359 U.S. 500 (1959), 45, Beacon Theatres, Inc. v. Westover

Docket Nº:No. 45
Citation:359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988
Party Name:Beacon Theatres, Inc. v. Westover
Case Date:May 25, 1959
Court:United States Supreme Court
 
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Page 500

359 U.S. 500 (1959)

79 S.Ct. 948, 3 L.Ed.2d 988

Beacon Theatres, Inc.

v.

Westover

No. 45

United States Supreme Court

May 25, 1959

Argued December 10, 1958

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

In anticipation of a suit by petitioner for treble damages under the Sherman and Clayton Acts, the prospective defendant brought suit against petitioner in a Federal District Court for a declaratory judgment which would have settled some of the key issues in such an antitrust suit, and prayed that the bringing of such a suit be enjoined pending outcome of the declaratory judgment litigation. Petitioner filed a counterclaim raising the issues which would have been raised in the antitrust suit for treble damages, and demanded a jury trial. Purporting to act in the exercise of its discretion under Rules 42(b) and 57 of the Federal Rules of Civil Procedure, the District Court ruled that it would try in equity, without a jury, the issues common to both proceedings before trying petitioner's counterclaim. The Court of Appeals held that the District Court had acted within the proper scope of its discretion, and it denied petitioner's application for a writ of mandamus requiring the District Court to set aside its ruling.

Held: the judgment of the Court of Appeals is reversed. Pp. 501-511.

1. The District Court's finding that the complaint for declaratory relief presented basically equitable issues draws no support from the Declaratory Judgment Act, which specifically preserves the right to a jury trial for both parties. P. 504.

2. If petitioner would have been entitled to a jury trial in a treble damage suit, he cannot be deprived of that right merely because the prospective defendant took advantage of the availability of declaratory relief to sue petitioner first. P. 504.

3. Since the right to trial by jury applies to treble damage suits under the antitrust laws, and is an essential part of the congressional plan for making competition, rather than monopoly, the rule of trade, the antitrust issues raised in the declaratory judgment suit were essentially jury questions. P. 504.

4. Assuming that the pleadings can be construed to support a request for an injunction against threats of lawsuits, and as alleging the kind of harassment by a multiplicity of lawsuits which would traditionally have justified equity in taking jurisdiction and settling

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the case in one suit, nevertheless, under the Declaratory Judgment Act and the Federal Rules of Civil Procedure, neither claim can justify denying petitioner a trial by jury of all the issues in the antitrust controversy. Pp. 506-511.

(a) Today, the existence of irreparable harm and inadequacy of legal remedies as a basis of injunctive relief must be determined not by precedents under discarded procedures, but in the light of the remedies now made available by the Declaratory Judgment Act and the Federal Rules of Civil Procedure. Pp. 506-510.

(b) Viewed in this manner, the use of discretion by the District Court under Rule 42(b) to deprive petitioner of a full jury trial of the issues in the antitrust controversy cannot be justified. P. 508.

5. Mandamus is available under the All Writs Act, 28 U.S.C. § 1651, to require jury trial where it has been improperly denied. P. 511.

252 F.2d 864 reversed.

BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

Petitioner, Beacon Theatres, Inc., sought by mandamus to require a district judge in the Southern District of California to vacate certain orders alleged to deprive it of a jury trial of issues arising in a suit brought against it by Fox West Coast Theatres, Inc. The Court of [79 S.Ct. 952] Appeals for the Ninth Circuit refused the writ, holding that the trial judge had acted within his proper discretion in denying petitioner's request for a jury. 252 F.2d 864. We granted certiorari, 356 U.S. 956, because

Maintenance of the jury as a factfinding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care.

Dimick v. Schiedt, 293 U.S. 474, 486.

