International Boxing Club of New York, Inc. v. United States

PETITIONER:International Boxing Club of New York, Inc.
RESPONDENT:United States
LOCATION:Union Station

DOCKET NO.: 18
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 358 US 242 (1959)
ARGUED: Nov 13, 1958
DECIDED: Jan 12, 1959

Facts of the case

Question

  • Oral Argument – November 13, 1958 (Part 2)
  • Audio Transcription for Oral Argument – November 13, 1958 (Part 2) in International Boxing Club of New York, Inc. v. United States

    Audio Transcription for Oral Argument – November 13, 1958 (Part 1) in International Boxing Club of New York, Inc. v. United States

    Earl Warren:

    Number 18, International Boxing Club of New York et al., Appellants, versus United States of America.

    Mr. Royall.

    Kenneth C. Royall:

    May it please the Court.

    This case involves boxing.

    It’s on appeal from the — by defendants in the judgment — judgment of the Southern District of New York in an action under Section 1 and 2 of the Sherman Act.

    The District Court found an actual monopoly, not an intent to monopolize and a relief was based on this finding.

    Our firm represents the Madison Square Garden and New York I.B.C., International Boxing Club.

    Mr. Charles Sawyer’s firm represents the Chicago Stadium, the I.B.C.of Illinois and Mrs.Arthur Wirtz and James Norris.

    I’ve been requested to present the case for all the defendants.

    Now, the three of the usual questions proposed in this case to the championship bouts that is distinguished from all the professional box constitute in themselves a relevant market.

    And second, if so, is there a violation shown of the antitrust law.

    Finally, if both market and violation should be established, is — are there relief provisions proper or are they punitive, oppressive, and unnecessary?

    The period covered by the complaints from 1949 to 1953.

    Prior to that time, boxing on a national scale had been largely dominated for some years by a tax record and later, from 1937 to 1948 or 1949 by Mike Jacobs who had a lease on the Madison Square Garden.

    In 1948 or 1949, Jacobs held had failed and the he was completely enacted.

    A smaller boxing organization, the Tournament of Champions had started early in 1948, had declined almost to the vanishing point, was seeking to get out of business and salvage something.

    Joe Louis, who had held the center of the stage for a long time was quitting his heavyweight crown and trying to arrange a series of fights by others in order to obtain some revenue.

    He was unable to find a backup.

    Professional world boxing was it, its lowest have for many years and was facing a further decline.

    Now, Madison Square Garden was worried about it.

    While boxing represented only 6% of the Garden business and involved just a smaller amount of its personnel, yet it did provide income normally necessary for the Garden to operate with profit.

    The garden had a large investment.

    Its expenses were in one sense, enormous and it was necessary for it to schedule and present popular events covering a great majority of the time it had opened.

    They want it and badly needed the boxing events to continue.

    Now, in 1949 and since 1937, Mrs.Wirtz and Norris held a substantial block of Madison Square Garden stock.

    In fact, Norris’ father has been a stockholder for many, many years.

    The Chicago Stadium owned by Mrs.Wirtz and Norris had a problem similar to the Garden’s problem.

    It had been operated in a substantial loss and was desperately trying to increase its revenues.

    These two gentlemen also in the Detroit Arena and in an (Inaudible) St. Louis Arena.

    Incidentally, before the decree in the case, the Detroit Arena had been sold and the boxing had been abandoned in the St.Louis Arena.

    Kenneth C. Royall:

    Wirtz and Norris had owned the Chicago Stadium since 1935.

    Wirtz’s original activity was in ice shows and other events.

    Both he and Norris had helped sustain the Stadium by such events.

    And they had helped to build the Garden by various events.

    For them boxing was an afterthought designed to — at that particular period of the boxing history to get the Stadium into the — on the block side a ledger and to help the Garden from losing to the margin that it had.

    A settlement was made, an agreement was made with Joe Louis.

    The I.B.C. is to organize as promoting organizations.

    The surrender of Mike Jacobs’ lease was purchased and the Tournament of Champions was acquired.

    The two I.B.C.’s promoted professional fights, championship and nonchampionship.

    There was a Friday night series and then a Wednesday night series which I think it’s — everybody has pretty common knowledge.

    As a result of this, there was a revival in the professional boxing in the Garden and in the United States as a whole and with other promoters.

    But the Stadium continued to lose money.

    Now, these aren’t to show under the facts which led to the agreements that are under attack in this case.

    I want to mention that those agreements were made with layman, lawyers, and judges, were almost unanimously to the opinion that sports arrangements of this kind did not violate the law under the (Inaudible) case.

    The contracts made with other arenas by the defendants were historically typical and nothing unusual.

    The same was true as the well-established return bout agreements and three year exclusive contracts with boxers.

    Our position on this matter is more fully covered in the brief.

    We say here briefly that the agreements were made by the defendants because necessary to say for declining industry which industry in turn was necessary to the continued operation of there to expansive buildings.

    No conducts of the defendants caused the death for the Tournament of Champions.

    They were seeking and unable to find anyone to salvage their operation.

    The same is true of the St.Louis arrangement and the Jacob’s contract.

    Those people, Louis and Jacobs with the movements because they were at the end of their road.

    There was no previous boxing competition between the Madison Square Garden on the one hand, Stadium on the other or between any of the various defendants.

    And hence there was no competition to lesson in this case because none existed.

    The exclusive contacts with the boxers were for a reasonable period and they were necessary for the continuity required for the continuous operation of a Stadium or an arena.

    These agreements in turn protected the boxers themselves.

    There is nothing in the record, not one single word to show that the defendants excluded from boxing any boxer, that they excluded a single promoter, or that any — or excluded any other Stadium, or any television arrangement, or any radio or moving picture company.

    The defendants did not own TV or other TV time.

