INTERNATIONAL BOXING CLUB v. U.S.

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Argument of Kenneth C. Royall

Chief Justice Earl Warren: Number 18, International Boxing Club of New York et al., Appellants, versus United States of America.

Mr. Royall.

Mr. Kenneth C. Royall: May it please the Court.

This case involves boxing.

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

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

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

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

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

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

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

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

The period covered by the complaints from 1949 to 1953.

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

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

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

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

He was unable to find a backup.

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

Now, Madison Square Garden was worried about it.

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

The garden had a large investment.

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

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

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

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

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

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

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

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

Wirtz and Norris had owned the Chicago Stadium since 1935.

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

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

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

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

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

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

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

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

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

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

But the Stadium continued to lose money.

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

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

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

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

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

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

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

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

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

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

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

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

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

These agreements in turn protected the boxers themselves.

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

The defendants did not own TV or other TV time.

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

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

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

They did have a large percent of it.

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

Nor was there any monopoly on television.

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

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

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

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

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

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

Defendants have not restricted or restrained the boxing industry.

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

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

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

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

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

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

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

We say that is wrong.

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

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

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

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

It takes those differences to make competition conversely.

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

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

This would rather be a bootstrap operation.

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

It is true and the facts we think are immaterial.

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

But that's just the average.

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

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

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

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

There maybe more a number.

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

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

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

Individual boxers start as novices.

They go up the scale.

Some of them become champions.

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

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

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

That starts with the novice.

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

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

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

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

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

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

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

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

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

And the average -- dollar averages go higher.

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

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

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

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

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

This case is clearly a distinction.

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

They thought it was a single market.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Justice John M. Harlan: What was the theory in which contained the (Inaudible)

Mr. Kenneth C. Royall: He said that they were an agency or an arm of the monopoly.

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

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

Mr. Kenneth C. Royall: Well, they -- they --

Justice John M. Harlan: (Inaudible)

Mr. Kenneth C. Royall: They required a domestic corporation and they preferred to have the promotion activities centered in a single person.

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

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

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

Justice Felix Frankfurter: May I ask, right before your answer to Justice Harlan's question.

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

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

Justice Felix Frankfurter: Well, did he answer yes to my question?

Mr. Kenneth C. Royall: No.

Well, it's not in the decree --

Justice Felix Frankfurter: No, I'm -- I'm -- I understand that.

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

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

Justice Felix Frankfurter: Because I -- spell it out some more.

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

Mr. Kenneth C. Royall: I.B.C. of Madison Square Garden is the word the judge had used.

Justice Felix Frankfurter: What is your answer to that?

Mr. Kenneth C. Royall: I would say, I would advice that he could.

I would -- I don't think there's any appreciable risk because of the statement.

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

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

He volunteered that.

Justice Charles E. Whittaker: Mr. Royall, may I ask you sir.

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

Mr. Kenneth C. Royall: Well, I don't think, show instrumentalities is quite accurate.

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

They had personnel.

They had contracts, contracts of employment.

Justice Charles E. Whittaker: Valuable goodwill?

Mr. Kenneth C. Royall: A very valuable goodwill.

Justice Charles E. Whittaker: And the stock could've been sold for something?

Mr. Kenneth C. Royall: Yes, sir.

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

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

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

And therefore, that reason had no support.

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

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

And therefore, that reason would not stand up.

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

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

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

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

Justice John M. Harlan: Are there any figure in the record as to what that stock's worth?

Mr. Kenneth C. Royall: No, sir.

I don't believe it is.

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

I think that must necessarily be true.

Justice William O. Douglas: (Inaudible)

Mr. Kenneth C. Royall: It is listed, yes.

It is listed, but it's --

Justice William O. Douglas: (Inaudible)

Mr. Kenneth C. Royall: It's -- they have a big block.

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

Mr. Kenneth C. Royall: It couldn't -- it would not sir.

It would not do so.

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

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

Justice William J. Brennan: (Inaudible)

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

I think a little over 50%.

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

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

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

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

None of it was in any sense of fraudulent conspiracy.

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

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

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

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

They're given money and time to doing it.

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

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

Justice Felix Frankfurter: That option is not open under the decree?

Mr. Kenneth C. Royall: No, sir.

He gave us no options.

I'm coming to those in a moment.

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

Unknown Speaker: (Inaudible)

Justice Charles E. Whittaker: Mr.Royall, is that because in addition to divestiture there is some injunction against Madison Square Garden?

