price, and other restrictions. It is claimed that the agency system is inherently illegal and, in any event, must be stricken down because of the Post's prior marketing practices. These contentions are rejected.
It should be noted at the outset that the Post's determination to shift from a dealer to an agency system was made unilaterally, without prior contact with its dealers, and well prior to the Newberry action. The agency system involved a substantial readjustment of the Post's previous marketing procedure and a rearrangement of business risks. Under it, agents provide delivery, collection, and solicitation services in exchange for fees paid by the Post. The agents do not bear the risks of buying and reselling the newspapers, as in the case of dealers. Responsibility for delivery and accountability to the reader for delivery is placed squarely on the Post. The agent receives specified delivery fees, a circulation incentive fee, and a specified fee for each print or insert delivered. He obtains the bulk of his revenue directly from the Post and avoids the uncertainties of payment by the subscriber that the dealer confronted. The agent is given a definite responsibility to maintain the Post's penetration of the agent's area, but he may handle other publications and may arrange with the customer to provide additional services at prices that he sets.
The Post shifted to the agency system largely as a result of the Supreme Court's ruling in Albrecht, which cast doubt on the legality of systems of dealer distribution, such as the Post's, then employed by many newspapers across the country. After an unsuccessful effort by the industry to obtain relief from the Congress, the Post determined that a different method of distribution was desirable to avoid the business risks involved and to assure orderly pricing of its product. As a practical matter, there were only two choices that would assure continuance of both the Post's reasonable plan of distribution and the stability of prices charged home subscribers: to use employees or to use agents. The latter was the least restrictive, most reasonable alternative.
The shift from dealer contracts to agency contracts was made in a sensitive and appropriate way. All dealer contracts were allowed to run for their full five-year term. No dealer contracts were terminated. Early voluntary cancellation was encouraged only by a modest $1,000 bonus payment. There was no coercion. The great bulk of the dealers, 159 out of 178, accepted. Only the few plaintiffs have persisted in opposition. The system has operated smoothly since it was instituted.
There being no proof that the shift to an agency system was in any way in aid of an illegal price or sales restriction, it must be judged on its face. The Post had no legal obligation to continue any dealership once the contract period had run. In placing the agency system into effect the Post was merely creating a more integrated system of distribution for its own product, as is the right of any seller. A seller does not commit himself irrevocably to one method of distribution once commenced, and he may terminate, modify, and change his distribution system so long as his arrangements are legal. The agency system is a lawful and well-accepted means of distribution. See, e.g., United States v. Arnold, Schwinn & Co., 388 U.S. 365, 18 L. Ed. 2d 1249, 87 S. Ct. 1856 (1967). The dealers were not coerced into becoming agents, and the Post's conduct in adopting the new mode of distribution was less intrusive than that accepted by other courts. See, e.g., Knutson v. Daily Review, Inc., 548 F.2d 795, 805 (9th Cir. 1976), cert. denied, 433 U.S. 910, 97 S. Ct. 2977, 53 L. Ed. 2d 1094 (1977); McGuire v. Times Mirror Co., 405 F. Supp. 57, 64, 66 (C.D. Cal. 1975).
Furthermore, there is nothing in the facts of this case to lead the Court to believe that the agency system must be enjoined in whole or in part to dissipate the effects of the limited past violations shown. The injured plaintiff dealers will be compensated in damages, and their freedom to price for the duration of their dealer contracts will be sustained so long as they meet their responsibilities under the contract. There is neither legal precedent nor equitable reason why the Court should insist that for the indefinite future the Post should be frozen into a dealer system of distribution. See In re Multidistrict Vehicle Air Pollution, 538 F.2d 231, 234-36 (9th Cir. 1976). The Post proceeded over the years in an appropriate manner up until the Newberry incident. That violation was recent, of limited impact, and perhaps little more than a mistake in judgment or legal advice. The Post must pay the appropriate penalty. A dealer system imposed by this Court would amount to undue interference with the seller's right to fashion the manner in which he chooses to sell his own product. It is suggested that the Post has monopoly power and therefore has lost this right. But while the Post undoubtedly has power over price, this is a power gained by success, not predatory measures, and it remains free to choose between selling by employee, agent, or dealer since the choice has not been shown to constitute that "willful maintenance" of monopoly power condemned in United States v. Grinnell Corp., 384 U.S. 563, 570-71, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966). Plaintiffs are, moreover, but a small minority of the Post's dealer organization. Insofar as this record shows, the agency arrangement is satisfactory to the bulk of the dealers, also small businessmen, who are earning a useful, profitable livelihood. A far stronger showing than that made here would be required before a court of equity would be justified in imposing the greater risks of dealer status upon this group.
Counsel are directed to confer and to present a form of judgment and decree covering the award of damages and the terms of injunction specified and dismissing other claims in accordance with the above rulings of the Court. Plaintiffs are entitled to their reasonable attorneys' fees and costs and shall submit this claim for such fees and costs within thirty days.