United States v. Radio Corporation of America

PETITIONER:United States
RESPONDENT:Radio Corporation of America
LOCATION:Sherry Frontenac

DOCKET NO.: 54
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 358 US 334 (1959)
ARGUED: Dec 08, 1958
DECIDED: Feb 24, 1959

Facts of the case

Question

  • Oral Argument – December 08, 1958 (Part 2)
  • Audio Transcription for Oral Argument – December 08, 1958 (Part 2) in United States v. Radio Corporation of America

    Audio Transcription for Oral Argument – December 08, 1958 (Part 1) in United States v. Radio Corporation of America

    Earl Warren:

    Number 54, United States of America, Appellant, versus Radio Corporation of America and National Broadcasting Company, Incorporated.

    Mr. Solicitor General.

    J. Lee Rankin:

    Mr. Chief Justice, may it please the Court.

    This action involves the question of a conspiracy charged by the Government involving the exchange of radio and television stations in Cleveland, Ohio for radio and television stations in Philadelphia, Pennsylvania.

    The questions before this Court are whether or not the action of the Federal Communications Commission in allowing the exchange precludes the Government from bringing an antitrust proceeding because of the conspiracy between NBC, the wholly owned subsidiary of RCA, to obtain this exchange.

    And against the contract which was made as covering the exchange as a part of the conspiracy.

    And further, whether there are equitable considerations in the nature of collateral estoppel or akin to res judicata, or by reason of the — the delay of the Government in bringing the action which would preclude the proceeding.

    The matter came before the District Court, the Eastern Division.

    The Eastern District of Pennsylvania, and there the Government’s case was dismissed.

    It came up —

    William O. Douglas:

    Would you mind telling what happened before the Commission?

    J. Lee Rankin:

    Yes.

    Before the Commission, the Commission allowed the exchange and there was a stipulation as a part of the District Court proceedings between the Government and the parties that the Commission had the duty to consider and did determine whether or not there were antitrust violations in passing upon the decision as to whether or not to allow this exchange of the Cleveland station.

    William O. Douglas:

    Did the Department of Justice appear that the administrative proceedings —

    J. Lee Rankin:

    It did not but it was given notice.

    Hugo L. Black:

    (Inaudible)

    J. Lee Rankin:

    Yes, the Commission notified it that there were possible antitrust considerations involved, and the Department of Justice did not appear.

    There was no hearing.

    There was no adversary proceeding.

    There was no opinion.

    The order was just made allowing the transfers to be made under the statute.

    Charles E. Whittaker:

    Did they make (Inaudible) whether or not the Commission as of the time it was found to make that order incidentally had defined that did it not violate the antitrust?

    J. Lee Rankin:

    The Government does not think so.

    The Government believes that the problem with the Commission had was to — was defined by the statute, which was to determine a public interest, convenience, and necessity regarding this exchange.

    Now, this was not a comparative proceeding.

    There was no other applicant before the Commission for this — these particular stations.

    William J. Brennan, Jr.:

    How do you reconcile that statement Mr. Solicitor General, the stipulation in paragraph where it says, considering the following evidence, the FCC had a duty to and did consider whether the evidence support your — in violation of antitrust laws.

    J. Lee Rankin:

    We — we believe that stipulation involves this.

    That the Commission could properly have considered and did have a duty to consider, whether or not there was such a violation.

    And it could have determined within the stipulation that there was or that there was not such a violation.

    J. Lee Rankin:

    And even if it did, the consideration that it was determined — it was to pass on was not whether that was a violation of Section 1 of the Sherman Act.

    But what it was determining was the public interest, convenience, and necessity under the statute.

    Now, to depart a moment on that, if you recall this Court in the case of Federal Communications Commission against RCA Communications, in the case involving whether or not the Mackay Telegraph Company would be allowed to extend its lines, the radio communication in foreign areas to The Netherlands and to Portugal.

    The Federal Communications Commission determined that that application should be allowed to those two points on the basis that it would be — it would provide more competition, and it made the decision only on that ground.

    And the Court reversed because it held that competition was not enough.

    But the Commission was considering the element of Statute 313 regarding the application of the antitrust laws and thought that competition itself was the element that was enough to be controlling.

    And this Court reversed that decision and sent the case back to the Commission to determine according to the proper standard not merely whether or not if the competition was involved or whether competition would be benefited under Section 313.

    But whether or not under its basic statutory duty, the public interest, convenience, and necessity would determine that these extensions should be made so that taking into account that case, and the duty of the Commission by the statute the Commission could have found either that there was a violation or there was not, but that was not enough.

    It had to move on from that point and determine what effect that violation would have upon this applicant’s right to have his application — his application granted to have these particular stations exchanged.

    And in that determination there could be many factors that — it must necessarily considered including the question of — of its programming ability, its financial ability and all the other elements that go into the consideration of the Commission.

    Now, the fact is that the Commission says that it did not consider that if — it had the responsibility for determining.

    And it has a memorandum here before the Court and what it says, that it didn’t have the responsibility of determining the antitrust features of this manner as such, but it doesn’t withdraw at all from the proposition that it has a duty to consider them as they bear upon the public interest, convenience, and necessity.

    So keeping that in mind, the difference between the standard that they must apply and the elements that are involved in antitrust enforcement, it seems to me that this case becomes clearer as to the proper disposition.

    Supposing the Government, a response to its notification by the Commission had gone and said this is — this is — this is part of a conspiracy to violate the antitrust law.

    We want to put — put in some evidence as to my case.

    The Commissioner said we’re not concerned, we’ll — we’ll — we’ll take it all.

    We’re really — we’re really not concerned whether this have been a violation of the antitrust laws here if, unless we find that the thing — that this exchange is not otherwise in the public interest, and that we find it is why the antitrust law violation is something that we’re not considering but with that — we’ll do that — that would have been a good sustainable order of the Commission?

    J. Lee Rankin:

    Well, I — I think it would, Mr. Justice, providing they first reach the point of whether or not the public interest, convenience, and necessity was served if they concluded it would not be.

    I don’t think they had to reach the antitrust issue at all.

    But if they would consider that otherwise all the other elements would justify and they would entirely disregard the antitrust feature.

