Associated Film Distribution Corp. v. Thornburgh
| Citation | 683 F.2d 808 |
| Decision Date | 20 July 1982 |
| Docket Number | No. 81-2706,No. 81-2708,Nos. 81-2706,No. 81-2707,81-2706,81-2707,81-2708,s. 81-2706 |
| Parties | , 1982 Copr.L.Dec. P 25,436 ASSOCIATED FILM DISTRIBUTION CORPORATION, Avco Embassy Pictures Corp., Buena Vista Distribution Co., Inc., Columbia Pictures Industries, Inc., Filmways Pictures, Inc., Metro Goldwyn-Mayer, Inc., Paramount Pictures Corporation, Twentieth Century-Fox Film Corporation, United Artists Corporation, Universal Pictures Division of Universal City Studios, Inc., Universal Film Exchanges, Warner Bros. Inc., Warner Bros. Distributing Corporation, Appellees, v. The Honorable Dick THORNBURGH, Governor of the Commonwealth of Pennsylvania, Individually and in his official capacity, Bartle, Harvey, III, Attorney General for the Commonwealth of Pennsylvania, individually and in his official capacity, Budco Theatres, Inc., Budco Quality Theatres, Inc., its subsidiary corporation, Fox Theatres Management Corporation, The Governor and the Attorney General of the Commonwealth of Pennsylvania, Appellants inAppeal of BUDCO QUALITY THEATRES, INC., inAppeal of FOX THEATRES MANAGEMENT CORPORATION, into 81-2708. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Gregg H. S. Golden (argued), Deputy Atty. Gen., Leroy S. Zimmerman, Atty. Gen., Allen C. Warshaw, Deputy Atty. Gen., Harrisburg, Pa., Chief, Special Litigation Section, for the Governor and Attorney General of the Commonwealth of Pennsylvania.
H. Donald Busch (argued), Lewis A. Grafman, Shelley R. Goldfarb, Philadelphia, Pa. (Harry Norman Ball, Busch & Schramm, Philadelphia, Pa., of counsel), for Budco Quality Theatres, Inc.
Peter M. Fishbein (argued), Richard M. Squire, Manya L. Kamerling, Karen E. Katzman, Philadelphia, Pa. (Cohen, Shapiro, Polisher, Shiekman & Cohen, Kaye, Scholer, Fierman, Hays & Handler, New York City, of counsel), for Fox Theatres.
Bernard G. Segal (argued), Bancroft D. Haviland, James D. Crawford, Carole E. Handler, George P. Williams, III, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., (Barbara Scott, William Nix, New York City, of counsel), for appellees.
Before GIBBONS, and HUNTER, Circuit Judges, and GERRY, * District Judge.
Plaintiffs in this case are movie distributors and producers. They filed suit against Pennsylvania's governor and several movie exhibitors seeking a declaratory judgment that the Pennsylvania Feature Motion Picture Fair Business Practices Law, 73 P.S. §§ 203-1 through 203-11, was unconstitutional. The trial court granted summary judgment for plaintiffs, striking down the entire statute as violative of the First and Fourteenth Amendments and the pre-emption provision of the Copyright Act, 17 U.S.C. § 301. 1 For the reasons which follow, we will reverse the grant of summary judgment and remand this case to the district court, 520 F.Supp. 971.
In 1980, Pennsylvania enacted the Feature Motion Picture Fair Business Practices Law ("Pennsylvania Act"). 2 The Act forbids all blind bidding, some guarantees, all advances, all "five o'clock looks," 3 and exclusive first runs which last longer than 42 days. Motion pictures contain protected speech. However, the Pennsylvania Act does not directly affect speech or content; rather, the Act is an economic statute designed to regulate motion pictures as commodities.
