Viking Theatre Corp. v. Paramount Film Distributing Corp.

PETITIONER:Viking Theatre Corp.
RESPONDENT:Paramount Film Distributing Corp.
LOCATION:New York Times Office

DOCKET NO.: 481
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 378 US 123 (1964)
ARGUED: Apr 27, 1964
DECIDED: Jun 15, 1964

Facts of the case

Question

  • Oral Argument – April 27, 1964 (Part 1)
  • Audio Transcription for Oral Argument – April 27, 1964 (Part 1) in Viking Theatre Corp. v. Paramount Film Distributing Corp.

    Audio Transcription for Oral Argument – April 27, 1964 (Part 2) in Viking Theatre Corp. v. Paramount Film Distributing Corp.

    Earl Warren:

    Mr. Nizer, you may continue your argument.

    Louis Nizer:

    Thank you.

    When this suit was instituted, there were 13 alleged discriminations set forth in the complaint ranging from the rejection of allegedly superior offers by Viking in favor of inferior offers by competitors to the failure to screen on days requested or advertising clauses that were different from other advertising clauses but the word “split” never appeared in the complaint as a discrimination or as a charge.

    There were seven pretrial conferences resulting in five pretrial orders.

    Not only was there no allegation that splits were per se illegal but an affirmative order was made by the Court on consent at Record 30.

    The question was whether Stanley-Warner-Goldman splits were illegal per se and it was held that they were not, it’s abandoned, no longer an issue in this case haec verba.

    At the trial, the plaintiff’s executive realm was on the stand for 20 days.

    In all of his specifications of discriminations and grievances, the word “splits” never passed his lips.

    Any of the theories that we now have about — that are now presented about this, of course, could not be cross-examined because they were never even presented.

    Instead, for 42 days, 7700 pages of the record, we were involved in the trial in which on a blackboard, we compare the chief charge that superior offers by Viking were rejected in favor of inferior offers and that became a shambles, the plaintiff out of his own mouth, repeatedly said, “I take it back.

    Now that I see that I’m wrong, cross it off”, and we crossed off picture after picture.

    And all of his other alleged discriminations had the same fate and there was nothing left since there was not even a proper of — fact of damage.

    There was nothing left but for a directed verdict at the end of 42 days of trial.

    We went to the Court of Appeals.

    There, for the first time, although the chief time was taken up on all these alleged discriminations, reviewing them, splits escape their anonymity and were mentioned at least as one of the ways of discrimination from which circumstantial evidence of conspiracy could be spelled out.

    Judge Biggs allowed a full day of oral argument, requested cross indexes so that the Court could check every exhibit and every bit of testimony and then the Court unanimously wrote a 31 page opinion, which after dissecting the plaintiff’s testimony with microscopic care, analyzing each of the distributors’ conduct first separately.

    Then referring to the Continental Ore doctrine by name and saying we now look upon the entire matter as an integrated whole and giving every favorable inference to the plaintiff, we find there is no evidence from which a jury could find conspiracy.

    But the Court of Appeals went further.

    It analyzed the new argument that splits were illegal, all the arguments made in this Court.

    And they found that it was not unlawful, that splits were not unlawful and that the evidence showed no injury to the plaintiff therefrom.

    Then came the petition of certiorari to this Court and for the first time that was contented that the splits are the conspiracy.

    That all the other discriminations flow from it, the phrase used is syllogistically.And splits emerged as the doctrine of law upon which, indeed, if they had believed in it, they could have moved for summary judgment as a question of law instead of trying the case for 42 days without mentioning it.

    And the company in this concoction in this Court are contrived theories in the brief of submarkets which do not exist in the realistic economic life of this industry, alleged monopolization of submarkets, these non-existent submarkets, monopoly becomes measured by computing theatre seats and incidentally, manipulated so that they multiply the defendants’ exhibitor seats by three and divide the plaintiff’s seats by three on the theory that the Viking had to enter three submarkets therefore one-third of the seats were competing in each market.

    The theory that by storing up financial resources during the split, the defendant exhibitors were able to give premium offers against the Viking and other semantic and mathematical legit domain about syllogistic inevitability.

    And all these, Your Honor, in this Court, without any record to support it, dismembered from all the evidence, floating in midair, detached from anything in the record.

    Now, when one concocts such a verba, there are 1000 facts which rise to be dealt with.

    The new theory that there’s — this is a monopoly case of the submarket runs into the fact that there was an expressed concession cited in page 5 of our brief, that this case does not involve monopoly and no charge of monopoly is made.

    That position wasn’t even changed in the Court of Appeals.

    Section 2, the monopoly statute wasn’t even cited among the statutes involved in the Court of Appeals.

    And therefore, the Court of Appeals in its opinion necessarily treated with this simply as a conspiracy case.

    Louis Nizer:

    The new theory that the defendants through splits, the defendant exhibitors were able to store up finances to make premium office, subsequently runs into the fact that in the trial, the plaintiff’s entire burden was to demonstrate that it was the plaintiff that made the premium bids and that they were rejected in favor of non-premium bids, lower bids or offers by his competitors.

    And the new theory that seats are the determining factor in this so-called submarket of monopoly runs into the theory that the plaintiff’s insisted at the other end of the spectrum, in the court below, that seats aren’t even a factor in determining an evaluation of an offer or a bid.

    He was asked, supposed a 600 seat theatre competed against Radio City 6000 seats, would the difference in seats be a factor?

    His answer was, “No, sir.”

    And in the reply brief, after being faced with these references to the self-stultification of the plaintiff, there is no answer to these contentions.

    Now, what are splits and what are their function?

    Due to television impact upon the industry, there was an alarming shrinkage of the number of theatres in this country and also an alarming shortage and reduction of motion pictures.

    And so there was a shortage of products.

    And as this Court had occasions, to Mr. Justice Douglas, to say that we will not compel bidding, competitive bidding, when the matter came before you, there was a search for alternative methods, than simply competitive biding.

    And one of the alternatives that grew up in the nation and as the reason for the amicus curiae brief filed by 12,500 theaters in this country opposing the Viking’s position, one of the alternative methods was the splitting of product.

    And as in Philadelphia when there are 12 first-run theatres and only eight companies to feed the 12 mouths, there is a problem of whether these theatres can exist and this — this is one of the outlets, the relief and ameliorated — amelioratory process to say particularly the little theatres, the grassroots splitters throughout the country that want the splitting arrangements.

    Now, how does the split operate?

    I’m afraid there is some misunderstanding from the pre — presentation.

    Very rarely, indeed, the record shows never does the distributor put all of these pictures on a split.

    Apparently, he has some special productions and he doesn’t wish to put them on, he has a special sales policy.

    The two exhibitors or there may be more come to the distributor and say, “Would you mind if we didn’t compete against each other on your product coming out for the next three months?” And they make a list of pictures.

    No terms, no financial terms, just names.

    And presumably, they divide this list to have parody between them.

    And the distributor is asked to make the sacrifice of consenting to eliminate the competition between these two for those particular pictures.

    The arrangement is always terminable at will.

    The distributor makes no commitment to the exhibitor that he will receive the pictures on the split, not at all.

