Costello Pub. Co. v. Rotelle

• Decision Date: 16 December 1981
• Docket Number: 80-2196,Nos. 80-2147,s. 80-2147
• Citation: 670 F.2d 1035
• Parties: , 212 U.S.P.Q. 811, 1981-2 Trade Cases 64,352, 1982 Copr.L.Dec. P 25,390 COSTELLO PUBLISHING CO., et al., Appellants, v. John E. ROTELLE, O. S. A., et al. COSTELLO PUBLISHING CO., INC., et al. v. John E. ROTELLE, O. S. A., et al., Episcopal Conference of Australia, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1035

670 F.2d 1035

216 U.S.App.D.C. 216, 212 U.S.P.Q. 811,

1981-2 Trade Cases 64,352,

1982 Copr.L.Dec. P 25,390

COSTELLO PUBLISHING CO., et al., Appellants, v. John E. ROTELLE, O. S. A., et al.

COSTELLO PUBLISHING CO., INC., et al. v. John E. ROTELLE, O. S. A., et al., Episcopal Conference of

Australia, et al., Appellants.

Nos. 80-2147, 80-2196.

United States Court of Appeals District of Columbia Circuit.

Argued June 15, 1981.

Decided Nov. 10, 1981.

As Amended Dec. 16, 1981.

Appeals from the United States District Court for the District of Columbia (D.C. Civil Action No. 76-01930).

Charles R. Work and Nathalie P. Gilfoyle, Washington, D. C., with whom Timothy J. Waters, Lawrence White and Jeffrey N. Martin, Washington, D. C., were on the brief for Costello Pub. Co., Inc., et al., appellants in No. 80-2147 and appellees in No. 80-2196.

Terence P. Boyle, Washington, D. C., with whom Wilfred R. Caron, Washington, D. C., was on the brief for John E. Rotelle, O. S. A., et al., appellees in No. 80-2147 and No. 80-2196.

G. Franklin Rothwell, Washington, D. C., with whom Cynthia E. O. Clarke, Washington, D. C., was on the brief for The Episcopal Conference of Australia, et al., appellees in No. 80-2147 and cross-appellants in No. 80-2196.

Before McGOWAN, Senior Circuit Judge, and WILKEY and WALD, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

This case involves a dispute between lay and clerical members of the Roman Catholic Church, who also share a commercial relationship. It began as an antitrust action initiated by the Costello Publishing Co. ("Costello") ¹ against officials of the Roman Catholic Church in the United States, the Bishops' Committee on the Liturgy ("BCL"), the National Conference of Catholic Bishops ("NCCB"), the United States Catholic Conference, Inc. ("USCC"), Catholic Book Publishers, Inc. ("CBP"), as well as unnamed alleged co-conspirators, publishers and retail distributors, asserting violations of the Sherman Act, 15 U.S.C. §§ 1-2, and requesting treble damages and injunctive relief. Costello's complaint was based upon defendants' efforts to discourage Catholic book retailers from distributing a work entitled Morning and Evening Prayer ("accused book"). The defendants responded by claiming a first amendment exemption from the antitrust laws. The Episcopal Conferences of Australia, England and Wales, and Ireland ("Episcopal Conferences") sought and were granted permission to intervene and then counterclaimed copyright infringement and unfair trade practices against Costello. ² Costello then

amended its complaint to include intervenors among defendants, and moved to dismiss intervenors' counterclaims for failure to join an indispensable party. The district court granted plaintiffs' motion to dismiss the counterclaims and ruled in favor of defendants on the antitrust issue. Because the counterclaims should not have been dismissed, we remand so that the parties will have an opportunity to address the issues presented by the counterclaims. If intervenors show copyright infringement and unfair trade practices, ³ then the counterclaims may not be dismissed for failure to join an indispensable party, and there may be no occasion to address the antitrust issues. However, to conserve judicial resources, we offer the district court some guidance on the antitrust issues, should they eventually need to be resolved.

I. BACKGROUND

At the Second Ecumenical Council of the Vatican in 1962 ("Vatican II"), the Roman Catholic Church decided to permit use of vernacular language rather than Latin in the Church's liturgy. To implement the decision of Vatican II, NCCB (the Episcopal Conference of the United States), and ten other episcopal conferences in English-speaking countries joined together to form the International Commission on English in the Liturgy ("ICEL") to provide common English translations of Latin liturgical texts and to exercise common copyright control over those translations. The ICEL has no authority of its own, but acts only as agent of the member conferences. J.A. 1310, 1311. Its translations can be distributed only in those countries where the translations have been approved by that country's episcopal conference.