Ohio has enacted a similar statutory scheme, R.C. §§ 1333.05 through .07, the constitutionality of which was upheld after eight weeks of discovery and a four week trial. Allied Artists Pictures Corp. v. Rhodes, 496 F.Supp. 408 (S.D.Ohio, 1980), aff'd in relevant part and remanded on commerce clause issue, 679 F.2d 656 (6th Cir. June 4, 1982). 4 The Ohio statutory scheme unlike the Pennsylvania scheme, allows advances within fourteen days of the first exhibition of a movie, forbids conditioning a license on guarantees, and contains no provision regulating the length of first runs. 5
The trial court ruled that the Pennsylvania Act was unconstitutional as violative of the First and Fourteenth Amendment because the Act, on its face, "creates the risk of a delay in licensing and of shifting financial burdens and uncertainties (from the exhibitors to the distributors)." 520 F.Supp. at 983. 6 We disagree. On its face, the Act does nothing but forbid certain trade practices. Whether the Act in fact creates any material risk of delay in exhibition or in fact threatens to inhibit the production of motion pictures by changing the financial structure of the industry were hotly contested questions of fact: defendants argued that, in fact, the statute has no impact on any First Amendment freedoms at all, or, in the alternative, that any impact is minimal and more than justified by the need to restore some economic power balance between the exhibitors and the distributors/producers. 7
The Ohio district court established the following framework for its First Amendment analysis of the Ohio statute:
There is no question that motion pictures are a form of expression falling within First Amendment protection. Interstate Circuit v. Dallas, 390 U.S. 676, 682 (88 S.Ct. 1298, 1302, 20 L.Ed.2d 225) (1968); United States v. Paramount Pictures, Inc., 334 U.S. 131, 166 (68 S.Ct. 915, 933, 92 L.Ed. 1260) (1948). Even assuming that the Ohio statutes encroach upon that expression, however, that fact does not end the inquiry.
... (In) Konigsberg v. State Bar of California, 366 U.S. 36, 49 (81 S.Ct. 997, 1005, 6 L.Ed.2d 105) (1961), ... the Supreme Court (stated) ...:
(G)eneral regulatory statutes, not intended to control the content of speech but incidentally limiting its unfettered exercise, have not been regarded as the type of law the First or Fourteenth Amendment forbade Congress or the States to pass, when they have been found justified by subordinating valid governmental interests, a prerequisite to constitutionality which has necessarily involved a weighing of the governmental interest involved.
Id. at 50-51 (81 S.Ct. at 1006-07)....
The Act (is not directed at the content of expression). It is trade practice legislation, directed at the motion picture industry as opposed to other industries, not because that industry communicates ideas, but rather because, as plaintiffs readily acknowledge, the market structure of that industry is unique.
The Ohio Act is clearly content-neutral. It is an economic regulation operating on all distributors and exhibitors acting within Ohio regardless of the content or subject matter of the films involved. To the extent that it affects expression, it does so only incidentally.
As such the Act falls within that category of "general regulatory statutes, not intended to control the content of speech but incidentally limiting its unfettered exercise," which should be upheld when "justified by subordinating valid governmental interests." Konigsberg, supra, 366 U.S. at 50-51, 81 S.Ct. at 1006-07....
Determination of the constitutionality of such legislation necessarily entails a balancing of the legitimate governmental interests it serves against its impact on the protected expression.
In United States v. O'Brien, 391 U.S. 367, 377, 88 S.Ct. 1673, 1679, 20 L.Ed.2d 672 (1968), rehearing denied, 393 U.S. 900, 89 S.Ct. 63, 21 L.Ed.2d 188, the court elaborated on the balancing test:
(A) government regulation is sufficiently justified if it is within the constitutional power of the Government; if it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.
496 F.Supp. at 432-33 (footnotes omitted). 8 We agree with the Ohio district court and with the Sixth Circuit, see 679 F.2d at 661, 663, that this framework embodies the correct approach to statutes like the Pennsylvania Act. However, the grant of summary judgment in this case precluded the application of this framework. The trial court could not evaluate the actual impact of the Act (if any) on First Amendment values; 9 could not assess the nature and weight of the state concerns which led to the Act's enactment; and could not balance the state concerns against the threat (if any) to the First Amendment. 10
In addition to striking the Pennsylvania Act as unconstitutional under the First Amendment, the trial court ruled that the Act was pre-empted by the federal Copyright Act and therefore unconstitutional under the Supremacy Clause:
The Act's limit upon the duration of the license, upon when a distributor may license, its prohibition of guarantees and advances, and its bar against licensing or negotiations prior to screening, as well as consummating a license without complying with rebidding requirements, all directly-and severely-restrict the rights of the licensor.
520 F.Supp. at 995. We disagree with the trial court's analysis.
Title 17 U.S.C. § 301(a) provides:
On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 ... are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.
Section 106 of the Copyright Act confers exclusive rights on the copyright holder to the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies of phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of ... motion pictures ..., to perform the copyrighted work publicly; and
(5) in the case of ... individual images of a motion picture...
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