Beacon Theatres, Inc. v. Westover – Oral Argument – December 10, 1958 (Part 2)

Media for Beacon Theatres, Inc. v. Westover

Audio Transcription for Oral Argument – December 10, 1958 (Part 1) in Beacon Theatres, Inc. v. Westover

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Earl Warren:

Mr. Johnston, you may proceed.

Frank R. Johnston:

If it please the Court.

At the recess I was in the middle of reading from the complaint in trying to demonstrate that there is an equitable issue posed by the complaint which could not, under the allegations of the complaint, be determined if in an action of law.

And if the Court will bear with me, I’ll resume reading at the first of the sentence, I have started thusly.

And I’m reading from page 18 again of the record.

“That said threats and the duress in coercion upon the distributors arising out of and resulting from said threats of litigation, threaten to and have, in fact, deprived plaintiff and its said California Theatre of the right to negotiate for motion pictures upon their first-run in the San Bernardino area, and to negotiate for clearance over theatres in competition with plaintiff’s said theatre upon said first-run, including defendant’s Bel-Air Drive-In Theatre.

That plaintiff is without any speedy or adequate remedy at law and will be irreparably harmed unless defendant and its officers, agents, and employees are restrained and enjoined from instituting any action under the antitrust laws against plaintiff and said distributors, or any of them, based upon the facts hereinabove alleged during the pendency of this action.

And until — and until such time as the Court shall determine whether or not the plaintiff and defendant have equal and correlative rights to license a prior run with clearance on behalf of their respective theatres.”

I should say also that the traditional hallmark of a suit in equity, that is the absence of a prayer from monetary damages, is apparent here in our prayer.N

ow —

Potter Stewart:

Of course, generally no declaratory judgment action ever prays for monetary damages, does it?

Frank R. Johnston:

It’s conceivable it can.

I agree, Mr. Justice Stewart, but the general rule would be out of line.

Potter Stewart:

You ask for a judgment.

Frank R. Johnston:

You asked for a judgment for a declaration of rights.

William O. Douglas:

I suppose — I suppose counsel that if the issue of competition was resolved against you, that is, that there is — there was a finding of competition that was settled in the lawsuit, wouldn’t it, on the Paramount case?

Or if there’s a finding that there was no competition, it would settle it the other way, wouldn’t it?

Frank R. Johnston:

Not necessarily, Your Honor.

I believe that regardless —

William O. Douglas:

What I’m getting at and perhaps you don’t want to answer it at this time, but sometime I’d like to have your views on it.

Suppose that the — just a general denial had been entered here, to this complaint, would or would not be, the parties, they would go to trial on — before a jury in the declaratory judgment action?

Frank R. Johnston:

I would think not, Your Honor.

For the reason that the gravamen of the complaint constitutes or is constituted by the threats of duress, which we say were unlawfully exercised or wrongfully exercised.

William O. Douglas:

Because there was competition.

Frank R. Johnston:

Because there was competition.

Now, there is a collateral aspect to that, too, to answer your question fully, Mr. Justice Douglas.

I can conceive of the situation in which a party has the right to negotiate for a prior run without clearance.

That is, I can see that a supplier of motion pictures has, absent a conspiracy, the right to pick his costumers as he sees fit.

And that, I think also could be the subject of adjudication under this complaint heard as an equity action.

Now, as I say, the gravamen of this action is the allegation of threats and the effect those threats have had.

Frank R. Johnston:

That is a fact to be determined by the Court sitting in equity.

As is the question of competition may very well be a fact to be determined by the Court sitting in equity.

Now, I must pause there and say that if an equity action is properly alleged, it’s of course within the power of the Chancellor to decide questions of fact.

We can only turn to the — or need only turn to the familiar examples of a specific damage or a specific performance, action based of the — an action for damages on contract or an action to quiet title versus an action in ejectment.

Those two sets of examples present, and I could modify them, present situations in which the Chancellor and the Court or the law side of the Court have equivalent duties and equivalent powers.

So, I say here, simply because there are factual issues for the resolution of the judge sitting as an equity judge does not ipso facto deprive him of equity jurisdiction.

I’m of course stating obvious law but you cannot dismiss this complaint or characterize it as an action of law simply by saying there are various factual issues which under other circumstances might well be tried by a jury.

We’ve asked for a very narrow relief here.

This is not a substitute for an antitrust action in the traditional sense.

We’ve asked for only one thing.

That we be allowed to negotiate equally with the other party, with the defendant for a first-run with clearance.

Now, the fact this is —

William O. Douglas:

Oh —

Frank R. Johnston:

— not a subject —

William J. Brennan, Jr.:

(Inaudible) in competition.

Frank R. Johnston:

We would not be entitled to clearance, Mr. Justice Brennan, unless they were competition.

William J. Brennan, Jr.:

I mean, can negotiate it but you can’t —

Frank R. Johnston:

That’s — that’s correct.

William J. Brennan, Jr.:

(Inaudible) this competition.

Frank R. Johnston:

That’s right.

Except —

William O. Douglas:

(Inaudible)

Frank R. Johnston:

He says there is no competition.

Except I must qualify that in the example that I, perhaps, put in perfectly to Mr. Justice Douglas, that I can conceive of situations in which either party might have the right to negotiate for a first-run without respect to clearance, simply on the proposition that a supplier and a purchaser can deal together outside of the Public Utility Law or some comparable field.

Earl Warren:

Well, in addition to that one point, you did also ask for an injunction, did you not?

Frank R. Johnston:

We did, Mr. Chief Justice.

Earl Warren:

What — what is your answer to — to the argument of counsel that you did not follow the rules concerning injunction that you neither — neither verified your complaint nor filed an affidavit?

Frank R. Johnston:

We did not pursue the summary remedies that are available such as getting a temporary restraining order or a preliminary injunction which we would have to do by affidavit or verify a complaint.

And I must go outside the record to answer your question fully, if I may.

Earl Warren:

Good.

Frank R. Johnston:

The Court had set our case down for trial after these motions and so forth, as I recall it in July of 1957.

