintiff then went back to Defendant Capital and requested that it once again supply Plaintiff with wrestlers. Defendant Mondt, an officer of Defendant Capital, refused for the reason that Plaintiff had dealt with a competitor (referring to Martinez) and that Smyth was going to take over the promotion of wrestling in Baltimore. Subsequently, a registered letter was sent by Plaintiff to Defendant Capital under date of January 30, 1960 requesting wrestlers. This was signed for as received but was not answered. Smyth has continued to the present time to carry on wrestling operations under the license issued to him on January 26, 1960 by the Maryland State Athletic Commission for the promotion of wrestling in the City of Baltimore, securing his wrestlers from Defendant.
Four separate violations of the Sherman Act, Sections 1 and 2 are alleged by Plaintiff:
(I) Violations of Section 2 -
(1) That Defendant Capital, their officers, and employees, including Defendant McMahon, illegally attempted to monopolize the booking and promotion of wrestling within the northern part of Virginia, District of Columbia and Maryland.
(2) That Defendants illegally monopolized and combined or conspired to monopolize the booking of wrestlers within the northern part of Virginia, District of Columbia, Maryland, eastern part of Pennsylvania, Delaware, New Jersey, southeastern part of New York, Connecticut and Rhode Island.
(II) Violations of Section 1 -
(1) That Defendant Capital, Mondt, and other members of the National Wrestling Alliance did illegally conspire to restrain trade in the promotion and booking of wrestlers in Baltimore.
(2) That Defendant Capital, McMahon, and the Maryland Wrestling Corporation, did conspire illegally to restrain trade in the promotion and booking of wrestling in Baltimore.
Defendants categorically deny that any violation of the antitrust laws were committed.
The Court will consider these four separate alleged violations in the same sequence as above set out.
(I) VIOLATIONS OF SECTION 2 -
(1) Attempt to Monopolize
Plaintiff stresses in this count the charge that Defendants' conduct sums up to and clearly constitutes an attempt to monopolize the entire field of wrestling entertainment in the Baltimore area to Plaintiff's damage. The gravamen of Plaintiff's commplaint on this count, as it seems to be under each of the alleged violations of the Act, is that Defendant Capital occupied a dominant position in relation to booking or supplying of professional commercial wrestling talent to promoters of wrestling shows in the Baltimore area and that Defendant used such power by raising the fees for supplying wrestlers to Plaintiff with intent to oust Plaintiff from the business of promoting wrestling shows in the City of Baltimore; that, furthermore, with the intent of taking over Plaintiff's promotional operations, Defendant McMahon and one Zacko, acting through Maryland Wrestling Corporation, of which Corporation they were officers and which Corporation was owned and controlled by Defendant McMahon, filed an application with the Maryland State Athletic Commission for a license to promote wrestling in Baltimore and, finally, that Defendants subsequently refused to supply Plaintiff with wrestling talent.
The charge of attempting to monopolize obviously involves the element of intent. United States v. Columbia Steel Co. , 334 U.S. 495, rehearing denied 334 U.S. 862. The burden of proof of intent rests upon the party asserting the charge.While it is true that the acts of the corporate officers of a single corporation may constitute an attempt to monopolize under Section 2 of the Sherman Act and make the corporation subject to the provisions of this Section, Nelson Radio & Supply Co., v. Motorola, Inc. , 200 F.2d 911 (C.A. Ala. 1952), cert. denied, 345 U.S. 925, and while it is likewise true that in order to sustain a recovery against Defendant, Plaintiff need only prove that Defendant attempted to monopolize and need not prove that Defendant succeeded, Lorain Journal Co. v. United States , 342 U.S. 143 (1951); Swift & Co. v. United States , 276 U.S. 311 (1927), yet where no monopoly results, there can only be a finding of an attempt to monopolize with proof of intent, United States v. Columbia Steel Co. , 334 U.S. 495, rehearing denied 334 U.S. 862; United States v. Quaker Oats Co. , 232 F. 499 (D.C. Ill. 1916), appeal dismissed 253 U.S. 499.