    The evidence is conclusive and there’s no contradiction of it that the split is always subject to the distributors having the right as he must insist to recoup his money to offer that picture on the split to all other exhibitors in the territory.

    The exhibitor makes no commitment that he’ll buy that picture on the split, neither does he.

    Indeed, the exhibitor very often ignores the picture on his own split, not only because it may not turn out to be attractive to him for practical reasons he may not have planned that.

    But above all, the finding of the Court of Appeals and the uniform testimony without contradiction was that no competitor in the territory was affected by pictures being put on the split.

    They all had an opportunity to negotiate a bid for those pictures.

    And indeed, without wishing to trespass on my colleague who will develop this fact, just one statistical fact, I leave the rest to him.

    The Viking was interested in 87 pictures.

    Of these 48 were on splits.

    The Viking got 17 of these 48 pictures from the split, proof enough that the splits didn’t affect it.

    Louis Nizer:

    And indeed as Mr. Wolf will demonstrate, Stanley-Warner and Goldman got less pictures on this split than the Viking did of those that the Viking went for.

    William J. Brennan, Jr.:

    Now Viking would get them only as a result of bidding, wouldn’t it?

    Louis Nizer:

    No.

    25, that also, I’m afraid was a misapprehension here.

    25 out of the 34 pictures that the Viking got were by negotiations, Your Honor.

    25 out of 34, the theory that he was compelled to bid is simply not supported by the record.

    Potter Stewart:

    At what stage would it (Voice Overlap) —

    Louis Nizer:

    And that — that’s in the record.

    I — I beg your pardon.

    Potter Stewart:

    Would there first be a bidding?

    Louis Nizer:

    No.

    Many pictures were never put on (Voice Overlap) —

    Potter Stewart:

    They never bid.

    I see.

    Louis Nizer:

    The practices vary from company to company.

    Columbia Pictures for example had what it called competitive negotiation.

    They never had bids but they competed with negotiations.

    Each companies was varied and the plaintiff who lumps all of the distributors together here, he wasn’t — you can hardly find the name Columbia Pictures in his record because he only went for a few pictures and got one of Columbia whereas he went for Metro Pictures, the first year, the best product that year and played, I think 11 out of 18.

    That’s how well he did.

    Now, the Court of Appeals found as a fact and since the petition for certiorari raises a legal point on which plaintiff succeeded in getting here, his attempt to review the facts here, it seems to us not in good standing.

    But —

    Byron R. White:

    (Inaudible) or something you said that what — what the — this is the distributors’ consent as to a split agreement between two — two exhibitors.

    Louis Nizer:

    Without it, they are dividing his property either secretly or overtly and that is — would be a violation of law.

    And Mr. Stan — Stanley Barnes, the Assistant Attorney General made that distinction in addressing the small business —

    Byron R. White:

    But as a — but — but as a matter regardless of the legality, part of it Mr. Nizer, this is a matter of operation.

    Would it make any difference to — in the operation of the system whether distributors consented?

    If two — if two chain exhibitors agreed on a split and all that would mean as far as the distributor is concerned, is it — is it only one or the other would be bidding on certain pictures.

    The distributor can’t make that bid, I don’t suppose, he could offer it to them both.

    Louis Nizer:

    But I think Your Honor as the Goldman case held, if there is —

    Byron R. White:

    I know but if — but how about if they — what —

    Louis Nizer:

    The practical —

    Byron R. White:

    Yes.

    Louis Nizer:

    If — if Your Honor is directing the question to the practical impact, it — it is so precisely what Your Honor implies, namely, that it — the record shows in no instance that all exhibitors did or negotiate for a picture.

    Byron R. White:

    Yes.

    Louis Nizer:

    There were always exhibitors missing so that the distributor wasn’t making an enormous sacrifice by consent.

    It merely meant in this case he had one less.

    Byron R. White:

    Why would anyone want the exhibitors — the distributor to consent at all?

    Louis Nizer:

    Because without it, I think it would be illegal.

    One divides his product stopping competition for his product without his consent.

    Byron R. White:

    But it has no practical, I mean — practically, why would the —

    Louis Nizer:

    It may —

    Byron R. White:

    — exhibitors want the distributors’ consent.

    It doesn’t add anything to the split arrangement, doesn’t (Voice Overlap) —

    Louis Nizer:

    (Voice Overlap)

    Byron R. White:

    — in any way.

    Louis Nizer:

    It gives it — it gives it I think, legality Your Honor.

    Without it, I’m afraid the exhibitor would be seizing the property of another and dividing it amongst — suppose all the exhibitors in the territory said, “We won’t negotiate a bid except by arrangement on the following pictures each for each.

    The distributor could be vitally hurt.

    It may not affect him but it could and it would be illegal.

    And the — that distinction between the consent of the distributor being essential was made by Judge Palmieri who was Your Honor knows deals with applications with respect to United States Paramount’s decree, and he said concededly, this is United States against Loew’s, quoted at page 34 of our brief.

    Concededly any arrangement whereby exhibitors agreed with each other that they will not compete in the buying of the product cannot be countenanced.

    Although it is equally clear that splits of product with the consent of both distributors and exhibitors are proper and that same contention was made by Assistant Attorney General Stanley N. Barnes that appears at the footnote on page 33 of our brief in which he said and he’s testifying with it respect to the report of the subcommittee on small business select committee.

    He said, “I threw out the suggestion that in the situation as outlined by him, it would seem that one possible solution might be splitting product and told him that we would regard an agreement between exhibitors to split product as improper.

    But that we had not taken the position it was improper for the distributors in such a situation to advise the exhibitors that they were willing to split their product, as long it was — as long as it was understood that it was up to the distributors that if they found that it did not work to their best interest, there was nothing to prevent them from changing their policy.

    It is only caveat as a solicitude for the distributors’ position.

    And the antitrust division of the Department of Justice took the position in two letters which appear in the annex of Mr. Williams’ brief, that splits are legal.

    Indeed, they requested — the antitrust division requested several of our companies to consent the splits in certain territories where it might be of aid to the small theatre and we did so.

    It is true as Mr. Williams points out that in those particular situations, it was of a small town and the split was between all of the theatres in that town.

    But I failed to see any distinction as to whether there are two or three or four theatres and how many are joined in it.

    Indeed, if there was any pernicious effect of the split, it would be more pernicious if all joined than if only two or three joined.

    Byron R. White:

    But the (Inaudible) said the — of the distributor, you suggest to —

    Louis Nizer:

    Different legality.

    Byron R. White:

    — to ensure legality, that’s because without the consent, the distributor might be able to sue for an illegal agreement —

    Louis Nizer:

    That’s right.

    Byron R. White:

    — then recover damages.

    Louis Nizer:

    That’s right.

    Byron R. White:

    Now if it so happened that the split didn’t include everybody and the split hurt some other parties, other than the — other than the — than the distributor.

    Certain — would the distributors’ consent insulate the otherwise illegal agreements?

    Louis Nizer:

    Certainly not if it were illegal.

    But it cannot hurt the other party so long as that every picture is submitted to all exhibitors in the territory and that’s why the distributor insists upon it incidentally for a selfish business reason.