So that — and we had constantly urged upon the Court, and this does appear in the record, that it set our case down for an early trial.

We — we followed all the provisions of the rules, so far as I am aware of them, with respect to our getting an injunction on a full hearing.

We would have had to do additional things to secure a preliminary injunction or restraining order, I conceive that.

Now, going back to the matter, of whether or not this is in fact a substitute for the provisional treble damage action, I would say that the proof that it is not is found in the type of action that ultimately, the defendant filed by way of counterclaim.

In that, and the specifications of conspiracy that are there alleged are found starting at page 39 of the record.

Preliminarily, I should like to call attention.

This is in the counterclaim, to make it intelligible, of the defendant.

Preliminarily, I should like to mention that on page 39, in paragraph (e), it is alleged that for the purpose of establishing and maintaining a monopoly of exclusive, and I emphasize the word “exclusive”, first-run exhibition, and for the purpose of establishing and maintaining a monopoly of first-run patronage, three exhibitors entered into a combination conspiracy attempt to monopolize and so forth, as herein after alleged.

Now, that is much broader than the narrow thing we seek in the complaint.

We acknowledge that the defendant here has an equivalent right with us to first-run.

So, the adjudication of the issue put or posed in our complaint would be neither the defense to the charge that is made here in (e), or would it be necessarily adjudicated by a jury finding on (e).

We certainly, according to our complaint, have not sought and do not seek an exclusive first-run.

We simply seek, as I have repeated, perhaps ad nauseam, the right to negotiate equally with the defendant.

Now, following along with the various specifications, I shall try to paraphrase them and they’re found at pages 39, 40, and 41 of the record, that the specifications are seven in number.

One, six, and seven charge a conspiracy among the three exhibitors there mentioned, to arrogate to themselves a monopoly of first-run exhibition in San Bernardino.

And in one of those specifications, there is broader language that says in other areas, I believe.

Specifications 2 and 3 deal with an allocation of product among the three exhibitors, sometimes called in the parlance of the industry as split of product.

Earl Warren:

A split of what?

Frank R. Johnston:

A split of product.

Earl Warren:

Oh, yes, yes.

Frank R. Johnston:

That’s an industry not a legal phrase.

Specifications 4 and 5 deal with imposing clearance in favor of the three exhibitors for the purpose of protecting the monopoly of first-run exhibition in those three exhibitors.

Again I say, and I answer that as I answered Specifications 1 and 2.

We do not seek an exclusive right to first-run exhibition, simply a correlative one and the right to negotiate for it.

Now, counsel has made some reference to so-called anticipatory suits citing the Di Giovanni case and perhaps others.

I think, fairly read, our complaint does not indicate the anticipation of a suit.

In the Di Giovanni case, the facts of the complaint or the allegations, I should say the complaint was that the defendant has threatened and is about to sue.

In other words, the eminence of a suit at law, which was to be brought, was apparent from the pleading of the plaintiff there.

There is no comparable allegation in our complaint.

Frank R. Johnston:

We couldn’t allege, of course, that the plaintiff did not intend to sue because that would render the allegations of the threat being harmful to us that are rather empty thing.

It is a question and a problem of — and the anxiety or doubt as to whether the defendant would sue that gives rise to our cause of action.

As long as this club was held over our heads and was working, there was really no haste.

There was no real purpose in the defendant filing a suit.

The defendant was achieving its purpose by keeping us from the mark.

Earl Warren:

Well, Johnston, one of the thing —

Frank R. Johnston:

Yes, sir.

Earl Warren:

— that crosses my mind is this.

If your — if your complaint did not have in mind that the threat included the possibility of them filing an antitrust case, why — why did you ask in number 4 the pending final decision of the Court maybe restrained and enjoined from commencing an action under the antitrust laws?

Frank R. Johnston:

I may answer that this way, Your Honor.

The possibility of their filing a suit was always present in our minds.

The certainty of it was not present.

In other words, we did not know whether or not a suit would be filed.

It was that doubt, that anxiety that permeated our thinking in the drafting of this.

But if — if — should eventuate that suit should be filed, which ultimately it was, then the prayer might have some force and effect.

Now, we perhaps may have conceived — misconceived our remedy here, perhaps as Judge Pope pointed out.

What we should have done was to seek in our prayer not an injunction against a suit.

And I question, quite candidly, whether such an injunction would lie.

What we perhaps should have done in drafting the prayer was to seek an injunction against the continuation of the threats of suit.

But again, I can only say, Mr. Chief Justice, in answer to your question that there was a doubt as to whether a suit would be brought.

Had we been certain that suit was to be brought, we would have alleged as the plaintiff did in Di Giovanni that the defendant was about to institute suit.

And you will find no such allegation in our complaint.

Earl Warren:

Suppose there had been no threat but merely the filing of a suit, would you sought to restrain them from proceeding with that suit until — until you could do that in adjudication on this matter?

Frank R. Johnston:

If in that suit we felt that we could not have adjudicated the right that we seek to have adjudicated in this complaint, we may have sought that.

Earl Warren:

We’ll let’s take the very — the very pleading that we have here the custom of the counterclaim.

Frank R. Johnston:

I would say we would perhaps have sought a restraining order or an injunction pendente lite with respect to that suit.

We would have — in other words, we would have sought the same order of trial that we now seek.

Earl Warren:

Now, wouldn’t they then be deprived to the — to have a right to a jury trial?

Frank R. Johnston:

No, Your Honor.

Earl Warren:

If you determine these issues first?

Frank R. Johnston:

No, Your Honor, because I say that the issues in the two suits that have actually been filed are so disparate that the jury trial of the counterclaim is not going to serve as an adjudication of our rights under the complaint nor of what — what is found as a complaint served as a defense to the charges contained in the counterclaim.

Earl Warren:

Well, but if you’re — if you prevailed on your — your number 4, paragraph 4 in your — in your complaint and they had been restrained from filing such a damage suit, you — you would’ve effectively blocked them from having such cause of action, wouldn’t you?

Frank R. Johnston:

It’s just pendente lite during the pendency of this suit.

