UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 7, No. 1FALL 1983
A Free Press: The Forgotten Issue in Home Placement v. Providence Journal
I. Introduction
The first amendment guarantees freedom of speech and of the press.(fn1) Justice Cardozo described these as the freedoms upon which nearly all of our liberties are based,(fn2) a view supported by the elevated position accorded free speech throughout our history. The rights created are not absolute-government interests in regulating nonspeech activity may prevail in certain well-defined instances-but neither are they easily put aside. When the government interest is in enforcing the Sherman Antitrust Act,(fn3) a number of special difficulties arise. Congress provided treble damages(fn4) and injunctive relief(fn5) to ensure the effectiveness of the Act. Yet these sanctions could have a devastating effect on free speech if used to regulate the content of a newspaper. The Supreme Court has avoided this constitutional dilemma by only applying the Sherman Act to the business side of a newspaper; the content or editorial side has been left alone.(fn6) Nowhere is this line between protected speech and unprotected commercial activity more difficult to discern than in the classified advertisements. A court required to make these distinctions should do so with sensitivity to the first amendment interests which adhere whenever the content of a newspaper is involved. Core first amendment rights are no less important because they are exercised through editorial control of the classified advertisements. Only the most compelling of state interests can overbalance their free exercise.(fn7)
Home Placement Service, Inc. v. Providence Journal Co.(fn8) involved a private antitrust action brought against a newspaper to compel the publication of proffered advertisements. The First Circuit Court of Appeals reversed the District Court decision(fn9) and held that the newspaper had violated sections one(fn10) and two(fn11) of the Sherman Act. Since Senior Circuit Judge Aldrich's opinion never mentioned free speech, free press, or the first amendment, the implication is that, in the court's view, first amendment issues were not present.
This Note will demonstrate that the court's decision in Home Placement did infringe upon protected first amendment activity. Since free speech and free press guarantees were threatened by the government's action, the court should have balanced the competing interests and held in favor of Home Placement only upon a showing of a compelling state interest. After examining the interests of the advertiser, the reader, the government, and the newspaper, this Note concludes that the newspaper's right to control its message and to make editorial decisions free from the threat of governmental interference overbalance the antitrust claim made in this case. A Sherman Act claim should not be upheld where the anticompetitive effect is the unintended result of the exercise of protected speech activity. A contrary result would elevate antitrust law at the denigration of constitutional rights.
Home Placement arose out of a dispute between a Rhode Island newspaper and a rental listing service. The Providence Journal is the sole daily newspaper in its market.(fn12) Its print competition comes from suburban daily and weekly newspapers.(fn13) Home Placement sold lists of rental housing to prospective renters.(fn14) It attracted customers by placing advertisements for specific homes in the newspaper's classified section.(fn15) When a reader responded to the advertisements he was encouraged to purchase the full list. Only then would the service release additional information about the house.(fn16) In response to an earlier experience with another rental listing service,(fn17) the Journal had formulated a policy of rejecting advertisements from advertisers who charged the reader a fee before releasing additional information about the advertised property. When the Journal discovered that Home Placement charged such a fee, it refused to accept additional advertisements. Home Placement then removed the fee and the Journal accepted several advertisements.(fn18) Shortly thereafter, however, Home Placement ceased doing business and filed suit.(fn19)
The Journal believed that Home Placement's style of advertising was inherently misleading. It argued that Home Placement's scheme was a classic bait and switch: the objective was to sell rental lists and the bait was the advertisement for a single home. The reader, expecting to speak with someone authorized to rent the house, was instead put in contact with someone whose sole objective was to sell him a different product.(fn20) The Journal felt that this practice was inconsistent with the expectations of its readers and its advertisers.(fn21) As a result, it decided not to print this type of advertisement.
Home Placement argued that the Journal's policy violated section two of the Sherman Act, and that the Journal's refusal to accept the advertisements, coupled with Home Placement's subsequent removal of the fee, amounted to a conspiracy in restraint of trade in violation of section one. The District Court rejected both claims.(fn22) The Court of Appeals reversed, finding violations of sections one and two.(fn23)
Judge Aldrich held that the Journal's refusal to print was an unreasonable business decision. Home Placement was a new company with no history of deceptive practice. Its method of advertising was not "inherently and unfailingly deceptive,"(fn24) nor was fraudulent practice shown. Until Home Placement actually succumbed to deceptive practice, the Court ruled that the Journal's policy could not be applied to it.(fn25) In contrast to the District Court, Judge Aldrich found that the facts plainly indicated monopoly power.(fn26) The parties were competitors because a rental listing service could conceivably draw advertising away from the newspaper.(fn27) Intent to exclude competition was irrelevant.(fn28) It was sufficient that the Journal's action, taken for whatever reason, had the effect of excluding competition.(fn29)
The Court of Appeals also accepted Home Placement's argument that the Journal's refusal to accept the advertisements with a fee, and Home Placement's subsequent removal of the fee, amounted to a conspiracy in restraint of trade.(fn30) The combination fixed a price of zero for Home Placement's sale of rental information. The newspaper's refusal was a unilateral action, but the refusal, the removal of the fee, and the consequent acceptance of the advertising formed a conspiracy in violation of section one.(fn31)
As noted previously, the Court's opinion was notably void of first amendment analysis. The right of a newspaper to refuse advertising was limited by the court to the common law right of any business to choose with whom it will deal. In fact, the scope of this right has been sufficient in most cases to protect a newspaper's interests.(fn32) The exception to the common law rule is that the refusal cannot further an illegal monopoly.(fn33) The First Circuit held that the Journal's refusal fell within the exception. The court's mistake, however, was in assuming that its analysis was complete.
A. The First Amendment Rights of the Advertiser
With certain well established exceptions, the Supreme Court has recognized that an advertiser has a first amendment right to disseminate his message.(fn34) If his message is political or, as it is sometimes described, "public," he enjoys the same degree of protection as any other speaker.(fn35) If his message is "commercial," his protection is somewhat less.(fn36) Until 1975, commercial speech was considered to be outside the first amendment.(fn37) Along with certain other categories of speech-fighting words,(fn38) obscenity,(fn39) shouting fire in a theatre(fn40)-commercial speech was thought too removed from the quest for truth to deserve first amendment protection.(fn41) Beginning with Bigelow v. Virginia(fn42) and Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc.(fn43) a new commercial speech doctrine evolved. It recognized that, although speech might relate to products or services, it could be a valuable part of the marketplace of ideas.(fn44) Even a purely commercial message can be helpful in making many of the daily decisions of life.(fn45) On the other hand, the Court has noted that commercial speech is "hardier" than classic public speech.(fn46) As such, it needs fewer protections to assure its place in the market, and, since there is an economic incentive behind the message, it is more likely to find an alternative medium if one is foreclosed.(fn47)
As with all first amendment rights, the advertiser's protection for his commercial message is only secured against government action.(fn48) He has no first amendment rights against private parties.(fn49) For an advertiser to claim that a newspaper's refusal to deal violated his first amendment rights, he would have to prove that the refusal involved some cognizable form of state action.(fn50) A number of advertisers have attempted to prove state action without success.(fn51) State action exists only when one is "clothed with the authority of the state and . . . purporting to act thereunder."(fn52) As the history of the state and the press is of disassoci-ation,(fn53) it is difficult to prove that they act as one. In fact, state...