The foregoing rule centers focus at once on the question as to whether the evidence in the record in this case establishes that a monopoly in wrestling promotion has been shown to have resulted in the City of Baltimore.
Here the facts are clear, in the Court's judgment, apart from the question of the attempt to monopolize, that no monopoly of the promotion of wrestling was created by Defendants or existed in Baltimore. In the Court's opinion, Smyth, the current promoter in Baltimore to whom Defendants supply wrestlers, is not shown by the proof adduced in the trial of this case to be anything but quite independent of Defendants.
The Court is not persuaded that the record supports Plaintiff's contention that an intent to monopolize existed. It is well settled that a refusal to deal is not, in and of itself, a violation of the Act but that it becomes a violation only where its purpose is to aid in the monopolization or an attempt to monopolize any part of interstate commerce. United States v. Bausch & Lomb Co. , 321 U.S. 707, 719-23 (1944); United States v. Colgate & Co. , 250 U.S. 300, 307 (1919). As expressed by Judge Holtzoff, in the absence of any purpose to create or maintain a monopoly,
... a person engaged in the manufacture or sale of goods, or in rendering services, in under no obligation to sell to everyone who applies, or to serve everyone who desires to deal with him. The only exception relates to callings coupled with a public interest.Dealers and manufacturers may use their own judgment and discretion and select persons with whom they choose to do business as well as the time when they will enter into transactions with them.
Orbo Theatre Corp. v. Loew's, Inc. , 156 F.Supp. 770, 779, aff'd 261 F.2d 380 (U.S. App. D.C.), cert. denied, 359 U.S. 943. The facts in the case at bar show merely that Defendants announced in June, 1959 that they desired a greater share of the gate receipts, whereupon, Plaintiff, dissatisfied with the new offer, changed bookers and when the new booker found it financially impossible to continue the arrangement, Plaintiff once again attempted in January, 1960 to negotiate with Defendant for his wrestlers and Defendant refused, saying that it would deal with a new promoter, Smyth, who had obtained a license to promote in Baltimore.
The evidence discloses that although a 50-50% division of the net gate receipts may be the more usual financial arrangement between bookers and promoters in this industry, arrangements whereby the booker receives a greater percentage are not uncommon. Indeed, the evidence shows that when Contos, Sr. was running the operation in the City of Baltimore prior to his death, he supplied wrestlers to one Zacko who promoted wrestling in the towns outside of Baltimore pursuant to an agreement whereby Contos, Sr. was paid 60% of the net gate receipts. There was no showing that Defendants' demand in June, 1960 for a higher than 50% division of the net gate receipts was either unconsionably oppressive or pursuant to a scheme to oust Plaintiff. In fact, Plaintiff had made between $4000 and $5000 profit in the period during which he was supplied by Defendant Capital. Beyond this, the evidence is clear that at the time Plaintiff decided to forego Defendant Capital's wrestlers, the financial arrangement had reverted to the 50-50% division.
There is no persuasive showing that Defendants' refusal to deal with Plaintiff occurring in January, 1960, was motivated by any illegal intent to monopolize wrestling promotion in Baltimore. Rather the record is more persuasive of the conclusion, which the Court reaches, that Defendants merely exercised their prerogative to deal with the promoter of their choice. The situation is quite distinct from that found in Eastman Kodak Co. v. Southern Photo Materials Co. , 273 U.S. 359 (1927) in which the defendant was attempting to use its power over the supply of a product on which the plaintiff's business depended to force the plaintiff out of business and to monopolize business in a single city.
(2) Illegal Monopolization or Conspiracy to Monopolize
The second violation charged is that Defendants monopolized illegally and combined or conspired to monopolize the booking of wrestlers within an approximately nine state area and that when this alleged monopoly power was used in refusing to deal with Plaintiff, it followed as a consequence and as a matter of collusive design by Defendants that Plaintiff promoter was forced out of business.
