Paramount Publix Corporation v. Hill, 2068.

• Decision Date: 20 December 1932
• Docket Number: No. 2068.,2068.
• Citation: 11 F. Supp. 478
• Parties: PARAMOUNT PUBLIX CORPORATION v. HILL et al. (twelve cases.)
• Court: U.S. District Court — Western District of Wisconsin

11 F. Supp. 478

PARAMOUNT PUBLIX CORPORATION v. HILL et al. (twelve cases.)

No. 2068.

District Court, W. D. Wisconsin.

December 20, 1932.

Miller, Mack & Fairchild, of Milwaukee, Wis., for plaintiff.

F. M. Wylie, Deputy Atty. Gen., for defendants.

Before PAGE, Circuit Judge, and GEIGER and FITZHENRY, District Judges.

PER CURIAM.

These twelve suits have been brought by the plaintiffs against the defendants who constitute commissioners of the department of agriculture and markets of the state of Wisconsin, charged with the administration of chapter 99 of the Wisconsin Statutes; also the defendant Orchard, an Assistant Attorney General of the state, the defendant Staten, an investigator for the department. In nine of the suits each of the complainants is a producer and distributor of copyrighted picture films — photoplays. In three of them the complainants are theater owners, two are exhibitors of photoplays in the state of Wisconsin. All of the plaintiffs are nonresidents of the state of Wisconsin, licensed to do business therein, and the object of the several actions is to restrain the department of agriculture and markets, its officers and agents, from proceeding under the department's petition in which it is alleged that the defendants therein (being plaintiffs herein) have violated section 99.14 of the Statutes of Wisconsin in that they have employed unfair, oppressive, and coercive practices in the purchase and sale of motion picture films in that state; and in the exaction, administration, and application of protection arrangements. The department's petition, as will later appear, was and is the basis of a proceeding initiated by said department against the several respondents therein, charging the latter, among other things, with attempting to monopolize the moving picture business and that such respondents who are therein characterized as "producer — affiliated exhibitors" are monopolizing, stifling, and suppressing competition in the business of showing motion picture films in that state, and that such acts constitute unfair methods of competition and unfair trade practices within the meaning of section 99.14 of the Wisconsin Statutes.

Before the expiration of the time for answering the petition in the state court proceeding, the respondents therein (plaintiffs herein) filed objections to further proceeding thereunder on the grounds that such proceedings were in violation of their copyrights, of the due process clause of the Constitution of the United States, an unlawful interference with interstate commerce; wherefore, said section 99.14 is unconstitutional. The objections thus interposed were ignored and a further day set for public hearing. Thereupon these suits were filed, a temporary restraining order issued, and this three-judge court was convened.

It is believed that an analysis of the pleadings is essential for the purpose of indicating what facts are pertinent to a determination of the motion on behalf of the plaintiffs for an injunction pending these suits. Such, however, should be prefaced by noting the Wisconsin law pursuant to which the department and the defendants herein are acting, upon which the complaint in the state proceeding is predicated, and against which the complainants in these twelve suits direct their challenge respecting the power of the state to proceed. For the present, it suffices to note section 99.14:

Wis. Stats. 1929, § 99.14: "Methods of competition and trade practices. (1) Methods of competition in business and trade practices in business shall be fair. Unfair methods of competition in business and unfair trade practices in business are hereby prohibited.

"(2) The department, after public hearing, may issue general orders forbidding methods of competition in business or trade practices in business which are determined by the department to be unfair. The department, after public hearing, may issue general orders prescribing methods of competition in business or trade practices in business which are determined by the department to be fair.

"(3) The department, after public hearing, may issue a special order against any person, enjoining such person from employing any method of competition in business or trade practice in business which is determined by the department to be unfair. The department, after public hearing, may issue a special order against any person, requiring such person to employ the method of competition in business or trade practice in business which is determined by the department to be fair."

