Beacon Theatres, Inc. v. Westover

PETITIONER:Beacon Theatres, Inc.
RESPONDENT:The Hon. Harry C. Westover, Judge of the United States District Court of the Southern District of California, Central Division, et al.
LOCATION:U.S. District Court Southern District of California

DOCKET NO.: 45
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 359 US 500 (1959)
ARGUED: Dec 10, 1958
DECIDED: May 25, 1959
GRANTED: May 19, 1958

ADVOCATES:
Frank R. Johnston – for the respondents
Jack Corinblit – for the petitioner

Facts of the case

Fox West Coast Theatres (Fox West Coast) in San Bernardino, CA, held various contracts for “first-run” rights of movies. Beacon Theatre, Inc. (Beacon) opened a drive-in theater within the competitive area and threatened to sue Fox West Coast over their “first-run” contracts claiming they violate antitrust laws, in particular the Sherman Antitrust Act and the Clayton Act. Beacon then threatened legal action against Fox West Coast. Fox West Coast proceeded to file an injunction to prevent Beacon from pursuing legal action because their actions were causing “duress and coercion.” Beacon responded to the injunction with a counterclaim against Fox West Coast stating they were not competitors in the same area, so Fox West Coast’s claim to “first-run” rights was unreasonable. Beacon further claimed that Fox West Coast and local film distributors were conspiring together to monopolize “first-run” exclusive rights to films.

Judge Harry C. Westover denied Beacon a trial by jury because the suit involved both matters of law and equitable damages. Beacon appealed this decision on the grounds that the competition existing between Beacon and Fox West Coast was a matter of fact to be decided by a jury affirming Beacon’s Seventh Amendment right to trial by jury. The Ninth Circuit Court of Appeals affirmed the lower court’s decision.

Question

Does a case involving both equitable claims and legal claims have a right to trial by jury under the Seventh Amendment?

Earl Warren:

Number 45, Beacon Theatres, Incorporated, Petitioner, versus The Honorable Harry C. Westover, Judge of the United States District Court of the Southern District of California, et al.

Mr. Corinblit, you may proceed.

Jack Corinblit:

Mr. Chief Justice, Associate Justices, may it please this Honored Court.

This case presents the issue as to whether the respondent in this case has improperly denied petitioner a jury trial as to issues related to violations of the antitrust laws.

And whether the rules of law announced by the Court of Appeals to accomplish this result are or are not contrary to the Rules of Civil Procedure promulgated by this Court, adopted by the Congress and are contrary to the Seventh Amendment of the Constitution.

The case briefly arose in the Southern District of California wherein a complaint was filed by Fox West Coast Theatres Corporation.

The complaint was captioned, “Fox West Coast Theatres Corporation versus Beacon Theaters, Inc.”

It was entitled a complaint for declaratory relief.

After the petitioner here, was named defendant there, filed a motion to dismiss on the grounds of lack of jurisdiction and that was denied.

Petitioner filed an answer in which he raised an affirmative — filed an answer in affirmative defense, filed a counterclaim against the plaintiff and in other party and demanded jury trial as to the complaint, the answer and the counterclaim.

The grounds upon which the petitioner argued that it was entitled to a jury trial as to the complaint — as to the complaint standing alone were as follows.

The first, that the Seventh Amendment guarantees a jury trial as to actions of law, actions of common law.

This was an action for declaratory relief which is not an action at common law nor is it an action traditionally known as an action in equity.

That the right to trial by jury and an action for declaratory relief turns upon the basic nature of the case and turns upon the — the kind of the case for which the declaratory action is a substitute.

That in this action, it was apparent from the face of the complaint, from the allegations contained therein that it was a substitute for an antitrust damage suit and that its basic issues were those issues.

And that since under well-established rules, in antitrust damage suits, a — the plaintiff and defendant are both entitled to a jury trial that therefore plaintiff or defendant — petitioner here was entitled to a jury trial.

The complaint to make this point was not a very lengthy one.

It alleged, first, that — it alleged, first, that it was brought under the declaratory relief provisions of the judicial code.

As to page — at page 10, the complaint appears in our record.

It alleged, first, that it was brought under the Federal Declaratory Judgment Act.

It was entitled, “Complaint for Declaratory Judgment”.

But in the second paragraph of the complaint after the first, as one sentence, there was alleged that there was a controversy in excess of $3000.

And that the matter in controversy arises under the law of the United States to which Sections 1 and 2 of the Act of Congress of July 2nd entitled, “An Act to protect trade and commerce against unlawful restraints and monopolies”, commonly known as the Sherman Act and the Section 4 of the Act of October 15, 1914, the amendatory thereof commonly known as the Clayton Act.

That Section — Section 4 of the Clayton Act is the statute which gives private persons who are injured, by violations of the antitrust laws, a right to sue.

It is the damage provision of the antitrust laws relating to private individuals.

So that in paragraph 2, there is a rather straightforward statement that the complaint arises under the antitrust laws and under the section of the Clayton Act which gives a private right to damages.

The complaint then alleged that described the parties, the plaintiff, Fox West Coast Theatres Corporation as a company organized in — operates in the neighborhood of 150 motion picture theatres primarily on the West Coast.

The defendant, Beacon operated the theatre — opened the theatre, a drive-in theatre just outside of San Bernardino, California where Fox West Coast had for many years, operated a conventional theater as a theater with four walls and a ceiling.

The complaint alleged, then, that there were eight major companies in the United States that produced films.