    I think the NBC case by this Court in regard to the network regulations requires them to consider the antitrust feature as a part of the public interest, convenience, and necessity measure.

    So, to answer your question if it’s not — if I haven’t made it clear, if they don’t reach the question because they already find that the application cannot be approved because it is not in the public interest, for reasons involved in that, other than the antitrust.

    It seems to me they don’t have to go as far as to consider the antitrust issues at all.

    But if they find everything else and they completely disregard antitrust issues, then I think its error under the NBC case.

    Does that answer the question?

    Well, I understand your point of view and —

    J. Lee Rankin:

    Now —

    William O. Douglas:

    (Inaudible) [Laughs]

    Charles E. Whittaker:

    May I ask you, if — if the subjects in this case is true that the Commission did file an old antitrust violation, would you then still contend that was not binding from Department of Justice?

    William O. Douglas:

    I would contend that it was not binding upon the Department of Justice insofar as an action under Section 1 of the Sherman Act is concerned, because they are not required under the law.

    William O. Douglas:

    And they aren’t expected under the law to determine that question except for a limited purpose of the public interest, convenience, and necessity.

    Now, they held no hearing in this matter.

    And RCA, the other conspirator was not a party.

    Is it conceived for a moment that if the Commission had held against them on the antitrust and made such a finding that it could bind RCA, who was not a party in the action, and the Government was not a party, in such a later proceeding, wouldn’t the RCA say, “We had no trial.

    We had no hearing on this Section 1.

    We’ll be involved at all kinds of trouble damage actions in relation to this matter by such a holding.

    We’re entitled to a trial under Section 1 in the courts on the issue of whether or not we did or did not violate these antitrust laws.

    And the incidental feature of the effect of the antitrust relationship on the public interest, convenience, and necessity certainly cannot bind us, and preclude us from a proper hearing in the court of law on the other issue.

    Hugo L. Black:

    Suppose they had found, there was a violation of the antitrust law and the other company had been there, could the person who claimed to have self-examined on account of this violation of the antitrust law take advantage of the statute authorizes them where the court finds guilt to use that as prima facie?

    J. Lee Rankin:

    I don’t think so.

    I think the statute provides to the regard to a particular federal statute and it’s the determination by a Court that they can rely upon as a prima facie evidence.

    Now this — this system of regulatory statute for the Federal Communication Commission does have provision for exemption with regard to telegraph and telephone companies.

    But it’s very careful in those sections to provide for the notice to different institute parties, Commissions, Attorney General, and other people in the States, and for hearing the proceedings, so as to determine whether or not the consolidation or the other elements are proper in the public interest.

    Hugo L. Black:

    Suppose there have been a finding of innocence by the — by the Commission, finding there was no violation of the antitrust law, and a suit had been filed by some person who claims under civil suits or some — claims of an injured, could that finding be set-up either as res judicata or collateral estoppel or anything else?

    Or as to civil damage suit then?

    J. Lee Rankin:

    The Government contends that it cannot.

    The Government takes the position that the issue before the Commission is the public interest, convenience, and necessity, and that the antitrust feature is a consideration to be taken into account but is not a determination of that issue for the purposes of the Sherman Act.

    Hugo L. Black:

    Do the other parties take that position?

    I’m not talking about your position but —

    J. Lee Rankin:

    I think they would —

    Hugo L. Black:

    — they discussed what would happen in a case of a civil action for damages by someone who claims had been injured, should there be a plea of res judicata or collateral estoppel?

    J. Lee Rankin:

    I would think that their position would be, from their briefs, that at least if they got a favorable decision that they could have the benefit.

    Now, if it was adverse to them before the Commission whether they’d be bound by it is something I don’t gain from their briefs.

    I think you can learn from counsel more accurately than I can describe it.

    Hugo L. Black:

    Well, if it’s a legal adjudication, I suppose it —

    J. Lee Rankin:

    It should be binding both ways.

    Hugo L. Black:

    Yes.

    J. Lee Rankin:

    Now —

    William O. Douglas:

    I suppose if the Commission had made explicit findings here at least we can find that this did not violate the antitrust laws, we’d be here — not here then?

    J. Lee Rankin:

    No, I would still contend that that was not —

    William O. Douglas:

    (Voice Overlap) — but it was — its purpose for it.

    J. Lee Rankin:

    That Congress did not intend that it should determine the antitrust aspects insofar as whether or not there was a violation of Section 1.

    But its duty was merely to determine the effect of that question as it related to the public interest, convenience, and necessity.

    Now, I think that is borne out by the terms of the statute itself, which is very clear in 313 on page 5 of the Government’s brief, where it’s made very plain that the antitrust laws are to apply in great detail to this entire area of radio broadcasting.

    And then it goes on, not to saying, how the Commission shall handle to the matter?

    But the proceedings before a court, and how the Court, if it imposes certain requirements in regard to licenses and so forth, those shall be carried out by the Commission so it recognizes in the pattern here.

    And when the — in the legislative history when it came up, Senator Dill was very clear that the Court should continue to carry out and apply the antitrust laws.

    And the only purpose of the Commission consideration was to make certain that that would be an element, the competitive factor, in the determination of what was the public interest, convenience, and necessity.

    What about that phrase in there whenever in any suit, action, or proceedings, civil or criminal, brought under the provisions that (Inaudible) or in any proceeding brought to enforce or review findings of the — an order to the Federal Trade Commission, I see.

    J. Lee Rankin:

    That’s the Federal Trade Commission.

    I see, I’m sorry.

    Hugo L. Black:

    May I ask you just one other question, practical — of the practical effect.

    You’re prepared to answer it.

    Suppose it is true that this adjudication, it’s finding either of guilt or innocence, and that —

    William O. Douglas:

    (Inaudible)

    Hugo L. Black:

    — therefore in order to determine it, you’d have to have a full-fledged trial of all the evidence relating to reasonableness and so forth, so far as antitrust charge is concerned.

    Would that have any appreciable effect on the length of time required to pass on this application?

    J. Lee Rankin:

    Well, but that’s one of complaints that the Commission makes in its showing we have before the Court.

    It says it would be an impossible burden that it isn’t equipped to have such proceedings under its set up.