The plaintiffs are here urging the objections filed to the petition in the said proceedings against which the defense urges three main propositions: First, that the bills were prematurely filed; second, that the producers are not engaged in interstate commerce; third, that even if they are, yet the matters being inquired into are intrastate acts within the police powers of the state, and affect interstate commerce, if at all, only incidentally. Answers have been filed in each of the twelve cases.

It may be said generally of the pleadings that notwithstanding the differences in situation and activity of the plaintiffs in some of the actions, all of the bills are rested upon the same ultimate facts; and that this is so appears quite clearly from the fact that the answers in the several cases are substantially identical with each other. It is therefore permissible in analyzing the pleadings to give a synopsis in part and to quote literally from other parts of one of the bills (we take that from the case wherein Paramount Publix Corporation is the plaintiff). Such plaintiff avers:

"The complainant Paramount Publix Corporation is and was during all of the times herein mentioned a corporation organized and existing under and by virtue of the laws of the State of New Jersey and engaged, during all of the time herein set forth, in licensing the operators of motion picture theatres throughout the United States to exhibit motion picture photoplays under copyrights granted by the United States and owned or held as exclusive licensee by the complainant (which motion picture photoplays so copyrighted are designated in the trade and are hereinafter referred to as `photoplays') and in connection therewith using the United States mails, common carriers and other channels of commerce among the states."

After averring the organization and character of the department of agriculture and markets of the state of Wisconsin, its personnel and the relationship of the other defendants thereto, and after narrating the acts of the defendants in commencing a proceeding before the department by service of a notice and complaint — a copy of the latter being annexed to the bill — and likewise the interposition of complainant's objections to the exercise of any jurisdiction in connection with the proceeding so instituted and the grounds of such objection, and that the defendants, notwithstanding complainants' objections, proposed to continue with the proceeding for the purpose of entering an order which would have the effect of regulating, controlling, or changing the terms and manner and conditions under which complainant licenses operators of motion picture theaters to exhibit photoplays, the complaint herein proceeds in substance as follows:

That complainant used a form of license agreement with operators of motion picture theaters for the exhibition of photoplays under copyrights, which forms are used in substantially all cases wherein plaintiff grants licenses throughout the United States. A copy of the form of license is annexed to the bill and the complaint avers the time and extent, seasonally, for effecting such licenses, the number entered into, and the obligations for license fees accruing thereunder.

The complaint thereupon deals with the alleged acts and transactions of the complainant which are referred to and intended to be comprehended by the complaint filed against it in the state department of agriculture and markets; and avers that such complaint is directed to and comprehends the acts of the complainant which are in conformity with its general trade practice, to wit:

"A. In the Spring of each year complainant announces its prospective list or program of photoplays for the twelve-month period (sometimes called `season') commencing the following autumn, whereby such photoplays are to be released (which is a technical trade word meaning `made available for exhibition') at approximately regular intervals during the season. Such announcement usually describes each photoplay to be produced, gives its title, names the star or leading player and the other featured players in the photoplay, the director, the author and the drama or story from which it is derived.

"B. Immediately after the announcement of its program of photoplays, complainant proceeds, through its salesmen, to solicit the operators of motion picture theatres located in the State of Wisconsin and other states (hereinafter for convenience called `Exhibitors') to enter into license agreements with complainant in the form hereunto annexed as Exhibit `C' covering complainant's program of photoplays for the coming season, all of which photoplays are copyrighted under the laws of the United States by copyrights owned or held as exclusive licensee by complainant, and such license agreements, when signed by the Exhibitor, in each instance, are, under the terms thereof, mailed to the New York office of complainant and there are either accepted or refused by complainant.

"C. Laboratories for the production of prints of photoplays owned or held as exclusive licensee by the complainant are located at New York, Long Island City, New York, and Hollywood, California, and the prints of photoplays distributed by complainant are produced at one of the above laboratories.

"D. Each print of a photoplay produced at the laboratory is packed in a tin box which is enclosed in a wooden case and such prints, packed...