After that, they could’ve filed a suit if they did file and have a full determination by the jury of the issues that are — there presented in their counterclaim.

Earl Warren:

Well, was that —

Frank R. Johnston:

The claim —

Earl Warren:

Oh pardon me.

I’m just going to ask, was that all you wanted?

Didn’t you seek permanent relief against — against them finding an antitrust suit against you?

Frank R. Johnston:

No, no, Your Honor.

Earl Warren:

You didn’t?

Frank R. Johnston:

No, Your Honor.

And we — I doubt that we could seek such relief.

I — I think that would be — that would be beyond the process of the Court to issue such an injunction.

Earl Warren:

Yes.

Well, I —

Frank R. Johnston:

I — I can’t conceive that we could — we might ask for it, but I can’t conceive of a Court granting it.

Earl Warren:

Yes, well, I was just wondering if you did pursue that and asked for it to and find the judgment.

Frank R. Johnston:

Oh, no, we couldn’t and didn’t intend to ask for a permanent injunction against a filing of the suit perpetually by the defendant.

And as I say, it would be an abuse, I think of any court’s discretion to or power to grant such an injunction.

Earl Warren:

But I think where I’m confused is if you had been granted all the relief that you sought in your complaint, would these people have been — had available to them a legal action for — for damages for the things they claimed in their counterclaim?

Frank R. Johnston:

They would.

Without equivocation, I’d say they would.

There would be no estoppel, adjudication, res adjudication — res judicata of their rights.

They would be entitled to go forward with their complaint or I should say their counterclaim or if they filed it independently a complaint alleging the same things that they have alleged.

And what had been decided in our complaint would not be a defense to the charges that they make.

Hugo L. Black:

In whole or in part?

Frank R. Johnston:

In whole or in part.

Hugo L. Black:

Why wouldn’t it be res judicata as far as the determination on the fact is of concern?

Frank R. Johnston:

Oh, one issue.

Frank R. Johnston:

If — if they chose to raise this issue, there would be an adjudication of whether or not there was competition between the two theatres.

On that single issue.

Hugo L. Black:

That’s the vital issue on the antitrust case, isn’t it?

Frank R. Johnston:

It might or might not be.

It isn’t in this counterclaim.

In the suit that was actually found or in the suit that was actually filed, the matter of competition is — is not set forth as a paramount or even a vital or collateral issue as I read it.

Hugo L. Black:

As to your complaint, maybe I’m wrong about your —

Frank R. Johnston:

No.

Hugo L. Black:

— complaint — but I thought your complaint was to set up certain facts, reasons why you were not guilty of violating the Antitrust Law.

Frank R. Johnston:

Well, that’s —

Hugo L. Black:

Is that not right?

Frank R. Johnston:

That is not right, Your Honor.

Hugo L. Black:

Would those — if — if what you say was true, would that have had no effect whatever on an antitrust proceeding, as a defense?

Could you not have set this up as a defense to the antitrust action?

Frank R. Johnston:

Only if the issue of competition were raised in the antitrust action, which I say it was not raised.

Hugo L. Black:

Well, the antitrust action is usually based somewhat on the restraint of competition, isn’t it?

Frank R. Johnston:

It — speaking in general terms, yes, Your Honor.

But I’m speaking in terms of competition between two specific theatres.

Every antitrust action, of course, is based upon a restraint of competition.

But we asked the Court to as an incident of our right for relief from its duress to determine whether there was competition in the technical sense, whether two theatres were drawing from the same pool of patronage.

That’s the sense in which I use competition.

In that limited sense, not in the broad general sense, restraint of competition as it’s commonly used in — in private — treble damage suits.

Hugo L. Black:

But the duress you set up was, if they were threatening to sue you for — on allegations of facts that were not correct, wasn’t it?

And that you didn’t show the Court they were not and if they allowed them to sue you, it’d cost you irreparable damage.

Allowed them to threaten you, whatever that is.

Frank R. Johnston:

Yes.

Hugo L. Black:

It may be a distinction, but I would think that if all you had gotten was an injunction against their threatening to sue you, they would have did — done exactly what they did in the counterclaim and just sued you.

All you could’ve gotten was an injunction there against threatening.

Frank R. Johnston:

Well, if — if I answer the last question first, at least we might’ve been able to have purchased product from the distributors rather than having the door shut in our face because I assumed that the defendant would respect the order of the Court to desist from the threats that they would sue or — or it would sue the distributors if they talk to us about getting first-run pictures.

Hugo L. Black:

What did they threaten to sue you for?

Frank R. Johnston:

Well, it was put in very general terms.

Hugo L. Black:

What do you understand from your complaint that they understand to threaten to sue you about?

What kind of suit are they threatening to file against you?

Frank R. Johnston:

I’m reading from page 18.

“And that plaintiff will be subjected to an action by said defendant for treble damages under Section 4 of the Clayton Act.”

Now, what that action might be, what it might specify as a conspiracy is — was unknown at the time of the complaint, but as I have just tried to indicate, the counterclaim goes beyond and is broader than the issues, we have sought to have determined in our complaint.

The counterclaim, as I have tried to point out, has as — it’s not the arrogation to Fox West Coast, specific drive-in theatres in Stanley-Warner of the monopoly of first-run exhibition in the San Bernardino area, plus allegations of allocation of product among those three exhibitors.

Well, now if they had sued you under the Clayton Act then they could’ve proven that you’d violated it.

Before a jury they could’ve gotten a verdict to that.

And you said they were threatening to sue you under the Clayton Act.

That’s —

Hugo L. Black:

And you set up certain facts to bar them from suing you.

Wouldn’t those facts have been a defense if they claim what you say you’re not guilty of?

Frank R. Johnston:

No, Your Honor.

Hugo L. Black:

Could they have sued you for that?

Frank R. Johnston:

They could have sued us for what — perhaps what we claimed in our complaint or made that the basis of their counterclaim but they didn’t choose to do so.

They chose to go beyond that.

Hugo L. Black:

But they could amend it yet, couldn’t they?

