This is a civil antitrust action brought by the Government in the United States District Court for the Southern District of New York. Named as defendants are Lee Shubert,
The complaint alleges that the defendants have restrained this trade and commerce, and have monopolized certain phases of it, through a conspiracy (a) to compel other producers to book their legitimate attractions exclusively through the defendants, (b) to exclude others from booking legitimate attractions, (c) to prevent competition in the presentation of legitimate attractions, (d) to discriminate in favor of their own productions with respect to booking and presentation, and (e) to combine their power in booking and presentation in order to maintain and strengthen their domination in each of these fields. The main relief sought by the Government is the divorcement of the booking and presentation branches of the business.
The allegations of the complaint, on a motion to dismiss, must of course be taken as true. And the defendants do not deny that the allegations state a cause of
Both terms have been interpreted broadly in the decisions of this Court. "[T]rade or commerce" has been held to include the production, distribution, and exhibition of motion pictures (United States v. Paramount Pictures, 334 U.S. 131; Schine Theatres v. United States, 334 U.S. 110; United States v. Griffith, 334 U.S. 100; United States v. Crescent Amusement Co., 323 U.S. 173; Interstate Circuit v. United States, 306 U.S. 208; Binderup v. Pathe Exchange, 263 U.S. 291); real estate brokerage (United States v. National Association of Real Estate Boards, 339 U.S. 485); the gathering and distribution of news (Associated Press v. United States, 326 U.S. 1); medical services to members of a health cooperative (American Medical Association v. United States, 317 U.S. 519); and insurance underwriting (United States v. South-Eastern Underwriters Association, 322 U.S. 533). A similarly liberal construction has been given the requirement of §§ 1 and 2 that the "trade or commerce" be "among the several States." Thus, in the South-Eastern Underwriters case, the requirement was satisfied by a "continuous and indivisible stream of intercourse among the states" involving the transmission of large sums of money and communications by mail, telephone, and telegraph. Cf. Electric Bond & Share Co. v. Securities and Exchange Commission, 303 U.S. 419, 432-433; North American Co. v. Securities and Exchange Commission, 327 U.S. 686, 694-695. In the Associated Press case, the requirement was satisfied by the interstate dissemination of news. See also Lorain Journal Co. v. United States, 342 U.S. 143.
These decisions, apart from Federal Baseball and Toolson, make it clear beyond question that the allegations of the Government's complaint bring the defendants within the scope of the Sherman Act, even though the actual performance of a legitimate stage attraction "is of course a local affair." The defendants contend, however, that Federal Baseball and Toolson have already established their immunity under the Act. While conceding, as they must, that the motion picture industry is subject to the antitrust laws, they insist that all other businesses built around the performance of local exhibitions are exempt.
At the very next Term, in Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, the Court was directly concerned with the effect of the Federal Baseball decision on the status of the theatrical business under the Sherman Act. The complaint in the Hart case, much like the complaint here under review, alleged a conspiracy to control the booking and presentation of vaudeville acts in theatres throughout the country. The district court, like the district court in the instant case, dismissed the complaint on the authority of Federal Baseball. This Court, again speaking through Mr. Justice Holmes, unanimously reversed.
In Toolson, where the issue was the same as in Federal Baseball, the Court was confronted with a unique combination of circumstances. For over 30 years there had stood a decision of this Court specifically fixing the status of the baseball business under the antitrust laws and more particularly the validity of the so-called "reserve clause." During this period, in reliance on the Federal Baseball precedent, the baseball business had grown and developed. Compare Helvering v. Hallock, 309 U.S. 106, 110. And Congress, although it had actively considered the ruling, had not seen fit to reject it by amendatory legislation. Against this background, the Court in Toolson was asked to overrule Federal Baseball on the ground that it was
The defendants would have us convert this narrow application of the rule into a sweeping grant of immunity to every business based on the live presentation of local exhibitions, regardless of how extensive its interstate phases may be. We cannot do so. If the Toolson holding is to be expanded—or contracted—the appropriate remedy lies with Congress. See United States v. South-Eastern Underwriters Association, 322 U.S. 533, 561. Moreover, none of the considerations which led to the decision in Toolson are present here. This Court has never held that the theatrical business is not subject to the Sherman Act. On the contrary, less than a year after the Federal Baseball decision, the Court in the Hart case put the theatrical business on notice that Federal Baseball could not be relied upon as a basis for exemption from the antitrust laws. The rule of stare decisis undoubtedly embodies a policy of basic importance, but the rule cannot help the defendants here. If it is to be applied, Hart and the motion picture cases—not Federal Baseball and Toolson—are the controlling decisions.
We are not yet called upon to determine whether the defendants have in fact violated the Sherman Act or if they have what relief would be appropriate. We hold only that the allegations of the complaint state a cause
MR. JUSTICE BURTON, retaining the views expressed in his dissent in the Toolson case, 346 U.S. 356, 357, joins the opinion and judgment of the Court in this case. MR. JUSTICE REED joins in this concurrence.
MR. JUSTICE MINTON agrees with the judgment in this case because, as it comes here on the pleadings, it is controlled by the Hart case. Whether the Government can prove its case now to the satisfaction of present courts, which the plaintiff could not do in the Hart case, 12 F.2d 341, remains to be seen.
APPENDIX TO OPINION OF THE COURT.