And these were these — and the complaint expressly stated that they constituted in the aggregate, this is at page 13 of the record, constant in the aggregate, the major distributors of motion pictures in the United States.

Jack Corinblit:

Thereafter, the complaint alleged that there had been a prior antitrust case between the Government and these major suppliers of motion pictures.

It was the case known as United States against Paramount which — which started with the District Court, came to this Court, went back to the District Court openly affirmed.

It was then alleged that there was a dispute between the parties.

The complaint alleged that the plaintiff, Fox West Coast Theatres Corporation had for many years operated a theatre in San Bernardino on what was known as a first-run in clearance basis.

That is, Fox West Coast had for many years licensed from this major distributors, the privilege or whatever you will call it, or at least there was a practice at that time to license to it a first-run.

This Court has reviewed that problem often.

First-run is the right to exhibit a picture exclusively first and that license clearance.

The clearance is an agreement that you’ll find in the cases and recognize in the industry as an agreement between a distributor of motion pictures and the exhibitor.

The two parties agree that during the time that that exhibitor will exhibit the motion picture, that no other theatre will be permitted to exhibit that picture for a given period.

It’s in the nature, it’s been called, analogized to the common law agreements on not to compete.

That is analogized to those cases where a seller of a business selling goodwill agreed with the buyer that he would not compete for a given period of time.

The Court will recall those — those agreements were held finally to be unlawful if unreasonable.

That is, if extended it too far, too greater area or extended into a length of time.

They were analogized — they have been analogized by this Court to those common law, unreasonable restraints of trade.

And the — the courts have held, in the motion picture industry, this Court among them, that such clearances were lawful if reasonable, unlawful if unreasonable.

One aspect of unreasonability, the courts have held, is whether the clearance is granted between theatres that are not substantially competitive.

Again, analogizing it to the common law rules.

For if an agreement by a seller of a business as to goodwill, that if there was an agreement that he would not compete within an area broader than it was — than was necessary, such agreements were not enforced because they were unnecessary and because they were basically restraints of competition.

And since they were unnecessary, they would not be enforced by the courts.

For that they would then be unreasonable.

That rule of law, namely, that the clearances between theatres which are not substantially competitive is an– is an unreasonable restraint of trade as a proposition of law which I understand neither party to contest here based upon this Court’s decisions on the recognized decisions in other courts.

And so the complaint alleged that for many years, Fox West Coast had operated the — its theatre on this basis, an exclusive running clearance over theatres in the area.

And it — it was alleged that a controversy had arisen because of the — of the opening — because a theatre — a new theatre was about to come into existence, namely, petitioner’s theatre here, a drive-in theater located some 11 miles from downtown San Bernardino.

The allegation was that the petitioner, Beacon Theatres made this contention.

It contended that its drive-in theater was not and would not be substantially competitive with the downtown San Bernardino theatre.

And that it contended, therefore, that if any distributor granted clearance, entered into a restrictive agreement that I’ve described, such a — such an agreement would be unlawful under the antitrust laws.

The complaint alleged that Fox, on the other hand, took a contrary position.

That it contended those two theatres were not or were substantially competitive.

And that, therefore, if either of them licensed, they first run and either of them obtained an agreement, a clearance agreement, that such an agreement would not be unlawful within the meaning of the law.

The complaint there, then alleged that in — restated this proposition in terms of rights, that is to say, it stated that — that the plaintiff, Fox West Coast, contends that it had an equal right with Beacon to negotiate with each distributor independently for that prior running for a clearances between the two theatres.

Jack Corinblit:

The — this was the end of this — after the completion of this paragraph, there then was alleged a paragraph XII, which became of some importance to the Court of Appeals which is what I mentioned.

It was alleged in this — in the next paragraph that petitioner, Beacon Theatres had threatened Fox West Coast and had told Fox that it — that it had threatened the distributors.

That if any distributor granted clearance between these two theatres, that the petitioner, Beacon, would file an antitrust case, a damage antitrust case against — against any distributor who so did.

While its not alleged, if you will recall, that in the prior paragraph, it is alleged, but not in this paragraph that the — the difference of opinion was as to whether these theatres were competitive such a clearance will be unlawful.

And so it was alleged that petitioner told Fox and told Fox that it had told the distributors, that if any such contract was entered into, it would file a damage suit under the antitrust laws.

It was then alleged that these threats which it has alleged in the complaint were made to Fox and Fox had been informed that we had threatened the distributor.

It was alleged that these threats exercise a coercion upon the distributors and resulted in the fact — and resulted in depriving Fox from obtaining first-run and clearance in that area.

A complaint, then alleged, to follow.

The plaintiff was without any speedy or adequate remedy at law and will be irreparably harmed unless and I’m quoting, “Defendants and its officers, agents and employees are restrained and enjoined from instituting any action under the antitrust laws against the plaintiff and said distributors or any of them based upon the facts hereinabove alleged, during the pendency of this action and until such time as the Court shall determine whether or not the plaintiff and defendant have an equal and correlative right to license a prior run with clearance on behalf of their respective theatres.”

This is the body of the complaint in which the allegation was made that — that unless the plaintiff — the petitioner here, Beacon, is restrained from suing for damages under the antitrust laws, during the pendency of the case that there will be irreparable injury.

Thereafter, the complaint set forth its prayer, the prayer is a fairly simple.

The first one, asked the Court, the word is used to decree that a grant of clearance between a first-run theatre in San Bernardino between the Fox Theatre and the petitioner’s theatre is not a violation of the antitrust laws and is not a violation of the decree in the Paramount case.