Mr. Kenneth C. Royall: No.

It -- it you takes Wirtz and Norris --

Justice Charles E. Whittaker: Out --

Mr. Kenneth C. Royall: -- out of them and they don't appeal.

The law with the course in years is holistic.

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

Justice Charles E. Whittaker: And the result would be that without their resistance, the corporation would suffer in getting this so-called legitimate business?

Mr. Kenneth C. Royall: That's what that the record said by unanimous holding excluded.

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

Justice Charles E. Whittaker: But there would be no legal prohibition against Madison Square Garden?

Mr. Kenneth C. Royall: Oh, no sir.

No, none at all.

They could do it with other the people.

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

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

Justice Felix Frankfurter: I didn't ask about that.

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

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

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

Mr. Kenneth C. Royall: Oh, I know only one boxing or another or whether -- it wouldn't make any difference whether there was a contract or arrangement.

The Court would decide that.

Unknown Speaker: Is that --

Justice John M. Harlan: Well, that's -- excuse me.

Mr. Kenneth C. Royall: Yes, sir?

Justice John M. Harlan: I've just gone to observe that's not so very different to put in the --

Unknown Speaker: Hardly.

Justice John M. Harlan: -- covered into the business of fixing reasonable royalties and compulsory patents as devised --

Mr. Kenneth C. Royall: Well, the patents -- yes, sir.

That -- that's the only analogy.

Those are the analogies we know.

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

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

But --

Justice Felix Frankfurter: But I'm not sure I understand this.

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

Mr. Kenneth C. Royall: That's where it leads.

Justice Felix Frankfurter: But I think that's very different from happening.

Mr. Kenneth C. Royall: Yes, sir.

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

Justice Hugo L. Black: Mr. Royall, all of this notwithstanding the divestiture of the practices?

Mr. Kenneth C. Royall: Yes, sir.

This goes on, in and out --

Justice Hugo L. Black: Even after the divestiture.

Mr. Kenneth C. Royall: This is an addition.

Justice Charles E. Whittaker: What is the theory of that (Inaudible)

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

And -- and that's true although there are hundreds of other arenas.

Justice William O. Douglas: Could you put your finger on those provisions of the decree?

Mr. Kenneth C. Royall: Yes, I can.

Well, give me -- I'll continue while they are looking that up.

Justice William O. Douglas: That is --

Mr. Kenneth C. Royall: Now, even if that applied only to boxing, it would still prevent a -- present a very complicated problem.

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

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

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

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

That was not -- that was turned down.

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

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

That it would be sold to the highest bidder.

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

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

Mr. Kenneth C. Royall: Well sir, that's what we offered to do.

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

Now, there's one other thing.

This decree also adversely affects nonchampionship boxing material.

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

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

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

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

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

That would meet every possible legitimate purpose.

This two-bout is a bad thing.

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

The judge put the two-bout on.

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

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

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

The -- I'm not going to discuss much the abuse of discretion.

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

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

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

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

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

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

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

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

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

Chief Justice Earl Warren: Mr. Elman.

Argument of Philip Elman

Mr. Philip Elman: Mr. Chief Justice, if the Court please.

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

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

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

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

That's the function of the District Court.

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

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

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

The case went back to Judge Ryan.

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

The printed record alone is three volumes.

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

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

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

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

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

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

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

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

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

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

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

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

That isn't here.

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

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

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

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

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

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

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

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

Justice John M. Harlan: What part of the case was part of their contentions in this -- in this argument?

Mr. Philip Elman: I'm making -- I think that that applies to the whole case Mr.Justice Harlan.

Justice John M. Harlan: Do you mean throughout?

Mr. Philip Elman: As to the relief, I think there too.

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

Justice John M. Harlan: To interrupt to your order (Voice Overlap)

Mr. Philip Elman: Not at all.

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

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

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

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

Well, it's true.

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

That was his initial reaction.

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

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

There are about 9000 pages of transcript just under relief.

Justice Charles E. Whittaker: What?

Mr. Philip Elman: It wasn't --

Justice Felix Frankfurter: 9000?

Mr. Philip Elman: 9000 pages in a stenographic transcript, the bulk of volume two of the printed record.

Justice Felix Frankfurter: You said 40 --

Justice Charles E. Whittaker: (Inaudible)

Mr. Philip Elman: Well, the total -- the total is about 1800 and about 900 were devoted to relief.