The defendants state at page 3 of their brief: "The allegations of the complaint are summarized adequately at pages 5 to 11 of the Government's brief." That portion of the Government's brief is set out below:
Production of a legitimate theatrical attraction involves (1) assembling of its component elements, including a script, financial backing, actors, stage hands, designers, advertising agents, scenery, costumes, lighting, and music; (2) rehearsals to weld the parts into an attraction suitable for presentation; (3) arranging for the booking and presentation of the attraction in a try-out town or towns, in New York City, and in road-show towns; and (4) transporting the entire cast and scenery to try-out towns, to New York City, and to road-show towns throughout the United States to fulfill these bookings and presentation arrangements (par. 24, R. 4). At the present time the cost of producing a play runs from $60,000 to $100,000, and of a musical from $200,000 to $300,000
After the production has been assembled and rehearsals have been completed, the attraction is presented in one or more "try-out" towns for the purpose of judging audience reaction and correcting observed deficiencies (pars. 20, 26, R. 4, 5). Audience reaction in try-out towns is important in gauging subsequent financial success in New York City and on the road (par. 26, R. 5). The attraction is then presented in New York City (par. 27, R. 5). If the run there is successful, the attraction is sent on tour to "road-show" towns throughout the United States (ibid.). This road-show tour is an "integral part of the exploitation of the attraction" and is the source of a "substantial part" of its profits (ibid.).
With the exception of a few cities, a legitimate attraction ordinarily cannot profitably play in a road-show town for more than a limited period of time, seldom exceeding two weeks. The producer of a play must therefore obtain playing dates in a number of suitable road-show towns, arranged so as to minimize lay-offs and travel between engagements. Successful operation of a theatre in a road-show town requires scheduling legitimate attractions so as to keep the theatre as continuously occupied as possible during the theatrical season. Playing dates of a road-show town must therefore be arranged so as to meet the needs of both the producer and the theatre operator. (Par. 29, R. 5.)
UBO acts as middleman between producers and operators of theatres in try-out and road-show towns, but is regarded as the agent of the theatre operators and usually receives, as compensation for its services, five per cent of the operator's share of the theatre's gross receipts (par. 28, R. 5). Each year UBO enters into or renews agreements with theatre operators to act as their booking agent (par. 30, R. 5). After negotiation with the producer of an attraction, UBO tentatively schedules it at
The individual appellees control the booking of legitimate attractions in try-out and road-show towns in the United States (par. 37, R. 7). Apart from Select and a subsidiary thereof, UBO is the only concern in the country which books legitimate attractions throughout the United States (par. 5, R. 2). From 1932 to 1946, UBO followed a policy of entering into franchise agreements with theatre operators making UBO the exclusive booking agent for their theatres (par. 40, R. 8-9). About 1946, UBO discontinued formal franchise agreements and adopted in lieu thereof a system of listings which, as tacitly understood by the parties, continued the previous contract arrangements (id., R. 9).
The appellees operate or participate in the operation of approximately forty theatres in eight states (par. 42, R. 9). They operate or control all the theatres in "virtually all" key try-out towns, and in several important road-show towns (par. 41, R. 9).
In producing, booking, and presenting legitimate attractions, there is a constant, continuous stream of trade and commerce between the various states, consisting of
The substantial elements of appellees' conspiracy to restrain and monopolize, attempted monopolization, and monopolization have been that the appellees, by concert of action: (a) compel producers to book their legitimate attractions exclusively through appellees; (b) exclude others from booking legitimate attractions; (c) prevent competition in presentation of these attractions; (d) discriminate in favor of their own productions with respect to booking and presentation; and (e) combine their power in booking and presentation in order to maintain and strengthen their domination in each of these fields (par. 51, R. 13).
The means which the appellees have used in carrying out the foregoing acts have included the following:
Some of the effects of appellees' concerted actions have been that producers have been forced to book exclusively with appellees on non-competitive terms; persons have been denied the right to engage in the business of operating a booking office; operators of independent theatres competing with those of appellees have been systematically excluded from obtaining legitimate attractions and, in many cities, have been forced out of business; in cities in which the appellees operate theatres, persons have been denied the right to engage in the business of presenting legitimate attractions, and the public has been deprived of access to legitimate attractions and the benefits which flow from open competition; and interstate commerce in production, booking, and presentation has been unreasonably restrained, and in booking and presentation has been monopolized (par. 53, R. 14).
"§ 1. . . . Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal . . . . Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1-7 of this title to be illegal shall be deemed guilty of a misdemeanor . . . .
"§ 2. . . . Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor . . . ."
Section 4 confers jurisdiction on the district courts "to prevent and restrain violations of sections 1-7 of this title" in equity proceedings instituted under the direction of the Attorney General.
"In principle, I can see no valid distinction between the facts of this case and those which were before the Supreme Court in the cases of Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L. Ed. 898, and Toolson v. New York Yankees, 346 U.S. 356, 74 S.Ct. 78.
"Upon the authority of these adjudications the complaint in the above-entitled action will be dismissed." 120 F.Supp. 15, 16.
That other segments of the entertainment business, besides the motion picture industry, may constitute interstate commerce is well established. See, e. g., Federal Radio Commission v. Nelson Bros. Co., 289 U.S. 266, 279 (radio).
For lower court decisions holding the theatrical business to be subject to the Sherman Act, see Judge Learned Hand in Marienelli v. United Booking Offices of America, 227 F. 165 (D. C. S. D. N. Y.), and Judge Charles Clark in Ring v. Spina, 148 F.2d 647 (C. A. 2d Cir.), modified in 186 F.2d 637 (C. A. 2d Cir.), cert. denied, 341 U.S. 935. But cf. San Carlo Opera Co. v. Conley, 72 F.Supp. 825 (D. C. S. D. N. Y.), affirmed, 163 F.2d 310 (C. A. 2d Cir.), involving a personal employment contract under the Federal Arbitration Act.
The "key" try-out towns are Boston, Philadelphia, Baltimore, and New Haven (par. 26, R. 4). [Footnote in original.]