Secondly, that it be decreed that the distributors are each them entitled to negotiate with the plaintiff and defendant and other operators of theaters in the competitive area equally for a prior run in the said area.

Third, that the Court declares such, otherwise, for that pending file decision of the Court herein defendant Beacon and its theatres and its officers, agents and employees be restrained and enjoined again from commencing any action under the antitrust laws against plaintiff and the distributors hereinabove named arising out of the facts or controversies.

This was the complaint.

And the petitioner here, Beacon, when it made its demand for jury trial, in the trial court, as to the complaint took a very simple position and stated that — that this was a complaint for declaratory relief, and a complaint for declaratory — in a complaint for declaratory relief if the action is a substitute, for a suit at law, namely, a suit for damages under the antitrust laws that the petitioner is entitled to a — that the defendant, either side was entitled to a jury trial and that this was on the face of the complaint an action for declaratory relief brought under the section of the antitrust laws relating to private damages and was not — and that therefore, we were entitled to a — to a jury trial.

I might point out that it may not be an important point.

The complaint I might say was not verified.

This maybe of some significance because Rule 65 of the Federal Rules provide that if you want a preliminary restraining order, you’ve got to verify or you’ve got to put in an affidavit that during the entire pendency of these proceedings, all the time the matter was in the trial court, no application was made for injunction to restrain us from filing the antitrust case or any other type and no pleading, no papers were filed which will sustain such a — such a request.

The argument that we’re entitled to a jury trial on this — on the complaints standing — standing alone was based not only upon the — these allegations which seem straightforward based upon the analogy of the common law, to the common law covenants not to compete, based — based also upon the fact well known to these — to Fox West Coast that these problems of — of restraints of trade by clearances have long been litigated in damage cases.

That is as a fairly common — common matter that appears in case after case involving these — involving Fox.

Can I ask you a question?

Jack Corinblit:

Yes, sir.

Was this application for a jury trial before you filed your counterclaim?

Jack Corinblit:

It was — it was endorsed upon the same pleading, Your Honor.

Same pleading but this –- this demand for a jury trial was independently of the issues raised with the counterclaim.

In other words, you said you were entitled —

Jack Corinblit:

Yes.

— to the jury trials just as if you’d filed no counterclaim —

Jack Corinblit:

That’s correct.

— at all?

Jack Corinblit:

That’s correct.

Since the —

Is that issue before us?

Jack Corinblit:

Yes, Your Honor, squarely.

It was raised by — the first issue was raised in our brief.

The — I was saying that the — the matter of — of the trial — of issues of substantial competition and clearance had long for many years been part of the damage cases brought by litigants where they thought they had a right.

A — a typical case in this connection is one that we cited — cited in our brief.

It’s the case of J&J. Theatres, Inc. a Second Circuit case, 212 F.2d 840 in which the — in that case, the contention was by an individual theatre that it was unlawfully being deprived of the opportunity to play pictures on a given run by reason of unreasonable clearances and clearances over its theater which was not competitive.

In that case, the instruction was given, as follows, which is of some interest as to demonstrate the way in which this issue arises.

If you find that this — there — there was substantial competition between the two theatres, then plaintiff has failed to establish the element of te prior run and clearance in favor of the Park Plaza over the Luxor was unreasonable.

And your verdict should be for the defendants.

That is, the issue is one of unreasonable restraint of trade.

If there is a conspiracy to impose clearance and the clearance is between theatres that were not competitive, you’ve got an unreasonable restraint of trade.

That issue, I might say, goes not only to the unreasonable restraint of trade but, of course, to the issue of conspiracy itself because, if a court were to conclude or jury trial, if that were to conclude, that these clearances were unreasonable and that they were uniformly granted.

A trier of fact would be entitled to infer, not required to infer, as this Court held, the Theatre Enterprises case.

But entitled to infer, that it was pursuant to a conspiracy in the sense that you can infer from uniform unreasonable acts in a business circumstance.

To put the — the picture together, a jury is ordinarily permitted to make such — such an inference.

So, that this issue had been litigated and was regularly litigated as part of private treble damage cases in jury trials and known by the plaintiff, Fox West Coast to be — to — that that was known by them.

Their company has been the defendant in a number of antitrust cases, as the major distributors have, arising out of this Court’s — out of the — out of the Sherman Act as well as out of the Paramount case itself.

When in a — we made a demand for jury trial as to the complaint in the answer.

In the answer, I might say, we raised the — the fact that the plaintiffs were violating the antitrust laws.

We filed an affirmative defense which said we thought that they were violating the antitrust laws and then we filed a counterclaim.

It’s one document, the answer from the defense in counterclaim and endorsed upon the document as request for jury trial as to the complaint, the answer in the counterclaim is expressed.

The counterclaim raised the antitrust issues and sought damages as well as other conjunctive relief.

The proceedings then took place as follows.

The motion was filed to strike our demand for jury trial as to the complaint in the answer.

The motion was granted.

The motion was filed to strike our allegations and our answer in affirmative defense that the defendants were violating the antitrust laws.

This motion was granted.

Jack Corinblit:

A motion was filed to sever the complaint for the counterclaim and to try the complaint first, ahead of the counter claim.

And this motion was granted.

The — upon these motions, I — I’ve broken them up but of course the motions were in one and that there were three parts if I’d describe them independently.