Frank R. Johnston:

If the Court grants (Voice Overlap) —

Hugo L. Black:

Do you say that — in other words, that issue is a material ingredient of a claim that they might have against you for violating the Clayton Act.

Frank R. Johnston:

Not as the pleadings are now framed.

Hugo L. Black:

Well, it — it is an essential ingredient of the offense that you’re afraid they’ll sue you on, isn’t it?

Frank R. Johnston:

They have sued us.

Hugo L. Black:

That they’ve threatened to sue you?

Frank R. Johnston:

They — and they have sued us, Mr. Justice Black.

They have sued us.

They’ve not only threatened but now they have sued us.

And that complaint is framed on a different theory if I were — and that counterclaim is framed on a different theory than is our complaint.

Tom C. Clark:

(Inaudible)

Frank R. Johnston:

I beg your pardon?

Tom C. Clark:

What about the first paragraph in Section 6 (Inaudible) that has to do with the Clayton Act, doesn’t it?But what I want to find out is if it was determined in your suit that there was or was not a competition between you and the issue here, would that bar the res judicata on this suit on number 1, on page —

Frank R. Johnston:

No —

Tom C. Clark:

— of the Clayton Act?

Frank R. Johnston:

No, sir.

Tom C. Clark:

That has to do with (Inaudible)

Frank R. Johnston:

Yes.

But there is an additional element that must be proved to support the allegation of number 1, that is a conspiracy, the — the one — the one element that would be res judicata is, was there competition between the two theatres?

That would be determined by our complaint.

Did they draw from the same pool of patronage?

Now, whether a conspiracy existed to give clearance, either whether competition is found to exist, or is not found to exist, would still have to be determined under number 1 here.

That is the distinction I make.

In other words, the counterclaim must show a conspiracy.

Our complaint has nothing to do —

Tom C. Clark:

But (Inaudible) under the counterclaim.

Frank R. Johnston:

I beg your pardon?

Tom C. Clark:

But where a conspiracy would be the counterclaim, it goes through the whole claim and then these specific items over that comes the conspiracy of one being a threat.

And that would depend upon whether or not there’s competition.

Frank R. Johnston:

That’s right.

Tom C. Clark:

And that would be determined in your case, wouldn’t it?

Frank R. Johnston:

The competition would be determined, not clearance.

Tom C. Clark:

I understand, not clearance.

Frank R. Johnston:

Not clearance, simply the existence of a competition.

Tom C. Clark:

Would be determined that — that was an area in which clearance was in line with legally, (Inaudible)

Frank R. Johnston:

If — if it were granted absent the conspiracy.

Tom C. Clark:

Yes, go ahead.

Frank R. Johnston:

We don’t touch upon a conspiracy question in our complaint.

Tom C. Clark:

(Inaudible)

Frank R. Johnston:

That is the distinction I tried to make, Mr. Justice Clark.

Tom C. Clark:

But don’t you think that would have some effect on this case even though he had — you, of course has to prove the conspiracy?

Frank R. Johnston:

He would have to prove conspiracy.

Tom C. Clark:

But he —

Frank R. Johnston:

I — I don’t know how much effect it would have.

I doubt if it would have a great deal of effect if he proves a conspiracy — let me put it this way.

If the judge in the equity suit finds the existence of competition and instructs the jury that he has so found or it was brought to the attention of the jury in some way, that competition exists and they are not to pass upon that single point.

Now, if the defendant — the counterclaim adherent, can show a conspiracy in the grant of clearance with competition, let me take one example which had been frequently urged.

Suppose every distributor granted a — I’ll pick a figure out of the air, 7-day or 14-day clearance.

Now, that would be a fact that would go to the jury as to whether or not there had been an agreement among the distributors and the exhibitor to grant a uniform clearance, whether there had been a conspiracy.

That element, that item is not determined under the allegations of our complaint.

We do not ask in our complaint at all to have it determined whether how much clearance should be granted.

We simply say, “Can we negotiate equally with the other theatre for a clearance?”

Tom C. Clark:

Was the case construed at the Section 1 that there was conspiracy to — to create the first-runs in (Inaudible) which would not be your case.

Frank R. Johnston:

That wouldn’t be our case.

William J. Brennan, Jr.:

But tell me this though, Mr. Johnston, if it should be a fact-finding by the judge, no competition, (Inaudible) lose the lawsuit?

Frank R. Johnston:

Oh, no, we’d lost ours.

William J. Brennan, Jr.:

Why (Inaudible)

Frank R. Johnston:

Because he alleges other things.

He alleges an agreement to allocate products among the distributors in specifications 2 and 3 of his counterclaim which is —

William J. Brennan, Jr.:

Well, let me put this way.

Are there any specifications alleged in this counterclaim in which the essential element of his right to recovery (Inaudible)

Frank R. Johnston:

Not in my opinion, sir.

William J. Brennan, Jr.:

Not (Inaudible)

Frank R. Johnston:

Not in any of it.

Because I have to take his complaint or his counterclaim as he has pleaded it which is basically two things.

It is an arrogation to three exhibitors of the monopoly of first-run exhibition in the San Bernardino area.

Charles E. Whittaker:

(Inaudible)

Frank R. Johnston:

I say not — whether or not competition exists would not —

(Inaudible)

Frank R. Johnston:

Yes.

Charles E. Whittaker:

As to the three the allegations made, if none of the three is in competition with (Inaudible)

Frank R. Johnston:

He can prove it this way.

Frank R. Johnston:

That the distributors conspired with the exhibitors to grant them first-run in theatres which were in no sense superior to the theatre operated by the defendant.

Tom C. Clark:

If it’s so, there is no competition here in (Inaudible)

Frank R. Johnston:

He — no, you’re talking about damages in the sense of being able to compare his theatre with one another.

But if he has a theatre which is equally well-situated —

But somewhere else.

Frank R. Johnston:

But somewhere else, which has the same attributes, the same characteristics so as to entitle it to a first-run, and he is denied first run.