    It doesn’t have the money, but beyond that if it had to do it in all the cases where they were charges of antitrust violations that it would never get its work done, which it conceives to be the principal job of determining what is in the public interest regarding whether a license should be granted or denied.

    And therefore, it would be impossible for it to carry out this primary duty that the Congress has imposed on it if it had to file all these issues like a court, and even then it says it doesn’t equipped to do so.

    Now this —

    Hugo L. Black:

    Does it — does the right to trial by jury have any connection with the proceedings, if it has that effect?

    Is a defendant charged with violating antitrust laws other than Federal Courts, a trial by jury?

    J. Lee Rankin:

    Well, they often obtain it by asking, maybe waive it by not asking, and they certainly would — I would think would raise it.

    And here they had no — no proceeding of any kind, there was an investigation by the Commission.

    But there was no adversary proceeding of any kind.

    So that certainly if the issue was found against them, they would say they had no trial whatsoever and that would be true.

    It would be merely, the agency itself going out investigating and deciding they were guilty or innocent.

    Now, that would be something that the Commission it seems to the Government would have the power to do, insofar was it — it would bear not preclude them on the public interest and convenience, and necessity, but they have a bearing on it, in one of the factors.

    J. Lee Rankin:

    But to decide the issue of whether they’re guilty of a violation or a conspiracy without a trial of any kind.

    It seems to me they would be the first ones to say if that happened to them and that adverse — holding was adverse that it couldn’t be done under the law.

    I suppose if the Government had wanted to embrace this great opportunity in going to trail in an antitrust case before the Commission, the Commission would’ve had a right to say no as it did to the effect as I understand it, this should bring (Inaudible) that not — we’re not going to hold any trial.

    J. Lee Rankin:

    Well —

    The Government couldn’t insist without a trial, isn’t it?

    J. Lee Rankin:

    It couldn’t have insist that on a trial but I don’t want to mislead the Court.

    We didn’t ask for it.

    I want that —

    (Voice Overlap) —

    J. Lee Rankin:

    The Government took the position that it should not be precluded and that this — it had a right to proceed under the Sherman Act regardless of what the Commission did because the Commission was not trying to decide this very issue.

    Charles E. Whittaker:

    It isn’t quite correct that (Inaudible) to say that the issue before the Commission were built on these.

    Isn’t that true, the position before them was (Inaudible)?

    J. Lee Rankin:

    Well that’s our contention.

    We say that the whole theory —

    Charles E. Whittaker:

    But, they go on.

    J. Lee Rankin:

    Yes.

    Charles E. Whittaker:

    Is it for public interest (Inaudible) then the Commission was not to determine whether this application was for public interest.

    J. Lee Rankin:

    That’s right.

    Charles E. Whittaker:

    Isn’t it?

    Now, that it could it could not be in the public interest if it filed under the antitrust laws which reenacted in the public interest, do you?

    J. Lee Rankin:

    Well, it could.

    Now, this — because of this, this was not a comparative hearing where you had other applicants for the same facility.

    You have this one exchange between these two parties.

    And the question of whether or not there was a violation of the antitrust laws was — is just one factor in regard to the public interest.

    Charles E. Whittaker:

    Well, there’s one factor and is determined the adversity then the Commission could not find (Inaudible) for the public interest, did they?

    J. Lee Rankin:

    Well, it seems to the Government that they could in this regard in the NBC case about regulations where the competitive factor it seem to be over winning to the Commission and decisive.

    They decided the case just on that basis in allowing these extensions that I just described in regard to The Netherlands and Portugal.

    And this Court said you can’t do that.

    You must go back and decide all these various elements if they fit into the pattern of the public interest.

    No one of them controlling, so that the competitive factor, it seems to the Government can’t be the one that can say this cannot be granted at all.

    J. Lee Rankin:

    Now, take into consider this — consideration in this very case, here is NBC, one of the alleged conspirators, that involves a great network in this country.

    It has five owned and operated stations which is all that is permitted to have under the FCC regulations.

    Now, they are operating those over the country and it’s recognized that they are performing a public service.

    They certainly have programming ability.

    They have the financial capacity.

    They have demonstrated their ability to operate stations in the public interest in other places.

    Now, if you find the conspiracy here without a trial or anything else but there is enough to convince the Commission that there is a violation of Section 1.

    Should that in itself be conclusive, that’s the — that’s the issue.

    And the Government says it should not.

    It’s one of the factors that has to be considered.

    Charles E. Whittaker:

    Well, it didn’t (Inaudible)

    J. Lee Rankin:

    Yes, if it found that that was an element that in itself.

    But it seems to us that the Mackay case makes it clear that competition alone can’t decide that you have to take in to consideration these other factors because otherwise the Court wouldn’t have reversed the case and sent it back and said it was error to consider merely competition and think the competition alone was sufficient for the Commission to act on.

    Charles E. Whittaker:

    We’re not dealing here as I understand it, (Inaudible) res judicata problem but it’s rather an estoppel in pais, those collateral estoppel and the conduct not existing by the warrant of the Department with the position now taken by the other (Inaudible), is that it?

    J. Lee Rankin:

    Yes, their principal reliance at this time is upon primary jurisdiction, but I think that the Court treated it also as akin to res judicata and I think estoppel in pais would be a description of it.

    But then you have to get into the question of whether or not there was a trial, an adversary proceeding, in which people can be bound and there is none of that element here.

    There was no finding as such.

    Charles E. Whittaker:

    Well, would it be — I have this document (Inaudible) if this practically consistent.

    Once the Commission had found within its jurisdiction to go about in an adversary proceeding, that — this move on to the public interest.

    Then the Department of Justice come around, ask that that (Inaudible) been concluded has taken contrary decisions.

    J. Lee Rankin:

    Well, that was the position of the lower court.

    And we think it would because the Federal Communications Commission does not have the responsibility of deciding the same issue that the Court did.

    And it was conceived by Congress and intended that this issue of the violation antitrust laws should be decided by the courts and not by the Commission with regard to whether or not there was a violation of the Sherman Act.

    And it’s very clear in Section 311 they direct that if the courts decide that a station license shall be revoked, the Commission is required to follow that out.

    And, they are also required not to issue a license where the Courts have directed the revocation.

    They’re not subsequently to issue a license where such a revocation has been directed.