We filed a –a petition for writ of mandamus in the Court of Appeals.

We based our request for mandamus upon this Court’s seemingly long line of opinion, decisions which said — and other Courts of Appeals including the Ninth Circuit which seemed to indicate that in jury trial matters, where a jury trial has been denied that that was one of those exceptional issues which Courts of Appeals should hear by way of mandamus.

I like to say that the Court of Appeals never passed upon that question.

That is when they ultimately —

What decisions in this Court do you rely on for that proposition?

Jack Corinblit:

I rely primarily, Your Honor, on the line of cases beginning with — with Ex parte Simons.

Now, I will submit that that was mandamus out of this Court and not mandamus out of the Court of Appeals.

There has not been any — there have not been any law to the effect that really makes a distinction between the two and the Courts of Appeals, they have granted mandamus and jury trial.

I have argued that there is not a distinction between the two.

The point that I — I wish to make is that I do — don’t believe that that question is before you here unless you conclude that this is a matter of jurisdiction of the Court of Appeals because there is no cross-petition of certiorari in this case.

There is no issue raised that there was — that the discretion was abused because the Court of Appeals distinctly refused to pass upon that.

It went to the merits of the case without passing upon whether, in its discretion, it would or would not issue mandamus.

And they said so in their opinion.

And we didn’t raise that question and when we raised our three questions in the petition for certiorari, no cross-petition was filed by the other side and if the matter was in — and — and therefore, no issue of the willingness or unwillingness to exercise discretion, is I believe, before this Court at this time.

In the Court of Appeals, when we filed, I might say an application for leave to the file a writ of mandamus, the Court of Appeals for Ninth Circuit follows that practice.

I — I’m not sure that it’s not filed — followed everywhere but at least it is in the Ninth Circuit.

You just can’t file automatically and they — they considered it and they decided we ought to be granted a leave.

We were permitted to file a petition.

And the respondent judge was ordered to show cause why — why the petition shouldn’t be granted.

He filed a response.

Potter Stewart:

Hasn’t the statute been changed since this Court decided Ex parte Simons?

Jack Corinblit:

Yes.

The — the statute — the statute has been changed although the language of — of present — of the present mandamus statute, I don’t think, changes the — the ultimate result.

At least I felt that La Buy versus Howes, although it was a subject to considerable argument, indicated that — that there was at least a power in the Court of Appeals to act.

But the question was to be one of discretion.

And again, that issue of the exercise of the Court’s discretion has not been brought here in my judgment in this case.

The Court of Appeals, after I might say, keeping the matter under consideration for some time because I think the Court thought it was an important question, that rendered its opinion.

Jack Corinblit:

And it — it denied our petition for mandamus.

What the Court did, was to say in the first place that we were right.

If this complaint had only been a complaint for the declaratory relief, the Court said we were right.

That is to say, you can’t in the complaint for the Court declaratory relief, reverse positions and destroy the right of jury trial.

You can’t anticipate a case or — and destroy the right of jury trial by suing declaratory relief.

But the Court said that this really wasn’t an action for declaratory relief.

This was an action which it was not willing to label “In equity.”

And the basis for the contention that the — that the whole case was in — was in equity is the paragraph 12 in which the —

Charles E. Whittaker:

May I ask you, do I understand that you argue by an action for declaratory relief may not be in equity?

Jack Corinblit:

No, sir.

It may be in equity.

Charles E. Whittaker:

It maybe either.

Jack Corinblit:

Either in equity.

Charles E. Whittaker:

I — I see.

Jack Corinblit:

Yes.

The Court of Appeals held here that this action was in equity based upon the allegations of paragraph 12 of the complaint.

That is to say, the allegations of the petitioner here threatened Fox with an antitrust case, that had interfered with their business.

But the Court went further.

In holding that was was in equity, the Court of Appeals did not say that the issue of the threats alleged, alone, would be tried by the Court.

But all of the issues and the complaint would be tried with the Court without — and no — no jury.

That is to say, the issues of unreasonable restraint of trade, the issue of substantial competition would be tried by the Court, as well as the question of the threats and whether some kind of an injunction should be issued.

Now, I might point out that the Court ignored the fact that the only prayer in the complaint and the only substantive allegation in the complaint asked for an injunction, pendente lite.

There was never a single prayer or a permanent or any permanent injunctive relief, just during the course of the proceedings.

And yet the Court of Appeals used this paragraph of the complaint and that prayer unless it relied on a general prayer, to conclude that the whole case was thereby in equity.

Charles E. Whittaker:

You assume the fact that there might be problems (Inaudible) by this injunction to await the declaratory judgment.

Jack Corinblit:

Yes.

Charles E. Whittaker:

And hence no need for any kind of injunction if the judgment in the suit declared the rights of the party, is that it?

Jack Corinblit:

The purpose — yes.

The purpose of that pendente lite injunction would be to prevent us from filing an antitrust case, I might say.

This is the prayer.

Jack Corinblit:

This is what we will ask, not the threats.

The Court later inferred that.

But filing antitrust case, while will the declaratory relief suit was being tried?

But what the Court did was to say that the declaratory relief issues would be tried to the Court and not to the jury and hang — hung its hat on the proposition that the — that the substantive allegation in that prayer made it a case in equity which — which deprived us, which was permitted to deprive us of the right of jury trial.

Charles E. Whittaker:

As in any equity case.

Jack Corinblit:

As in equity case.