    He won’t speak at the best offer and bid.

    He’s not going to permit two people —

    Byron R. White:

    But this seems to go to — this seems to me, they go to the question of legal injury or damage to some third party and say, that they just couldn’t hurt them.Even if it was illegal it couldn’t hurt them.

    Louis Nizer:

    Yes, and I say that the evidence — where the evidence is clear that all exhibitors had an opportunity to negotiate a bid.It is not only legal, it is a beneficent practice which these 12,500 theaters in the United States have joined to plead with this Court not to declare illegal.

    They opposed the Viking position vigorously in their amicus curiae brief.

    I may say in connection —

    Tom C. Clark:

    (Inaudible) if Mr. Goldman did not have to bid, Mr. Nizer, is it true that Goldman did not have to bid under your arrangement?

    Louis Nizer:

    He did bid — let me give Your Honor a direct answer as — by skipping to that point.

    The so-called Schwalberg Agreement arose out of the effort by one company Paramount to solve the problem with one exhibitor Goldman who stubbornly and on grounds of principle as he felt refused to bid.

    He said that bids up the price, it’s uneconomic.

    I will not deal that way.

    When Paramount said this is legal under the Supreme Court decree, Goldman sued Paramount and said, “You are only submitting pictures to me, certain pictures on bid and I say it’ illegal”, and he brought suit.

    The resolution of that suit was the following.

    That if bids were requested and not very, very rarely or bids or requested on bad pictures or weak pictures but in some certain pictures, if bids were requested.

    And the bid did not bring in a — an amount equal to the national — national film rental requirement which is set in advance, the minimum.

    Paramount, as any other company, could reject all bids like an auctioneer who has a $10,000 property and its highest offer is $100.

    He rejects the bids.

    In that event, it would either rebid or if it negotiated, it would then give Goldman the second refusal, he having refused to bid.

    He still would not bid.

    If Goldman met the national film terms or exceeded them, he requested that he then not be used as a slaking horse to go across the street and improve his offer which was the highest that had been offered by anybody up to that point.

    Louis Nizer:

    This is the so-called Schwalberg Paramount Agreement.

    Tom C. Clark:

    Is that only prevent those of Paramount?

    Louis Nizer:

    Only Paramount and Your Honor we say it was a perfectly reasonable and legal arrangement, but, we needn’t stop there.

    The Court of Appeals analyzed this and my time wouldn’t permit a detailed analysis that appears at 2778 of the Court of Appeals’ record.

    But may I just indicate in passing that the evidence contrary to what counsel advised you.

    The evidence shows that Exhibits D (19) and D (30) which are at 2669 of the record and 2677, that in the very instances where Paramount had rejected this, you will find letters sent to Viking and all others saying, “We invite you to negotiate further with us, to negotiate with each of you”.

    And the Court of Appeals found on the uncontradicted record that actually — I’ll read from the Court of Appeals conclusion after a very detailed analysis of every picture, incidentally, there were only four pictures involved in this entire matter.

    And not only did the Viking — was the Viking invited to negotiate but it actually got one of those pictures.

    And that picture was the Gallant — Lucy Gallant and it’s interesting to observe that the terms were of such a nature that Paramount loss $3000 on that picture by paying for advertising and the Viking made a profit.

    Now the conclusion of the Court of Appeals and I’ll have to run only to the conclusion that this — the detailed analysis on the preceding page.

    The conclusion is this.

    The evidence as a whole failed to completely to support the alleged uniform plan of distribution incorporating terms such as those embodied in the Paramount Agreement.

    We are of the opinion that a jury would not be justified in inferring that any distributor other than Paramount, either new of, acquiesced in, or adhered to the agreement.

    And this is the uncontradicted record in this case, one or two of the instances of pictures which have been cited, there are complete answers on our brief too, they were not — I regret to say correctly analyzed.

    Now I go back to the indicia of the splits and point out in answer to Mr. Justice Goldberg’s question that it is uncontradicted that the Viking never requested to be included in the splits but more than that Your Honor, the distributor executive testified that Viking was invited to go into the split and refused.

    That appears at Record 1924.

    And when Mr. Williams attempted to explain that refusal by saying it was made on the eve of a certain lawsuit that that was an unfortunate error.

    The date as appears at Record 1923 is September, 1955, that offer to join the splits and their refusal, September 1955, one year before the suit and before we had any indication that there would be a suit.

    Tom C. Clark:

    Did they invite the other —

    Louis Nizer:

    Yes.

    Tom C. Clark:

    — exhibitors (Inaudible)

    Louis Nizer:

    Yes, sir.

    The same testimony, that they called everyone and then I concentrated, whom did you call of the Viking.

    And he told the gentleman he spoke to.

    And the man said, “Will you put it in writing, Mr. Rim (ph), the Executive of the Viking.

    And he said, “I certainly will”.

    And he called up after he got that writing and he said no, we’d rather not to go in”.

    And the reason he would not join the split as all other exhibitors were invited to join, the reason for it Your Honor is this, as was indicated by one of the questions before.

    He was able to compete for a 100% of the product of any company whereas Goldman and Stanley-Warner could only compete for 50% by virtue of the split arrangement they have made between them.

    And it was an advantage to him.

    Louis Nizer:

    The split, I’m sure, was not arranged to advantage him.

    But the result of taking out one competitor from the market certainly is an advantage to another competitor.

    He cannot be heard to complain.

    And the analogy drawn with pooling arrangements is of course false.

    In the pooling arrangement, you merge the interest, the profits, the share to control is shared, and obviously you eliminate competitors against the remaining competitors.

    The split works the precise opposite way.

    You eliminate an offer of bid for a particular picture thus leaving the Viking Theatre with one less competitor to compete with.

    How could he possibly be hurt by that in ordinary common sense?

    And what was the duty of the distributor in that case?

    Who are we to say to the Viking, “We want you to approve for us, competing against one less exhibitor in the market.”

    Was it necessary to do that?

    In most industries there is no auction bidding for profit and when we, the distributors find that to our advantage to have auction bidding in the form of competitive bidding, we’re advised that by some exhibitors like Goldman and the 12,500 theatres that joined here, that they would prefer the splitting arrangements.

    Byron R. White:

    Mr. Nizer, you say that the Viking couldn’t have been hurt by this arrangement?

    Why — why was it — do you suppose that?

    I’m just curious, why did the Court of Appeals did not get to this question?

    That there was a — there they — at the outset, there was not an illegal arrangement so it didn’t have to reach this question at all.

    The District Court did, I take it.

    Louis Nizer:

    The District Court, Your Honor, I would — I can only offer my interpretation of it.

    The offer of damage, the fact of damage in this case was so vacuous, a mere schedule without an expert testifying to anything completely defective because what the plaintiff did was to average the receipts of theatres two and three and four times his size.

    And set it up against his own average as if he would have the same receipts.

    He included nondependent pictures such as Oklahoma.

    He included pictures in which he never had an interest.

    It was completely barren and defective of any probative value.

    Consequently, the lower court Judge Lloyd (ph) said that — and invited plaintiff’s counsel.

