United States v. Loew Incorporated Loew Incorporated v. United States Super Corp v. United States 8212 44

• Decision Date: 05 November 1962
• Docket Number: Nos. 42,s. 42
• Citation: 83 S.Ct. 97,371 U.S. 38,9 L.Ed.2d 11
• Parties: UNITED STATES, Appellant, v. LOEW'S, INCORPORATED, et al. LOEW'S, INCORPORATED, et al., Appellants, v. UNITED STATES. C & C SUPER CORP., Appellant, v. UNITED STATES. —44
• Court: U.S. Supreme Court

371 U.S. 38

83 S.Ct. 97

9 L.Ed.2d 11

UNITED STATES, Appellant,

v LOEW'S, INCORPORATED, et al.

LOEW'S, INCORPORATED, et al., Appellants,

v. UNITED STATES.

C & C SUPER CORP., Appellant,

v. UNITED STATES.

Nos. 42—44.

Argued Oct. 16, 1962.

Decided Nov. 5, 1962.

Daniel M. Friedman, Washington, D.C., for appellant in No. 42 and for appellee in Nos. 43 and 44.

Louis Nizer, New York City, for appellees in No. 42 and for appellants in No. 43, Loew's Incorporated, Associated Artists Production, Inc. and United Artists Corporation.

Myles J. Lane, New York City, for appellee in No. 42 and appellant in No. 43, Screen Gems, Inc.

Mervin C. Pollak, New York City, for appellant in No. 44.

Justin M. Golenbock, New York City, for appellee in No. 42, National Telefilm Associates, Inc.

Mr. Justice GOLDBERG delivered the opinion of the Court.

These consolidated appeals present as a key question the validity under § 1 of the Sherman Act¹ of block booking of copyrighted feature motion pictures for television exhibition. We hold that the tying agreements here are illegal and in violation of the Act.

The United States brought separate civil antitrust actions in the Southern District of New York in 1957 against six major distributors of pre-1948 copyrighted motion picture feature films for television exhibition, alleging that each defendant had engaged in block booking in violation of § 1 of the Sherman Act. The complaints asserted that the defendants had, in selling to television stations, conditioned the license or sale of one or more feature films upon the acceptance by the station of a package or block containing one or more unwanted or inferior films. No combination or conspiracy among the distributors was alleged; nor was any monopolization or attempt to monopolize under § 2 of the Sherman Act averred. The sole claim of illegality rested on the manner in which each defendant had marketed its product. The successful pressure applied to television station customers to accept inferior films along with desirable pictures was the gravamen of the complaint.

After a lengthy consolidated trial, the district judge filed exhaustive findings of fact, conclusions of law, and a carefully reasoned opinion, 189 F.Supp. 373, in which he found that the actions of the defendants constituted violations of § 1 of the Sherman Act. The conclusional finding of fact and law was that

'* * * the several defendants have each, from time to time and to the extent set forth in the specific findings of fact, licensed or offered to license one or more feature films to television stations on condition that the licensee also license one or more other such feature films, and have, from time to time and to the extent set forth in the specific findings of fact, refused, expressly or impliedly, to license feature films to television stations unless one or more other such feature films were accepted by the licensee.' 189 F.Supp., at 397—398.

The judge recognized that there was keen competition between the defendant distributors, and therefore rested his conclusion solely on the individual behavior of each in engaging in block booking. In reaching his decision he carefully considered the evidence relating to each of the 68 licensing agreements that the Government had contended involved block booking. He concluded that only 25 of the contracts were illegally entered into. Nine of these belonged to defendant C & C Super Corp., which had an admitted policy of insisting on block booking that it sought to justify on special grounds.

Of the others, defendant Loew's, Incorporated, had in two negotiations that resulted in licensing agreements declined to furnish stations KWTV of Oklahoma City and WBRE of Wilkes-Barre with individual film prices and had refused their requests for permission to select among the films in the groups. Loew's exacted from KWTV a contract for the entire Loew's library of 723 films, involving payments of $314,725.20. The WBRE agreement was for a block of 100 films, payments to total $15,000.

Defendant Screen Gems, Inc., was also found to have block booked two contracts, both with WTOP of Washington, D.C., one calling for a package of 26 films and payments of $20,800 and the other for 52 films and payments of $40,000. The judge accepted the testimony of station officials that they had requested the right to select films and that their requests were refused.

