Ring v. Spina

• Decision Date: 17 May 1949
• Citation: 84 F. Supp. 403
• Parties: RING v. SPINA et al.
• Court: U.S. District Court — Southern District of New York

84 F. Supp. 403

RING v. SPINA et al.

United States District Court S. D. New York.

May 17, 1949.

Alfred S. Julien, New York City, for plaintiff.

Wittenberg, Carrington & Farnsworth, New York City (Philip Wittenberg, New York City, of counsel), for defendants Spina, Heyman, and Pauker.

Greenbaum, Wolff & Ernst, New York City, (Edward S. Greenbaum, Alexander Lindey, Milton Ross, and Mervin Rosenman, New York City, of counsel), for defendant Dramatists Guild of Authors League of America, Inc.

RIFKIND, District Judge.

The plaintiff brought this action against the defendants Spina, Heyman and Hannan and the Dramatists' Guild of the Authors' League of America, Inc. (hereinafter, Guild), for treble damages and equitable relief under the anti-trust laws. 15 U.S.C.A. §§ 15, 26. A temporary injunction was granted by the Court of Appeals at the instance of the plaintiff. Ring v. Spina, 2 Cir., 1945, 148 F.2d 647, 160 A.L.R. 371. Its terms are set out hereafter. Pursuant to the direction of the Court of Appeals, 2 Cir., 166 F.2d 546, the claim for damages was tried to a jury. The jury found a special verdict that the defendants had violated the anti-trust laws but had not thereby damaged the plaintiff. Plaintiff's claims for equitable relief were tried to the court and are now to be determined. In addition, the reasons for my withdrawal of one certain claim for damages from the jury should be stated. But first the facts, as revealed by the evidence, deserve brief recitation.

Defendants Spina, Heyman and Hannan are the authors of "Stovepipe Hat," a musical play. One Gaumont, a producer, contracted with them on February 7, 1944, to produce "Stovepipe Hat." Defendant authors were and are members of the defendant Guild. Gaumont was a signatory of the Minimum Basic Agreement (hereinafter, M.B.A.) promulgated by the Guild. The M.B.A. is a comprehensive private "statute" governing the production of plays in the United States and elsewhere, the disposition of motion picture and other rights to reproduction, and the rights and duties of authors and producers. Among other things, it establishes the author's and producer's right to veto any proposed changes in the play, the minimum royalties to be paid by producers, and compulsory arbitration of any disputes arising between authors and producers. Substantially all authors of repute are members of the Guild, and substantially all producers of note are signatories of the M.B.A. The M.B.A. forbids members and signatories to deal with non-members and non-signatories.

The Spina-Gaumont production contract for "Stovepipe Hat" (Spina acted throughout as agent for the other author-defendants) specifically encorporated the M.B.A. in its entirety, spelled out in detail the royalties to be awarded with respect to stage and film rights here and abroad, and obligated Gaumont to produce the play on or before May 7, 1944, or to pay $1500 to the Guild, for the authors' account, for the privilege of postponing the opening to October 7, 1944. This contract was made on the standard form supplied by the Guild and was countersigned by the Guild, as required by the M.B.A. Simultaneously were executed two letters by which Gaumont contracted to hire Spina as General Supervisor of the artistic and musical phases of the production. By the terms of these letter-agreements, Spina had a veto over the selection of cast, production staff, theaters, changes in the play, lighting and sets.

The plaintiff, Ring, had become a partner of Gaumont and had invested about $50,000 in the proposed production of "Stovepipe Hat" when, on May 4, 1944, Gaumont appeared to be unable to complete the necessary financing. Ring, not yet a signatory to the M.B.A., then attempted to negotiate an arrangement with Spina whereby Spina would cooperate with Ring in terminating Gaumont's participation in the venture and Ring might replace Gaumont as producer on the same terms and conditions as existed under the Spina-Gaumont production and supervision contracts, except that one Samrock was to be the sole arbitrator of differences which might arise between them, instead of the arbitrators provided for under the Spina-Gaumont contracts. Spina's attorney disapproved the proposed arrangement. Thereupon Ring signed the M.B.A., making him eligible to deal with Guild authors, and promptly brought an action against Gaumont in this court which was settled on May 12, 1944 by a stipulation whereunder Gaumont assigned to Ring all his rights of every kind against all persons in connection with the play.

The play was produced by Ring in New Haven on May 18, 1944, and subsequently in Boston. Disputes developed between Ring and Spina concerning changes in the play. Spina refused to consent to changes desired by Ring, and Ring, who by that time had invested over $100,000, closed the play on May 27, 1944. On June 7, 1944, Spina demanded that arbitration be had pursuant to the M.B.A. On June 14, 1944 Ring instituted this suit against the authors and the Guild, alleging violation of the anti-trust laws and asking treble damages, temporary and permanent injunctions against arbitration under the M.B.A. and against the enforcement of the M.B.A., a declaratory judgment of plaintiff's rights in the play, an injunction prohibiting defendant authors from enforcing their copyrights (in fact only a small portion of the play is copyrighted), and an injunction prohibiting defendant authors from interfering with plaintiff's production of the play. The vacation by the district court of a temporary restraining order was reversed by the court of appeals, which issued a temporary injunction restraining arbitration, restraining defendants from enforcing the M.B.A., and restraining defendant authors from selling or claiming the right to sell the play.

That the M.B.A. constitutes an illegal agreement in restraint of interstate trade and commerce was held by the Court of Appeals in Ring v. Spina, 2 Cir., 1945, 148 F.2d 647, based upon an analysis of alleged facts there set forth. Since those allegations have been amply established, it follows that the M.B.A. is illegal. And so I charged the jury, leaving it to them, however, to decide whether the Guild was a labor organization exempt from the antitrust laws under 15 U.S.C.A. § 17. They decided that the Guild was not a labor organization and I see no reason for rejecting their finding.

Plaintiff's demands for equitable relief are interpreted by him to mean that defendants be enjoined from attempting to enforce any rights under the M.B.A. or contracts subsidiary thereto, and from interfering in any way with plaintiff's production of "Stovepipe Hat" for a reasonable time after the final disposition of this suit. Plaintiff disavows any desire for a final adjudication of the parties' rights to the play, the scale of royalties, or reproduction rights. He prefers to leave those questions to be determined when and if defendant authors should seek to enforce any rights they assert. Such a disposition of this case cannot be tolerated. It amounts to an open invitation to litigation and seriously and adversely affects the marketability of the play and any subsidiary rights therein. The rights and duties of the parties should be set forth with sufficient precision to afford them guidance, and the controversy should, if possible, be finally disposed of so as to secure an end to litigation.

Plaintiff is entitled to injunctive relief which would protect him against prospective damage. 15 U.S.C.A. § 26. Such damage arises when there is danger of interference with rights or privileges he now enjoys, not merely as a member of the general public, but as one engaging in the commerce which is being restrained. See Minnesota v. Northern Securities Co., 1904, 194 U.S. 48, 70-71, 24 S.Ct. 598...