    The record shows, he said, “Please, put in some — some evidence of damage if you have it.”

    And this is all they could come up with.

    And he has now in his reply brief, the plaintiff virtually conceded that that wasn’t the proper schedule.

    He now limits it to two theatres the Midtown and the Viking, which are a little more comparable and that’s wholly defective for reasons — I would rather save my time for another moment if Your Honor permits.

    Now the — after the film rental, I will make only this point.

    The counsel stated that he paid higher film rental.

    Louis Nizer:

    The film rental of the plaintiff’s Viking Theatre equates favorably with any of the exhibitor defendants theatres.

    If one eliminates one grievance, one grievous error of judgment made by the plaintiff, that accounts that one picture for 16% of his total film rental, and he conceded in the record that he voluntarily made this bid, the picture was the man with the great rental suit and the Trans-Lux Theatre, another defendant theatre offered a 100,000 guarantee, and then has — his anxiety to get this picture bid up not by any defendants and not involved in the split.He bid $106,500.

    This resulted in the disaster to him and he conceded in the record, I would just like to read that.

    “Did you make this offer voluntarily?”

    “Yes.”

    “Nobody compelled you to bid on great rental suit and nobody told you not to bid on any (Inaudible) story?

    That is a matter of your judgment, right?”

    And he say, “Yes, sir.”

    “And if you make a mistake in judgment, you don’t expect subsequently that either your competitors or the motion picture companies will give you back the money that you lost due to your bad exercise of judgment, do you?

    You don’t’ claim that?”

    Answer: “No sir.”

    Now, if one eliminates that one disastrous error of anticipated receipts, you will find not only that the Viking’s film rentals compare favorably, indeed they are lower than most of the comparable theatres in this case.

    I should like to save if I have any few moments for rebuttal if Your Honor will permit me to — or no?

    (Inaudible)

    Earl Warren:

    (Inaudible)

    Louis Nizer:

    Well then, if I have a few more moments, I would like to point out that the splitting arrangements throughout the nation grew up and in Philadelphia —

    Earl Warren:

    Mr. Nizer, if you need a little more time, you may have five minutes for and Mr. Williams may have five minutes more for — for his rebuttal.

    Louis Nizer:

    I will stay within my time, sir.

    Now, if the three —

    Earl Warren:

    Very well.

    Louis Nizer:

    — the splitting arrangements in Philadelphia began three years prior to the Viking coming into operation.

    Therefore, the allegation and the complaint that the splitting arrangement was aimed at destroying the Viking is of course obviously not true.

    Tom C. Clark:

    I understand that the arrangement was initiated by the exhibitors?

    Louis Nizer:

    Yes, Your Honor.

    Tom C. Clark:

    And they went to the distributors?

    Louis Nizer:

    Yes.

    Tom C. Clark:

    Somewhat along the line of interstate circuit case?

    Louis Nizer:

    I’m not familiar with the detail of that fact in that case.

    I know that sometimes in some companies, the distributor would make the separation of the list as to values of pictures.

    Most of the time, the exhibitors made them but it was always the exhibitor who sought the privilege of splitting and the consent of the distributor because it eliminated their competitive bidding would state that was an advantage to them.

    Tom C. Clark:

    Well, what advantage would it be to the distributor?

    Louis Nizer:

    Only from a view point of enlightened self interest that he would rather lose a few dollars if he does have to lose it on a particular picture and keep the theatre in business and have a better healthy market.

    The decline of theatres in this nation is alarming.

    And if a distributor seller chooses to do something for the economic health of the nation such as the antitrust division request them to do in some particular situations, and as Attorney General Barnes indicated is advisable, I do not think that the antitrust laws were designed to discourage him there.

    Tom C. Clark:

    Well, I assume they asked for information.

    I just wondered what is (Inaudible)

    Louis Nizer:

    If that’s —

    Tom C. Clark:

    Perhaps how many —

    Louis Nizer:

    He gave him no advantage.

    It’s a sacrifice on the part of the distributor which he makes —

    Tom C. Clark:

    (Inaudible)

    Louis Nizer:

    — in the interest of keeping the industry as healthy as possible to have a longer — a bigger market for the future.

    Tom C. Clark:

    When they examined this invitation to the remainder of the exhibitors, if you know how many of them accepted it.

    Louis Nizer:

    In Philadelphia, the — there were some in — I — I’m afraid I cannot say fairly on the record, there was inchoate evidence with respect to some of this but it never became firm.

    I think I’d better say that I don’t know of any they had accepted.

    Tom C. Clark:

    Now in effect, suppose all of them accepted, then they would get a — the split would be all the way down the line and get (Voice Overlap) —

    Louis Nizer:

    Yes, Your Honor.

    Tom C. Clark:

    — to bid on three pictures and half of them on the other three.

    Louis Nizer:

    And —

    Tom C. Clark:

    And that — the effect of that would be to eliminate the — so far as the distributors who are concerned, half of the bidders, wouldn’t it?

    Louis Nizer:

    No.

    Oh, it would eliminate — yes for any particular —

    Tom C. Clark:

    (Voice Overlap) —

    Louis Nizer:

    — picture.

    I think, even pictures.

    But Your Honor, even in towns where the split is among three theatres, those are the only three.

    They still have to negotiate and bid for the pictures and one theatre may get 60%, the other only 20%.

    Pictures were continuously bought and licensed by others who were not party to the splits.

    It is not an allocation of product neither the distributor commits themselves nor the exhibitor to get that picture.

    Tom C. Clark:

    Well, I understand the — if I’m on the firm Goldman, I’m on this side of the three, I’d bid on those three, I’m suppose to, is that right, after the split?

    Louis Nizer:

    You don’t have to be.

    You can ignore them if they frequently did.But if you wish —

    Tom C. Clark:

    (Inaudible) then negotiate later?

    Louis Nizer:

    Or — or negotiate either way, you don’t have to negotiate.

    But if you do negotiate, you negotiate only for the pictures on your side of the split and not on Mr. Goldman.

    Tom C. Clark:

    Of course I’d have to take the bid wouldn’t I if I knew the others did not have to bid.

    Louis Nizer:

    No Your Honor because you have in this case 11 other theatres that do bid.

    And the Trans-Lux for example, a theatre — a non-defendant theatre offered a $100,000 guarantee to get a particular picture here and there are many other real-estates, a 50,000 guarantee, 75,000 guarantee.

    In short, you would still be competing against 11 other theatres.

    Tom C. Clark:

    Suppose everyone decided they wouldn’t bid, everyone had that option, (Voice Overlap)?

    Louis Nizer:

    Then the distributor would simply — it’s true they had that option, would simply negotiate and do the best they could.

    Sometimes he couldn’t sell a picture at all.

    There are some pictures that never see distribution.

    Arthur J. Goldberg:

    (Inaudible)

    Louis Nizer:

    I think they would prefer that Your Honor.

    But the distributor has some control over his product and I — I think would be adverse to that general rule.

    He makes too much of a sacrifice in some instances.

    But I think the exhibitors would dearly prefer that.