    At the date of the decree, they were negotiating, that is they did not own over a period of time.

    They were negotiating for a contract which covered a reasonable continuity on this.

    Kenneth C. Royall:

    There was no monopoly of championship boxing unless it can arise solely from percentages.

    They did have a large percent of it.

    Before the decree, the Garden and the Stadium were losing their position, have lost all their heavyweight bouts.

    Nor was there any monopoly on television.

    Indecently, the sponsors and the advertisers of television are much more powerful than either these corporations of any of these defendants could be.

    As to the Stadium, the defendants at the time with the decree control only one of the several suitable stadium in New York and only two out of hundreds suitable stadiums in the United States.

    And those two that they control so to speak belonged to them.

    Under these conditions, there is not and could not be any possible control of price.

    Now, that price element was lamely brought into this case in the brief in this Court and never found below.

    The prices as a matter of fact, boxing must be reported to the respective boxing commissioners for their consideration.

    Defendants have not restricted or restrained the boxing industry.

    On the contrary, the result of their action, they have expanded the number of good boxing contests with other promoters, have decreased the admission prices, have provided television for millions of viewers, and it helped the boxers financially, and helped the viewing public.

    There is no semblance of monopoly in — of professional boxing as a whole.

    There are 2000 professional boxing programs in the United States each year involving almost 20,000 boxers because they have several bouts.

    The championship — the non — the — all the — all the boxing contests promoted by all the defendants at the maximum between 80 and 90 a year.

    In the championship field, it is six to eight a year.

    Now, there in our opinion, there is no violation even if the profitable market is a championship boxing market.

    But they have sought the — the Government has sought to post its case to make it stronger by picking out what we say as an artificial market that is confining it to championship boxing and not to all boxing.

    We say that is wrong.

    The District Court itself conceded that a violation was dependent on that market and that there would be no violation in any event if the market included professional boxing.

    The only distinction between the two, we urge upon you, is a difference of quantity and not of kind.

    Within any market, there are differences in cost, differences in price, and quality, and acceptance, and demand.

    If these factors did not exist then there would be no competition possible in that market.

    It takes those differences to make competition conversely.

    If the existence of these differences define a market then conceivably each product in the market could be — each product in the business could be a market because if every factor were identical on the theory — on the theory proposed then there would be a monopoly in one product.

    We say that the Court, the District Court cannot select and define its market just to create a situation where they can argue that there’s a violation of law.

    This would rather be a bootstrap operation.

    And the cases they have said starting with Columbia Steel that it’s first necessary to delimit the market.

    It is true and the facts we think are immaterial.

    It is true that on the average, championship bouts have a higher prestige in publicity, a greater public demand on the average, a larger number of viewers, they bring in more dollars on gate receipts or television.

    Kenneth C. Royall:

    But that’s just the average.

    Both championship and nonchampionship fights, either classification, they’re maybe poor, they’re maybe — fail, or they’re maybe good and there are differences in amount depending on that.

    And there are some better championship fights that are larger in every way than some nonchampionship fights which often occurs based on the popularity of the participants in which outlays the rating, technical rating of championship.

    Now that’s — that situation is applicable to similar products of the same business of others in the same field.

    There is nothing for a — in our case, there’s nothing to show even one that there is a substantial audience for championship fights as distinguished from audience for nonchampionship fights.

    There maybe more a number.

    But the natural presumption is and there is evidence in the record which states it, that is undenied.

    That all who view championship fights, all or maybe at one time or another viewers of nonchampionship fights, some nonchampionship fights.

    In other words, the audience may be more accumulated when it’s a championship fight but it’s the same people.

    Individual boxers start as novices.

    They go up the scale.

    Some of them become champions.

    Some of the champions move downward and some of those that move downward move up again.

    And this testimony was given by witness which was not challenged or denied at all or contradicted.

    He said, “This is a sport where boys are fighting for the championships.”

    That starts with the novice.

    “We are showing them each week that we can show champions, why we want to do so.”

    And that shows that the boxing — professional boxing is all one market.

    Both of them timed with a weekly series, it is Wednesday and Friday night and some other promoters have other night series.

    When there was a championship fight in the series, it’s the main attraction.

    But when there is not a championship fight in the series then some nonchampionship fight is the main attraction.

    In either case, the prestige of the championship fight or the nonchampionship fight contributes to the success of the weekly series and makes its continuation possible.

    The sponsored — the sponsors who really should know (Inaudible) of about this matter, testified unanimously that all professional boxing as far as they was concerned was one market.

    We believe that the championship and nonchampionship fights are to a large degree inter changing.

    And under the Cellophane case, the market could not be split artificially into — Cellophane as you gentlemen will remember cost two or three times more than the other products.

    And the average — dollar averages go higher.

    But those facts did not justify a dollar division of the market.

    The Times-Picayune case was a different — even different readers read the morning and the evening papers, yet this Court found that they could not split that market in the morning and afternoon that it was a relevant market.

    I suppose the General Motors du Pont case which confined the matter to paint products sold the motor companies was one of the most restrictive of the market decisions.

    But there, there was no narrowing on the market on the basis of quantity of dollars or relative figures.

    Kenneth C. Royall:

    As a matter of fact, the basis in — by inference ignored that distinction and made it only on the different customers which does not arise in this case and from that case.

    This case is clearly a distinction.

    And it is rather amusing in a way that the plaintiff itself in writing his brief in this case could not refrain from disclosing the fact that in — at least involuntarily.

    They thought it was a single market.

    In page five of their brief, the language is, “Professional boxing including championship boxing.”

    And on 35, they said the championship fights are included within the classification of good fights which of course includes the great men in nonchampionship.

    Now, we respectfully submit that the professional boxing market is a criterion and was used.