The bulk of volume --

Justice Felix Frankfurter: According -- you gave us an early (Inaudible) Mr. Elman.

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

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

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

Justice Felix Frankfurter: Since you're dealing at large before you come to details, may I put to your questions at large?

Mr. Philip Elman: Yes, sir.

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

Mr. Philip Elman: Well, --

Justice Felix Frankfurter: Are there any difference?

Mr. Philip Elman: In the abstract, perhaps the answer is yes.

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

Justice Felix Frankfurter: I've had that --

Mr. Philip Elman: Now, the --

Justice Felix Frankfurter: -- put in my question with the proper scope to be given to the discretion, to the wide area within which the judge could think.

Mr. Philip Elman: I think -- I think --

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

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

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

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

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

You've got to look at the record.

Unknown Speaker: Equity --

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

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

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

But it's quite the contrary.

Justice John M. Harlan: (Voice Overlap)

-- nobody is going to have to argue that.

Nobody has -- have experience as Judge Ryan (Inaudible)

Mr. Philip Elman: Well, Judge Ryan --

Justice Felix Frankfurter: May I ask this, and I -- it carries -- now my question carries (Inaudible).

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

Mr. Philip Elman: The decree that you have before you is peculiarly the creation of the District Judge.

Justice Felix Frankfurter: All right.

Mr. Philip Elman: The principal -- the principal provision here that's under attack, the divestiture provision was substantially -- was proposed by the Government substantially modified by Judge Ryan.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It was the center of the boxing industry.

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

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

He had an exclusive lease on the Garden for boxing.

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

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

They had promoted two middleweight championship fights earlier that year.

They were planning to promote some additional ones.

They have an exclusive lease on the Polo Grounds.

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

He was a stockbroker.

Wirtz was a real estate man.

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

It's true they owned some shares of stock.

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

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

They were not directors of the Garden.

They exercise no control over the Garden.

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

They were out and lived in Chicago.

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

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

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

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

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

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

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

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

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

And that agreement was carried out.

Louis got those contracts.

He retired as champion.

He had signed those contracts to Norris and Wirtz.

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

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

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

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

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

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

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

They are representing themselves.

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

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

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

Joe Louis would get 20%.

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

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

Mike Jacobs also had an exclusive arrangement with Yankee Stadium.

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

Now, that was -- that the Garden did that.

Mr. Jacobs was eliminated.

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

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

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

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

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

They had the Polo Grounds.

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

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

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

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

They had the welterweight championship exclusive rights.

They also have the middleweight championship exclusive rights.

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

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

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

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

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

Now, that was --

Justice John M. Harlan: Is that the (Inaudible) deal with the relief question?

Mr. Philip Elman: Yes, sir.

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

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

Chief Justice Earl Warren: We'll recess now

Print this transcript Transcript: 

Argument of Philip Elman

Chief Justice Earl Warren: Mr. Elman, you may proceed.

Mr. Philip Elman: Mr. Chief Justice, if the Court please.

While I should like to devote the rest of time to the decree, I feel I should say just a few words on the relevant marketpoint in view of the importance which appellants attached to that.

There again, there is no disagreement as to the legal standard.

Both sides accepted the standard of law that was expressed in the du Pont cellophane case.

The complaint in this case alleged that the heart of trade or commerce which was involved here was the promotion of world's championship boxing contests.

The District Court found on the facts that there was a special, unique and distinct market as to championship contest that ultimate findings.

In fact is supported by numerous supporting findings as to the greater commercial appeal of championship fights for spectators.

There's a finding that championship fights generated three times the television, motion picture and radio revenue and five times the box office revenue.

During the four-year period of the conspiracy, there were some 44,000 fights throughout the country.

Only 44 of those, one-tenth of 1% were championship fights and yet that small fraction produced one-third of the total gross revenue of all boxing.

The -- there was testimony by television sponsors and their advertising agency executives.

There's testimony by the former chairman of the National Boxing Association, Mr. Abe Greene, that a championship fight, a fight is -- is entirely different from the ordinary fight where two men are fighting each other and when a champ -- when the championship for the world is involved, when the winner of the fight is officially proclaimed by a government agency that he is the champion of the world and can defeat any man his size and weight in the whole world, somehow that invests the contest with a quality that the Court can take judicial notice of.

It's -- the same phenomenon occurs every year, the first week in October when the World Series in baseball was played.

People who aren't interested in baseball during the season, for some reason become excited about the World Series because a championship is involved, and that has tremendous commercial implications.

