United States v. Shubert

• Decision Date: 31 January 1955
• Docket Number: No. 36,36
• Citation: 348 U.S. 222,75 S.Ct. 277,99 L.Ed. 279
• Parties: UNITED STATES of America, Appellant, v. Lee SHUBERT, et al
• Court: U.S. Supreme Court

348 U.S. 222

75 S.Ct. 277

99 L.Ed. 279

UNITED STATES of America, Appellant,

v Lee SHUBERT, et al.

No. 36.

Argued Nov. 9 and 10, 1954.

Decided Jan. 31, 1955.

Mr.

Philip Elman, Washington, D.C., for appellant.

Mr. Alfred McCormack, New York City, for appellees.

Mr. Chief Justice WARREN delivered the opinion of the Court.

This is a civil antitrust action brought by the Government in the United States District Court for the Southern District of New York. Named as defendants are Lee Shubert,¹ Jacob J. Shubert, Marcus Heiman, and three corporations controlled by them.² The defendants are principally engaged in the business of producing legitimate theatrical attractions,³ booking legitimate attractions in theatres throughout the United States,⁴ and operating approximately 40 theatres in eight states for the presentation of legitimate attractions.⁵ The Govern- ment's complaint charges that the defendants, in the course of this business, have violated §§ 1 and 2 of the Sherman Act.⁶ On the defendants' motion, after this Court's decision in Toolson v. New York Yankees, 346 U.S. 356, 74 S.Ct. 78, 98 L.Ed. 64; the District Court, 120 F.Supp. 15, dismissed the Government's complaint on the authority of the Toolson decision, and Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898.⁷ The case is here on direct appeal under the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29.

The Government's complaint, which is summarized in an appendix to this opinion, describes the interstate phases of the defendants' theatrical business in considerable detail. It concludes that the business of producing, booking, and presenting legitimate attractions requires

'a constant, continuous stream of trade and commerce between the States of the United States, consisting of the assemblage of personnel and property for rehearsals, the transportation of said personnel and property to various cities throughout the United States, the making and performing of contracts under which attractions are routed and presented in various States of the United States, and the transmission of applications, letters, memoranda, communications, commitments, contracts, money, checks, drafts and other media of exchange across State lines.'

The complaint alleges that the defendants have restrained this trade and commerce, and have monopolized certain phases of it, through a conspiracy (a) to compel other producers to book their legitimate attractions exclusively through the defendants, (b) to exclude others from booking legitimate attractions, (c) to prevent competition in the presentation of legitimate attractions, (d) to discriminate in favor of their own productions with respect to booking and presentation, and (e) to combine their power in booking and presentation in order to maintain and strengthen their domination in each of these fields. The main relief sought by the Government is the divorcement of the booking and presentation branches of the business.

The allegations of the complaint, on a motion to dismiss, must of course be taken as true. And the defendants do not deny that the allegations state a cause of action if their business is subject to the Sherman Act. The question presented is thus a narrow one: whether the business of producing, booking, and presenting legitimate attractions on a multistate basis constitutes 'trade or commerce' that is 'among the several States' within the meaning of those terms in the Sherman Act.

Both terms have been interpreted broadly in the decisions of this Court. '(T) rade or commerce' has been held to include the production, distribution, and exhibition of motion pictures, United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260; Schine Chain Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245; United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236; United States v. Crescent Amusement Co., 323 U.S. 173, 65 S.Ct. 254, 89 L.Ed. 160; Interstate Circuit v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610; Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.Ct. 96, 68 L.Ed. 308; real estate brokerage, United States v. National Association of Real Estate Boards, 339 U.S. 485, 70 S.Ct. 711, 94 L.Ed. 1007; the gathering and distribution of news, Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013; medical services to members of a health cooperative, american Medical Association v. United States, 317 U.S. 519, 63 S.Ct. 326, 87 L.Ed. 434; and insurance underwriting, United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. A similarly liberal construction has been given the requirement of §§ 1 and 2 that the 'trade or commerce' be 'among the several States.' Thus, in the South-Eastern Underwriters case (322 U.S. 533, 64 S.Ct. 1167), the requirement was satisfied by a 'continuous and indivisible stream of intercourse among the states' involving the transmission of large sums of money and communications by mail, telephone, and telegraph. Cf. Electric Bond & Share Co. v. Securities and Exchange Commission, 303 U.S. 419, 432—433, 58 S.Ct. 678, 681—682, 82 L.Ed. 936; North American Co. v. Securities and Exchange Commission, 327 U.S. 686, 694—695, 66 S.Ct. 785, 791, 91 L.Ed. 945. In the Associated Press case, the requirement was satisfied by the interstate dissemination of news. See also Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162. And in the motion picture cases, the requirement was satisfied by the interstate transportation of films, Binderup v. Pathe Exchange, supra, even though the actual 'showing of motion pictures is of course a local affair.' United States v. Crescent Amusement Co., supra, 323 U.S. at page 183, 65 S.Ct. at page 259, 89 L.Ed. 160. See also Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271,⁸ 43 S.Ct. 540, 67 L.Ed. 977.