    If so, admittedly by the Court and by the counsel for the plaintiff in their briefs, this case would have to be dismissed because they did not make — they could not make, they did not even contend, and there of course no finding that there’s any monopoly of any kind in the professional boxing industry.

    Now, the — if it should happen and we of course being passed and do not see, it could happen.

    That the questions of market and violation were both decided against us.

    Then we contend that the relief ordered by the Court is a large part unnecessary and it’s extremely excessive and oppressive, and punitive.

    We say that the District Court despite its protestations to the contrary completely ignored the existing conditions, and I think of reading of their decree would almost disclose that.

    If those conditions included the fact that there were only two arenas out of a hundred involved and a hundreds involved in this case and that they had, that defendants had no leases on any others.

    It showed that at time the market was completely open to promoters and other arenas and outside of those of our clients.

    As a matter of fact, the other promoters were successfully, so successfully, they took the heavyweight championship, and the — they were operating.

    Despite of all this — these existing facts and others, the District Court made an order that included both dissolution and divestiture.

    Dissolution of the I.B.C.’s which were they’re promoting agencies, subsidiaries of the Stadium.

    And the judge did that after he had stated this, “I do not know of any decree at any time where a corporate defendant was ordered to dissolve.”

    And he said that with reference to these same corporations which he later ordered dissolve.

    There is no contention that that dissolution of those companies would increase competition.

    As a matter of fact, the Court specifically said, “At the time of his decree that such corporations when necessary to comply with the state boxing laws and were necessary in the operation of boxing in the Stadium.”

    That same situation arose by — in the case tried by Judge Wyzanski, mentioned in our brief.

    What was the theory in which contained the (Inaudible)

    Kenneth C. Royall:

    He said that they were an agency or an arm of the monopoly.

    But he said at the same time we could organize exactly similar corporations and name them I.B.C.

    Felix Frankfurter:

    What were the provisions of the New York law which — which is implied as much — you said a minute ago that corporations are necessary to imply that (Inaudible)

    Kenneth C. Royall:

    Well, they — they —

    (Inaudible)

    Kenneth C. Royall:

    They required a domestic corporation and they preferred to have the promotion activities centered in a single person.

    The — the convenience and almost necessity of doing that in dealing with people was also unquestioned.

    Kenneth C. Royall:

    So much so as I say the judge said that we could do it.

    Well, the only result of that the dissolution would be to cause inconvenience, confusion, and expense.

    Felix Frankfurter:

    May I ask, right before your answer to Justice Harlan’s question.

    There’s a decree — the decree permits these very persons to get their lawyer to drop a piece of paper and file it in Albany and then do business under the same name.

    Kenneth C. Royall:

    The judge made a statement explanatory of the decree or at the time he announced his intention in which he said that simultaneously in effect.

    Felix Frankfurter:

    Well, did he answer yes to my question?

    Kenneth C. Royall:

    No.

    Well, it’s not in the decree —

    Felix Frankfurter:

    No, I’m — I’m — I understand that.

    I’m asking whether the decree — whether if you did that, would you have a citation for contempt?

    Kenneth C. Royall:

    Well, I — I think you would have to take into account the — the definite statement of the judge made in Court that we would be authorized to do that and I don’t believe he would find us in contempt because it was a — a printed record and I don’t think he would.

    Felix Frankfurter:

    Because I — spell it out some more.

    Are you prepared to say that a lawyer advising these persons who are the affected — the personalities behind the corporations would not be sailing close to the law if he said you could draw up new articles of incorporation and file it at Albany and call yourself the International — whatever name.

    Kenneth C. Royall:

    I.B.C. of Madison Square Garden is the word the judge had used.

    Felix Frankfurter:

    What is your answer to that?

    Kenneth C. Royall:

    I would say, I would advice that he could.

    I would — I don’t think there’s any appreciable risk because of the statement.

    It don’t matter, the statement the judge made.

    And volunteer — was no ordinary — any — and asked any inquiry about.

    He volunteered that.

    Charles E. Whittaker:

    Mr. Royall, may I ask you sir.

    Did this I.B.C.’s have any physical assets or are they just show instrumentalities for the promotion of these contests?

    Kenneth C. Royall:

    Well, I don’t think, show instrumentalities is quite accurate.

    They did — did not have a large amount of assets.

    They had personnel.

    They had contracts, contracts of employment.

    Charles E. Whittaker:

    Valuable goodwill?

    Kenneth C. Royall:

    A very valuable goodwill.

    Charles E. Whittaker:

    And the stock could’ve been sold for something?

    Kenneth C. Royall:

    Yes, sir.

    Kenneth C. Royall:

    Now the — they — now, then the Court started — it ordered divestiture, ordered Wirtz and Norris to sell their stock in the Garden.

    His purpose as it — as well as it can be gathered from his many remarks was that it was necessary to restore the parties to their previous competitive positions.

    The record shows without contradiction, the plaintiff conceded that there never had been any competition between Wirtz and Norris in the Stadium and the — he stayed in the Madison Square Garden.

    And therefore, that reason had no support.

    The — but he also said that the divestiture and the purpose of preventing a monopoly in the future.

    However, he had already provided that in his order that the Garden couldn’t have a two championship bouts a year and that the Stadium couldn’t have two championship bouts a year which not by inference but by a direct and necessary order prevented the monopoly.

    And therefore, that reason would not stand up.

    Now, the foresail of this Garden would greatly damage Mrs.Wirtz and Norris.

    It is common sense they have a very substantial block stock.

    There is no fair value that could possibly be gotten from the stock with a large block overhanging in their mind in a closely held corporation.

    Not only that, whatever stockholder in Madison Square Garden who haven’t — who had no participation even in the things they alleged would find the injury to his stock.

    Are there any figure in the record as to what that stock’s worth?

    Kenneth C. Royall:

    No, sir.