The television sponsors, well, one of them the Pabst Brewing Company paid $200,000 for the right to televise the Joe Louis-Ezzard Charles fight.

It paid the motion -- for the motion picture rights $100,000 for championship fight.

There was no market at all for the motion picture rights for the non-championship fights.

Now, you have all these findings as to the nature of the business.

You have findings as to the vast differences, the amount of money that was produced.

And perhaps, more significant than anything else, the defendants themselves recognized that distinction because they concentrated their activities in the championship field.

As to the -- as to the aspects of the conspiracy, of course, they're engaged in the promotion of non-championship fights, but the arrangements between themselves, the -- the agreement to split the profits between the Illinois and the New York group was at -- were only at the championship fights.

The -- these exclusive contracts which they entered into with contenders were not -- were not applicable in case the -- the contender lost.

They -- they were concerned only about his winning.

They wanted to make sure that he became the champion then they'd have the exclusive promotional rights.

And similarly, the territorial allocation as to where the fights would be -- would be held, that applied only to championship fights.

Now, on the basis of all that, we -- we find it very difficult to see any basis on which the finding of fact, and it's a factual question, can be set aside as clearly erroneous.

And I shall therefore pass on immediately to the -- to the relief.

Now, the District Court had, as I say, in March of 1956, entered his findings of fact as to the violations of law, the restraints of trade, the monopoly and the monopolistic power that exclude competitors which the defendants enjoy.

Proposed -- proposed forms of final judgment were submitted by the parties in April of 1957.

The Government and the defendants submitted their -- their proposals, the defendants requested a hearing.

And I -- I misspoke myself before the lunch recess, I -- I said there were 9000 pages, that was a slip of the tongue, it was 900 pages.

The hearings covered a period of nine trial days and the purpose of the hearings, which the Court expressly stated and I think I should refer to -- to that in view of General Royall's observation that -- that the District Judge disregarded the existing conditions.

If Your Honors will look at pages 769 and 774 of the record, you will find Judge Ryan saying why he was having these hearings on the relief that he wanted to go into all the existing conditions.

He wanted to know what the defendants and the Government had to say as to the fairness and the reasonableness and the feasibility of the proposals for -- for the relief.

Now, as I mentioned earlier, the practice he followed was not of reserving judgment until the last day.

He expressed his mind openly as he went along and he changed his mind as he went along in the light of -- of his preoccupation with the case and his being immersed in -- in the record.

And what finally emerged, as I also said, was a judgment which was not proposed in toto by either side.

It was a composite.

Parts came from the Government, parts came from the defendant, part defendants and part -- one significant part, the compulsory leasing part initiated with the judge was adopted by the defense and that's in -- in the decree.

Let me refer to the opinion which he delivered from the bench on June 24th, 1957, which is in the record, starting at page 891 in Volume 2 in which he explains why the relief that he grants is necessary and -- and proper in view of the findings and the evidence that he had -- had presented to him.

He states, at the bottom of page 891, that the conspiracy which he found to be existing was made effective by the concert of action of the defendants.

The combination was the source of the monopolistic power which they had acquired and exercised.

He said, at page 891, what he had earlier said through -- in the course of the hearings that there must be a dissolution of that combination in order to reestablish the competitive conditions which existed in 1949 before the combination was established and to permit the entry of others into the market.

That was the core of the case as it appeared to Judge Ryan.

It was the fact that Norris and Wirtz who had been in Chicago would, as a practical matter, have been outside of the -- of the Garden boxing picture in 1949, who had held only 10% of the stock in the Garden and who had not exercised any control or participating in its management, who had been directors or officers in Norris and Wirtz by reason of this combination had become directors of the Garden.

Norris became the president of the - of the Madison Square Garden Corporation.

They increased their stockholdings from 50,000 shares prior to 1949 to well over 200,000 shares in 1955, a 38% stock interest.

There was no question that Norris and Wirtz, during the period of this conspiracy, had acquired control of the -- of the Garden Corporation.

That they were now directors of the corporation.

And Norris, as I say, was -- had become the leading spirit in -- in the group.

And what had seemed to Judge Ryan to be absolutely essential was to get Norris and Wirtz out of the Garden picture to try to get the situation if it could possibly be done back to where it'd been in 1949.

He also wanted -- he wanted the decree to encourage others to come into the picture, other independents to undertake, to compete, if they could with -- with the Garden and with Norris and Wirtz.

