United States v. International Boxing Club of NY

• Citation: 150 F. Supp. 397
• Parties: UNITED STATES of America, Plaintiff, v. INTERNATIONAL BOXING CLUB OF NEW YORK, Inc., a corporation of New York; International Boxing Club, a corporation of Illinois; Madison Square Garden Corporation, a corporation of New York; James D. Norris; and Arthur M. Wirtz, Defendants.
• Decision Date: 08 March 1957
• Court: U.S. District Court — Southern District of New York

150 F. Supp. 397

UNITED STATES of America, Plaintiff, v. INTERNATIONAL BOXING CLUB OF NEW YORK, Inc., a corporation of New York; International Boxing Club, a corporation of Illinois; Madison Square Garden Corporation, a corporation of New York; James D. Norris; and Arthur M. Wirtz, Defendants.

United States District Court S. D. New York.

March 8, 1957.

COPYRIGHT MATERIAL OMITTED

Herbert Brownell, Jr., Atty. Gen., Victor R. Hansen, Asst. Atty. Gen., Victor H. Kramer, New York City, Richard B. O'Donnell, John D. Swartz, William J. Elkins, Lawrence Gochberg, Frank D. Curtis, Edward F. Corcoran, Attys., Dept. of Justice, New York City, for the United States.

Simpson, Thacher & Bartlett, New York City, for defendants Madison Square Garden Corp. and International Boxing Club of New York, Inc., Whitney North Seymour, Benjamin C. Milner, III, Armand F. Macmanus, Newell G. Alford, Jr., New York City, of counsel.

Reid & Priest, New York City, Peabody, Westbrook, Watson & Stephenson, Chicago, Ill., for defendants International Boxing Club, Inc., James D. Norris and Arthur M. Wirtz, Charles H. Watson, Ralph M. McDermid, New York City, of counsel.

OUTLINE OF OPINION

                1. THE ISSUES PRESENTED
                2. FINDINGS OF FACT
                        I. Description of Defendants and Others
                       II. Professional Boxing
                      III. State and Municipal Regulation of Professional Boxing.
                       IV. The Trade and Commerce Involved.
                        V. The Interstate Character of This Trade and Commerce.
                       VI. The Promotion of Championship Contests—a Separate Part of This Interstate
                            Commerce.
                      VII. The Sale of Television and Broadcast Rights to Championship Contests—a
                            Separate Part of This Interstate Commerce.
                     VIII. The Defendants' Position in the Professional Boxing Business in 1949.
                       IX. The Unlawful Combination and Conspiracy.
                             a. The defendants combine and conspire.
                             b. The Garden joins the combination and conspiracy.
                        X. The Conspiracy Afoot.
                             a. Elimination of competitors.
                                  1. Michael S. Jacobs and Twentieth Century Sporting Club, Inc.
                                  2. Tournament of Champions, Inc., Sporting Events, Inc., and Columbia
                                      Broadcasting System.
                             b. Defendants' control of important stadia and arenas.
                             c. Defendants' exclusive contracts with contenders for championship.
                       XI. The Results of Defendants' Conspiracy.
                3. THE LAW APPLICABLE TO THE FINDINGS OF FACT.
                4. CONCLUSIONS OF LAW.
                

RYAN, District Judge.

This civil anti-trust suit was filed on March 17, 1952 by the United States under Section 4 of the Sherman Act, C. 647, 26 Stat. 209, as amended, 15 U.S.C. A. § 4, to prevent and restrain violations by the defendants of Sections 1 and 2 of the Act, 15 U.S.C.A. §§ 1, 2. The amended complaint alleges, in substance, that the defendants combined and conspired in restraint of, and to monopolize, and have monopolized, interstate and foreign commerce in the promotion of professional championship boxing contests, including the sale of radio, television and motion picture rights thereto.

Defendants' motion to dismiss the complaint for lack of jurisdiction over the subject matter, i. e., for lack of interstate commerce and for failure to state a claim upon which relief can be granted, was granted on February 8, 1954. The United States appealed directly to the Supreme Court, which reversed the judgment of dismissal and remanded the suit for trial, United States v. International Boxing Club of New York, Inc., 1955, 348 U.S. 236, 75 S.Ct. 259, 99 L. Ed. 290. This determination was a holding that accepting the allegations of the complaint, a claim was stated entitling the Government to some form of relief and that "* * * the Government is entitled to an opportunity to prove its allegations * * *."

I note, with gratitude and appreciation, that I have had the utmost cooperation from counsel both in the pre-trial hearings and at trial. This expedited the presentation of the evidence and shortened the trial.