    I don’t believe it is.

    I’m — I’m arguing that from inference that the corporation of this kind, as I said, it reads as common sense.

    I think that must necessarily be true.

    William O. Douglas:

    (Inaudible)

    Kenneth C. Royall:

    It is listed, yes.

    It is listed, but it’s —

    William O. Douglas:

    (Inaudible)

    Kenneth C. Royall:

    It’s — they have a big block.

    Felix Frankfurter:

    Mr. Royall if — if the decree is supportable otherwise on the ground that this corporation was an agency and instrumentality for violating the Sherman Law, the fact that there was some innocent stockholders would be not relevant to the validity of the decree.

    Kenneth C. Royall:

    It couldn’t — it would not sir.

    It would not do so.

    But it has only — they are bound by the — actually the corporations, no doubt about that.

    But it — it does land it — I mean, it is important on the general justice of this decree.

    William J. Brennan, Jr.:

    (Inaudible)

    Kenneth C. Royall:

    In the record, it shows 38% of the Garden and later in the decree they had other — they were asked to produce anything that they thought they might have any direct contact within its realm.

    I think a little over 50%.

    Now, they also set up — set up for trusteeship ship for the stock.

    Kenneth C. Royall:

    The expense of which was depending to sale and to be paid from dividends of Wirtz and Norris.

    And while the Government says it’s a trifling financial burden, my experience with the little things that is to the contrary, and I imagine the Court has had some experience.

    The Wirtz and Norris stock was acquired long before the alleged conspiracy.

    None of it was in any sense of fraudulent conspiracy.

    None of it was used to force any in the agreements made by the Garden.

    Divestiture also deprives them of future profits, not only from boxing which is only 6% of the business, whether it deprives them of anything they could make out on 94% of the operation in other events.

    And I will say — well, I think, the apology that if — decree could be punitive, that’s a punitive decree.

    They had filled up the Garden in other events long before boxing came.

    They’re given money and time to doing it.

    The directors felt so strong about it, with them absent and no evidence that they control the directors at all.

    They state it that in desperation, they would rather give up championship boxing than to lose the services of Wirtz and Norris in the conduct of their other operations and pass it by a formal resolution.

    Felix Frankfurter:

    That option is not open under the decree?

    Kenneth C. Royall:

    No, sir.

    He gave us no options.

    I’m coming to those in a moment.

    There again, they decree would purchase all of the — punish all of stockholder on all these other events, circuses, flower shows, horse shows, religious meetings, even political gatherings.

    (Inaudible)

    Charles E. Whittaker:

    Mr. Royall, is that because in addition to divestiture there is some injunction against Madison Square Garden?

    Kenneth C. Royall:

    No.

    It — it you takes Wirtz and Norris —

    Charles E. Whittaker:

    Out —

    Kenneth C. Royall:

    — out of them and they don’t appeal.

    The law with the course in years is holistic.

    Madison Square Garden up to what it is today, the hard work and intelligence, and their main effort has been in matters other than boxing.

    Charles E. Whittaker:

    And the result would be that without their resistance, the corporation would suffer in getting this so-called legitimate business?

    Kenneth C. Royall:

    That’s what that the record said by unanimous holding excluded.

    They did not attend the meeting and no evidence of any control in that except the spontaneous statement from the Corporation itself.

    Charles E. Whittaker:

    But there would be no legal prohibition against Madison Square Garden?

    Kenneth C. Royall:

    Oh, no sir.

    No, none at all.

    Kenneth C. Royall:

    They could do it with other the people.

    Now, the — then, they have a composure leasing provision which would require them to — if an applicant came for a boxing match, the Court would decide whether they’d give it even if he took it away from another boxing match or if he took it away from a horse show or if he took it away form anything else.

    In the first place, that’s a bad way to run a — to run the District Courts to put them in the operation of a — of a sporting —

    Felix Frankfurter:

    I didn’t ask about that.

    I don’t — would you mind completing what it is that would be logical in the Court?

    Kenneth C. Royall:

    If there was an applicant for a boxing match and there were other applicants for that time whether they were boxing or anything else, it would raise an issue which if the — that which could — could — there could be a request the Court to determine to whom it could be leased and on what terms.

    Felix Frankfurter:

    Do you mean the Court would have to decide whether it could be boxing or (Inaudible)?

    Kenneth C. Royall:

    Oh, I know only one boxing or another or whether — it wouldn’t make any difference whether there was a contract or arrangement.

    The Court would decide that.

    Is that —

    Well, that’s — excuse me.

    Kenneth C. Royall:

    Yes, sir?

    I’ve just gone to observe that’s not so very different to put in the —

    Hardly.

    — covered into the business of fixing reasonable royalties and compulsory patents as devised —

    Kenneth C. Royall:

    Well, the patents — yes, sir.

    That — that’s the only analogy.

    Those are the analogies we know.

    But I think it’s quite different that this is — this is a matter of running this different type of business, a complicated type of business.

    That is one of the greatest decisions, the Garden or the Stadium or any other arenas got to make.

    But —

    Felix Frankfurter:

    But I’m not sure I understand this.

    Does it mean that the Court would have to decide whether on December 15, 1960 to be left to a — for a boxing championship match or — and then use it for some — suppose they’re exhibitions, French or Russian Ballet?

    Kenneth C. Royall:

    That’s where it leads.

    Felix Frankfurter:

    But I think that’s very different from happening.

    Kenneth C. Royall:

    Yes, sir.

    I don’t think so and I think even between two boxing matches is very difficult.

    Hugo L. Black:

    Mr. Royall, all of this notwithstanding the divestiture of the practices?

    Kenneth C. Royall:

    Yes, sir.

    This goes on, in and out —

    Hugo L. Black:

    Even after the divestiture.

    Kenneth C. Royall:

    This is an addition.

