Beacon Theaters, Inc v. Westover

• Decision Date: 25 May 1959
• Docket Number: No. 45,45
• Citation: 79 S.Ct. 948,3 L.Ed.2d 988,359 U.S. 500
• Parties: BEACON THEATERS, INC., Petitioner, v. The Hon. Harry C. WESTOVER, Judge of the United States District Court of the Southern District of California, Central Division, et al
• Court: U.S. Supreme Court

359 U.S. 500

79 S.Ct. 948

3 L.Ed.2d 988

BEACON THEATERS, INC., Petitioner,

v The Hon. Harry C. WESTOVER, Judge of the United States District Court of the Southern District of California, Central Division, et al.

No. 45.

Argued Dec. 10, 1958.

Decided May 25, 1959.

Mr. Jack Corinblit, Los Angeles, Cal., for petitioner.

Mr. Frank R. Johnston, Los Angeles, Cal., for respondents.

Mr. Justice BLACK delivered the opinion of the Court.

eti tioner, 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 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, 78 S.Ct. 996, 2 L.Ed.2d 1064, because 'Maintenance of the jury as a fact-finding 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, 55 S.Ct. 296, 301, 79 L.Ed. 603.

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, 15 U.S.C.A. §§ 1, 2, and under the Clayton Act, 38 Stat. 731, 15 U.S.C. § 15, 15 U.S.C.A. § 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 if 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 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 factul i ssues in the case as provided by Federal Rule of Civil Procedure 38(b), 28 U.S.C.A. The District Court, however, viewed the issues raised by the 'Complaint for Declaratory Relief,' including the question of competition between 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 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 page 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, 28 U.S.C.A. §§ 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, 36 S.Ct. 233, 234, 60 L.Ed. 505, 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 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 21 5, 57 S.Ct. 377, 380, 81 L.Ed. 605, decided before the enactment of the Federal Rules of Civil Procedure, it invoked the principle that a court sitting in equity could retain jurisdiction even though later a legal remedy became available. In such instances the equity court had discretion to enjoin the later lawsuit in order to allow the whole dispute to be determined in one case in one court.⁵ Reasoning by analogy, the Court of Appeals held it was not an abuse of discretion for the district judge, acting under Federal Rule of Civil Procedure 42(b), to try the equitable cause first even though this might, through collateral estoppel, prevent a full jury trial of the counterclaim and cross-claim which were as effectively stopped as by an equity injunction.⁶ Beacon takes issue with the holding of the Court of Appeals that the complaint stated a claim upon which equitable relief could be granted. As initially filed the complaint alleged that threats of lawsuits by petitioner against Fox and its distributors were causing irreparable harm to Fox's business relationships. The prayer for relief, however, made no mention of the threats but asked only that pending litigation of the claim for declaratory judgment, Beacon be enjoined from beginning any lawsuits under the antitrust laws against Fox and its distributors arising out of the controversy alleged in the complaint. Evidently of the opinion that this prayer did not state a good claim for equitable relief, the Court of Appeals construed it to include a request for an injunction against threats of lawsuits. This liberal construction of a pleading is in line with Rule 8 of the Federal Rules of Civil Procedure. See Conley v. Gibson, 355 U.S. 41, 47—48, 78 S.Ct. 99, 102—103, 2 L.Ed.2d 80. But this fact does not solve our problem. Assuming that the pleadings can be construed to support such a request and assuming additionally that the complaint can be read as alleging the kind of harassment by a multiplicity of lawsuits which would traditionally have justified equity to take jurisdiction and settle the case in one suit,⁷ we are nevertheless of the opinion that, under the Declaratory Judgment Act and the Federal Rules of Civil Procedure, neither claim can justify denying Beacon a trial by jury of all the issues in the antitrust controversy.

The basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies.⁸ At least as much is required to justify a trial court in using its discretion under the Federal Rules to allow claims of equitable origins to be tried ahead of legal ones, since this has the same effect as an equitable injunction of the legal claims. And it is immaterial, in judging if that discretion is properly employed,tha t before the Federal Rules and the Declaratory Judgment Act were passed, courts of equity, exercising a jurisdiction separate from courts of law, were, in some cass, allowed to enjoin subsequent legal actions between the same parties involving the same controversy. This was because the subsequent legal action, though providing an...