But, Mr. Justice Whittaker, the Court was if you please — here characterizing the whole complaint by reason of this pendente lite request because this is all the Court of Appeals used to find that this was an action in equity.

This pendente lite request in the — in the substantive paragraph and in the prayer.

The — we submit, of course, that the Court’s action in finding that an action for declaratory relief or allegations of declaratory relief, which are substituted allegations for a suit at law, namely, suit for damages.

That such an action is converted into an action in equity and all of the issues to be tried in equity by reason of an allegation of threats of litigation is not sound, is contrary to this Court’s rules and is contrary to the spirit of the Federal Rules in uniting law and equity.

We say it is not sound historically.

Historically, the courts were always very careful to see to it that a complainant did not blend issues at law and issues in equity, possibly in equity, in the same complaint and thereby eliminate the right of jury trial.

A case which — which makes this statement directly is the case of Scott versus Neely which we cited in which the Court there, in that case, Mississippi had decided that you could sue in the state court in equity and become a creditor and get a lien executed on at the same time.

And you do all that in equity.

And a plaintiff tried to accomplish that result in the federal court.

And the federal court said, “They may do that in the Mississippi state courts but the Seventh Amendment binds us here as — and –and we cannot do it and they said —

Hugo L. Black:

Did you say that case was cited in your brief?

Jack Corinblit:

Yes, sir.

Hugo L. Black:

Scott versus Neely?

Jack Corinblit:

Yes, sir.

If I can finally — oh, I’m sorry.

It’s — it’s in the reply — in the reply, Your Honor.

I beg your pardon.

Scott versus Neely, 140 U.S. 106.

And the Court in that case said, “In the federal courts, this right — right of trial by a jury cannot be dispensed with except by the assent of parties entitled to it nor can it be impaired by any blending with the claim properly cognizable of law of a demand for equitable relief in aid of a legal action or during its pendency.”

Now, of course, the Federal Rules of Civil Procedure has been designed precisely to blend, that is, in the sense of giving a litigant the right and the obligation to bring all his claims in at the same time.

The whole purpose of the — of the uniting the rules under the Federal Rules was to –to encourage that, to get it all settled at one time.

And so, whether you got an action at law or equity, you bring it in.

As a matter of fact, if you don’t, you’re barred.

But, when this Court — when Congress passed the enabling statute which sure led to the adoption of this rule, Congress said that in adopting these rules, you shall not incur the right of trial by a jury.

Jack Corinblit:

And of course, Rule 38 said the same thing.

And there was never any intent indicated by any decision of this Court that the mere adaption of the rule which now permits a litigant to bring actions of law and actions of equity, at the same time, to destroy the right of jury trial.

So, that if blending couldn’t be permitted to destroy the right of jury trial prior to the rules, surely, it is not permitted to destroy the right of jury trial under the rules.

And the interpretation by the Court of Appeals here had that result because, looked at correctly in a sense, it can be — if you’re going to argue that there’s any equitable features at all in this complaint, properly construed.

That — that pendente lite to equitable request will — will be permitted to result in holding that all of the issues are to be tried with the Court and not with the jury.

But if this rule were adopted, that it would be a serious — have serious effect upon — upon all litigants in the federal courts.

The Rules of Civil Procedure would have become a trap.

William J. Brennan, Jr.:

(Voice Overlap) you are from this alternative arguments first that in any event, this is really only a declaratory judgment proceeding, in lieu of the law action and therefore the issue is to be tried to the jury and that the prayer for pendente lite relief does not but change —

Jack Corinblit:

Yes, sir.

William J. Brennan, Jr.:

— in that sense.

And alternatively, if it does change it, then the argument you’re now making (Voice Overlap) —

Jack Corinblit:

Yes, sir.

Thank you.

You clarified it, sir.

With respect — of course, we think that looked at, the complaint correctly and often times, when these complaints are filed and deciding whether there’s a right to trial by jury, there is a question of history to be analyzed.

What is this complaint like?

What would there have been prior to the rules?

We urged in our brief and we think it’s — it’s sound that — that really this — this complaint without the prayer for a moment, states no action for — for equitable relief at all.

That it’s nothing but an action for declaratory relief.

And that paragraph 12 does not have the result the Court of Appeals thought it had.

Hugo L. Black:

Was there any allegation of — of the usually equitable nature that could not have been determined when a suit of law alleged in the petition declaratory judgment?

Jack Corinblit:

None — none that I know of Your Honor.

Hugo L. Black:

No —

Jack Corinblit:

There was an — a statement of irreparable injury, an allegation made of irreparable injury.

Hugo L. Black:

If a suit should be allowed to be (Inaudible)

Jack Corinblit:

If the suit should be allowed to be made.

Hugo L. Black:

But was there any issue in connection with the transaction which was the basis of this previous lawsuit as to the substance of it which would — whereby, it showed that they would be deprived of some relief that they could get in equity as a substantive answer to the charging —

Jack Corinblit:

No, sir.

Not in any way, shape or form.

May I ask if the construction of the Paramount was included?

Jack Corinblit:

They did.

That very question?

Jack Corinblit:

The factual question as to whether there is competition between theatres and as to whether there is unreasonable clearance, is in my judgment a jury question.

Hugo L. Black:

But what if it’s a jury question or not is there anything to keep the Court from — the question I ask if you will permit me.

What I had in mind was, was there anything that the — that the relief they sought either which required the interpretation by the Court, or a decision of fact by the jury which could not have been fairly tried out in the suit of law.

Jack Corinblit:

None at all.