    Now, it’s very clear in 1952, the Congress amended the Act, and we deal with that on the bottom of page 29 and at the top of page 30 of the Government’s brief.

    Hugo L. Black:

    Suppose Mr. Solicitor General that if it be correct that this is a — an adjudication, a final adjudication or you’re barred on the same basic principle by estoppel, what do you call the estoppel in pais or collateral or whatever it is?

    I suppose what you’re barred and once you — the scope of the judgement would be if there is one that’s binding, that there’s no conspiracy between these two companies to violate the antitrust laws.

    Suppose you try to indict both of them or one of them, why couldn’t both of them plead this as a defense?

    Hugo L. Black:

    It would be a final adjudication if it is one of the fact that neither one is guilty.

    J. Lee Rankin:

    Well, in effect I think that’s what they did in the District Court.

    They said that by reason of this proceeding before the Federal Communications Commission.

    You — this Court has no jurisdiction, that is the lower court, to determine whether or not we violated the Section 1 of the antitrust laws, the Sherman Act.

    Hugo L. Black:

    Well, not merely that company but the other one too, I would suppose.

    J. Lee Rankin:

    Yes, both of them.

    Now, it doesn’t have any of the elements of the collateral estoppel or res judicata where you have to have an adversary proceeding in a trial between the same parties.

    And even if you assume for a moment that the Federal Communications Commission is the same as the United States because it’s a governmental agency, you still don’t have RCA, the other conspirator, a party here, and they had no hearing of any kind.

    And they certainly would never come into this Court and say that they were bound by an adverse decision of that kind where it was made merely by investigation, no hearing and no opinion either.

    Hugo L. Black:

    If merely — if only one of them however, had been indicted here before, let’s take the Court proceeding.

    J. Lee Rankin:

    Yes.

    Hugo L. Black:

    Only one of them had been indicted.

    And on the ground that he can file that A had conspired with B.

    But B wasn’t indicted.

    And they — the Court and jury found A innocent.

    Could B be prosecuted after that?

    B wasn’t party to it.

    J. Lee Rankin:

    Well, if you have joint conspirators, if you have the conspirators and one of them was found not guilty that the conspiracy would fall, that’s correct.

    But certainly neither conspirator here would say to this Court that if it was bound by a decision by the Federal Communications Commission as to violation of Section 1, if it didn’t even have a hearing on it, and that’s what happened here.

    There was no adversary proceeding of any kind.

    They didn’t have an opportunity to try out, cross-examine witnesses, the adverse witnesses or anything, and they certainly would not agree that they were bound — to be bound by any such proceeding.

    What’s the citation, Solicitor General with the Mackay case (Inaudible), if we don’t hold it up?

    J. Lee Rankin:

    I think it’s 346.

    346.

    J. Lee Rankin:

    346 U.S. 86, it’s cited in the appellee’s brief.

    Thank you.

    J. Lee Rankin:

    Now, in 1952, when the Congress did examine this question.

    The Court — the complaint was made that the Commission had the power and apparently was exercising it to re-examine the question after a person was tried in a court for a violation of the Sherman Act.

    William O. Douglas:

    What kind — what kind of violation were they talking about?

    We’re talking here about the violation as to — is inherent in the things that the Commission grants the licensee, the monopoly, are we not?

    J. Lee Rankin:

    No.

    The — the application here doesn’t show any violation of any — the — the violation is in connection with the exchange but the conspiracy was much broader than the exchange.

    The conspiracy was to try to get two owned and operated stations for NBC in one or two of the eight principal markets of the United States instead of in — the tenth, which was Cleveland, and the eleventh, which was Washington, that they then had, so the conspiracy extended beyond this particular transaction to extending — exchanging the stations in Cleveland and Philadelphia.

    It was to also get them one station in one of the eight — eight principal markets for the station they owned in Washington.

    That’s the conspiracy charged.

    Now, there is no question about an allegation of very predatory action here.

    They started out with the idea of using the affiliation that NBC could make available and did have with Westinghouse in Philadelphia and denying that affiliation in Philadelphia, and also threatening it to deny it in Boston where Westinghouse hadn’t.

    And not give it to — in Pittsburgh where it was requiring a new station unless it gave in to this exchange.

    And the exchange was a very valuable and attractive proposition for NBC and RCA and that the property they paid $3 million additional for the exchange over the — exchange in the Cleveland station but the property was worth over $1 million a year according to the claims of the Government.

    And we — and that’s the allegations of the Government in that regard.

    So this is an act where powerful financial groups, NBC and RCA, decided that they wanted some property that belonged to somebody else, and that was Westinghouse, which is a pretty powerful group in itself.

    And by saying we won’t allow you affiliation with our network any longer.

    They were able to force this transaction across, and that’s our allegation and we expect to prove them.

    It’s about as predatory as anything that you could experience in this field.

    And the fact that they were able to accomplish with this large and aggregation of capital, as Westinghouse demonstrates, what the effect would be on the lesser financial groups and lesser business enterprises engaged in this industry.

    Charles E. Whittaker:

    (Inaudible)

    J. Lee Rankin:

    It was investigated.

    And it went into it by making various inquiries of the parties in the Westinghouse and so forth.

    And when this matter came up in regard to the amendment of this section, certain language was deleted and that is set forth on page 30.

    Hugo L. Black:

    Of the record?

    J. Lee Rankin:

    No, of the Government’s brief, in italics.

    To meet the complaint that the Commission, after a Court had decided not to revoke a license of a radio station.

    The Commission could go in and decide to revoke the license or not grant it.

    And the Congress in its report said that this was an unusual situation where the Commission would have the power to review the Court after it has decided in favor of the appellant.

    And it was Congressional action was to remove that particular power from the Commission but not to take away in any respect the power of the Court to act in regard to revoking and acting upon licenses.

    Now, the last sentence deals with the stopping of the United States and the Congress acted on that in the legislative history, the conference report we set out at length on page 31.

    But it made the explicit that it consider that language mere surplusage, the last sentence.

    And that it was not taken any powers away from the Government at all but it was merely taking that language out because it’s considered as surplusage.

    And it’s so set out in detail in the conference report.

    The conference report is set out on page 33.