It is true that in order to make out the crime of actual monopolization it is not necessary to prove specific intent but it is sufficient that monopoly results as a consequence of Defendants' conduct. Times-Picayune Pub. Co. v. United States , 345 U.S. 594; United States v. Paramount Pictures , 334 U.S. 131; United States v. General Elec. Co. , 80 F.Supp. 989 (D.C.N.Y. 1948). However, the facts show to the satisfaction of the Court that no actual situation of monopoly existed in this nine state area as alleged. Martinez, the Buffalo booker, "booked into" the Baltimore Coliseum with Plaintiff for a period of approximately six months - from July 21, 1959 to the mid-part of January, 1960. Baltimore is of course within the geographical area in which Plaintiff claims that Defendants enjoy a monopoly. The Court finds that there is no showing that Defendants were in any way involved in Martinez's decision to sever his connection with Plaintiff. The facts show that this was a decision based on strictly economic grounds.
Moreover, there is unrefuted testimony that Defendants booked into locations in southern Virginia, in an area which Plaintiff alleges to have been the exclusive territory of the booker situated in North Carolina, pursuant to the alleged illegal agreement.
It is true that combination or conspiracy to monopolize violates the provisions of this Section though monopoly power was never acquired. United States v. Griffith , 334 U.S. 100. It is likewise true that absent a formal agreement a conspiracy to monopolize may rest on adequate circumstantial proof. American Tobacco Co. v. United States , 328 U.S. 781; Slick Airways v. American Airlines , 107 F.Supp. 199 (D.C.N.J. 1952), appeal dismissed 204 F.2d 230 (3d Cir. 1953), cert. denied 346 U.S. 806. However, the evidence of the course of dealings and other circumstances in this case brought out on trial do not in the Court's judgment support the allegation that a conspiracy to monopolize booking in this area existed. In order to succeed in proving the charge of conspiracy to monopolize, Plaintiff has the burden of proving the same intent required to support his charge of an attempt to monopolize. See United States v. Jerold Electronics Corp. , 187 F.Supp. 545 (E.D.C. Pa. 1960), affm'd 365 U.S. 567, rehearing denied, 365 U.S. 890; United States v. General Elec. Co. , 80 F.Supp. 989 (S.D.C.N.Y. 1948).
The fact of Martinez's booking into Baltimore, part of the territory alleged to be exclusively that of Defendants, runs counter to Plaintiff's position that the members of the National Wrestling Alliance, an organization composed of bookers, of which Martinez is one, agreed not to invade each other's territory. So, too, does the evidence that Defendants booked into Southern Virginia. Conversely, Plaintiff alleges that two other members of the Alliance refused to supply wrestlers in furtherance of the alleged conspiracy but there was no showing or attempt to show that their refusal was predicated on the alleged illegal agreement. This being the case, the presumption is as warranted as not that these two bookers refused for the same reasons of economic expediency that caused Martinez to fail in his booking venture in Baltimore.
It is the Opinion of the Court, for the foregoing reasons, that Plaintiff is not entitled to the relief prayed for in his complaint as to Section 2.
(II) VIOLATIONS OF SECTION 1 -
(1) Conspiracy to Restrain Trade by Defendants Capital, Mondt and Other Members of National Wrestling Alliance.
The allegation that Defendants Capital, Mondt and other members of the National Wrestling Alliance illegally conspired to restrain trade in the promotion and booking of wrestlers in Baltimore proceeds on the same basic theory as the alleged Section 2 violation of conspiracy to monopolize booking and, consequently, promoting in the nine state area discussed above.
It is true that this Section of the Act covers matters not identical with the matters covered by a conspiracy to monopolize proscribed by Section 2 and there may be an unreaesonable restraint of trade that does not constitute a monopoly. Shapiro v. king , 125 F.2d 890 (8th Cir, 1942); United States v. Whiting , 212 F. 466 (D.C. Mass. 1914). However in support of this alleged violation, it is contended that the division of the booking market with the agreement that one booker would not book into another member of the National Wrestling Alliance territory constitutes a per se violation of this Section of the Act. This same allegation was advanced in support of the conspiracy to monopolize count and for the reasons set out above, the Court finds no such agreement to exist.