Hugo L. Black:

That was what I have in mind.

Jack Corinblit:

The — I was saying that — that you could — it — it seemed to me as a classical matter here that this complaint, in no way, with substantive allegations, even alleged a proper suit in equity.

Potter Stewart:

You refer, Mr. Corinblit, to the necessity sometimes of making a historical analysis —

Jack Corinblit:

Yes.

Potter Stewart:

— and as I think it would — I’d certainly agree with that necessity.

What is lacking here from a traditional equitable suit what they called quia timet?

I have the name right?

I think I do.

Jack Corinblit:

You have the name right and my understanding was that quia timet or quia timet whichever it is —

Potter Stewart:

You — you pronounce it your way.

Jack Corinblit:

— is — was traditionally had to do with real property.

And I must say that — that this is, as about as much as I know, about — about quia timet, sir.

But I will say this, Your Honor.

That with respect to the usual, to the attempt in this complaint to use the fact that we had warned somebody, they — they called a threat.

We can’t do anything about it.

It’s in their complaint.

But that we had warned somebody that we thought that what they were going to do, violate the antitrust laws.

It has been the rule and was the rule at the — almost the time of the adoption of the Constitution that that kind of — an assertion could never form the basis of an action in equity unless it was asserted.

That the man who made that claim was doing it in bad faith and was unwilling to test his right in court.

These are cases which I’m sure, Your Honors, you’re all familiar with.

There — it was — there was a long bitter battle over the question as to whether equity could even do it — could even enjoin the second situation.

That is, where there was bad faith, but no court that — that no court had held.

That unless that you could have a — a case in equity, unless you made that allegation in that assertion because it was fundamental.

The argument was in the case, one case came to this Court that if you’ve got a right to file under the antitrust laws, you have a right to — to warn somebody of your rights and that that warning by itself is not the grounds for — for an injunction.

Jack Corinblit:

That what makes — what may turn that into a case, is if you’re doing it simply.

You’re warning and then pulling back, you’re warning and pulling back and refusing that — to have that right tested.

But this case, the complaint on its face demonstrates that we, that if the petitioner here was anxious to have the matter litigated.

Not only does it fail to allege these facts that are simply described, but the — but the contrary is directly shown because the allegation is, that the petitioner has threatened an antitrust case and Fox West Coast wants to keep us from filing an antitrust case by way of an injunction.

And they say they’ll be hurt by the filing of the antitrust case, unless we’re enjoined.

Charles E. Whittaker:

Did you in your by warning, if I understand this complaint, say not only if they did do, but was anticipated, then a suit would be filed, isn’t that right?

Jack Corinblit:

That is the complaint, Your Honor.

You’ve got to understand that this was set up in the Fox’s complaint.

They were describing what we were alleged to have done.

And as they described it, they’re in your words, that — that is to say that if they did what we thought was unlawful, we would sue under the antitrust laws for damages.

Charles E. Whittaker:

Yes.

So, your contention then is, that they were entitled not to the adjudication of that status to relation but they had to go ahead and commit what you thought was a violation of the law before the right could be tested?

Jack Corinblit:

No, sir.

We do not contend that these alleged warnings were not a sufficient basis to go in to a court for declaratory judgment.

We think now, that this is what declaratory judgment is for and that paragraph 12 is part and parcel of the declaratory relief action.

But doing that, we say, we’re entitled to a jury trial.

Charles E. Whittaker:

Do you say the (Inaudible) cause of action alleged was legal in character and not equity?

Jack Corinblit:

That’s correct.

This is —

Charles E. Whittaker:

That’s all — that’s all there is to it.

Jack Corinblit:

That’s all there is to it.

And that’s — that’s the theory that we have in this case.

Potter Stewart:

Well, now, doesn’t paragraph 12 allege that their very threats of filing a suit — that your very threats of file — of filing a suit has in fact deprived them of their right to negotiate on a first-run clearance basis —

Jack Corinblit:

Yes.

Potter Stewart:

— with the distributors.

And certainly, if that’s true and it’s understandable how that could be true.

It wouldn’t be necessary for you to file any law suit in order to — in order to — to deprive them of their right that they’re asserting isn’t that true?

Just to — the — the mere threat of it could succeed.

Jack Corinblit:

Well, I — this is an inference.

This is — is what you’ve got to do to infer.

Jack Corinblit:

You’ve got to say that the threat has been made and they want to enjoin us from suing.

Now, the — the same paragraph has the allegation that they wanted to enjoin us from suing.

Potter Stewart:

Do you agree that it — that it alleges there that the threat to sue has operated to deprive them of a right to their suit?

Jack Corinblit:

Yes, it — it does so allege.

I would come back to that point again on analogizing this to the historical case that it was always true that if you warn the man of the rights that you honestly believe you had, and I might say this complaint by alleging the dispute, certainly sets up that there is a dispute in good faith.

There’s not single word in this allegation that suggest that there’s any bad faith on either side with regard to the declaratory relief allegation.

That if you have a right to make that kind of a warning in good faith, that that may have some effect upon the supplier.

Remember, if the Court please, that these suppliers whom they described are our suppliers as well as Fox’s suppliers.

The allegation is made on the complaint that they have the pictures.

They — we must go to them for supply of pictures as well as Fox West Coast.

And so that when we made the alleged — the alleged warning, the alleged warning might have had that effect.

But again, there’s no allegation of bad faith, no allegation that we are unwilling to test our right in Court.