And he sees three theatres in San Bernardino being granted first-run, when his theater is equally well-situated, equally well-adapted for the exhibition of first-run pictures —

William J. Brennan, Jr.:

Suppose there’s a theatre in Pittsburgh, could he — could he —

Frank R. Johnston:

Could he —

William J. Brennan, Jr.:

— make this kind of action based upon these allegations in San Bernardino?

Frank R. Johnston:

I would say not, Your Honor.

William J. Brennan, Jr.:

I don’t understand how he could have in California, but remote in the San Bernardino area.

Frank R. Johnston:

Well, to be factual, it isn’t remote, it’s 11 miles away.

William J. Brennan, Jr.:

That — that gets down in these parts of competition, doesn’t it?

Frank R. Johnston:

It does, but the theatres, of course, the example is — that you have given of a theatre in Pittsburgh is just quite remote from a theatre in San Bernardino.

William J. Brennan, Jr.:

What I’m trying to get to is instead of area, as I understood —

Frank R. Johnston:

That’s right.

William J. Brennan, Jr.:

— that basically his claim with the existence that he was in competition with these three against the (Inaudible)

Frank R. Johnston:

He won’t — it — I say he does not have to prove that to prove his case.

I’d say he — he simply has to prove this, whether or not he is in competition.

If his theatre, being situated where it was, being the character theatre it is, is not accorded the first-run, he has something to go to the jury with and the jury I think could come in with a finding or a verdict in his favor that I have a theatre in —

William J. Brennan, Jr.:

In Pittsburg.

Frank R. Johnston:

All right, say — let’s say in Pittsburg.

Or I have a theatre in Los Angeles.

Or I have a theater in Colton, which is a point a little further than those from San Bernardino.

He should be entitled to equivalent rights if there is — well, under any circumstances, involving a conspiracy.

Potter Stewart:

(Inaudible) of Mr. Justice Brennan’s Pittsburg theatre, isn’t that — is that man could recover and could perhaps show in the allegation.

Frank R. Johnston:

He perhaps — he —

Potter Stewart:

A conspiracy to give first-runs to San Bernardino.

Frank R. Johnston:

I — I could conceive of a situation where that might arise.

Potter Stewart:

I have a theatre near Pittsburg, (Inaudible) and so on.

That if you gave him what you gave the San Bernardino theatres, I would make much more money than I’m making, (Inaudible) no competition (Inaudible)

Frank R. Johnston:

I would think such a theory could be developed, and if — let us pursue your example, Mr. Justice Stewart further.

Suppose a theatre superior in Pittsburg in appointments, in seating capacity, in location and in every other factor was placed upon by the distributors a long delayed run, I would think pointing to inferior theatres in other parts of the country would receive a preferred run, would establish a cause of action in the plaintiff.

Potter Stewart:

Even though the theatre were not in substantial competition —

Frank R. Johnston:

I don’t think that would be —

Potter Stewart:

— with each other for the same audience?

Frank R. Johnston:

I don’t think it’s necessary that they compete for the same audience to prove the allegation that he has —

Potter Stewart:

A conspiracy as of the kind alleged in the counterclaim.

Frank R. Johnston:

That’s right.

And there’s another type of conspiracy that is — which is alleged in — in Specifications 2 and 3, to divide the product among the three exhibitors.

Now, that isn’t a — an issue in our complaint under any stretch of interpretation.

Tom C. Clark:

Do you know of any case which have been filed like the Pittsburg theatre?

Frank R. Johnston:

I — I don’t know, Mr. Justice Clark, but I wouldn’t be surprised to — to hear of one.

William J. Brennan, Jr.:

(Inaudible)

Could I ask you a question, Mr. Johnston?

Frank R. Johnston:

Yes, Mr. Justice Harlan.

Earl Warren:

(Inaudible) — go ahead.

Do you consider that you have to stand or fall in this Court on the question is to whether — on the — on the proposition that there are no common questions of fact involved here?

Frank R. Johnston:

Oh, no.

I — I — I don’t — I don’t realize —

Do you realize the discussion up to date has been on that premise, as I understand it.

Frank R. Johnston:

Yes, because I have taken that line because I conceive that there are no common questions of fact.

But assuming, for the sake of argument, that there are —

Perhaps I’m anticipating something.

Frank R. Johnston:

Assuming for the sake of argument, there are and under circumstances here, there could be one common question of fact and that is the question of competition.

I don’t deny that it could come into the case.

I suggest it’s highly improbable as coming to the defendant’s case under his counterclaim.

But assuming that there is a common question of fact or common questions of fact, that does not deprive us of a right to equitable relief.

Well, the reason I mentioned —

Earl Warren:

Go right ahead.

Go right ahead, finish your answer.

Frank R. Johnston:

For the reason I mentioned a moment ago, that equity, if it can assume jurisdiction properly, can decide on certain questions of fact.

And the chance that a suit may later be brought, which could litigate those same questions of fact, doesn’t deprive equity of jurisdiction.

Earl Warren:

Mr. Johnston, if the trial judge had accepted all the allegations in paragraph 12 of your complaint and had granted the injunction pendente lite at the outset of the proceeding, is there any reason why the remainder of the fact should not be tried to a jury?

Frank R. Johnston:

There — I conceive of — you’re talking about the facts in our complaint, —

Earl Warren:

Yes, yes.

Frank R. Johnston:

— Mr. Chief Justice?

Earl Warren:

Yes.

Frank R. Johnston:

There are no other facts.

The facts that we alleged are so interwoven that once the judge had decided those facts, he had decided all the issues posed by our complaint because those issues are very narrow and very limited.

Were there threats?

Was there competition?

Was there irreparable harm?

Was there an adequate remedy of law?

Earl Warren:

But if he granted you the equitable relief that you sought through the injunction pendente lite, would — is there any reason thereafter why the — the facts, both of your complaint and on the — on the counterclaim should not be tried through a jury?

Frank R. Johnston:

Well, the facts of the counterclaim would then be tried through a jury.

And —

Earl Warren:

Well, is that the procedure that the judge adopted in this case?

Frank R. Johnston:

Exactly, Your Honor.

Earl Warren:

Would you — would you elaborate that a little bit?