These decisions, apart from Federal Base Ball and Toolson, make it clear beyond question that the allegations of the Government's complaint bring the defendants within the scope of the Sherman Act, even though the actual performance of a legitimate stage attraction 'is of course a local affair.' The defendants contend, however, that Federal Base Ball and Toolson have already established their immunity under the Act. While conceding, as they must, that the motion picture industry is subject to the antitrust laws, they insist that all other businesses built around the performance of local exhibitions are exempt.⁹ We believe that Federal Base Ball and Toolson afford no basis for such a conclusion.

In Federal Base Ball, the Court, speaking through Mr. Justice Holmes, was dealing with the business of baseball and nothing else. The Court considered the nature of the game, its history and league organization, the necessity of arranging games between cities in different states, and the resulting travel across state lines. The travel, the Court concluded, was 'a mere incident, not the essential thing.' On that basis, the Court held that 'the restrictions by contract that prevented the plaintiff from getting players to break their bargains and the other conduct charged against the defendants were not an interference with commerce among the States.' (259 U.S. 209, 42 S.Ct. 466.)

At the very next Term, in Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 43 S.Ct. 540, 67 L.Ed. 977, the Court was directly concerned with the effect of the Federal Base Ball decision on the status of the theatrical business under the Sherman Act. The complaint in the Hart case, much like the complaint here under review, alleged a conspiracy to control the booking and presentation of vaudeville acts in theatres throughout the country. The district court, like the district court in the instant case, dismissed the complaint on the authority of Federal Base Ball. This Court, again speaking through Mr. Justice Holmes, unanimously reversed.¹⁰ The Court took note of the plaintiff's argument (263 U.S. 271, 43 S.Ct. 541) 'that in the transportation of vaudeville acts the apparatus sometimes is more important than the performers' and concluded that the complaint, at least to that extent, sufficiently alleged a violation of the Act to permit the case to go to trial. The Court distinguished Federal Base Ball on the ground that 'what in general is incidental, in some instances may rise to a magnitude that requires it to be considered independently.' The Court thus established, contrary to the defendants' argument here, that Federal Base Ball did not automatically immunize the theatrical business from the antitrust laws.

In Toolson, where the issue was the same as in Federal Base Ball, the Court was confronted with a unique combination of circumstances. For over 30 years there had stood a decision of this Court specifically fixing the status of the baseball business under the antitrust laws and more particularly the validity of the so-called 'reserve clause.' During this period, in reliance on the Federal Base Ball precedent, the baseball business had grown and developed. Compare Helvering v. Hallock, 309 U.S. 106, 110, 60 S.Ct. 444, 446, 84 L.Ed. 604. And Congress, although it had actively considered the ruling, had not seen fit to reject it by amendatory legislation. Against this background, the Court in Toolson was asked to overrule Federal Base Ball on the ground that it was out of step with subsequent decisions reflecting presentday concepts of interstate commerce. The Court, in view of the circumstances of the case, declined to do so. But neither did the Court necessarily reaffirm all that was said in Federal Base Ball. Instead, '(w)ithout re-examination of the underlying issues,' the Court adhered to Federal Base Ball 'so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal antitrust laws.' (346 U.S. 356, 74...