Chronicle Publishing Co. v. National Broadcasting Co.

• Decision Date: 25 July 1961
• Docket Number: No. 17208,17277.,17208
• Parties: CHRONICLE PUBLISHING CO., Appellant, v. NATIONAL BROADCASTING COMPANY, Inc., a corporation, et al., Appellees. CHRONICLE PUBLISHING CO., Petitioner, v. The Honorable George B. HARRIS, Judge of the United States District Court of the Northern District of California, Southern Division, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

294 F.2d 744 (1961)

CHRONICLE PUBLISHING CO., Appellant, v. NATIONAL BROADCASTING COMPANY, Inc., a corporation, et al., Appellees.

CHRONICLE PUBLISHING CO., Petitioner, v. The Honorable George B. HARRIS, Judge of the United States District Court of the Northern District of California, Southern Division, Respondent.

Nos. 17208, 17277.

United States Court of Appeals Ninth Circuit.

July 25, 1961.

Cooper, White & Cooper by Sheldon G. Cooper and James B. Schnake, San Francisco, Cal., and Cox, Langford, Stoddard & Cutler by Lloyd N. Cutler, Arnold M. Lerman, Samuel A. Stern, Arthur Z. Gardiner, Jr., Washington, D. C., for appellant-petitioner.

Pillsbury, Madison & Sutro, John A. Sutro, James Michael, Noble K. Gregory, George A. Sears, San Francisco, Cal., Schnader, Harrison, Segal & Lewis, Bernard G. Segal, Jerome J. Shestack, Philadelphia, Pa., for appellees Nat. Broadcasting Co., Inc., and Radio Corp. of America.

Dunne, Dunne & Phelps, A. B. Dunne, Louis L. Phelps, San Francisco, Cal., Regan, Goldfarb, Powell & Quinn, Sidney P. Howell, Jr., New York City, for appellee RKO General, Inc.

Pillsbury & Dunlap, Edwin S. Pillsbury, San Francisco, Cal., Pierson, Ball & Dowd, Harold D. Cohen, Washington, D. C., for appellee San Francisco-Oakland Television, Inc.

Pillsbury & Dunlap, Edwin S. Pillsbury, San Francisco, Cal., for appellees Ward D. Ingrim, William D. Pabst, Willet H. Brown, Stoddard P. Johnston and Harry R. Lubcke.

Pillsbury & Dunlap, Edwin S. Pillsbury, San Francisco, Cal., Orris R. Hedges, Los Angeles, Cal., for appellee Edwin M. Pauley.

James Michael, Louis L. Phelps, Edwin S. Pillsbury, San Francisco, Cal., for respondent, the Honorable George B. Harris.

Before HAMLEY, MERRILL and KOELSCH, Circuit Judges.

MERRILL, Circuit Judge.

In these two cases, consolidated for our consideration, Chronicle Publishing Company challenges the propriety of an order of the district court staying further proceedings in a private antitrust action brought by Chronicle against National Broadcasting Company. In case number 17208 the challenge is by direct appeal and the matter is before us upon appellee's motion to dismiss the appeal upon the ground that it is taken from a nonappealable order. In case number 17277 the challenge is by petition for writ of mandamus directing the district court to vacate its stay order and permit proceedings in the case below to continue.

NBC has entered into a contract to acquire from San Francisco-Oakland Television, Inc., its television station KTVU. The Chronicle owns station KRON-TV, which has for years been the San Francisco outlet for NBC programs. Should NBC acquire KTVU, that station as a matter of course will become the NBC outlet for the San Francisco area. The Chronicle will lose that valuable connection.

In the case below Chronicle alleges that NBC has, in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2, engaged in a course of conduct designed to suppress competition in the sale of program and broadcast time; that acquisition by NBC of station KTVU and certain other stations sought by it throughout the country may tend to substantially lessen competition in specified lines of commerce in violation of § 7 of the Clayton Act, 15 U.S.C.A. § 18.

Before NBC can acquire KTVU, it must secure the approval of the Federal Communications Commission. It has applied to that agency for approval and those proceedings are pending. In those proceedings Chronicle has filed objections to the granting of approval and is taking an active part in support of its position.

The order here challenged stays all further proceedings in the case below until after the final determination by the FCC of the proceedings before it upon NBC's application. The stay order does reserve to Chronicle the right to "hereafter apply for an injunction pendente lite to preserve the asserted status quo."

The first question presented is that raised by appellees' motion to dismiss the appeal in case number 17208: whether the stay order is an appealable order. If so, it must come within the provisions of 28 U.S.C. § 1292.¹ The question thus is whether this order can, under that section, be regarded as an injunction.