Frank R. Johnston:

I will and perhaps, I can elaborate best by referring to the judge’s response to the petition for mandamus.

Earl Warren:

Oh, yes, yes, I — I get your point.

You don’t need to answer the question, I — I recalled.

But they would — but if to take the case in its present posture, there would be some things that would be res judicata at the time they got to a jury, wouldn’t it?

Frank R. Johnston:

I conceive of only one that might possibly be, depending upon the proof adduced under the counterclaim.

Earl Warren:

Yes.

Frank R. Johnston:

And that is the question of competition, whether the two theatres drew from the same pool of patronage.

That might or might not be an issue in the counterclaim depending upon — and this I think is a significant thing — depending upon which tact or how the defendant wished to present its case.

Now, that is one reason that I feel that this equitable action is a problem here.

Frank R. Johnston:

The defendant can direct his order of proof.

Let us assume for the sake of argument that the defendant decides to prove a conspiracy simply to allocate product.

Then there are — there are no common issues.

There is nothing that is in this complaint that we can have adjudicated in the counterclaim.

There is nothing that is decided in this compliant that would have served as a defense to that particular specification of conspiracy.

Earl Warren:

Now, may I — if I can ask just one more question.

I’ll try not to bother you anymore.

But suppose these people didn’t answer at all and you took a judgment against them on your complaint.

And thereafter, they filed a suit against you under Section 4 of the — of the Clayton Act, to what extent would the defendant be bound by res judicata in that action?

Frank R. Johnston:

It would depend on what type of action he filed and what he sought to prove in the trial of his action.

Earl Warren:

Well, let — let’s — let’s say that he — he tried the same theory that he tried in the — in the counterclaim here.

Frank R. Johnston:

I — well, again, I can’t answer that in advance, Mr. Chief Justice, because I don’t know what he’s going to try to prove under his counterclaim.

He may — if he — if he goes to the point of competition, if he thinks that that is an issue in the case, then the issue of whether there’s competition between these two theatres would be res judicata in his — in his suit.

Earl Warren:

It would be.

Frank R. Johnston:

It would be.

Earl Warren:

Yes.

Frank R. Johnston:

If –if —

Earl Warren:

Yes.

Frank R. Johnston:

If he decides to develop a conspiracy revolving around that, but I don’t know and we don’t know yet whether he so proposes or whether he has proof.

That’s why I say, and perhaps imperfectly that what we have alleged here is neither a defense to his counterclaim necessarily, a prejudgment of it or will we have the privilege of having it adjudicated during the course of the trial of his counterclaim.

We have — if I —

Earl Warren:

Well, is it (Voice Overlap) —

Frank R. Johnston:

Excuse me.

Earl Warren:

Is a question of competition a legal or an equitable issue?

Frank R. Johnston:

The question of whether competition exists between two theatres is a question of fact.

Earl Warren:

Yes.

Frank R. Johnston:

The judge would make the finding of fact upon it.

Earl Warren:

Well, is it a question of law or is it an equitable question?

Frank R. Johnston:

Well, it can be a question that can be decided by a court of equity.

A court of equity has the power to decide questions of fact such as under —

Earl Warren:

Well, if under — under the decisions, is that the type of question that is normally left to a jury or is it to be — or — or can it be arrogated to the Court in an equity proceeding?

Frank R. Johnston:

I think it can in this equity proceeding as it can in any other equity proceeding, be assumed to — and decided by the judge sitting in equity.

I gave the familiar examples of specific performance.

There the judge sitting as a Chancellor must decide among other things questions of fact.

Was a contract made?

In an action for quiet title, the judge must decide questions of fact.

Where — where was the title?

Where was possession?

Now, those questions might also be common to a question or to a case, as I put before, for breach of damages for contract or for ejectment in which a jury can be had.

Could you save two or three minutes to discuss your mandamus point, your point one in the brief and particularly, Mr. Corinblit’s answer to you that this question before us is improbably before us.

Frank R. Johnston:

I will, Mr. Justice Harlan.

I believe, first, to answer your second question, the question is before this Court.

The court below, the Ninth Circuit took the position, if I apprehend it carefully, that there was no violation, no excessive discretion on the part of the trial judge, so that there was no occasion for that Court to issue a writ.

Now, I take it, that is what is before this Court for review, whether the Court was in error in that respect.

But you haven’t cross-petitioned?

Frank R. Johnston:

That’s correct.

What’s your answer to that —

Frank R. Johnston:

I don’t think —

(Voice Overlap)

Frank R. Johnston:

— it’s necessary.

I think the case is here before this Court for adjudication on — properly on the question of whether or not mandamus should or should not issue.

Implicit in the — in the — in the opinion of the Circuit Court of Appeals is certainly that mandamus does not lie here.

Hugo L. Black:

Does not lie or —

Frank R. Johnston:

Does not lie.

Hugo L. Black:

Does not lie or should not be granted?

Frank R. Johnston:

Well, I — I should say should not be granted.

Potter Stewart:

You’re relying generally on the proposition that if the — if the Court is right, even if for the wrong reason, then its action should be affirmed, isn’t it?

Frank R. Johnston:

I think I should always rely on that.

Potter Stewart:

I mean, in this — on this (Inaudible) case?

Frank R. Johnston:

Yes, yes.

(Inaudible)

Frank R. Johnston:

Precisely, Your Honor.

Now, going back, Mr. Justice Harlan, to the question of mandamus here in this general sense, I don’t know whether I’m foreclosed from arguing by the La Buy case, whether or not the Court should issue mandamus.

I will — I — I must say that there are some points of distinction which I do not wish to and I do not have the time to label.

I say only this that let us assume the power.

And I do not wish to concede it, but let us assume the power of the Court to issue mandamus rather than reviewing this by appeal which seems to me the orderly way to review this that I might digress for a moment to say why.

Because after this case is tried, we’re simply in a pleading stage here.

After this case is tried or even partially tried, under the new appeal statute, there’ll be a remedy available to the defendant, to come to this Court.