And we suggest that under the cases and under the general analysis that these — these warnings were sufficient to permit Fox to — to require us to test our claim in a court.

But they were not sufficient to destroy our right of jury trial because the substantive issue was the same.

Were — was there a violation of the antitrust laws.

Was there a clearance between theatres which were not competitive.

Was there unreasonable clearance?

Charles E. Whittaker:

(Inaudible) the Paramount issue would be a determination with the question of whether or not you were in competition?

Jack Corinblit:

That would be a — that would be a Paramount issue.

Although, Your Honor, the issue of unreasonable clearance is, stated is, sometimes somewhat broader than merely the question of competition.

That there are other factors of some kind.

But I think this complaint primarily emphasizes the matter of substantial competition between the parties.

That this was an issue triable — triable at law.

And I’m arriving to a conclusion that if their — if there isn’t substantial competition, clearance would be unlawful.

If there’s — if there were no substantial competition, clearance would be unlawful under the cases.

Charles E. Whittaker:

The determination of that question in the setting of this complaint was a legal in character.

Jack Corinblit:

Yes, sir.

This is our — this is our contention.

William J. Brennan, Jr.:

Mr. Corinblit, what about the language duress and coercion?

Jack Corinblit:

Well, the — again —

William J. Brennan, Jr.:

(Inaudible) though of an implication in that allegation of bad faith in the —

Jack Corinblit:

In duress and coercion which is stated by way of a conclusion in which, of course, no facts are alleged other than the mere making of the statements, Your Honor please.

We submit (a), without the affirmative allegation of facts showing that they were in bad — that there was bad faith.

You cannot, we say, obtain an action in equity but — and without these affirmative allegations.

Historically, you never could.

And the Courts were even concerned that you could even do it then.

There were cases that held you couldn’t do it even if there was bad faith there.

The Courts were worried of whether — whether equity was destroying the right of jury trials.

But always, there had to be affirmative positive of allegations of fact.

And I know of no case which has ever permitted an implication to be drawn from the conclusion and resulting in the right of jury trial being lost.

But, and again we come back to the secondary point.

That even if you grant that, if you give them the benefit of every doubt, that there is something in equity there, this had never have been the basis for deciding that the substantive questions are not to be decided by a jury.

Even if the Court will want to decide the question of bad faith, if there is such in — with respect to the injunction by the Court.

Again, relating to the fact that our rules don’t mean that you have to — that it is all or nothing.

Some matters can be decided but the jury (Voice overlap) —

William J. Brennan, Jr.:

Well, actually this gets down to really the issue of competition, as you feel was decided by a jury even if all the other issues in the case were tried by the judge.

Jack Corinblit:

That’s correct.

William J. Brennan, Jr.:

That’s what it all comes down to.

Jack Corinblit:

That’s what it — and you said it as — a lot better than I could.

(Inaudible)

Jack Corinblit:

We do put it — someone to counterclaim, Your Honor.

It’s a kind of a third line of defense in this case.

That is to say, we — we argue and it is I concede a — a little more difficult problem.

Let’s assume that the whole complain is an equity.

Let’s assume that our counterclaims at law and let’s assume that there are common issues involved in the complaint and the counterclaim.

That’s the only way in which the counterclaim becomes a material.

We say if you sue —

Hugo L. Black:

But how would it be material then?

Jack Corinblit:

I beg your pardon?

Hugo L. Black:

How would it be material then?

Jack Corinblit:

It would then be material in that — we say that in — that a suit in equity in anticipation of a suit at law which raises common issues requires under the Federal Rules of that the Court procedure in such a manner as to protect our right of — to jury trial.

If I anticipate that you are about to sue at law and I sue in equity and I stated merely a good claim in equity I — I put my pleading in — in shipshape order, and then the counterclaim is filed at law that under — in that —

Hugo L. Black:

What is your counterclaim?

Jack Corinblit:

I beg your pardon?

Hugo L. Black:

What is your counterclaim?

Jack Corinblit:

Our counterclaim is for damages for violation of the antitrust laws.

We do attach a request for injunction, as well.

But, it is primarily a complaint for damages under the antitrust laws triable as of right to a jury.

And we contend —

Hugo L. Black:

Is that one of the grounds of your — are you asking us to pass the fact here?

Jack Corinblit:

Well, we are asking Your Honor, we would of course ask you to take the — the question if you — if you rule with us on the first portion of it, we have no desire to have your rule upon the latter.

But, I must say that each of those questions was raised by our petition for certiorari?That all three of the questions are avoided.

Hugo L. Black:

Are you raising your question in whatever the complaint charge and whether or not it was could have been adjudicated in equity when you filed your counterclaim raising precisely the same issues that it was the duty of the Court to try that counterclaim?

Jack Corinblit:

Duty of the —

Hugo L. Black:

Are you raising that question?

Jack Corinblit:

Duty of the jury to raise — duty of —

Hugo L. Black:

Duty — that it was the duty of the Court to try — try the counterclaim for jury, are you asking that question?

Jack Corinblit:

We did raise it by our petition for certiorari, Your Honor.

We — I’m not — these are alternative points.

Each of them is raised by the petitioner.

I have to concede that we did raise it as we came — came up to the Court of Appeals, and we raised it here.

Hugo L. Black:

Are you abandoning?

Jack Corinblit:

No, sir.

I will not abandon it.

I — I think their proposition is sound.

Where the equity suit is — is in anticipation of a suit at law, that you cannot anticipate a suit at law and substitute a suit in equity.