He rejected the suggestion which came almost on the eve of the decree that the Garden give up championship, give up boxing entirely because from the judge's point of view that would have eliminated the most important potential independent promoter of boxing.

There was the Garden, the big -- the big factor in the boxing picture.

And to remove it from -- from boxing would leave Norris and Wirtz still in -- still in the -- in the scene and the Garden would be out.

And -- and from Judge Ryan's point of view, he wanted to keep the Garden in the business, not exclude it from the business, but he wanted to have the Garden remain in -- in boxing free from the control which Norris and Wirtz had acquired during the period of this conspiracy.

And that's the main thing in this case.

And he -- and I could give Your Honors record references to the places throughout the hearings on the relief where Judge Ryan says again and again, “What I'm trying to do is to get Norris and Wirtz back to Chicago, get the situation back to where it was in 1949, break up this combination.”

And all the provisions of the decree have to be examined as against that central purpose.

Justice Felix Frankfurter: But wouldn't that central purpose be satisfied and mitigated by making conditions as to the non-monopolistic use of the Garden rather than also requiring them to get out of the Garden?

Mr. Philip Elman: Well, if -- so long as --

Justice Felix Frankfurter: And I'm -- I cannot follow your argument with, I think, full appreciation that you didn't want to close up the Garden as the medium for exhibiton or what are they called, boxing events, but I don't follow you in saying that that evidence that says you take them away from the Garden.

Mr. Philip Elman: Well, the reason -- the reason why they are taken out of the Garden is that their entry into the Garden was the combination, it was the combination of these two --

Justice Felix Frankfurter: I understand that.

Mr. Philip Elman: -- economic --

Justice Felix Frankfurter: I understand that.

Mr. Philip Elman: -- economic entities.

Justice Felix Frankfurter: Judge Ryan did find, but I think one can take over judicial notice of.

That at the time the combination was entered into, people rightly thought it was not a combination within the Sherman law.

Mr. Philip Elman: I -- I'm not sure I understand that, Your Honor.

Justice Felix Frankfurter: At the inception of the combination, I should think it was rather the accepted notion that boxing was not within the Sherman law.

Mr. Philip Elman: 1949, Your Honor?

Justice Felix Frankfurter: What?

Mr. Philip Elman: This was 1949.

The Toolson case -- Toolson --

Justice Felix Frankfurter: This -- this Court decide that on the 1954.

Mr. Philip Elman: The Toolson case -- the Toolson case was 1953 for one thing.

For another --

Justice Felix Frankfurter: But before you had (Voice Overlap)

Mr. Philip Elman: -- for another --

Justice Felix Frankfurter: (Inaudible) decision and Justice Holmes' decision.

Mr. Philip Elman: Which was a baseball decision.

Justice Felix Frankfurter: Well, I know, but --

Mr. Philip Elman: I hope I don't have to reargue --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Philip Elman: -- the boxing case that was [Laughs] before Your Honor's (Inaudible)

Justice Felix Frankfurter: Yes, I know it was baseball, but I think it required refinement to differentiate baseball from boxing as within the Sherman law.

That required a good deal of scrutiny whatever effect of the (Voice Overlap) --

Mr. Philip Elman: Well, there may -- there may very well have been some people who thought that the -- the boxing contest itself was not trade or commerce, but I can hardly subscribe to the view, Your Honor, that -- that any responsible lawyer actually thought that a scheme for the exclusive acquisition of television motion picture rights and all that was -- was completely immune from that Sherman Act.

Justice Felix Frankfurter: But that's a very different story as I tried to indicate in what I said in this case when would it be affirmed.

That's a different story.

Mr. Philip Elman: I -- I agree it's a different story.

And the story -- the story that I'm trying to present here is that the answer to your question as to the dissolution of this combination really rests -- it has two aspects, one, the facts and two, the law.

So far as the law is concerned, there is really no problem.

This Court has said, we quote on page 45 of our brief from the Crescent Amusement case, “The dissolution of a combination will be ordered where the creation of the combination is itself a violation.”

Justice Felix Frankfurter: Well, I mean --

Mr. Philip Elman: I could also cite the -- the Paramount case, the -- and other cases that are -- that are familiar to the -- the Court.

Justice Felix Frankfurter: My point is -- may I put my point to you, Mr. --

Mr. Philip Elman: Certainly.

Justice Felix Frankfurter: Because it seems to me important in determining the scope and the validity, the propriety of a drastic decree.