Associated Artists Productions, Inc., negotiated four contracts that were found to be block booked. Station WTOP was to pay $118,800 for the license of 99 pictures, which were divided into three groups of 33 films, based on differences in quality. To get 'Treasure of the Sierra Madre,' 'Casablanca,' 'Johnny Belinda,' 'Sergeant York,' and 'The Man Who Came to Dinner,' among others, WTOP also had to take such films as 'Nancy Drew Troubleshooter,' 'Tugboat Annie Sails Again,' 'Kid Nightingale,' 'Gorilla Man,' and 'Tear Gas Squad.' A similar contract for 100 pictures, involving a license fee of $140,000, was entered into by WMAR of Baltimore. Triangle Publications, owner and operator of five stations, was refused the right to select among Associated's packages, and ultimately purchased the entire library of 754 films for a price of $2,262,000 plus 10% of gross receipts. Station WJAR of Providence, which licensed a package of 58 features for a fee of $25,230, had asked first if certain films it considered undesirable could be dropped from the offered packages and was told that the packages could not be split.

Defendant National Telefilm Associates was found to have entered into five block booked contracts. Station WMAR wanted only 10 Selznick films, but was told that it could not have them unless it also bought 24 inferior films from the 'TNT' package and 12 unwanted 'Fabulous 40's.' It bought all of these, for a total of $62,240. Station WBRE, before buying the 'Fox 52' package in its entirety for $7,358.50, requested and was refused the right to eliminate undesirable features. Station WWLP of Springfield, Massachusetts, inquired about the possibility of splitting two of the packages, was told this was not possible, and then bought a total of 59 films in two packages for $8,850. A full package contract for National's 'Rocket 86' group of 86 films was entered into by KPIX of San Francisco, payments to total $232,200, after KPIX requested and was denied permission to eliminate undesirable films from the package. Station WJAR wanted to drop 10 or 12 British films from this defendant's 'Champagne 58' package, was told that none could be deleted, and then bought the block for $31,000.

The judge found that defendant United Artists Corporation had in three consummated negotiations conditioned the sale of films on the purchase of an entire package. The 'Top 39' were licensed by WAAM of Baltimore for $40,000 only after receipt of a refusal to sell 13 of the 39 films in the package. Station WHTN of Huntington, West Virginia, purchased 'Award 52' for $16,900 after United Artists refused to deal on any basis other than purchase of the entire 52 films. Thirty-nine films were purchased by WWLP for $5,850 after an initial inquiry about selection of titles was refused.

Since defendant C & C was found to have had an overall policy of block booking, the court did not analyze the particular circumstances of the nine negotiations which had resulted in the licensing of packages of films. C & C's policies resulted in at least one station having to take a package in which 'certain of the films were unplayable since they had a foreign language sound track.' 189 F.Supp., at 389.

The court entered separate final judgments against the defendants, wherein each was enjoined from

'(A) Conditioning or tying, or attempting to condition or tie, the purchase or license of the right to exhibit any feature film over any television station upon the purchase or license of any other film;

'(B) Conditioning the purchase or license of the right to exhibit any feature film over any television station upon the purchase or license for exhibition over any other television station of that feature film, or any other film;

'(C) Entering into any agreement to sell or license the right to exhibit any feature film over any television station in which the differential between the price or fee for such feature film when sold or licensed alone and the price or fee for the same film when sold or licensed with one or more other film (sic) has the effect of conditioning the sale or license of such film upon the sale or license of one or more other films.'

All of the defendants except National Telefilm² appeal from the decree. The appeals of defendants Loew's, Screen Gems, Associated Artists, and United Artists raise identical issues and are consolidated as No. 43. The appeal of defendant C & C raises additional issues, and is therefore separately numbered as No. 44. The Government, although it won on the merits below, asserts in a cross-appeal (No. 42) that the scope and specificity of the decree entered by the District Court were inadequate to prevent the continued attainment of illegal objectives. It seeks to have the decree broadened in a number of ways. All of the defendants below oppose these modifications. The cases are here on direct appeal from the District Court under § 2 of the Expediting Act, 32 Stat. 823, as amended, 15 U.S.C. § 29, 15 U.S.C.A. § 29. We noted probable jurisdiction, 368 U.S. 973, 82 S.Ct. 478, 7 L.Ed.2d 437, and consolidated the appeals. We shall consider No. 43 first, since appellants there raise the fundamental question whether their activities were in violation of the antitrust laws. We shall thereafter consider No. 44, the special arguments of appellant C & C, and finally No. 42, the Government's request for broadening the decree.

I.

This case raises the recurring question of whether specific tying arrangements violate § 1 of the Sherman Act.³ This Court has recognized that '(t)ying agreements...