    Charles E. Whittaker:

    What is the theory of that (Inaudible)

    Kenneth C. Royall:

    The theory of that apparently is that they want to open up so anybody can go in the Garden and if the — if someone else comes in, they — the judge will have to decide it.

    And — and that’s true although there are hundreds of other arenas.

    William O. Douglas:

    Could you put your finger on those provisions of the decree?

    Kenneth C. Royall:

    Yes, I can.

    Well, give me — I’ll continue while they are looking that up.

    William O. Douglas:

    That is —

    Kenneth C. Royall:

    Now, even if that applied only to boxing, it would still prevent a — present a very complicated problem.

    And if it did, we say that it’s not the sort of thing that all to be done.

    Now, it’s on page 912 of the record, provision 18 of the decree.

    Now, we — we assort some — the defendants requested three options, none of which were granted.

    One option directed to the threatened divestiture was to give Wirtz and Norris a choice whether they’d sell their stock in the Garden or in the Stadium.

    That was not — that was turned down.

    Another request was if they were going to dissolve and enjoined as they’ve threatened at one time to do.

    The I.B.C.’s or many activities, they were landed on that.

    That it would be sold to the highest bidder.

    And the final one, and the desperation one after the judge had informally announced what he was going to do was one I referred to that rather than this divestiture or they would rather stop championship boxing in the Garden although that would be a serious thing to them.

    Charles E. Whittaker:

    Do you Mr. Royall claim that if you get it on to certain parts and hold it against you on the (Inaudible) that rather than the report to divest themselves from that stock, accept that court resolution and ask us tremendous decrees only to enjoin boxing and perhaps (Inaudible)

    Kenneth C. Royall:

    Well sir, that’s what we offered to do.

    Without having to say that, it said it would be terribly unjust to the — but that, we’d rather have that than what we have, they’ve offered us.

    Now, there’s one other thing.

    This decree also adversely affects nonchampionship boxing material.

    It interferes and makes the impossible practically the continuation of these weekly series.

    It prevents a normal contracts that are made with boxers and arenas.

    It deprives the normal and recognized methods throughout the boxing industry.

    If the District Court and if this Court sustains it and says the market is limited, is valid and limited to championship boxing, then certainly, they should not step into the other field and interfere seriously with the operation in the nonchampionship boxing field.

    We want to say this in conclusion that if you find a violation and if you find the market which we hope you won’t do, that it would be sufficient for all purposes to prohibit exclusive contracts of boxers, to prohibit exclusive contracts with arenas, to establish a two-bout limitation.

    That would meet every possible legitimate purpose.

    Kenneth C. Royall:

    This two-bout is a bad thing.

    The Government didn’t ask for a three-bout limitation.

    The judge put the two-bout on.

    And it would put them whether to decide a disadvantage because other arenas would have a great advantage at all bidding for championship boxers because they could bid for any and we’d be limited to two.

    And it would give them even as to the others an advantage, would remove the competition of us when they bid for the others.

    But if that has to be born by us then we have to take it.

    The — I’m not going to discuss much the abuse of discretion.

    I think the Hartford — the Gypsum case, there is sufficient law on that and it — I understand still the law of this Court found in — about five years ago, perhaps six years ago have said we have never treated the power of the trial court as one of discretion subject only to reversal for gross abuse.

    Rather, we have failed an obligation to intervene in this most significant phase of the case, that is the relief when we concluded that we entered appropriate provisions in the decree.

    I want to call attention again to the fact that the time of this conspiracy or alleged conspiracy that we deny that the defendants had no reason in the world.

    The think they have done anything violative of the rule of law.

    The trial court itself says that it did not charge the defendants with malicious, intentional or moral wrongdoing.

    That’s what the Court says and added that at the time of their acts, most people felt that the plaintiff’s action was not prohibited.

    On those facts, may it please the Court, there is no basis we think for the drastic remedy and that’s the word the judge used.

    And simple justice and morals, the decree should be at most a curative decree with no element of punishment or oppression.

    We do not believe that there is any violation of the law or if they should be, we think that the decree should be radically changed and reduced to the principles which I have sought and present to you.

    Earl Warren:

    Mr. Elman.

    Philip Elman:

    Mr. Chief Justice, if the Court please.

    Before responding to the various specific contentions that had been advanced by General Royall, I should like to make a general observation as to what from the point of view of those of us on the Government side of this litigation.

    It appears to be the basic misconception, basic error that underlies and permeates the appellant’s position on this appeal.

    That error as we see it consist simply in this that the case is being presented to this Court precisely as if the case were still in the District Court.

    This Court did not sit to re-weigh the evidence, to retry the facts, to recast the decree.

    That’s the function of the District Court.

    When the case was here at the 1954 term, it was remanded by this Court.

    The Court holding that the complaint had — had stated the cause of action.

    The case should be remanded to the District Court to give the Government an opportunity to substantiate the allegation to the complaint.

    The case went back to Judge Ryan.

    There were extensive pretrial proceedings, interrogatories, depositions, case retried over a period of two months, not only extensive oral testimonies in the record, but documentary exhibits, agreements, memoranda, contracts with stenographic transcript in this case covers about 4600 pages.

    The printed record alone is three volumes.

    That was all before the District Court, after a trial of two months.

    Philip Elman:

    Judge Ryan took the case under advisement.His findings of fact, conclusions of law, on the merits were delivered in — on March 8, 1957 after he had had arguments on the law and the facts, proposed findings and conclusions by both sides.

    The arguments that Your Honors have heard today were the arguments that he considered.

    The case has been presented as if he had not rejected those arguments, as if he had not found the fact contrary to the interpretation given to the evidence by the defendants, the appellants here.

    This proceeding is not in the nature of a petition for rehearing in the District Court or a motion for a new trial.