1. THE ISSUES PRESENTED

The complaint alleges that the defendants, beginning in 1949, combined and conspired in restraint of and to monopolize interstate trade and foreign commerce in the promotion, exhibition, broadcasting, telecasting and motion picture production and distribution of professional championship boxing contests in the United States. The Government contends that the combination and conspiracy resulted in a monopolization, and that it consisted of a concert of action among the defendants to exclude others from the promotion and exhibition of and the sale of radio, television and motion picture rights in professional championship boxing contests in the United States.

The acts alleged to have been committed by the defendants, pursuant to the conspiracy and combination, are: (1) purchasing of promotional control of certain championships, (2) acquiring the assets of competitors, (3) acquiring the exclusive use of principal stadia and arenas, and (4) requiring each of certain contenders for a title, as a condition of being afforded an opportunity to engage in a championship contest, to enter into a contract pursuant to which the contender, if he won the contest and thereby became champion, was required to engage in title bouts only under the promotion of defendants for a period of from three to five years.

The complaint alleges that defendants have promoted, or participated in the promotion of, 80% of all championship contests presented in the United States during the period between January 1, 1949 and May 15, 1953.

Specifically, then, the complaint alleges that the trade and commerce involved in suit is the business of promoting championship boxing contests on a multistate basis, which includes the staging of the boxing contest in a suitable arena, the sale of tickets of admission, and the negotiations and sale of rights to broadcast, televise and to make and distribute motion pictures of such contests. This, the Supreme Court has held, "constitutes `trade or commerce among the several States' within the meaning of the Sherman Act", United States v. International Boxing Club of New York, Inc., supra, 348 U.S. at page 240, 75 S.Ct. at page 261. The complaint further alleges that, in addition to monies received from the sale of tickets of admission, a substantial portion of the total revenue from championship fights comes from the sale of rights involving radio, television and motion pictures.

The answers deny that defendants have unlawfully conspired or combined, or that they have, either individually or collectively, a monopoly within the meaning of the Sherman Act. The main thrust of the defense lies in the contention that championship boxing contests are not independent of and would not exist without non-championship contests and, therefore, the promotion of championship boxing contests does not constitute a relevant "market" for purposes of testing violations of Sections 1 and 2 of the Sherman Act.

The Government argues that the promotion and exhibition of, and the sale of radio, television and motion picture rights in professional championship boxing contests constitute a "market" for purposes of determining whether there were restraints of trade and monopoly as alleged. The defendants urge that the relevant market is the entire entertainment field (or, at the very least, the promotion of all boxing contests). They contend that if the sale of radio, television and motion picture rights with respect to championship bouts have material significance, such a finding would serve only to establish that the correct and relevant market is the entire entertainment field.

The Government, charging the defendants, as it does, with having violated Sections 1 and 2 of the Act, has the burden of establishing the relevant market as well as the elements of the offense as set forth in the Act. Thus, to sustain its charge that the defendants conspired to monopolize, the Government must prove that the defendants had a specific intent to monopolize, Swift & Co. v. United States, 1905, 196 U.S. 375, 396, 25 S.Ct. 276, 49 L.Ed. 518; and to establish that the conspiracy charged was successfully consummated, that the defendants did in fact monopolize the relevant market, that they were "* * * able, as a group, to exclude actual or potential competition from the field", American Tobacco Co. v. United States, 1946, 328 U.S. 781, 809, 66 S.Ct. 1125, 1139, 90 L.Ed. 1575.

The basic issues presented for determination as they have been framed and submitted by the defendants are:

1. Were the activities of defendants in connection with the promotion and exhibition of championship boxing contests interstate trade and commerce within the meaning of Sections 1 and 2 of the Sherman Act? and

2. If the defendants' activities were interstate trade and commerce, was Section 1 or Section 2 of the Sherman Act violated by them?

The Government called eight witnesses and introduced 268 exhibits; defendants called seven witnesses and offered 13 exhibits. On consideration of all this evidence, I make the following findings of fact.

2. FINDINGS OF FACT

I. Description of Defendants and Others.

1. Defendant International Boxing Club of New York, Inc. (hereinafter referred to as IBC(NY) ), is a New York corporation with offices and principal place of business in New York, New York. It was formed on March 14, 1949. From about July 1949 to May 15, 1953, the end of the period covered by the Amended Complaint (hereinafter referred to as Complaint), about 80% of its voting stock was substantially equally divided between defendants Wirtz and Norris and the defendant Madison Square Garden Corporation, while the remaining approximate 20% was owned by Joe Louis or Trustees for his benefit. It has been engaged in the promotion of professional boxing contests including professional world championship boxing contests. During the period July...