    J. Lee Rankin:

    The main report of the Committee is set out on pages 30 and 31 in the footnote —

    This language was in (Inaudible) at the time of this proceeding?

    J. Lee Rankin:

    It was not.

    It was not?

    J. Lee Rankin:

    No.

    The conference report said the deletion was not of any legal significance.

    It is the view of the members of the conference committee that the last sentence in the present Section 311 is surplusage.

    And that by omitting it from the present law, the power of the United States or of any private person to proceed under the antitrust laws would not be curtailed or affected in any way so that the legislative history is very clear on the intent of the Congress.

    Now, the principal position of the appellees, it seemed to us at first that the — the responsibility of the Commission was to determine this very question or whether or not there was a violation of the antitrust laws as such.

    The Government’s position was that is not the function of the Commission, that it only determines it as it relates to the public interest, to the convenience, and necessity.

    And that it is akin to the Georgia case in regard to the question of rates where the Court allowed the action brought by the State of Georgia even though the ICC had approved the rates.

    But it said, the Court said, the approval did not go to the conspiracy under which the rates remained.

    And that is the position of the Government here.

    The conspiracy for this exchange was not approved in any way by the Commission and it was not its function.

    It merely approved the simple application for the exchange as to whether or not it was in the public interest, convenience, and necessity.

    And it is the Government’s position that it could have found that there was a violation of the antitrust laws, that as between these two parties, it was in the public interest, convenience, and necessity to allow this exchange of these and allow this license and leave the question of the resolution of whether or not there was an antitrust violation that they would be liable for under this conspiracy that was broader than the exchange to the Court to determine.

    And if the courts determined it, adversely, their license could always be determined — terminated and revoked in accordance with the statute.

    Was it — Commission obligated to give the Attorney General notice, the United States notice?

    J. Lee Rankin:

    No, it is not.

    It was — that was merely a matter of courtesy.

    They did that —

    J. Lee Rankin:

    They didn’t —

    (Inaudible)

    J. Lee Rankin:

    I can’t say whether they do it always or not.

    They do it —

    But, in contrast, the word telephone company (Inaudible)

    J. Lee Rankin:

    Well yes, that’s correct.

    Now, as to the telephone and telegraph company though they are — the Commission has given the power to exempt them from the antitrust laws.

    Yes.

    J. Lee Rankin:

    But here they can’t.

    J. Lee Rankin:

    And so it’s — as we regard it in the Government is merely a matter of grace as to whether they give notice or not.

    Charles E. Whittaker:

    (Inaudible) violation of the antirust laws is one, would the Commission nevertheless go on and give you a (Inaudible)

    J. Lee Rankin:

    Yes.

    The Government believes that it could because that is only one factor regarding the public interest, convenience, and necessity.

    Charles E. Whittaker:

    That would still be contrasting with public interest to approve the transfer, the (Inaudible) and purpose.

    J. Lee Rankin:

    Well, it might, depending upon the situation, and in this particular situation you’d have the way against it.

    The fact that NBC is engaged in all of this large operation that it has other stations that have been found to be operating in the public interest, convenience, and necessity.

    And is in fact involving a great network or operating in a great network.

    All of those things would have to be weighed.

    And if we would have appealed as we recognize the only way the question of whether that he — there is error in the granting of the — approving the grant of the license is concerned would be an appeal under 402.

    If we would have appealed, the Government would have a test of whether it was in the public interest, convenience, and necessity.

    And the — the competitive factor would be only one of the considerations and we would be up against the proposition that in that kind of a hearing there would only be the question of whether or not this exchange from Westinghouse, who was asking for it too at that time.

    And NBC should be granted.

    There would not be a question of someone else making the application which would be present in a comparative hearing.

    And we couldn’t establish, or we didn’t believe we could establish, that the competitive factor in the light of the Mackay case could control every other consideration in this kind of an exchange proceeding because the test would be the public interest, convenience, and necessity.

    Now, that isn’t the test under the Sherman Act.

    The Sherman Act, the question is solely, did they conspire and did they act in accordance with the conspiracy to try to carry it out.

    Charles E. Whittaker:

    Or under the Sherman Act, it takes more under the Sherman Act for the (Inaudible) before the Commission would be denying a passport, isn’t that what you’re arguing?

    J. Lee Rankin:

    Well, I — I’m arguing that under the Sherman Act there is a trial of the very question of whether or not there is a violation of the Act filed under the Communications Act.

    There is that element to consider whether or not there is a violation, but it also has to be considered with all the other elements of public interest to determine how they all fit together and whether or not in light of the whole package is still is in the public interest to grant this particular application.

    Now, —

    Hugo L. Black:

    Can you think of — can you give a reason in your own mind or situation in which they could have found that this violated the Antitrust Act on — based on substantial evidence in which it could be said that it was in the public interest to let them violate the law?

    J. Lee Rankin:

    Well, the — assuming the allegations of the complaint here.

    I think that they could still be satisfied that the — with that the Government could prove the complaint as charged and weigh that against this particular application for the exchange and find that all of the other elements were in favor sufficiently so that the competitive factors could not be the controlling factor and therefore they had to grant the license.

    Hugo L. Black:

    Well, are you making — are you making a mistake in talking about the competitive factor, and making it wholly and completely synonymous proven violation of the law both criminal and civil.

    J. Lee Rankin:

    Well, I recognize there is a difference between a proven violation of the law and the competitive factor.

    But I do think the competitive factor is what the Congress was trying to reach in the Sherman Act to preserve free enterprise in competition.

    And so it’s — it may be weighted more of course, it is weighted more where there’s the conviction because they have actually interfered with that competitive enterprise.

    But you still have the question of competition involved in whether or not there is an antitrust violation.

    I suppose in the illustration on what you’re talking about is the per se violation where the Government that is so minded could go after, prosecute, get a conviction, get an injunction, and where the same transaction came up before the FCC they could say, “Well, this is per se alright but it’s dimmed an excessive amount too much and we think we’re overriding public interest, it means that we should throw this into the balance but ignore it.”

    That’s the kind of a situation (Inaudible)

    J. Lee Rankin:

    Yes, Mr. Justice.

    All except the, “Ignore it.”

    I think they have to put it on the scales for something.

    Yes.