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Fox had asked for declaratory relief against Beacon, alleging a controversy arising under the Sherman Antitrust Act, 26 Stat. 209, as amended, 15 U.S.C. §§ 1, 2, and under the Clayton Act, 38 Stat. 731, 15 U.S.C. § 15, which authorizes suits for treble damages against Sherman Act violators. According to the complaint, Fox operates a movie theatre in San Bernardino, California, and has long been exhibiting films under contracts with movie distributors. These contracts grant it the exclusive right to show "first run" pictures in the "San Bernardino competitive area" and provide for "clearance" -- a period of time during which no other theatre can exhibit the same pictures. After building a drive-in theatre about 11 miles from San Bernardino, Beacon notified Fox that it considered contracts barring simultaneous exhibitions of first-run films in the two theatres to be overt acts in violation of the antitrust laws.1 Fox's complaint alleged that this notification, together with threats of treble damage suits against Fox and its distributors, gave rise to "duress and coercion" which deprived Fox of a valuable property right, the right to negotiate for exclusive first-run contracts. Unless Beacon was restrained, the complaint continued, irreparable harm would result. Accordingly, while its pleading was styled a "Complaint for Declaratory Relief," Fox prayed both for a declaration that a grant of clearance between the Fox and Beacon theatres is reasonable and

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not in violation of the antitrust laws, and for an injunction, pending final resolution of the litigation, to prevent Beacon from instituting any action under the antitrust laws against Fox and its distributors arising out of the controversy alleged in the complaint.2 Beacon filed an answer, a counterclaim against Fox, and a cross-claim against an exhibitor who had intervened. These denied the threats and asserted that there was no substantial competition between the two theatres, that the clearances granted were therefore unreasonable, and that a conspiracy existed between Fox and its distributors to manipulate contracts and clearances so as to restrain trade and monopolize first-run pictures in violation of the antitrust laws. Treble damages were asked.

Beacon demanded a jury trial of the factual issues in the case, as provided by Federal Rule of Civil Procedure 38(b). The District Court, however, viewed the issues raised by the "Complaint for Declaratory Relief," including the question of competition between [79 S.Ct. 953] the two theatres, as essentially equitable. Acting under the purported authority of Rules 42(b) and 57, it directed that these issues be tried to the court before jury determination of the validity of the charges of antitrust violations made in the counterclaim and cross-claim.3 A common issue of the "Complaint for Declaratory Relief," the counterclaim, and the cross-claim was the reasonableness of the clearances granted to Fox, which depended, in part, on the

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existence of competition between the two theatres. Thus, the effect of the action of the District Court could be, as the Court of Appeals believed, "to limit the petitioner's opportunity fully to try to a jury every issue which has a bearing upon its treble damage suit," for determination of the issue of clearances by the judge might

operate either by way of res judicata or collateral estoppel so as to conclude both parties with respect thereto at the subsequent trial of the treble damage claim.

252 F.2d at 874.

The District Court's finding that the Complaint for Declaratory Relief presented basically equitable issues draws no support from the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202; Fed.Rules Civ.Proc. 57. See also 48 Stat. 955, 28 U.S.C. (1940 ed.) § 400. That statute, while allowing prospective defendants to sue to establish their nonliability, specifically preserves the right to jury trial for both parties.4 It follows that, if Beacon would have been entitled to a jury trial in a treble damage suit against Fox, it cannot be deprived of that right merely because Fox took advantage of the availability of declaratory relief to sue Beacon first. Since the right to trial by jury applies to treble damage suits under the antitrust laws, and is, in fact, an essential part of the congressional plan for making competition, rather than monopoly, the rule of trade, see Fleitmann v. Welsbach Street Lighting Co., 240 U.S. 27, 29, the Sherman and Clayton Act issues on which Fox sought a declaration were essentially jury questions.

Nevertheless, the Court of Appeals refused to upset the order of the district judge. It held that the question of whether a right to jury trial existed was to be judged

Page 505

by Fox's complaint read as a whole. In addition to seeking a declaratory judgment, the court said, Fox's complaint can be read as making out a valid plea for injunctive relief, thus stating a claim traditionally cognizable in equity. A party who is entitled to maintain a suit in equity for an injunction, said the court, may have all the issues in his suit determined by the judge without a jury, regardless of whether legal rights are involved. The court then rejected the argument that equitable relief, traditionally available only when legal remedies are inadequate, was rendered unnecessary in this case by the filing of the counterclaim and cross-claim which presented all the issues necessary to a determination of the right to injunctive relief. Relying on American Life Ins. Co. v. Stewart, 300 U.S. 203, 215, decided before the enactment of the Federal Rules of Civil Procedure, it invoked the principle that a court sitting in equity could retain jurisdiction...

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