But now, talking again about mandamus, conceding the power, I simply say as it’s well known to this Court, it’s sparingly used and in only exceptional circumstances.

I do not think it should be used here to review the discretion of a trial judge who was simply following the mandate of Rule 42 (b) and arranging its calendar in a way that he deems appropriate.

I do not feel that the promulgation of the rules of procedure have abolished the traditional differences between law and equity.

Equity jurisdiction can still be invoked in the federal courts.

Now, I — I cannot say more about the power of the Court.

I simply question it.

I say that mandamus here was not a remedy that should have been invoked.

I think you’d have to stand on power because it is a pure question of discretion.

I don’t see why we should substitute our views to the Court of Appeals.

Frank R. Johnston:

I agree with that, but I —

You have to stand on power, you have to deal with that.

Frank R. Johnston:

I — I have to take the position that the power does not exist.

I see.

Frank R. Johnston:

And I might say in closing, that I do not read the record in its present posture.

It shows with requisite, clarity, and certainty that the petitioner here is going to be deprived of a jury trial on any fundamental or basic issue that is now deducible or inferable from the pleadings.

Hugo L. Black:

Suppose it’s not deducible from the complaint as it had drawn, do you think that’s the end of the question?

Frank R. Johnston:

I think it should be the end of it for the purposes of this hearing, Mr. Justice Black.

It might not be on some further appeal.

This is not necessarily the end of this case.

If there is error committed now, which I do not concede, in fact, I think the Court has acted with entire propriety.

But it’s if it should and I assume that you are thinking, Mr. Justice Black, of an amendment to the complaint to make it more nearly impinged upon the allegations or fit in the allegations.

Hugo L. Black:

Well, what I think about it frankly was this.

Hugo L. Black:

You have a situation where you have a constitutional requirement of a trial by a jury in certain cases, you have — do you raise the question that some of these as — issues can be put before it comes to the Court, that they wouldn’t get a trial.

And if — if the action is split up into two parts, one which they — be tried by equity and the one to be tried by court of law, then you have a situation where you don’t get a trial by jury on order.

It’s capable of being amended.

It’s part of a — of a general controversial opinion.

What reason is that why in a declaratory judgment action aside from all of the other questions that have raised?

The Court shouldn’t refrain from exercising its jurisdiction to split up a cause of action which may now and may come for it later and give a trial by jury or the facts of (Inaudible).

Frank R. Johnston:

Because, Mr. Justice Black, the alleged harm by reason of the fact we were not able to get motion pictures.

The judge said that —

Hugo L. Black:

But that’s because you can’t — you say that if it’s left up in the air, the question must be decided.

Well, you are — you — you can get it decided, this question of whether you get it decided by a jury or the judge.

Frank R. Johnston:

And the question —

Hugo L. Black:

All I see now.

Frank R. Johnston:

And the question of when, Mr. Justice Black.

For this reason, I think the Court can take judicial notice of the length of the ordinary treble damage action.

In our district, I think it is averaged around, in a motion picture industry, around six weeks or thereabouts.

Now, the issues framed by our complaint as I informed the Court were separately filed in July of 1957.

We asked persistently for an early trial date.

That is a reason, I think a sufficient reason why the Court can say you can have this matter tried in which you are alleging irreparable injury which — which trial will consume a matter of two or three days before we can arrange the calendar so that there can be a full-blown hearing in a trial that may last six weeks or more.

Hugo L. Black:

But if you’re —

Frank R. Johnston:

In other words —

Hugo L. Black:

You’re right about the fact of the complaint.

I — I had rather thought it covered here, both of it.

But if you are right about the fact they hadn’t raised that issue and you only have it in that, what’s wrong with the Court giving a trial by — a jury trial in connection with the facts you allege in six weeks?

Or what is there about the rules or anything else that bars the Court?

It says that the statute, anything else, it says when you have a action for declaratory judgment, if you alleged some equitable grounds, you never can get a trial by jury.

Frank R. Johnston:

Well, I — I say that the Court — the complaints should be construed as a — a complaint in equity.

And that — when I say that, I then say that the jury is not appropriate.

Potter Stewart:

Or discretionary over Court.

Frank R. Johnston:

Not even discretionary.

Hugo L. Black:

You say that about any petition for declaratory judgment where the Court has absolute discretion, whether you’re granted or not.

Hugo L. Black:

I think that’s usually the case.

Frank R. Johnston:

No —

Hugo L. Black:

They even tried it, isn’t it?

Frank R. Johnston:

No, Your Honor.

Whether or not a jury can be — had in a declaratory relief action depends upon the allegations of that particular declaratory relief suit.

If it sounds in equity, it’s an equity case.

If it sounds in law, it’s a law case and a — a jury can be demanded.

It is our position that this declaratory judgment, suits, sounds in equity and therefore it is triable not by a jury but by a judge.

Hugo L. Black:

It can’t — can’t grant it (Inaudible)

Frank R. Johnston:

Not if it’s an equity case.

Charles E. Whittaker:

(Inaudible)

Frank R. Johnston:

That’s right, yes.

But not as a finding, a finder of fact.

Hugo L. Black:

Then by splitting up the cause of action, you can always allege some grounds for equity and barred your return, if that’s the case.

Take the insurance cases where they come in and say, it held the fellow — the man has died.

Say he’s dead and we think he got this by a clause.

We want to try that question right now and you get it.

You allege that as ground for equity, is that all?

Do they — can they always defeat a trial by jury that way?

Frank R. Johnston:

Well, in one case, I won’t use your phrase, “of a defeat of a trial by jury.”

In one case, an opinion written by Mr. Justice Cardozo in a Stewart case, I think it’s in 296, that procedure was followed.

Hugo L. Black:

What about Enelow?

Frank R. Johnston:

Enelow?

A — is an earlier case and it reaches the opposite result but it is a different case in this.

In the — in the Stewart case, there was an incontestable clause so that the insurance company didn’t know whether it could have its right adjudicated within a two-year period which was a period of incontestability or not.

The Enelow case as I recall it, there was no such clause or at least it wasn’t the subject of discussion by the Court.