As copyright holder, ICEL receives royalties from the sale of liturgical books containing ICEL translations. Surplus profits from royalties paid to ICEL by its licensees are distributed to its members according to a formula based upon the amount of capital Dissatisfied with the pace of the ICEL's work, the Episcopal Conferences joined together with publishers and translators in 1971 to form a new consortium for the purpose of commissioning and publishing a translation of Liturgia Horarum. The consortium, known as the English Language Breviary Committee ("ELBC"), consisted of representatives of the three participating Episcopal Conferences and representatives of publishing companies from their respective countries-E. J. Dwyer of Australia, Collins Publishing of Great Britain, and Talbot Press of Ireland. The ELBC produced a three volume translation in 1974 entitled The Divine Office. The work was copyrighted by the Episcopal Conferences and their publishers were given exclusive licenses to publish. Late in 1975, the first volume of the ICEL's multi-volume translation of Liturgia Horarum, entitled Liturgy of the Hours, was published. In March, 1976, Talbot Press published a one volume edition of The Divine Office, entitled Morning and Evening Prayer-the accused book. Talbot Press published 10,000 copies of the accused book and sold them all to Dominican Publications.

contribution by each member. The NCCB receives over three-quarters of ICEL's surplus. J.A. 1604-05.

The idea of the accused book was conceived by Alexander Tarbett, then managing director of Talbot Press, and Austin Flannery, O.P., a Dominican Priest and manager of Dominican Publications. Patrick McGoldrick, a Roman Catholic Priest and an advisor to the Irish Bishops Conference, represented the interests of the Episcopal Conferences. He advised the Episcopal Conferences that he had read the proofs of the accused book and that "the edition fulfilled all the requirements." J.A. 62; see also J.A. 55, 56. McGoldrick found that the accused book "contained no newly set material but only material which has been re-arranged from 'The Divine Office' and 'Daily Prayer.' " Id. at 62. In fact, the accused book contained passages from the Revised Standard Version, substituted for passages from the Jerusalem Bible, because of difficulties in acquiring permission to use passages from the Jerusalem Bible from Doubleday, the Jerusalem Bible copyright holder in America.

Dominican Publications sold 7,500 copies of the accused book to Costello. In May, 1976, Costello advertised and began selling the accused book in the United States as an "officially approved" edition of Liturgia Horarum. J.A. 81. The accused book then came to the attention of the BCL, which administers the duties of the NCCB regarding publication, distribution and use of liturgical texts. The BCL also monitors liturgical works available for use by Roman Catholics in the United States. Father Thomas Krosnicki, then assistant director of the BCL, contacted Mr. Harry J. Costello, informed him that the work was not one which had been approved by the NCCB, and requested that a copy of it be sent to the BCL, for review. Mr. Costello refused the request and shortly thereafter the BCL made good on its warning that without an opportunity to review the book, the BCL would notify Catholic book dealers that the book was not an approved version of the Liturgy of the Hours. On May 26, 1976, the BCL, through its director, Father John E. Rotelle, O.S.A., distributed "Memorandum 5" to a large number of retailers throughout the country. That memorandum requested that book retailers not distribute the accused book. J.A. 487. Existing orders were cancelled and new orders virtually ceased. Costello responded by bringing an antitrust action against individual members of the BCL, the BCL, the NCCB, the USCC, CBP, individual officials of the Catholic Church, and unnamed alleged co-conspirator publishers and retailers.

The defendants enlisted the aid of the Episcopal Conferences, J.A. 408-10, who intervened and counterclaimed copyright infringement. Costello then amended its complaint to include intervenors among defendants and moved to dismiss the counterclaims for failure to join an indispensable party-Talbot Press. Costello argued that the counterclaims were essentially contract claims and that all parties to the contract must be joined. The district court agreed In view of the fact that the District Court's holding deprives appellants of any opportunity to pursue their infringement and false advertising claims against appellee, we believe that the District Court's ruling was premature. Under Rule 28(b) the parties may seek discovery of documents and testimony in the possession of Talbot Press in Ireland through letters rogatory.... We believe the equitable concerns of Rule 19 will be better served if the District Court reserves its ruling on appellee's motion to dismiss until after a good faith attempt is made to acquire Talbot Press' evidence. ⁴

and dismissed the counterclaims. On appeal this court held:

On remand, Costello applied for issuance of letters rogatory, which were granted by the district court in July, 1979. Although only a limited response was forthcoming, the district court found that a "good faith," but unsuccessful, attempt to acquire Talbot Press' evidence had been made and granted plaintiff's motion to dismiss the counterclaims. However, with respect to the antitrust claim, the district court held that the actions of the defendants were motivated exclusively by religious concerns and had no commercially competitive design. "Such religiously motivated conduct," said the court, "is not the type which falls...