    And it seems to us that the appellants have failed to face up to the burden which rests upon an appellant in a case ofthis sort.

    The burden arising out of fundamental principles of appellate review, the principle of findings of fact made by the District Court are to be accepted or not to be set aside here unless shown to be clearly erroneous.

    The rule codified in Rule 52 (a) of the Federal of the Civil Procedure.

    The rule which has been given special emphasis and application in respect to the big antitrust case involving such a case typically does and as this case does.

    The complex of economic facts clearly erroneous ruled this Court has said in the Gibson case means that the appellant has the burden of satisfying this Court after all is said and done.

    Leaving it with a clear and firm conviction, a definite firm conviction that a clear mistake has been made.

    Now, the appellants have not contended that the — the District Court here applied any erroneous standard of law as to the factual question, that contention which is usually made the basis of attack on finding the fact.

    That isn’t here.

    Instead, the approach has been taken and it has been to take out a — bits and pieces of evidence, the testimonies scattered throughout the record, and argument is to each one of these pieces.

    In itself, it’s a reasonable transaction actuated, proper, legitimate motives, no conspiracy, no combination, no evil in that.

    Now, that’s not the way in which the — of an appellate court, this Court deals with findings of conspiracy particularly — in antitrust cases.

    There’s a patent case in 226 U.S., the old Swift case in 196 U.S.

    The Court specifically said that when it deals with findings of conspiracy, it won’t fragmentize the record.

    It won’t take each little piece and look at it in itself because the whole maybe vastly different and greater than the sum of its parts, looking at the whole conspiracy, looking at all constituent elements.

    You may discern or design the significance which is not apparent from each particular piece.

    Now, not with standing that, the approach that’s been taken here has been to present the case as if there were no findings of facts.

    What part of the case was part of their contentions in this — in this argument?

    Philip Elman:

    I’m making — I think that that applies to the whole case Mr. Justice Harlan.

    Do you mean throughout?

    Philip Elman:

    As to the relief, I think there too.

    They — the appellants have failed in our opinion to give adequate respect to the rule —

    To interrupt to your order (Voice Overlap)

    Philip Elman:

    Not at all.

    I’m very — very — I’d like to take up each of the particular arguments that’s been made here.

    But I think by way of introduction that put — put our position at least in proper perspective.

    I think that the — this Court in effect is being asked to hear and decide this case to be noble as if Judge Ryan had not gone through the process of weighing the facts, deciding what the evil was, what the main gravamen of the case was and whether he had not himself wrestled as he did with the question of what to about it.

    Philip Elman:

    Now, there has been — there have been references to Judge Ryan’s characterization of some of the provisions and the decree is harsh and drastic.

    Well, it’s true.

    Judge Ryan did at one time consider that some of these provisions were harsh and drastic.

    That was his initial reaction.

    He had — he had responded to the request of the defendants to have a hearing on the relief that it is a better proposed judgment has had the Government and the defendants should ask to be heard as to the provisions that should be included in the decree.

    And those hearings also extended over a period of — of a month.

    There are about 9000 pages of transcript just under relief.

    Charles E. Whittaker:

    What?

    Philip Elman:

    It wasn’t —

    Felix Frankfurter:

    9000?

    Philip Elman:

    9000 pages in a stenographic transcript, the bulk of volume two of the printed record.

    Felix Frankfurter:

    You said 40 —

    Charles E. Whittaker:

    (Inaudible)

    Philip Elman:

    Well, the total — the total is about 1800 and about 900 were devoted to relief.

    The bulk of volume —

    Felix Frankfurter:

    According — you gave us an early (Inaudible) Mr. Elman.

    4600 pages the transcript of record in stenographic minutes, is that correct?

    Philip Elman:

    Mr. Justice, the index to the record, the printed record at the beginning of each volume, the last number of the original is 4623.

    If you look at the last number, that’s — that’s what I’m referring to, the 4600 pages of the original record 4623, 1595 pages of printed record.

    Felix Frankfurter:

    Since you’re dealing at large before you come to details, may I put to your questions at large?

    Philip Elman:

    Yes, sir.

    Felix Frankfurter:

    Will you deny that there’s a difference in the function of this Court or the power of this Court of the propriety of attitude of this Court, though you will between the weight to be attached to finding the facts based on evidence and the proper scope of this Court in reviewing a decree fully allowing great weights to the discretionary scope in allowing light scope of the discretion, but is there any other difference between finding the weight would which finding affect on the evidentiary matters leading to the conclusion of illegality and the attitude of this Court to take towards a decree particularly to the decree of novel proportion to the scope?

    Philip Elman:

    Well, —

    Felix Frankfurter:

    Are there any difference?

    Philip Elman:

    In the abstract, perhaps the answer is yes.

    But in — in this particular case, the reason why the judge ended the relief he did was based entirely upon his appraisal of the facts, not as appraisal of what the conspiracy and the evil here consisted of.

    Felix Frankfurter:

    I’ve had that —

    Philip Elman:

    Now, the —

    Felix Frankfurter:

    — put in my question with the proper scope to be given to the discretion, to the wide area within which the judge could think.

    Philip Elman:

    I think — I think —

    Felix Frankfurter:

    But nevertheless, a decree is an odd measurement of the appropriateness of the remedy to the facts and that does not lie within the peculiar knowledge of the District Judge.

    This Court has constituted frequently in the Sherman Law cases, modified decrees as to which one couldn’t say they were illegal in any event of jurisdictional power, but this Court found that they were not quite appropriate.

    Philip Elman:

    Yes, but the burden upon him who was searched that the provision of a decree is not appropriate is indeed a very heavy point.

    Asking this Court and with its limited opportunities for studying the case to substitute its judgment, if the matter is one of judgment as to what in fact will dissipate the illegality, what will prevent a recurrent or continuation of the violations of the law.