    I mean throw it into the hopper and then discard it.

    J. Lee Rankin:

    Yes.

    Yes.

    J. Lee Rankin:

    And they could say now that isn’t enough.

    We put it down the scales.

    Yes.

    J. Lee Rankin:

    That we won’t — it doesn’t weigh enough so that we can deny this license.

    William O. Douglas:

    But if they went up on — on a 402 case in the Court — to the Court of Appeals, the opposition could get a reversal on it definitely.

    J. Lee Rankin:

    Well, who’s going to go up on this proceeding?

    William O. Douglas:

    I say not this one but the second case, where there’s an adversary.

    J. Lee Rankin:

    Well, if you had a comparative hearing —

    William O. Douglas:

    Yes.

    J. Lee Rankin:

    — then you’d —

    William O. Douglas:

    Or if the Department of Justice had intervened, it would make yourself a party, do you think?

    (Inaudible)

    J. Lee Rankin:

    Yes.

    And it’s stipulated that we could have appealed and we could have asked —

    William O. Douglas:

    Suppose that —

    J. Lee Rankin:

    — for reconsideration.

    William O. Douglas:

    Yes.

    Suppose there had been, then that could have been the judgment — the decision could be reversed on — on that ground, doesn’t it?

    J. Lee Rankin:

    I don’t think it could be the only on the question of this violation of the antitrust law because I think that has to be weighed along with all the others, now, in determining the public interest.

    Now, it may be that the lower — the Court of Appeals or this Court finally would say lay down a rule and if there’s a violation of the antitrust laws that per se precludes anybody from ever having a license.

    But I don’t think that you could say that in the light of the legislative history of what public interest, convenience, and necessity means in this law.

    That carries in — in its connotation to many other elements that have to be waived, and that’s the problem that the Government was up against.

    J. Lee Rankin:

    If we should ask — come in to that proceeding, and ask for an appeal because we were dealing with a different measure then we would have in the trial of the antitrust law.

    We wanted a trial of the question of whether they engaged in a conspiracy and overt acts pursuant to it.

    And now, there’s also this element that the — I think the Commission could properly take into consideration in regard to public interest, convenience, and necessity and that is this very statute provides that if the Court should determine that there was such a violation, the courts could direct that the license be revoked, and that would take care of the whole question, so that is something.

    It seems to me the Commission could properly take into account in weighing this whole problem of all the different elements that are involved in the public interest, convenience, and necessity.

    So that I don’t — that on behalf of the Government that if they’d found that there was a violation they could take that alone and say, “That is controlled.”

    They have to weigh it against these other factors to determine the public interest.

    Hugo L. Black:

    Do you think this entails to take that position that if there’s a violation of the law clearly shown, violation of antitrust law, which is not unanimous, that they could be granted a license.

    Have you any other argument besides the one based on the premise of the violation of the law and need not bother?

    Is there — do argue — you make any argument in connection with the nature of the case, this being an answer for everything?

    It may be the proof but different to what it would be, if criminal or civil case, but to keep issue as the antitrust law?

    J. Lee Rankin:

    No, I — I don’t base it upon the question of proof.

    The Government satisfied that it can prove what it alleges here.

    Hugo L. Black:

    But I’m not talking about that proof.

    I’m talking about the case before the Commission.

    Is it — suppose there was a lot of evidence which is that — the Commission just said we’re not going to take three months to try this — all this case, this was not the end of it.

    Lead us close enough to believe that this is on the line of violating the antitrust law.

    That we’re just going to consider it for the purposes here that we’ll go no further.

    That we will take into consideration the fact that up to this time without drawing into it fully we believe the antitrust law has been violated.Could they do that?

    J. Lee Rankin:

    I think they could.

    I think they could waive that along with the other factors in the public interest and the — and deny the license.

    I think they could also weigh it in accordance with their function and determine the public interest, and feel that it balancing out it was not enough to deny the license in this type of a proceeding.

    What about the last point in Judge Kirkpatrick’s opinion, forget all about what we’ve been talking about —

    J. Lee Rankin:

    The delay?

    — (Inaudible) which is —

    J. Lee Rankin:

    Well —

    — discretionary finding of fact made by a good judge, a competent man, does that doctrine apply in your view in the case of this kind?

    J. Lee Rankin:

    I don’t think it should at all to the Government in a violation of the Sherman Act.

    That’s within the statutory period of the actions brought, it was brought within 11 months of the time of the decision.

    And —

    Perhaps you’re going to come to that phase of the case.

    I don’t want you to anticipate it but it struck me to something that you ought to argue.

    J. Lee Rankin:

    The — the Bowles case that cited by Judge Kirkpatrick, we think it’s not applicable at all because in the Bowles case, which was an OPA case, the various acts that were involved were not predatory.

    They were not deliberate and planned like this.

    They were negligent acts and they had already proceeded to rectify them and correct them so there were all the elements to appeal to the equity as distinguished from this kind of a situation which is what the Congress conceived that the Government would try to protect against.

    If there’s anything to be protected against in the Sherman Act, basically, certainly you would start with the predatory action where there is a deliberate determination to take somebody else’s of business away from by force of the position of the party.

    So the Government, it’s not in the record but the Government had to take some time to analyze the action, the holding of the lower court whether the validity of it.

    And then there was a grand jury proceeding and the question of whether or not to proceed criminally or civilly.

    And those things just did take time and was impossible to act in any shorter time than — than it was.

    Hugo L. Black:

    May I ask you a question, that is to see — what’s your position.

    Suppose the evidence showed that finding made that during this 11 months had been many new things done, new actions taken in a great extent so that it could be established a substantial evidence that big thing, whatever it is.

    The irreparable damages is has been suffered — would be suffered if — because of what is done within this 11 months, you try to unscramble this thing.

    What would you say to that?

    J. Lee Rankin:

    Well, I think if that was the case that it would be entirely a different case.

    I think that they did make an exchange of facilities and personnel and so forth that was involved large properties and important action.

    But they had noticed before they did that that the Commissioners, Doerfer and Bartley, they did not consider that the Commission, to a Federal Communications Commission decided this particular question or that it was their function.

