Columbia Pictures Industries, Inc. v. American Broadcasting Companies, Inc.

• Decision Date: 03 July 1974
• Docket Number: No. 922,D,922
• Parties: 1974-2 Trade Cases 75,147 COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs-Appellants, v. AMERICAN BROADCASTING COMPANIES, INC., et al., Defendants-Appellees, and Columbia Broadcasting System, Inc., et al., Defendants. ocket 74-1172.
• Court: U.S. Court of Appeals — Second Circuit

Page 894

501 F.2d 894

1974-2 Trade Cases 75,147

COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs-Appellants, v. AMERICAN BROADCASTING COMPANIES, INC., et al Defendants-Appellees, and Columbia Broadcasting System, Inc., et al., Defendants.

No. 922, Docket 74-1172.

United States Court of Appeals, Second Circuit.

Argued March 8, 1974.

Decided July 3, 1974.

Whitney North Seymour, New York City (Simpson Thacher & Bartlett, New York City), for plaintiffs-appellants.

Louis Nizer, New York City (Phillips, Nizer, Benjamin, Krim & Ballon, New

York City), for plaintiff-appellant United Artists.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for plaintiff-appellant Warner Bros.

Herbert A. Bergson, Washington, D.C. C. (Bergson, Borkland, Margolis & Adler, Washington, D.C.), for defendants-appellees American Broadcasting Companies, Inc. and others.

Hawkins, Delafield & Wood, New York City, for defendants-appellees American Broadcasting Companies, Inc., and others.

Cravath, Swaine & Moore, New York City (Bruce Bromley, Robert S. Rifkind, Robert F. Mullen, Paul C. Saunders, and Steven M. Edwards, New York City), for defendant Columbia Broadcasting System, Inc., as amicus curiae.

Seward & Kissel, New York City, for defendant CBS, Inc.

Hughes, Hubbard & Reed, New York City, for defendant Viacom International, Inc.

Before LUMBARD, MOORE and OAKES, Circuit Judges.

MOORE, Circuit Judge:

Plaintiffs-appellants ¹ appeal from an order of Judge Palmieri denying their motion for a preliminary injunction which sought temporarily to enjoin 'the defendant American Broadcasting Companies, Inc. ('ABC'), during the pendency of this case, from exhibiting or offering on the ABC television network any theatrical feature film produced or financed in whole or part or acquired on negative pick-up by ABC or a subsidiary of it . . ..'

The complaint in this action was filed on September 28, 1970, and in substance alleges a violation by defendants of federal antitrust laws (Sherman Act, 15 U.S.C. 1-3). Appellees interposed an answer, defenses and counterclaims. Under date of July 3, 1973, plaintiffs by motion sought the preliminary injunction. During this almost three-year period, extensive discovery has taken place and on at least one occasion appellants sought the aid of the court to restrain defendants from exhibiting their films. ² The long period of 'big case' preparation appears to be drawing to a close because even as of July 3, 1973, discovery was proceeding 'apace' and could 'be expected to be expeditiously completed.' (A120.)

Voluminous affidavits have been submitted in support of, and in opposition to, the motion. In addition, letters, documents, interdepartmental correspondence, financial statements, etc., form part of the record consisting of some 999 pages before Judge Palmieri. One of the affidavits supporting the motion alleged that ABC 'has advised us (presumably the plaintiffs) of its plans to show four of its own films on its own television network in the forthcoming television season (1973-74) and indicates that more will follow.' The four films are 'Lovers and Other Strangers,' ³ 'For Love of Ivy,' 'Charly' and 'Krakatoa/East of Java.' ⁴ Against the background of a highly concentrated industry, ⁵ appellants' underlying assertion is that ABC, by exhibiting its own-produced films over its own network is violating the federal antitrust laws by 'self-dealing.' ⁶ The exhibition by ABC of its own films it is argued, eliminates its need to buy appellants' films, thus depriving appellants of a principal market for feature films. They also inject a 'public interest' argument which, viewed in one light, is as much to say that they believe the public has more of a right to view their films than those of ABC; in any event, the public's interest in "the widest possible dissemination from diverse and antagonistic sources," Mt. Mansfield Television, Inc. v. FCC, 442 F.2d 470, 478 (2d Cir. 1971), quoting Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), is, we do not have to be reminded, of the greatest importance. Cf. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969).