    Those questions of judgment, we don’t — we believe can’t be answered by looking at the provisions of the Sherman Act to the Constitution or an Equity Hornbook.

    You’ve got to look at the record.

    Equity —

    Philip Elman:

    And when you’ve — when you’ve got that kind of a judgment, when you’ve got the approach that this Court has taken in the Paramount case, the Crescent Amusement case, the International Salt case and others recognizing that that the — that this function inherently is one, that the trial judge must assume the principal responsibility and burden.

    Of course, no one acts as a rubber stamp, and let me say this in answering your question Mr. Justice Harlan.

    I think that I can say here that Judge Ryan demonstrated throughout this period as to the relief questions that he was not a rubber stamp for either side, that he was not so intent on what ought to be done if he had made up his mind at the very beginning and he wasn’t going to be barging on it.

    But it’s quite the contrary.

    (Voice Overlap)

    — nobody is going to have to argue that.

    Nobody has — have experience as Judge Ryan (Inaudible)

    Philip Elman:

    Well, Judge Ryan —

    Felix Frankfurter:

    May I ask this, and I — it carries — now my question carries (Inaudible).

    I just want to know the fact whether the decree that they had before us was formulated by the Government and permitted to get a trial?

    Philip Elman:

    The decree that you have before you is peculiarly the creation of the District Judge.

    Felix Frankfurter:

    All right.

    Philip Elman:

    The principal — the principal provision here that’s under attack, the divestiture provision was substantially — was proposed by the Government substantially modified by Judge Ryan.

    The provision as to compulsory leasing of the Stadium was proposed by neither side.

    It was suggested to the parties by Judge Ryan after he had heard a testimony from the Chairman of New York State Athletic Commission, Mr. Julius Helfand.

    Mr. Helfand put in a plea for the independent promoters, the small men who are on the fringes of this business and who — he — he said — he suggested to the judge that those independent small promoters who are now in the nonchampionship promotion should have an opportunity to go to the Garden.

    And he — judge — the judge thought that there ought to be some provision in the decree in the nature of compulsory leasing on a reasonable rental.

    And the extraordinary thing about this aspect of the case is that after Judge Ryan has made this proposal in the Court, several days later, the defendants embraced that proposal.

    They incorporated in their own proposed judgment, didn’t complained to him about it.

    And that — and the precise terms in which it appears in the final judgment, Your Honors will find duplicated in the proposed form of judgment which is in the records starting at page 621.

    This is the defendant’s adoption of a proposal initiating from the judge and not from the Government.

    The Government had proposed that the Garden and Norris and Wirtz to be permanently barred from the business of promoting championship contest.

    The judge said that seemed to him to be unnecessarily severe and he accepted on that aspect of the case the defendant’s proposal.

    Philip Elman:

    That provision is to limiting the defendant’s to two championship contest a year, Your Honors will find in the proposed form of judgment submitted to the defendant — by the defendants to the Court.

    Now, I can’t ask Your Honors to accept what I’m saying here without suggesting even — even a casual scrutiny of the first page, the eary part of volume two to this record in which Judge Ryan deals with these questions of the decree.

    You have an unusual glimpse of the judicial mind and action here.

    He followed the practice of engaging in colloquies with counsel as he went along from day to day telling him — telling them frankly what was on his mind, what his difficulties were, inviting them to address themselves to these problems that he had.

    His initial reaction to the divestiture of provision was, it’s too harsh, it’s too drastic but as the evidence was presented, it was mainly the defendant’s evidence.

    The longer he parted it, the more — he reluctantly, he said over and over again to the — didn’t want to come out this way.

    But he — the longer I ponder over this, he said, the more convinced I am that the basic evil here is the combination between Norris and Wirtz, these mid-Western businessmen and in that Madison Square Garden Corporation in New York.

    He had to break that off that the only way in which he could prevent possible recurrences of the restraints, the monopolization which he had found was to breakup that monopoly.

    Now let me say just a word about the — his findings of fact as to — as to the relationship between these two groups.

    In 1949, when this conspiracy was — was formed, the situation in the boxing industry was — was roughly this.

    Madison Square Garden is a formal sports arena in the United States, if not the world.

    It was the center of the boxing industry.

    It was a place where most of the championship contests were held.

    At that time, it worked with Mike Jacobs in the 20th Century Sporting Club.

    He had an exclusive lease on the Garden for boxing.

    And they split with him on a 50-50 basis.

    The only other significant promotional group at that time was the Tournament of Champions which was partly owned by the Columbia Broadcasting System.

    They had promoted two middleweight championship fights earlier that year.

    They were planning to promote some additional ones.

    They have an exclusive lease on the Polo Grounds.

    Now, out in the Middle West, where Norris and Wirtz, two businessmen of very substantial interests, Norris was in the crane business.

    He was a stockbroker.

    Wirtz was a real estate man.

    As far — at that time, their relationship with the Garden was — was a rather insubstantial one.

    It’s true they owned some shares of stock.

    They owned between 50,000 out of a total of over 500 some odd thousand, less than 10%.

    The defendants themselves recognized that in 1949 before this conspiracy, Norris and Wirtz were not officers of the Garden.

    They were not directors of the Garden.

    They exercise no control over the Garden.

    They didn’t even actively participate in the management of the Garden.

    Philip Elman:

    They were out and lived in Chicago.

    They owned and controlled the Chicago Stadium, the Detroit Olympia and the St.Louis Arena which were the largest Stadium in those cities available for boxing but as a matter of fact, the boxing activities there were only occasional, not very profitable.

    Now, the conspiracy here had its inception in an agreement which was made by Norris and Wirtz on the one hand, and Joe Louis, who was then heavyweight champion, in January of 1949.