    They can see it could be their function to decide the question of whether or not this license transfer should be approved, and if there could still be — one that Bartley said that it might preclude action by the Government and two, the Commissioner Doerfer made a public statement that it would not preclude.

    So they had notice of that before they ever made defenses.

    I don’t think there was any misleading of anybody that the Government wasn’t busily working on this case and planning to bring some action.

    Hugo L. Black:

    Well, then your basic contention is — I’m having — only see if I’m rather wrong.

    Not that you could not be estopped as he said or barred by a reason of sitting by and letting people take steps upon them into great distress and trouble and so forth.

    But that there is nothing here that shows that any such situation existed.

    There are no findings to show us and no justification into all these things.

    J. Lee Rankin:

    Well, I’d say to the latter first that is there is no justification for the holding by the record here.

    But secondly, I’d say that when that question of whether you’re going to stop the United States when bringing in an action of this type that’s so fundamental to a — the preservation of free enterprise as competition, and you have predatory action involved, then I’d say that you should never apply estoppel unless it’s so clear that the public interest should suffer because of it.

    Hugo L. Black:

    You tried any cases that hold or how they held if the Government cannot be estopped by it’s vagueness for that being in a prosecution?

    J. Lee Rankin:

    Well, there is a case, Arizona against California in which that question was examined by the Court and the Court commented about it.

    It said that the public interest was too important for the negligence of its servants and employees to preclude the public from having its interest protected.

    And suppose you wouldn’t concede that you were negligent you just needed a good judgment, that’s your position.

    J. Lee Rankin:

    Well, it takes sometime to try to do these things right and it took us some time to do it.

    Hugo L. Black:

    But did you ask the Commission to hold up by (Inaudible)

    J. Lee Rankin:

    No, we didn’t.

    We took the position, very frankly, all the way through that the Commission’s action did not affect the Government’s rights.

    So we’re involved in that.

    Potter Stewart:

    Did you make that position known to the appellees all the way through?

    J. Lee Rankin:

    Well, there — I don’t know whether the petitioner made it known or not.

    The grand jury proceedings were about six months, between five and six months after the decision by the Federal Communications Commission.

    And the way those things go — excuse me — they — there — I assume there must be — have been exchanged, the counsel for the appellees might be able to bring light in this Court.

    Potter Stewart:

    You — you said you took the position all the way through, was it?

    That these FCC proceedings in no way affected your right to institute antitrust proceedings in a court of law and I was just wondering if you took it to whom you told them about it?

    Who, if anybody did you tell about this position (Inaudible)

    J. Lee Rankin:

    Well, I gather from the record that’s all I can give you.

    That it was made plain because the — it was stipulated between the parties that the department was notified and —

    Potter Stewart:

    And it did nothing.

    J. Lee Rankin:

    It did nothing and the investigation went on.

    They stipulated that they could have asked for reconsideration or appeal in all of these things so that all this time the action was going on and the other agency — the agency was working on it.

    It seems to me it would be difficult for them not to have known it was not a (Inaudible)

    Earl Warren:

    Mr. Segal.

    Bernard G. Segal:

    May it please the Court.

    As I apprehend the argument of my friend, the Solicitor General.

    It is — that although the Federal Communications Commission was the proper agency to pass upon this transfer.

    Although he concedes that the Commission when it passed upon the transfer had before it all the facts which the Department of Justice now has.

    Although he concedes that the Department — that the Federal Communications Commission had a duty to make the determination which it did make.

    Although he concedes that the Federal Communications Commission did make a determination on these facts, and that in the course of doing so it necessarily found that the proposed transfer was in the public interest.

    Although he concedes that the Commission had jurisdiction under the statute to make the determination which the Commission did make.

    Although he concedes that the statute under which the Commission acts makes that determination final unless an appeal was taken under the statute.

    Although he concedes that the Department of Justice had an opportunity too but did not participate in this proceeding as it has by the way of many proceedings before this Court, did not seek the hearing which in answer to Mr. Justice Harlan I may say it clearly have the right to get.

    Although, it did not take the appeal which the statute expressly provided in the exclusive way provided by the statute.

    Although he concedes that the Department of Justice has no new facts which have developed from the day the application was acted upon by the Commission until the day the complaint was filed and presumably certainly until today.

    Nevertheless, he urges upon this Court that when the Department of Justice later concluded on the identical facts that the transfer was not as the Commission found in the public interest.

    The Department should be permitted to maintain a suit in the United States District Court or the Eastern District of Pennsylvania for the purpose of setting aside as null and void, not a conspiracy, but the very transaction, the very transaction which the Federal Communications Commission approved.

    Bernard G. Segal:

    Now, I say to Your Honors that in an effort to justify that really remarkable position, and one completely without precedent, we have studied every page we could find.

    And I am comforted in our conclusion that there was no precedent because the Solicitor General who is of course always very efficient has cited none.

    In an effort to do that, what does he do?

    Well, he broadens the issues into questions of conspiracy, into questions of Sherman Act, into broad general policies, which I shall endeavor to narrow to present to Your Honors just what the issue was.

    And he avoids what is really a very simple statement of facts.

    So simple that when we before the trial court said, “No, we prefer to go ahead.”

    And try the space against the framework of a full presentation of all the facts, it was the Government as this record shows, who said, “No.”

    It was the Government who appeared before Judge Kirkpatrick and argued vigorously, and had several people there to say what’s the use of trying to this case since all the facts can be conceived now?

    And if the defendants are correct, the Government doesn’t want to proceed with the case.

    And so we entered into a stipulation of facts and there are — while the stipulation has 13 averments, I may say to Your Honor that just — Your Honors that just a very few, actually three or four numbers are significant.

    The stipulation does explain that the facts of this case are rather simple.

    NBC had — no, Cleveland stations, Westinghouse, and Philadelphia stations.

    NBC, pursuant to the Commission authority, as Commissioner Doerfer say in the opinion to which the Solicitor General has referred, had a affiliation with Westinghouse which it had the right to renew or not to renew as it saw fit within two years.

    This is something which the Federal Communications Commission in the full wisdom of its regulatory authority has decided it’s good for the industry.

    And I take it that this is something that is not before the Court matter.

    And in the exercise of that part it sat down with Westinghouse and it said, “We think we need the Philadelphia station.