    But I wish to call your attention Your Honor to the fact that one of these exhibitor associations, the Allied States Association representing small grassroots theatres, 5000 of them throughout the United States and the Theatre Owners of America, 7500 small and large, and this is the first time in the history of motion picture litigation that they have joined on this point.

    (Inaudible)

    Arthur J. Goldberg:

    (Inaudible)

    Louis Nizer:

    Particularly —

    Arthur J. Goldberg:

    (Inaudible)

    Louis Nizer:

    Particularly small theatres Your Honor.

    The Allied, it represents chiefly the grassroots little theatres.

    (Inaudible) to Your Honors.

    Earl Warren:

    Mr. Wolf.

    Morris Wolf:

    Before I address the Court on behalf of the exhibitors, Stanley-Warner and Goldman, I beg your permission at the request of Royall, Koegel & Rogers who are counsel for the Fox distributors to make the following statement which they asked me to make.

    Fox, Philadelphia and Twentieth Century-Fox will not be heard by separate counsel because of this Court’s ruling that only two counsels shall be heard for all the respondents.

    They rest upon the separate brief which they have filed and the following statements by the Court of Appeals which were fully warranted by the record, and I quote, “The evidence in this case shows that the product of Twentieth Century was available to all exhibitors and was licensed to own the basis of open competitive bidding.

    Morris Wolf:

    The plaintiffs did not become interested in Twentieth Century pictures until after March, 1955.

    The plaintiff then submitted bids on 15 pictures and of these licensed and exhibited eight just as Mr. Justice Stewart stated.

    The product of Twentieth Century was licensed picture by picture on a competitive bidding basis except where no bids were submitted.

    Its product was not split between Stanley-Warner and Goldman and was apparently made available to all interested exhibitors.”

    This is from the opinion of the Court of Appeals.

    Counsel goes on to say, “Fox, Philadelphia operated only one theatre and was not a party to any split of product.

    The Viking does not claim that at any superior bid or offer by it was rejected in favor of Fox Philadelphia.”

    That closes the quote.

    I acquiesce to the position of the Fox respondents and request that there is not time to discuss it further.

    I pass on to speak of the charges against Stanley-Warner and Goldman.

    Although these charges are in many respects different as to each of them common to both is the charge that there are separate loose agreements with various distributors and with each other terminable at will, the so-called splits were illegal and injured Sley.

    As presented to this Court by Mr. Williams, Sley’s case bears little resemblance to the case as it was tried so meticulously for 10 weeks in Philadelphia before Mr. Williams came into it.

    There, Sley’s position was not that the splits were illegal, but that the distributors sold Stanley-Warner and Goldman so many pictures for which Sley had made better offers that these sales tended to prove a conspiracy to starve Sley of product and thus bring about his ruin.

    Sley’s efforts to prove this charge ended in failure and the trial court had no alternative to directing a verdict for the defendants which the Court of Appeals headed by Chief Judge Biggs unanimously affirmed in a careful opinion which analyzed all the evidence.

    Now, this Court is told that although on the surface, this case is just another of a hundreds of damaged suits brought by discontented theatre operators to get the Courts, to give them better pictures, they’re alert in it heretofore unsuspected legal issues of heavy import, dominant market positions, division of market, monopoly power and that awesome intercontinental ballistic missile of antitrust litigation per se.

    This heavy artillery is introduced on the theory that the Court’s refusal to allow Sley to go to the jury seriously threatens the enforcement of the antitrust laws of our country.

    For us who have been familiar with this case from the beginning, the attempt to create an image of Harry Sley as a modern Henry V, fighting his second Battle of Agincourt against the Mighty Motion Picture Industry makes to say the least a dim impression.

    The evidence which Sley produced showed that there was no restraint of trade or monopolistic practice to which he or any other exhibitor would suggest was subjected.

    No interference with his getting all the pictures to which he was entitled.

    Arthur J. Goldberg:

    (Inaudible)

    Morris Wolf:

    He ran a small neighborhood theatre on a long back from first-run policy.

    This case contest — concerns not Sley splits in general, but the particular split in this case namely agreements between Stanley-Warner and Goldman consented to by the distributors which not only let Sley free to seek every film that was released but benefited him by reducing the competition he had to meet on those he did bid.

    The history of the splits begins in 1951.

    At that time, Stanley had six first-run houses, Goldman had three.

    There was no parody between the number of houses they had as Mr. Williams has suggested.

    Goldman had protested continuously by argument and by lawsuits that the sale of pictures by bidding was pre — prejudicial to him and harmful to the industry.

    As you have heard, 12,500 theatre operators feel the same way about it as Goldman did, and they are asking you to support the view that splits, which are their only remedy against bidding are not illegal provided in no case do they prevent any outsider from bidding just as generously as he could have done if there had been no split and with the added benefit of having only one competitor instead of two.

    As the result of Goldman’s protest, MGM, Stanley — and Stanley-Warner agree in 1951 that Stanley-Warner and Goldman, each would seek only one half of the pictures which MGM was willing to have split.

    Both Stanley-Warner and Goldman understood clearly and never questioned that the arrangement in no way was to interfere with MGM’s right to solicit any other customers they had wanted or any in the pictures it had, and in no way bound MGM to sell the pictures Stanley-Warner or to Goldman or bound them to buy any of MGM’s pictures.

    By the spring of 1953, other distributors individually had consented in principle to substantially similar arrangements in every case preserving their freedom of action with regard to selling their pictures.

    Morris Wolf:

    Paramount agreed —

    Tom C. Clark:

    Isn’t that because of the —

    Morris Wolf:

    I beg your pardon?

    Tom C. Clark:

    Was that because of the insistence of Goldman and Warner?

    Morris Wolf:

    The — that they agreed to it?

    Tom C. Clark:

    Yes.

    Morris Wolf:

    No, I think it was because they felt that it was the best way to run the industry just as the exhibitors did and just as MGM which was the strongest in the industry at that time did.

    Tom C. Clark:

    Why don’t they extend it to everyone then (Voice Overlap) —

    Morris Wolf:

    They did.

    Tom C. Clark:

    Not for two years.

    Morris Wolf:

    They did.

    Tom C. Clark:

    Mr. Nizer said in 1955.

    Morris Wolf:

    Oh!

    Oh, you mean why didn’t the distributors immediately go along?

    Well they went along as they were asked gradually.

    I pray they’d probably would all have gone along at the same time if they had been asked.

    Earl Warren:

    Mr. Wolf, what is your answer to the statement of Mr. Williams that some of the pictures that were offered to the plaintiff to bid on had already been awarded under the split and had been contracted for to one of the defendants?

    Morris Wolf:

    All that I can say is that there must have been a slip up of some clerk in one case out of a total of 87 pictures of which you made here.

    What it — how it actually happened, nobody knows.

    It was just a clear mistake along the dating —

    Earl Warren:

    I thought he was asking —

    Morris Wolf:

    — in all the testimonies they’d given.

    Earl Warren:

    I thought he said there was more than one instance?

    Morris Wolf:

    Well, there may have been one or two but even in the motion picture industry, you cannot avoid an occasional error.

    It was not by any means a matter of practice nor was there any pattern of such thing shown in the testimony.

    I think I can show that a little later on.