And thereby deprive a litigant of the right to jury trial.

That here, the anticipation is evidenced by the very complaint itself wherein it is stated that we warned of the filing with antitrust case and they want to enjoin us from the filing of antitrust case.

And that therefore, since there are common issues in the — in the complaint and counterclaim, we’re entitled to a jury trial.

Now, what are those common issues?

Jack Corinblit:

They’re precisely the same issues that were raised in the complaint.

There’s a question of competition, the question of clearance which are part and parcel of the counterclaim.

As I pointed out before, the — the — those issues have been tried regularly under a plaintiff’s — in plaintiff’s cases under the antitrust laws.

They go to the question of the unreasonability of the restraint.

They go to the question of conspiracy because if you find that there is uniform adoption of an unreasonable way of doing business, surely with other facts, a jury is permitted, not required, but permitted to infer conspiracy.

And therefore, those issues are common to our counterclaim.

And therefore, on that basis, we urge that the Federal Rules mean that if you had that — that anticipatory filing of an equity case raising issues common with the counterclaim requires jury trial and the —

Potter Stewart:

Don’t you find this in a similar situation quite frequently in the patent field where — where an alleged infringer will bring a suit for declaratory judgment for declaration that he’s not infringing?

Alleging that the patentee is threatening to sue for infringement?

I suppose the answer — the reason we haven’t had this problem arise, the stricter problem is that neither side wants a jury trial in —

Jack Corinblit:

In that —

Potter Stewart:

— those patent cases

Jack Corinblit:

Ordinarily, it —

Potter Stewart:

Yes.

Jack Corinblit:

— it happens sometimes.

There’s been a couple of patent cases are jury cases on the West Coast.

But, in those cases where a counterclaim would be for — for a — by the patentee he would counterclaim for damages for an infringement, the right to jury trial would exist and it would be that patent.

Potter Stewart:

This case would be in theory if not in practical effect very similar to that case.

Jack Corinblit:

Yes.

Yes, it was.

On this last third portion of — of our argument.

Hugo L. Black:

Why do say that (Inaudible) entitled to — do understand that if the — the controversy over the validity of a patent and the patentee comes in and asks for an interpretation of the patent in equity, and the other side says that — I mean, not the patentee, the man who said there had been —

Jack Corinblit:

Alleged infringer.

Hugo L. Black:

Yes.

The other man comes in and says, “I want to sue him on there and not put in a counterclaim.”

Do you mean that the cases have held that there could be a jury trial there?

Jack Corinblit:

Yes, sir.

Hugo L. Black:

Have you cited those?

Jack Corinblit:

No, sir.

We did not — we did not cite the cases.

Jack Corinblit:

And I have —

Hugo L. Black:

What’s the basis of the jury trial there?

Jack Corinblit:

The basis is that — that if the pleading show anticipation that this is being — the equity is being made use of as a technique for avoiding what would otherwise be — be a trial — be a trial at law.

And that’s — and a theory for example, some of the insurance cases which have held, the cases in which an insurance company anticipating a suit on the policy wants to set it aside for fraud and they sue in rescission in equity.

And the courts say that if a counterclaim is imminent, not only filed, but imminent, the Court, the usual way of handling it in the past was, of course, even to dismiss the cause of action in equity on the grounds that the — that the legal remedy — that the legal remedy was adequate.

Hugo L. Black:

I think you have not cited it?

Jack Corinblit:

I think they are cited in —

Hugo L. Black:

I didn’t find them in your brief.

I thought your adversary cited them as on his side.

Those insurance cases —

Jack Corinblit:

Yes.

Hugo L. Black:

— Enelow and the others.

Jack Corinblit:

Enelow, Your Honor.

Your Honor will find it’s cited in our brief —

Hugo L. Black:

Did you cite it?

Jack Corinblit:

Yes, sir.

I think we’ve cited that was — cited Enelow, specifically.

That’s at page 31 of our brief.

And I think we cite the leading case on that subject the (Inaudible), a very important case on the subject.

I think would like to leave sometime for reply and therefore will cease at this point.

Earl Warren:

Mr. Johnston.

Frank R.J. Ohnston:

Mr. Chief Justice, may it please the Court.

I must confess at the outset that the complaint which is here for construction by the Court is not a model of pleading as — as observed by Judge Pope in the court below.

However, I think viewed fairly and liberally as pleadings must be viewed now, it does state a cause for equitable relief and states it clearly.

Now, I would like to correct one misapprehension that may have been created, by my friend, Mr. Cornblit.

And that is this, in the complaint, we sought not an award of first-run by the distributors but the right to negotiate for first-run with clearance, equally with, Mr. Cornblit’s client, free of threats and duress.

We couldn’t demand that any distributor give us a first-run.

All we seek — all we ask for here is the right to not have the door shut in our face.

That is the extent of the remedies sought.

Now, I have a minute perhaps in which I can answer Mr. Justice Black’s inquiry of Mr. Cornblit as to whether, and I maybe paraphrasing, traditional equitable allegations are made here.

Frank R.J. Ohnston:

I will refer to page 18 of the record, paragraph 12 of our complaint and after having alleged that if clearance is granted, a treble damage action will be filed, we say further that said threats and the duress and 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 defendants Bel-Air Drive-in Theatre.

Then I come to this which is a traditional and conventional allegation in suits of equity, that plaintiff is without any speedy or adequate remedy at law and will be irreparably harmed —

Earl Warren:

We’ll recess now.