Albrecht v. Herald Co.

Herald Co. (defendant) published a newspaper, the Globe-Democrat, that was distributed each morning by independent carriers. The carriers purchased newspapers at wholesale prices and sold them to customers at retail prices. Herald had a suggested retail price for the newspapers. The independent carriers had exclusive newspaper routes that were subject to termination if the carriers raised the retail prices of their papers to customers. Lester J. Albrecht (plaintiff) was an independent carrier for Herald with over 1,200 customers. Albrecht raised his retail newspaper prices above the suggested retail price. After customers complained about the increased prices, Herald created a new newspaper route for 300 of Albrecht’s former customers, leaving Albrecht with 900 customers. Eventually, Herald terminated Albrecht’s position as a carrier and allowed Albrecht to sell his newspaper route. Albrecht sold his route for $12,000 but believed that he could have sold the route at a higher price if he could have transferred all 1,200 of his customers rather than the remaining 900. Albrecht sued Herald in federal district court, alleging that Herald’s vertical trade restraint, which placed a resale-price maximum on the newspapers it sold wholesale to its carriers, violated § 1 of the Sherman Act. A jury found in favor of Herald, holding that the resale-price maximum was not an illegal restraint of trade. Albrecht filed a motion for judgment notwithstanding the verdict, which the district court denied. The court of appeals affirmed the district court. The United States Supreme Court granted certiorari to consider whether vertical agreements that impose a maximum resale price on retailers are per se unreasonable restraints of trade.