    Tom C. Clark:

    That was only written on —

    Morris Wolf:

    I beg your pardon?

    Tom C. Clark:

    It is in the evidence that — it’s not in writing that it was trying to show that the same thing had occurred in other pictures?

    Morris Wolf:

    No.

    Morris Wolf:

    With respect to the Schwalberg Agreement, Paramount agreed with Goldman that if no one else was wiling to pay what Paramount wanted for a particular picture on the Goldman side of this split and Goldman was willing to pay it, Paramount with license set to Goldman.

    That’s all there was in the Schwalberg Agreement.

    Tom C. Clark:

    But it was — Mr. Williams said that Goldman had a practice did not bid at all.

    Morris Wolf:

    That is true.

    Tom C. Clark:

    Then he would — after the other’s bid, having the advantage of their bid, would you know what the bids were?

    Morris Wolf:

    Well, it was not — it was not an advantage of that.

    Tom C. Clark:

    Well, I’ll — I’ll take that back.

    Did you know what the bids were?

    Morris Wolf:

    No.

    There’s no evidence at all that he did.

    Probability is that he wouldn’t.

    Tom C. Clark:

    But he would know that whatever the bids were, they were not sufficient.

    Morris Wolf:

    So there’d would no — there would be no — there was no evidence to whether he would, whether he did know.

    The probability is that he didn’t, because a distributor would state what he wanted for his picture and Goldman could either pay it or not.

    There was no discussion as to what anybody else had offered for the picture.

    Tom C. Clark:

    But the offer was sufficient, I’d suppose that the distributor would accept it.

    Morris Wolf:

    Of course.

    Or else it wouldn’t have —

    Tom C. Clark:

    Then they wouldn’t have (Voice Overlap) — it would not have gone to Goldman —

    Morris Wolf:

    The presumption that — excuse me.

    Tom C. Clark:

    I say, it would not go to Goldman in any event?

    Morris Wolf:

    No.

    The presumption would be if they came to Goldman, then nobody else had been willing to offer what the distributor wanted for the picture.

    The — all — all of the splits had been arranged as has been said openly and above board and every one of them before Sley ever was dreamed of as a theatre owner or operator in Central Philadelphia.

    As far as the respondents were concerned, Sley wasn’t even born when these splits were arranged.

    Now, I’ll tell you how he came into the picture.

    By 1953, due to the impact of radio and television as Mr. Nizer has said, there were not enough quality pictures released to supply all of the theatres seeking them in Central Philadelphia.

    Goldman had given — I mean Stanley-Warner had given up two of its six theatres and it still could not get enough products.

    So it decided that in order to help the other theatres it had — it would sell the Alden Theatre which was the poorest of its four remaining houses.

    For obvious reasons, he didn’t intend to sell the property to anyone who would use it as a picture house.

    Morris Wolf:

    Sley, a well known garage and parking lot operator offered to buy the property for remodeling as he said into a garage.

    Relying on this expression of Sley’s purpose, Stanley-Warner sold the property to him and he carrying out what had been his concealed purpose from the beginning, fixed it up, gave it a belligerent name of the ancient North Sea pirates Viking and became one of 12 city houses, seeking first-run pictures.

    If Sley charges, the respondents had entered into a conspiracy to sabotage his operation from the date he opened, one would have expected them to try to choke him off before he got joined.

    Following Brutus’ advised to Julius Caesar, think him as a serpent’s egg which hatched, would as his kind, grow mischievous and kill him in his shell.

    When most “Shakespeare” in this anniversary week.

    If they didn’t sell — if they didn’t kill Sley, on the contrary for his opening, Sley got exactly the picture he wanted.

    The Student Prince, got it from MGM, the outstanding company in the business, although in fact, the picture was on Goldman’s side of the split.

    And from that time until this suit was brought, despite the shortage of product, Sley continuously got first-run pictures from the very distributors and now sues as conspirators.

    During that entire period, he never complained to Stanley-Warner or Goldman and their first knowledge that they too were supposed to be conspirators because when they got the complaint in this case, the history of how well Sley faired when his path crossed theirs in seeking pictures explains why he hadn’t complained.

    During the two and a quarter years involved in the action, the Philadelphia exhibitors played 468 pictures of which Sley made some effort to buy 87.

    As to the other 381, any or all of which, Sley was at perfect liberty to see — Sley’s counsel stated frankly in their brief and the Court of Appeals.

    There were some hundreds of pictures on which plaintiffs elected not to bid.

    Sley selected only 87 because of the entire 468, they were the only ones that he wanted.

    As to these, Sley does not deny that the door was opened to him at the trial as far as the door can be opened, to put in every particle of evidence which he wanted to offer.

    These pictures were diagnosed, x-rayed, psychoanalyzed, (Inaudible) — postmortem and quartered.

    And this is why they merged.Of the 87, Sley got 37 for the Viking, Stanley-Warner and Goldman together got 36 or six for each of their six houses.

    Now if Sley had any complaint against Stanley-Warner or Goldman, it must be about the 36 pictures they got.

    He certainly could not complain to Stanley-Warner or Goldman about the 37 pictures he himself got, nor could he complain about the 14 pictures which neither he or Stanley-Warner, nor Goldman got.

    So we now consider whether those 36 pictures were sold to Stanley-Warner and Goldman in this regard of Sley’s rights.

    In this case there was no direct proof of the conspiracy not even the conventional evidence of clandestine meetings, secret conversations, confidential letters or a loose talk in which some blundering salesmen at a bibulous party made damaging admissions about a plot against Sley.

    The only circumstantial evidence which could be of probative value would be evidence that the conspirators frequently according to a discernible pattern of conduct sold pictures to the favorite exhibitors on terms so much less advantageous than Sley’s offer.

    That a reasonable person would think that they had a malicious and deliberate purpose to deprive Sley of pictures to which he was entitled.

    In the brief — in the Court of Appeals, this was the claim that was made.Viking’s bids offering terms superior to those proposed by the defendant exhibitors were routinely rejected if they were the defendant exhibitors.

    In support of this, Sley charged that 25 of the 36 pictures which Stanley-Warner and Goldman got were sold to them although Sley had made superior bids with these 25 pictures.

    The fantastic way in which Sley tried to prove this case in the lower court was so much riddled on cross examination of his witness that he was compelled to admit the judge by his results with other pictures, Sley’s bids were inferior to those of Stanley-Warner and Goldman on these 25 pictures.

    Sley does not any longer argue here that the licensing of these pictures, the Stanley-Warner and Goldman was dishonest.

    His change of front in this Court forced him to this surrender.

    In the lower court and in the Court of Appeals, Sley had taken the position that the greater seating capacity of the Stanley-Warner and Goldman Theatres over Viking was not a factor at all which justified the distributors in deciding to sell their pictures to those houses rather than the Viking.

    Sley’s manager, as Mr. Nizer has said, testified emphatically that the greater number of seats was absolutely no factor in determining the grossing ability of the theatres as proven he said, by the fact that the Stanley Warner’s 4000 seat may as bound had to be taken down because they couldn’t fill the seats.