Despite appellants' expressed fears that over the years ahead ABC may show a large number of self-produced films, although apparently with 39 it has stopped production, at this time and for purposes of this decision we will consider only the four films which ABC has indicated it would show during the 1973-74 season. To be sure, both parties have argued the case otherwise-- ABC as if it were now free to show any of its feature films, appellants as if ABC were about to show them all. It is also true that the district court's denial of the temporary injunction is not by its terms limited to those four films. The injunction was sought, however, only when ABC scheduled those four. The district court opinion appears to us premised on the proposition that only those four are sought to be shown before the case proceeds to trial on the merits. ⁷ It refers to 'the four feature films in question.' ⁸ Its discussion of irreparable harm is based upon the exhibition of only these four films. ⁹ Thus, while for strategic reasons ABC would like to treat the denial of a temporary injunction as a carte blanche, and appellants apparently for similar reasons would like to have us treat the case here and now on the merits, we see no reason to do so. The trial may be under way by the autumn of 1974 and, if not, the trial judge will be available to consider such further relief as may be warranted. ¹⁰ Thus our affirmance of the denial of preliminary relief by the district court is only to the extent of permitting the other three films to be shown, though by virtue of the date of entry of this decision it is immaterial to us whether they are shown in the 1973-74 or the 1974-75 season.

The standard factors which this court now considers upon an application for a preliminary injunction are well known: (1) clear likelihood of success on the law and the facts then available and possible irreparable injury, or (2) sufficiently serious questions on the merits making them fair ground for litigation and a balance of the equities tipping decidedly in favor of preliminary relief. Sonesta International Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973); Gulf & Western Industries, Inc. v. Great Atlantic & Pacific Tea Co., 476 F.2d 687, 692-693 (2d Cir. 1973). The district judge's careful opinion read as a whole demonstrates that he gave full consideration to all of the factors involved in the light of the facts available to him, and, while another judge might have arrived at a different result, we cannot say that this result constitutes an abuse of the wide discretion normally accorded a district court on the issue of preliminary relief. Stark v. New York Stock Exchange, 466 F.2d 743, 744 (2d Cir. 1972).

Here it is sufficient to say, without in any way indicating our views on the merits, that there are 'substantial, serious, difficult and doubtful' questions so 'as to make them a fair ground for litigation and thus for more deliberate investigation.' Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1953). As we have said, plaintiffs assert that ABC's entry into production of feature films and its exhibition on its own network, in light of ABC's own position in the television industry, would violate antitrust laws. ABC responds that its course of action was and is merely vertical integration by internal expansion which is not per se illegal and which could under certain circumstances be pro-competitive.' ¹¹ Legality, ABC argues, depends upon purpose or intent, as to which the trial court found that '(1) the defendants have apparently acted without any intent to injure the plaintiffs, (and) (2) they appear to have acted against the background of a product shortage and . . . rapidly escalating prices for the licensing of film product for television production.' The trial court found, and we agree with it, that there are 'vast and intricate problems of fact and law . . . which cannot be fairly resolved short of . . . a trial . . ..'

On this basis, it would be impossible for either party to make out a clear showing of probable success on the merits, thus eliminating the basis for a grant of a preliminary injunction under the more traditional test of clear showing of probable success plus a showing of irreparable injury. This finding, however, certainly satisfies the first prong of our more recently articulated test for injunctive relief-- that prong being the presence of complex legal and factual issues.

Appellants argue that the district court never actually 'balanced the equities' after finding that appellants had met the first prong of the applicable test. We disagree. It appears to us that the district court, in balancing the 'equities,' first gave thorough consideration to the type of damage appellants claimed that they would suffer were preliminary injunctive relied to be denied. The district court concluded that appellants 'failed to make a persuasive showing that they are in danger of immediate irreparable injury if this temporary relief is not granted.' This conclusion was based on the following two findings:

1. 'The injury feared by plaintiffs is represented only in small part by the four films which ABC proposes to exhibit,' and 'The essence of plaintiffs' claim of injury at this point clearly is not the showing of four movies by ABC, but plaintiffs' prognostications as to subsequent practices by ABC . . .,' 'as to the basis of (which) predictions' plaintiffs have offered 'no persuasive evidence.'

2. Neither prospective difficulty in computing damages nor the fact that computations will be based on the effects of foreclosed competition necessarily preclude such computations; the damages alleged 'are susceptible to monetary computation.'

Appellants dispute...