The Court received into evidence for purposes of background information a consent decree entered into between the United States and the National Wrestling Alliance in United States v. National Wrestling Alliance , C.A. 3-729, U.S.D.C. So. D. Iowa, Oct. 15, 1946. This consent decree was signed by Defendant Mondt and Plaintiff contends that even though the decree was a contract entered into between the United States and Defendant Mondt, a member of the Alliance and an officer of Defendant corporation, the decree was for the benefit of Plaintiff and other promoters and that the Defendant corporation is bound by it as the successor in interest to Defendant Mondt, whose territory Defendant corporation purportedly took over. Even if the parties to the consent decree and to the present suit were the same, this consent decree entered without testimony having been taken and without any adjudication of law or fact, under the specific terms of Section 5 of the Clayton Act would not be entitled to be considered as prima facie evidence of a violation of the Act.
A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceedings brought by any other party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken. ... 15 U.S.C. § 16(a); Barnsdall Refining Corp. v. Birnawood Oil Co. , 32 F.Supp. 308 (D.C. Wis. 1940). Commercial Communications Inc. v. Public Utilities Comm'n , 327 P.2d 513 (Cal. 1958), appeal dismissed, 359 U.S. 119, cert. denied, appeal dismissed 359 U.S. 341.
The parties involved herein are not the same parties involved in the consent decree. In the light of that circumstance, even assuming now a final judgment or decree or a consent decree entered after evidence was taken and an adjudication of the facts and the law, which, was stated, is not the case here, specific violations would have to be shown during the specific time period complained of in the specific geographical area involved herein. Dipson Theatres v. Buffalo Theatres , 190 F.2d 951 (2d Cir. 1951). Webster Rosewood Corp. v. Schine Chain Theatres, Inc. , 157 F.Supp. 251 (N.D.C.N.Y. 1957), affm'd, 263 F.2d 533 (2d Cir. 1959), cert. denied 360 U.S. 912.
Two violations of the consent decree have been alleged. The first is that the members of the National Wrestling Alliance have persisted in their illegal allocation of territories. This has been disposed of earlier.
The second alleged violation of the consent decree was Defendants' refusal to provide wrestlers to Plaintiff said to be a violation of Provision V(b) of the decree. The circumstances of this refusal were discussed at some length above, and even if the decree were found to protect Plaintiff, the circumstances would not warrant a finding that this provision of the decree had been violated.
(2) Conspiracy to Restrain Trade by the Defendants Capital, McMahon and the Maryland Wrestling Corporation .
The fourth alleged violation of the Act, notably of Section 1, is said to consist of a conspiracy among Defendants Capital and McMahon and the Maryland Wrestling Corporation to restrain trade in the booking and promotion of wrestling in the City of Baltimore. It is contended that Plaintiff was squeezed out of business in anticipation of the granting by the Maryland Athletic Commission of a license to the Maryland Wrestling Corporation. The capital stock of the latter corporation was owned by Defendant McMahon. Defendant McMahon and Zacko were the officers of said corporation. The evidence shows conclusively that, after the death of Contos, Sr., Plaintiff had been operating on a week-to-week, show-basis or temporary license until August, 1959 when he was granted a regular license; that according to the testimony of the Secretary of the Maryland Athletic Commission, the license for the City of Baltimore had been declared open, at the time of the death of Contos, Sr. by the Commission and that pursuant to a meeting of the Commission on June 10, 1950, the two officers of the Maryland Wrestling Corporation were invited by the Commission to file an application for a license, as were others not connected with this suit. This occurred at the time that Plaintiff was still dealing with Defendants. The evidence that the application for a license was made at the invitation of the Maryland Athletic Commission stands as a contradiction of Plaintiff's contention that the filing of this application was a pivotal step in Defendants' alleged conspiracy, in view of the fact that there is an absence of any showing, or indeed of any assertion of collusion on the part of the Maryland State Athletic Commission. In these circumstances it must be held that Plaintiff has failed with his burden of showing that this alleged conspiracy to restrain this trade existed.
It is the Opinion of the Court, for the foregoing reasons, that Plaintiff is not entitled to the relief prayed for in his complaint as to Section 1.
Counsel for Defendants will prepare and submit Findings of Fact, Conclusions of Law, and Order, in accordance with the Opinion of the Court.
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