    In his brief in the Court of Appeals on which I see Mr. Williams name, appears the famous Footnote 72 on page 48 although the Mastbaum had 4378 seats to the Viking’s 1017, the extra seats were a liability rather than an asset.

    Morris Wolf:

    Stanley-Warner’s president admitted that the Mastbaum was obsolete in 1954.

    So, when Mr. Williams came up with his new theory that the great seating capacity of the Stanley-Warner and Goldman houses gave them buying power amounting almost to monopoly, he ran head on into Sley’s prior contrary position.

    He then was faced with the alternative of agree — arguing that the sale of pictures to Stanley-Warner and Goldman were not justified because as Sley had asserted, their seating capacity was no factor in calculating their gross ability or of contradicting Sley and admitting that the sales were justified because seating capacity was of vital decisive factor than grossing ability.

    He took the latter view and abandoned Sley’s position that the great seating capacity with Stanley-Warner and Goldman did not justify the awards of pictures to them.

    But where did this leave Sley?

    If Stanley-Warner and Goldman got it — the only pictures which Sley also wanted for legitimate business reasons, what ground was left for complaints by Sley?

    None.

    Thus left high and dry.

    Sley conceded in his brief in this Court frankly that if his evidence of conspiracy was limited to the 87 pictures which he wanted, “he could not give a coherent statement of the conspiracy.”

    In this crisis, Sley made his offers in the trial court to include evidence about the 371 pictures which he had elected not to see.

    These offers were considered carefully by the Court of Appeals and found to contain no matter of probative value.

    For this finding, the Court of Appeals is held up to this Court as both ignorant and prejudice, terms which sound to us who are familiar with that Court as singularly inappropriate.

    The first offer was to show that Viking got a disproportionately small number of films with high national film rentals over $3 million and that this was viewed of the dominant, economic market power of the exhibitors.

    Let us see.

    During the two and a quarter years, there were 55 such pictures released.

    Of this 55, 20 were among the 87 which Vikings sought.

    Of those 20, Viking got two.

    And Stanley-Warner and Goldman 10 for their six houses less than two a piece.

    One of Sley’s by the way was not as a stranger, a very tough $6 million which was on Stanley-Warner side of the split, was bid for by Stanley-Warner, and nevertheless was sold to Sley.

    So, there were 35 of these pictures which Sley did not seek.

    Since Sley did not seek any of them of course, he didn’t get any of them.

    But nevertheless, he claims that the fact that Stanley-Warner and Goldman who did seek them, got many of them, was probative value of the conspiracy against him and to benighted Third Circuit made an egregious error in not considering it as such.

    This raises interesting questions as to Sley’s mental processes.

    In order to avoid a charge of conspiracy, thus Sley suggests that the distributors and Stanley-Warner or Goldman had to go to see him and inquire whether it would be satisfactory to him if the distributors sold these pictures which he had not sought to Stanley-Warner or Goldman, and whether the terms proposed were alright with Sley, and if Sley did not approve that in his view that the distributor should bury the pictures in the ground and kill Sley, either sought them for himself or graciously change his mind and allow the sale to be made to Stanley-Warner or Goldman.

    His second offer was to prove that Stanley-Warner and Goldman got many more rental adjustments than he got.

    Of these, an insignificant number, we’re on the 381, were — were all (Inaudible) insignificant number, were on the 381 in which he was not interested.

    On the 87 in which he was interested, he faired better than Stanley-Warner or Goldman did.

    Why adjustments were granted in this particular case would require a separate trial as to each picture.

    But, we come back to the underlying inquiry.

    Did the respondents always owe Sley a duty to allow him to decide when adjustments should be granted and in what amounts even in the case of pictures which he didn’t want?

    Morris Wolf:

    Finally, Sley offered to show and Stanley-Warner and Goldman played more pictures than he did, that the national film rental of their pictures was more, that he had to play his pictures longer, that he had to pay more for them, always he had to.

    Why did he have to?

    He — why — with a hundred and — with 468 pictures released, why did he seek only 87 of them?

    If there were 59 $3 million pictures released, why did he pass up 39 of them?

    He deliberately and voluntarily adopted and carried out as was his right the policy with respect to the pictures he sought, which he considered best for his theatre.

    He now thinks perhaps he would’ve done better to have sought more pictures, played them in shorter time and paid less for them.

    But had he the right not only to set the policies for his own house but to set the policies for Stanley-Warner and Goldman houses as well, and tell them how many pictures they should play, and how long, and what they should play for them.

    In effect, Sley’s position with regard to the 381 pictures which he scorned is like that of a girl who flatly turns down an ardent suitor for her hand, but demands the right to pass judgment on any other girls he may want to woo.

    With Freudian forgetfulness, Sley, in setting out the statutes involved in his brief, omitted any reference to Section 4 of the Clayton Act on which his entire right of recovery depends and he now sees himself not as a plaintiff in an ordinary private antitrust case, but as an ad hoc deputy, protecting the Attorney General and speaking on behalf of all the citizens of the United States.

    Whatever may be the terms of others splits, the splits involved in our case, violated no antitrust act, violate and injured no private party, least of all Sley who was immeasurably helped by them in his unrestricted pursuit of pictures which he did want because he did not have to compete for them with both Stanley and Goldman, with only one of them.

    Arthur J. Goldberg:

    (Inaudible)

    Morris Wolf:

    Doesn’t — doesn’t it sound solely to tell us quite a — quite a tremendous economic power these two theatres had.

    And then to say that because they could save a few dollars possibly, there’s no evidence that they did, by buying pictures on which there was no competition from distributors who are much larger than they and well able to care of themselves.

    They were in a position to overbid Sley on the pictures he wants, when the evidence is not that he complained that they overbid him, but that they got the pictures in spite of the fact that they underbid him.

    The economic game, which indirectly might have resulted, if they had been able to get their pictures more cheaply as a result of his staying out of the market and as a result of their split, is so infinitesimal and so unproven that it certainly amounts to no evidence.

    Nor can Sley complain of the fact that these two people did not compete when he was not in the field himself.

    There’s no law in the world that makes it essential that people must compete against each other if there were some pictures which Stanley-Warner did not want or which Goldman did not want.

    There’s no reason why they should’ve competed against each other, to get what products they did not want and the split was merely a question of settling which was the product they didn’t want.

    If without producing anymore evidence of the conspiracy than Sley did, — may I finish my sentence?

    Earl Warren:

    You — of course you may.

    Morris Wolf:

    He is entitled to go to a jury and gamble that the bewildered jurors, floundering and foundering in Mr. Gladstone’s words, in the morass of 7500 pages of names, states and figures, may give him a verdict then every entrance into the motion picture business as a probable plaintiff in an antitrust suit because no exhibitor ever got all the pictures he wanted.

    Byron R. White:

    Mr. Wolf, a good deal of your argument again goes to the — the question of damage to the — to the plaintiff here, now and the Court of Appeals did not pass on — it was —

    Morris Wolf:

    The courts what?

    Byron R. White:

    The Court of Appeals did not pass on that?

    Morris Wolf:

    Oh, no they — they — they did —

    Byron R. White:

    What they did —

    Morris Wolf:

    — I think, at least inferentially, passed on the fact that there was no injury to him.