    We’re in the eastern part of the — of the State of Pennsylvania to a much greater extent; you’re in the western part, we have the Cleveland stations.”

    And in any event they worked out a deal.

    And the deal simply was that Westinghouse would get the Philadelphia — the Cleveland stations and that — that NBC would get the Philadelphia stations.

    And because the difference in earning power when capitalized came to $3 million.

    Westinghouse would get an additional $3 million.

    Now, that’s the whole deal.

    That’s the entire transaction.

    And I may say in answer to Mr. Justice Whittaker as to whether the Commission passed upon these facts that I need only to read to you a statement from the opinion by Commissioner Doerfer which appears at page 163 of the transcript.

    He writes it for himself and one other Commissioner in answer to Commissioner Bartley.

    I’ll read the last full sentence on that page.

    “It is impossible to read from this record that the Board of Directors of Westinghouse were intimidated by force or fear.”

    And he goes on to the next page at 164, the same observation can be made with respect to the question concerning, “The apparent withholding of the NBC affiliation for Westinghouse’s Pittsburgh station.”

    And finally at the bottom of the page, in the last two paragraphs, Commissioner Doerfer now, the Chairman says, “In the instant case there is no scintilla of evidence that NBC conspired with anyone to monopolize production of network or local programs.

    No price fixing for advertises were remotely upturned.

    Bernard G. Segal:

    NBC exercise the superior bargaining position to exchange a smaller market station in Cleveland for a larger one in Philadelphia.

    No suggestion is made that NBC is attempting to keep other networks out of the Philadelphia market or any other market nor that it’s conspired with anyone.

    Even Westinghouse is free to reenter the Philadelphia market with another network company or as an independent if it be so advised.

    No restraint of trade or attempt to monopolize and so on.”

    That is in reply to Mr. Justice Whittaker’s question whether the Commission actually did pass on this question.

    Now, Your Honors —

    Mr. Segal, what — when was this antitrust suit started?

    Bernard G. Segal:

    The antitrust suit was started in 1955, in December 1956, pardon, in December 1956.

    It was 16 months after the department was notified that these applications were pending and that there were antitrust issues involved.

    What happened to it in the end of the — was it awaiting the decision in this case?

    Bernard G. Segal:

    Waiting the decision in this case.

    In suspense.

    Bernard G. Segal:

    It’s in suspense by virtue of the Government’s argument that the facts were so simple quite contrary to the issues today that they could be stipulated.

    And I direct Your Honors’ attention then to the critical provisions of the stipulation.

    They are printed at Appendix B to our brief and they appear — it appears at 139 of the record.

    And I refer first to paragraph 7, the last sentence.

    Oh, let me just say to Your Honors in passing.

    This question of whether there was a hearing I’d like to get out of the way because it’s covered by the stipulation and because Commissioner Doerfer covers it very fully in this hearing and he covers it almost in the language that Mr. Justice Frankfurter used in explaining the procedures of administrative commission.

    Under the procedure, the Federal Communications Commission with all the facility that comes to an administrative body rather than a Court.

    And I take that this is one of the reasons for the original establishment of administrative bodies.

    It points out that the only time for a hearing is when something is to be accomplished by a hearing.

    What happened here?

    The FCC instituted as extensive an investigation as I ever — as I have ever known and incidentally those words are used in the stipulation, “extensive investigation.”

    They sent investigators out to every single person who had anything to do with this, not just at NBC and not just at Westinghouse, but any other allegation, not without knowledge of the Department of Justice.

    They had everything the Department of Justice had because the transcript says that not — I mean the stipulation — that not only did the Department of Justice — was the Department of Justice kept fully informed by the FCC but that they exchanged information.

    And so they went to the individuals in Philadelphia who allegedly were contacted by NBC to see whether NBC could acquire another station.

    They did a thorough complete workman-like job, the Broadcast Bureau of the Commission.

    And when they were all through, they decided that under Section 309 (b) of the Act, they could not proceed without a hearing.

    That they required other information on certain issues, and they define the issues.

    And I may say to Your Honor that among the issues defined were largely antitrust issues, largely the things that the Solicitor General talks about today.

    Bernard G. Segal:

    And both parties, both parties submitted very full and complete answers.

    And again the Broadcast Bureau filed its decision.

    And then the broadcast bureau said, “Well now, in view of what we have now, there’s nothing to be accomplished by you.

    There’s no protesting.

    The Department of Justice has had plenty of notice.

    It hasn’t come in.

    It hasn’t done a thing.

    It hasn’t shown an interest in this thing.

    It hasn’t indicated the things such a violation.

    Why have a hearing?”

    Commissioner Doerfer even said that he thought that what the Commission now had was more than it could get out of a proceeding where witnesses came on the stand and the restraints of being on a witness stand and subject to all of the rigors of a trial.

    And so with no complaint from anybody, and I may say with the concurrence even of the Broadcast Bureau which had thought there should be a hearing and acted as an adversary board, the Commission went ahead, and said that we don’t need a hearing.

    Now, if that isn’t the purpose of administrative proceeding, I don’t know what it is.

    No one has ever argued.

    That because of the false judgment doesn’t involve a hearing, it’s not res judicata.

    And here we don’t even have to argue res judicata as I’ll show in a moment.

    But let me get back to the stipulations.

    Paragraph 7 says behalf in the last sentence the FCC had before it all of the evidence relating to what?

    Relating to all of the antitrust issues presented by the complaint in this action.

    Now, there we have it.

    No issue, antitrust in which they didn’t have all the evidence.

    No issue presented in the complaint as to which they didn’t have all the evidence which the Department of Justice now has, paragraph 7 — 8.

    In considering the proposed exchange, the FCC had a duty to and it did consider whether the evidence before it showed any violation of the antitrust laws.

    I want to talk more about that in a moment.

    But it’s shocking to me to have the Government say that in deciding the public interest, the Commission didn’t have the plenary duty to decide whether this is a violation of the antitrust laws.

    And I may say just because Mr. Justice Harlan has shown interest in the case that I think hasn’t much relation, the Mackay case cited by the Solicitor General because that was a — a case of a common carrier regulated in a much different way (Voice Overlap) —

    Earl Warren:

    We’ll recess now — we’ll recess now, Mr. —