Enelow v. New York Life Insurance Company, 1935, 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, provides the rule. There, at pages 381-382 of 293 U.S. at page 311 of 55 S.Ct. it is stated:

"This section the predecessor to 28 U.S.C. § 1292(a) contemplates interlocutory orders or decrees which constitute an exercise of equitable jurisdiction in granting or refusing an injunction, as distinguished from a mere stay of proceedings which a court of law, as well as a court of equity, may grant in a cause pending before it by virtue of its inherent power to control the progress of the cause so as to maintain the orderly processes of justice."

Enelow was an action at law upon a life insurance policy. Defendant pleaded the equitable defense of fraud, prayed for cancellation and moved to have the equitable issue raised by its defense determined by a chancellor in advance of a jury trial of the legal issues. The district court so ordered. The supreme court held this order appealable, stating at page 382 of 293 U.S. at page 311 of 55 S.Ct.

"The power to stay proceedings in another court appertains distinctively to equity in the enforcement of equitable principles, and the grant or refusal of such a stay by a court of equity of proceedings at law is a grant or refusal of an injunction within the meaning of § 129."

Shanferoke Coal & Supply Corporation of Delaware v. Westchester Service Corporation, 1935, 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583, decided the same day as the Enelow case, involved an action at law upon a contract. Defendant, as a special defense, alleged that plaintiff had a duty to arbitrate and moved that the action be stayed pending arbitration. The supreme court held that the setting up of the arbitration agreement was an equitable defense for purposes of the Enelow rule and that the stay order was appealable as an injunction.

The rule of these cases has since been narrowly construed by the supreme court. We read Schoenamsgruber v. Hamburg-American Line, 1935, 294 U.S. 454, 55 S.Ct. 475, 79 L.Ed. 989; City of Morgantown, West Virginia v. Royal Insurance Company, 1944, 337 U.S. 254, 69 S.Ct. 1067, 93 L.Ed. 1347; and Baltimore Contractors v. Bodinger, 1955, 348 U.S. 176, 75 S.Ct. 249, 99 L.Ed. 233, as confining the rule of the Enelow and Shanferoke cases to those cases in which a defense equitable in its nature has been made the basis of a stay in an action which, before fusion of law and equity, was by its nature and action at law. Lyons v. Westinghouse Electric Corporation, 2 Cir., 1955, 222 F.2d 184 (majority opinion of Judge Medina) is to this effect.

The stay order here challenged was not granted pursuant to any equitable defense.

In Day v. Pennsylvania Railroad Company, 3 Cir., 1957, 243 F.2d 485, an action for damages was stayed pending the outcome of proceedings before the National Railroad Adjustment Board. The court, following the holdings of the supreme court in the cases heretofore cited, held that the ruling was "a step in controlling the litigation before the trial court" and not the granting of a temporary injunction. The court stated at page 487 of 243 F.2d:

"The distinction has been long recognized and it is well settled that the grant or denial of a stay of proceedings to await the determination of matters pending elsewhere is not an order granting or refusing an injunction and hence is not appealable."

To the same effect is United Gas Pipe Line Company v. Tyler Gas Service Company, 5 Cir., 1957, 247 F.2d 681.

In case number 17208, the appeal is dismissed.

In case number 17277, the proceeding in mandamus, the issue is whether the action of the district court in granting the stay amounts to an abuse of discretion and constitutes an unjustified refusal to proceed to trial in the pending antitrust action.

Chronicle concedes that the district court has the general power to stay proceedings on equitable principles pending the outcome of some other proceeding. It contends, however, that equitable principles have not been shown to apply here and further that in the area of private antitrust litigation where the district court has exclusive jurisdiction, it should not by stay defer to other pending proceedings.

Chronicle emphasizes that in antitrust litigation a significant public interest is involved and that the stay thus amounts to more than restraint on a litigant. It asserts that the stay constitutes frustration of congressional purpose and permits a course of conduct causing injury (public as well as private) to continue without the concern of the court.

Chronicle relies upon Lyons v. Westinghouse, supra, where by writ of mandamus a district court stay was ordered vacated. In that case a private antitrust action was stayed pending the outcome of a state action between the same parties. The state action was for accounting with an unlawful antitrust conspiracy alleged as a defense. The majority of a divided court held that the stay constituted an abuse of discretion. Judge Hand, for the majority, stated at page 189 of 222 F.2d:

"In the case at bar it appears to us that the grant to the district courts of exclusive jurisdiction over the action for treble damages should be taken to imply an immunity of their decisions from any pre-judgment elsewhere; at least on occasions, like those at bar, where the putative estoppel includes the whole nexus of facts that makes up the wrong. The remedy provided is not solely civil; two thirds of the recovery is not remedial and inevitably presupposes a punitive purpose. It is like a qui tam action, except that the plaintiff keeps all the penalty, instead of sharing it with the sovereign. There are sound reasons for assuming that such recovery should not be subject to the determinations of state courts. It was part of the effort to

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