    Byron R. White:

    But let’s assume for the moment that — let’s assume for the moment, I’m not suggesting that I or anyone else thinks this that — that the — assume that you’re wrong on the legality of this — of this split arrangement and you must get to the next issue, what would you suggest the Court do, to — to decide it here or send it back to the Court of Appeals?

    Morris Wolf:

    I — I don’t — I can’t — I can’t conceive myself, even attempting to answer a question which is based on the — in — on the illegality of the split which can — which constituted no restraint of trade.

    I can’t answer the question.

    Earl Warren:

    Mr. Williams.

    Edward Bennett Williams:

    The Court please, on at least three occasions this — this afternoon and this morning, counsel for the respondents had said to this Court that Viking was invited into this arrangement, this splitting arrangement.

    And in response to a question by Mr. Justice Clark, this afternoon, it was suggested that they were inviting — invited in some time midway in the alleged conspiratorial period.

    Well, I — I’d like to call the Court’s attention to the record on that because I think it’s time we lay this to rest.

    First of all, at page 974 (a) —

    Tom C. Clark:

    What volume is that?

    Edward Bennett Williams:

    In — this is in Volume 3, Mr. Justice Clark.

    The question is asked, do you recall, Mr. Nizer asking you whether Brooks or your rascal, Stanley-Warner, had not invited you into some wordage, whatever it may have been to talk about a split at this luncheon meeting, do you recall that?

    And when was that event?

    August.

    August of what year, Mr. Rim (ph)?

    1956.

    The same year?

    Yes, sir.

    Now, prior to the letter from your lawyers, which you state was about the middle of July, were you ever invited to join the split?

    No sir.

    That’s at page 975.

    So it isn’t an accurate statement to say that this record shows that they were invited into the split at the inception of their entry into the motion picture business or midway.

    They were invited in when they made a complaint about the fact that there was an illicit arrangement in the Philadelphia market.

    William J. Brennan, Jr.:

    Is that the —

    Edward Bennett Williams:

    Now —

    William J. Brennan, Jr.:

    Is that only evidence in the record on that subject?

    Edward Bennett Williams:

    There’s a — a testimony of a — a witness named Minksy, if the Court please, from Paramount, that he had made such an offer to Mr. Rim (ph) in 1955 but it specifically contradicted and under the basic rules applying to a directed verdict, we’re entitled to the most favorable inferences from the record.

    Now, Mr. Nizer suggested that Judge Palmieri and Mr. Burns had to give in by some language, their benediction to this split arrangement.

    I suggest to the Court that the language is exactly contrary to this because Judge Palmieri was very careful to say as pointed out at page 33 of Mr. Nizer’s brief that splits which embraced all exhibitors might be countenance.

    And when Judge Burns was using the language which Mr. Nizer quoted in a testimony before a congressional committee, he was talking about the Wichita Falls and the Alpine-Texas splits which embraced all the exhibitors, all of whom were parties.

    And when a letter was addressed at the request of Mr. Levenger, the Assistant Attorney General of the Department of Justice, asking him to elucidate on this approbation.

    He specially said and you’ll find this language at the very last page of our brief in chief that he would not extend his approbation.

    He would not say anything with respect to a split that included less that all of the exhibitors.

    Byron R. White:

    Even then (Inaudible)

    Edward Bennett Williams:

    Yes sir, of course.

    And of the producers who are coming to a market which has been rigged as a result of an agreement for no competition.

    Now, if the Court please, the suggestion has been made here that the split was a great afterthought that came about after new counsel came into the case, nothing could be more remote from the fact.

    The record shows very clearly at supplemental appendix, pages 2741, 2742 and 2743, which is the small volume that was added to the record in the — in the lower court that Mr. Henry Sawyer, who tried this case below, vigorously urged upon the trial judge, the illegality of the split system in which rebuffed by the trail court.

    The record shows that the Third Circuit at page 2777, Volume 10, specifically ruled that the split in this case was lawful.

    This is not a new concept.

    This concept has been advanced to every court that has passed upon this question, from the trial court through the Circuit, to the Supreme Court of the United States.

    Now, again, we’ve been told that there is no evidence that the Schwalberg agreement was in existence and that Mr. Nizer directed the Court’s attention to the defendant’s Exhibit 19 and defendant’s Exhibit 31 and said, see, after these pictures were bid upon by Viking, which appeared upon the Goldman side of the split, a letter went out.

    Defendant’s 19 and Defendant’s 31, inviting Viking to negotiate and Viking didn’t negotiate, but what he failed to tell the Court, was that these pictures were awarded precisely according to the split.

    And at page 201 of Volume 1, why were they awarded according to the split?

    Because the testimony is, and I want to read it exactly so that they’re will be no mistake as to what the record says, talking about the Desperate Hours, the picture which was covered by defendant’s Exhibit 19.

    Did Viking bid?

    We did.

    What happened?

    The offer was rejected.

    By whom?

    By Mr. O’shea, who at that time was a sales manager for Paramount.

    In what fashion was it rejected?

    Did you receive a notice?

    I assume, we received a notice but in addition to that, I got a call from Mr. O’shea, telling me, we weren’t going to get the picture that he had promised the picture.

    And I said, well what happens to us?

    What happens to us?

    And he said, don’t worry, your turn will come.

    Now, the question was asked toward the very end of Mr. Wolf’s statement, well, what about Goldman?

    Did Goldman know what the bids were?

    Plan — the distributor came to him after rejecting all the bids and Mr. Wolf answered quite categorically.

    No, Mr. Goldman didn’t know.

    Well, let’s see what the record says on that.

    At page 1716, Volume 4, Goldman said, he could figure out what the bids were once they were rejected.

    At page 1606 and 1607, Volume 4, Mr. Minsky of Stanley-Warner, said in the negotiations, the distributor would say what he wanted for the picture.

    Edward Bennett Williams:

    Mr. Mansell of Warner Bros. said, the negotiation started with something better than the rejected bids.

    So Mr. Goldman didn’t have to have clairvoyance to figure out what he had to bid in order to get the picture and bar the Viking from getting a chance to get it after he made his offer when they in the first instance had been the only exhibitor in the Philadelphia area, willing to make a competitive bid against the other distributors for or other exhibitors for a picture on the Goldman side of the market.

    These are the facts, if the Court please, in the record —

    Tom C. Clark:

    Can you give me those two pages again, just — just the pages (Inaudible)

    Edward Bennett Williams:

    There are three pages Mr. Justice Clark.

    Page 1716 of Volume 4, testimony by Goldman himself, page 2037 of Volume 5, testimony of Mr. Mansell of Warner Brothers and page 1606 and 1607, Record Volume 4, are the testimony of Minsky of Stanley-Warner.

    Tom C. Clark:

    (Inaudible)

    Edward Bennett Williams:

    But these reasons we say to the Court, I think that the argument from the respondents have dramatized far better than any brief that this was a case for a jury, for argument to a jury and the plaintiff should’ve had the opportunity to let a jury pass upon whether there was a conspiracy, whether it was damaging to them, whether it was unlawful.

    Thank you, sir.