    Louis at that time was heavily in debt, namely to the Government for unpaid taxes and he was getting on in years and his lawyer, a man named Truman Gibson conceived of a scheme whereby Joe Louis could secure some income for himself without engaging in any further boxing.

    And then went to Norris and Wirtz and as a result of that, an agreement which — substantive at which is in finding 107 on page 567 of the record was made between Louis on the one hand and Norris and Wirtz on the other.

    Now, under that agreement, Louis agreed that he would secure exclusive agreements with the — then for a leading heavyweight contenders, Ezzard Charles, Walcott, Lesnevich and Savold.

    These four who were the potential successors to the crown would enter into agreements with Louis, giving him the exclusive right to promote their fights, with exclusive radio, television, and motion picture rights.

    Louis would then resign or retire his Heavyweight Champion of the World.

    He would then assign to these four exclusive contracts which he had with these contenders to Norris and Wirtz.

    He would get a salary of $15,000 a year, some stock in the corporation to be formed by Norris and Wirtz, and $150,000.

    And that agreement was carried out.

    Louis got those contracts.

    He retired as champion.

    He had signed those contracts to Norris and Wirtz.

    Now, as a result of that agreement as the District Court specifically found on finding 116 on page 579, Norris and Wirtz in March 1949 were in the position to promote boxing context — contest which the Heavyweight Championship Title would be at stake.

    They had in effect cornered the market on hip on the heavyweight championship.

    And unlike the position they were in a year before when they were outside this industry, they were — they had acquired a dominant commanding preclusion particularly because of the fact that Mike Jacobs was then in Florida.

    And as Mr. General Royall pointed out was mortally ill.

    Now, Norris — the Norris-Wirtz group, after getting this agreement with Joe Louis, then proposed to the Madison Square Garden Corporation and to its president General Kilpatrick that they worked together and not create a — create a top competitive situation that would be harmful to all.

    They are particularly worried about the impending competition from the Columbia Broadcasting System, the Tournament of Champions which was showing — which had fast capital resources and was showing an interest in taking over the promotion of boxing in order to put it on television.

    Now, Norris and Wirtz and Kilpatrick, and the directors of the Garden, these were on opposite side, Norris and Wirtz were not on a Garden side of these negotiations.

    They are representing themselves.

    They negotiated and according to Finding 122 on page 580 on May 5th, 1949, they arrived in an agreement to combine and join forces.

    As a result of the agreement, common boards of directors consisting of Wirtz-Norris, Louis and Kilpatrick and Ned Irish, an official of the Garden were designated for these two corporations that had been set up by Norris and Wirtz, the I.B.C.s, International Boxing Club of New York, International Boxing Club of Illinois.

    The terms of the agreement set out in Finding 125 on the same page, Wirtz and Norris would get 80% of the profits of I.B.C. Illinois, the Garden would get 80% of the profits of New York.

    Joe Louis would get 20%.

    Championship contest would be allocated between the I.B.C., two-thirds to I.B.C in New York, one-third to I.B.C in Illinois.

    Finding 126 as a prerequisite to the execution of this agreement, the Garden had to buy up it’s — the exclusive lease that had with Mike Jacobs.

    Mike Jacobs also had an exclusive arrangement with Yankee Stadium.

    He also had an exclusive contract with the then welterweight champion Ray Robin — Sugar Ray Robinson, one of boxing’s all-time greats and an exceptional box office figure.

    Philip Elman:

    Now, that was — that the Garden did that.

    Mr. Jacobs was eliminated.

    The Garden took over — took over his rights to the Yankee Stadium and this exclusive contract with Robinson and with anyone else that they wanted to have.

    Then so far as the Tournament of Champions was concerned, the District Court found that pursuant to this agreement, the group bought up the right of Tournament of Champions to lease the Polo Grounds.

    They bought up all their assets including the exclusive contract which that group had with the then middleweight champion, Marcel Cerdan.

    Now, as a result of all these activities, you had this group in May of 1949 in control of the key stadia and arenas throughout the East.

    They had Madison Square Garden in New York at Yankee Stadium.

    They had the Polo Grounds.

    They had the St. Nicholas Arena which Mike Jacobs also had.

    They have the Chicago Stadium, Detroit Olympia and St.Louis Arena.

    They had all the key stadia as the District Court characterized them.

    They also had the heavyweight championship under control be — by reason of their assignment from Joe Louis.

    They had the welterweight championship exclusive rights.

    They also have the middleweight championship exclusive rights.

    The testimony of Judge Norris which Judge Ryan — the testimony of Mr. Norris which Judge Ryan incorporated in his findings was that that — the I.B.C.’s had a regular practice of entering into so-called contingent exclusive contract with everyone who wanted a shot at the championship title.

    Any contender who wanted to fight with the title had to enter into a contract with them giving them exclusive rights to promote any contest in the event that he won.

    Now, Judge Ryan said that this was — this Finding 164, the defendant’s practice of so obtaining such contracts served as a device for perpetuating their control of professional world championship contest as the title pass from one boxer to another.

    General Royall has said there’s no evidence along those lines.

    I suggest to Your Honors that on page 195 of the record you will explicit testimony by the manager of French boxer, (Inaudible), that he couldn’t get a contract with the champion unless he gave the defendants the exclusive promotional rights in the event that he won the championship.

    Now, that was —

    Is that the (Inaudible) deal with the relief question?

    Philip Elman:

    Yes, sir.

    But I think the relief question here can’t be considered in vacuo.

    You — you can’t decide what it is that has to be undone until you know what was done and that’s the reason I’m spending so much time on the findings of fact which Judge Ryan had made and on the basis of which and on the basis of — on the additional basis of the evidence which he received from the defendants on a supplementary hearing in 1957, he decided that this decree was necessary.

    Earl Warren:

    We’ll recess now