Now, I — I do not agree with the — your position that in any case, a jury trial can be defeated by the device, if we choose to call it such, of — of filing a suit in equity.

Hugo L. Black:

Well, I didn’t call it a device.

Frank R. Johnston:

Well, —

Hugo L. Black:

I said if a lawyer has that method and referred to one trial to the other, I wouldn’t call it a device.

Frank R. Johnston:

If — if he —

Hugo L. Black:

But perhaps —

Frank R. Johnston:

If he has a true case in equity and if that case will not dispose of all of the issues which might later be brought or which might later be posed in a legal suit, certainly, then he has the right to have that equity case heard and heard when?

In the discretion of the Court, it’s proper to hear it.

Earl Warren:

Thank you Mr. —

Mr. Corinblit, you may —

Jack Corinblit:

Your Honors, just briefly, I want to address myself to two questions, briefly.

First, I think on the question of our right to jury trial on the complaint standing alone.

It’s clear that the counsel stands on the right in a court trial of all of the issues upon only upon the grounds that they pray for a injunction pendente lite against the filing of antitrust case.

And I submit that the tail cannot wag the dog in that way.

You cannot characterize a — a complaint entirely as an equitable manner by an allegation of pendente lite relief or pendente lite relief.

Secondly, on the question of the relationship of the allegations of the complaint to the counterclaim, we allege that there was a — one of the elements of the conspiracy was a conspiracy to grant clearance between these theatres.

If there were no substantial competition between those two theatres, that would be an unreasonable restraint of trade.

And on that fact, a prior decision by the Court will be res judicata on the counterclaim and will be vital to the allegation and the proof of the counterclaim.

It is not the only issue and we can see it, it isn’t the only issue.

There are other grounds for relief or the basis of this — and other acts in furtherance of the conspiracy which were alleged.

But it is an important one and an essential one with respect to the proof in this case.

And finally, with — with respect to the question raised about, as to mandamus, I agree with Mr. Justice Harlan so that this matter can only considered by you in a mandamus question with respect to the matter of power.

(Inaudible)

Jack Corinblit:

I — I realize that.

And I think that on the question of power, that the Court has in the past on the formula adopted, agreed that mandamus of — there was a power of mandamus with the matter of jury trial — is involved.

I’m going to — I’d say this —

Potter Stewart:

Mr. Corinblit —

Jack Corinblit:

Yes?

Potter Stewart:

— as to that point, correct me if I’m wrong factually on this.

As I understand it now, this Court has the same power that the — that any United States Court of Appeals has so far as the statute goes.

The same statute governs both the Courts of Appeals and this Court —

Jack Corinblit:

To —

Potter Stewart:

— the All — the All Writs Act, isn’t it?

Jack Corinblit:

To — to issue on a writ out of this Court —

Potter Stewart:

Right.

Jack Corinblit:

— in the same grounds that you could issue a —

Potter Stewart:

Yes.

Jack Corinblit:

— writ out of if — out of the Court of Appeals.

Potter Stewart:

The same statute covers each — each (Voice Overlap) —

Jack Corinblit:

That’s — that’s correct.

Potter Stewart:

Now, one case is like the Simmons case and the Roche case and others were decided.

A different statute governed this Court’s power from the one that governed the Court of Appeals’ power.

Is that correct?

Jack Corinblit:

That is correct.

Potter Stewart:

And is — has there been any case under the All Writs statute, either here or in the Court of Appeals where a mandamus is issued in a situation like this to where there was a — where the — where the issue was whether or not a jury trial?

Jack Corinblit:

Yes.

Yes, Your Honor there has.

And that is in the particular — I think in both the Second and the Sixth Circuits, a mandamus have —

Potter Stewart:

What case is this Sixth Circuit?

Jack Corinblit:

Well, I was thinking of Bereslavsky, there — Bereslavsky versus Kloeb.

As a matter of fact, the same plaintiff was involved in two Circuits apparently, and both —

(Inaudible)

Jack Corinblit:

Yes.

But in both cases, both Circuits agreed and they reviewed your opinions here.

I think Mr. Justice — Judge Frank reviewed your opinions and he concluded that the new statute did not make any change and that the cases were still applicable because in a subsequent opinion, after the new statute was adopted, one of you, I — I believe it was — I don’t recall the name of it, you’ll find it in Bereslavsky versus Kloeb or versus Caffey, in that case, that you have referred to the fact the jury trial was one of those exceptional cases in which mandamus was — was — permissible.

And the cases begin — there are a long line of them.

And certainly in the light of this Court’s opinion, last term in La Buy, the power is a — is — should — should exist here and —

William J. Brennan, Jr.:

Tell me, what is (Inaudible)

Jack Corinblit:

No.

No, it’s in — in a construction of — in aid of jurisdiction, 1651.

William J. Brennan, Jr.:

(Inaudible)

Jack Corinblit:

The argument is made that — that when a trial court refuses to hear a — hear a case in the way that is in the form before the trier of fact, that it is proceeding in a way which is — which is in a sense outside of its jurisdiction.

And therefore falls with those cases that hold you may correct jurisdictional defects in the trial court by mandamus.

William J. Brennan, Jr.:

(Inaudible)

Jack Corinblit:

It is hard to think of that.

I concede that, Mr. Justice Brennan, and — but I say only that the record as of — of your decisions, this Court’s decision to this point, it seems to me sustain the — sustain the power of the —

William J. Brennan, Jr.:

(Inaudible)

Jack Corinblit:

Court of Appeals.

William J. Brennan, Jr.:

(Inaudible)

Jack Corinblit:

Yes, that’s one of the cases —

Potter Stewart:

(Inaudible) at this point, I’m sorry to waste much of your time.

This Court has never decided that under the All Writs statute, mandamus is appropriate in this field.

Jack Corinblit:

I think you — in a — under the All Writs statute, you made a reference in a — in a long list of cases you said the jury trial is one of those cases, isn’t it?

Except —

Potter Stewart:

All right.

Jack Corinblit:

No.

There is — it’s a case prior — prior to La Buy.

Thank you.