To me, it makes all the difference in the world what kind of a decree is entered by a chancellor if people broadly speaking with I hope and violate the law, rather than a violation is retrospectively found which, I respect, is a violation because he protects all chancellors, but it makes all the difference in the world what kind of a decree you impose on people if would I hope you to violate the law as against having been made a bad mistake and guessing it as to what this Court will do.

Mr. Philip Elman: Well, Your Honor, thereto, I -- I must express a caveat from our point of view.

From our point of view, the function of an antitrust decree is not punitive, it's not to punish them.

If it were punitive, then you'd consider the question of willfulness and moral culpability.

The function of an antitrust decree is prophylactic, it's to prevent this thing from happening again.

Justice Felix Frankfurter: But --

Mr. Philip Elman: And then it make -- from that point of view, it makes no difference what they thought.

Justice Felix Frankfurter: But prophylaxis has something to do with the kind of -- with the state of health on the person against whom you have applied.

Mr. Philip Elman: And the state of health that Judge -- Judge Ryan found here on adequate evidence was that there was an illegal monopoly, a monopoly which was created by the merger of these two groups.

And so long as those two groups continued to be one, you could have no competition between them.

Justice Felix Frankfurter: Well, you could by the conditions that he imposed as to the --

Mr. Philip Elman: No, sir.

Justice Felix Frankfurter: -- the limitation of the number of exhibitions and the other controls.

Mr. Philip Elman: You -- you -- all you -- all you --

Justice Felix Frankfurter: He himself could it suicide, didn't he?

Mr. Philip Elman: He -- he did not say this --

Justice Felix Frankfurter: He called it suicide.

Mr. Philip Elman: No, he didn't.

He was --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Philip Elman: -- talking about dissolution of I.B.C.

Justice Felix Frankfurter: Well --

Mr. Philip Elman: He was not talking about the divestiture of their Madison Square Garden stock by Norris and Wirtz.

So far --

Justice Felix Frankfurter: Well, I --

Mr. Philip Elman: -- as Norris and Wirtz were concerned, what Judge -- what the District Court here considered to be controlling, what we consider to be controlling is that so long as Norris and Wirtz control the Garden, you won't have any -- any real possibility for the reentry of new independent competitors and you won't have any competition as between Norris and Wirtz, the Chicago Stadium and these other -- other mid-western groups on the one hand and the Garden on the other.

Justice Felix Frankfurter: But couldn't --

Mr. Philip Elman: And no restraints as to what the Garden should or shouldn't do could -- could accomplish the purpose of getting them the same purpose that would be accomplished by getting them out of the Garden completely.

Justice Felix Frankfurter: But isn't there a difference between taking the grip of control away from people and taking them out altogether?

Mr. Philip Elman: Of course, there's a difference.

But -- but the only way you could get them out of control was to require them to divest themselves of what made that control possible.

Justice Felix Frankfurter: Or is the divestiture limited to that?

Mr. Philip Elman: The divestiture -- the divestiture was quite simple.

If -- if the judge is right in thinking that -- that Norris and Wirtz had to be removed from the Garden picture, what he did was certainly the way to do it.

Justice Felix Frankfurter: Yes.

Mr. Philip Elman: He required them to resign immediately as office directors and officers.

He -- he had them turn over their stock to trustees for the purpose of holding.

He gave them five years in which to sell it.

And -- and on terms that they, themselves, could -- could require, this is listed on the open market, there was a witness in the case here who said he -- he was ready, able and willing to buy the -- the Madison Square Garden stock open up the Norris and Wirtz owned at the market price, there's no problem as to that.

But he -- the judge gave them five years.

He gave them an -- an additional two years in the event that they couldn't sell it.

Now --

Justice Felix Frankfurter: That dissolved the corporation.

Mr. Philip Elman: Now, let's get -- now, let's get --

Justice Felix Frankfurter: I thought --

Mr. Philip Elman: -- back to the corporation.

No, no.

Now, we're --

Justice Felix Frankfurter: All right.

Mr. Philip Elman: -- talking about the corporation, we're talking about two different things.

The Garden is not being dissolved.

The Garden is going to continue to be there and Judge Ryan wants to straightened and make it an -- an independent agent.

That's the Garden.

Now, the I.B.C.'s are something entirely different.

That these two corporations, International Boxing Club of New York and the International Boxing Club of -- of Illinois part -- were recreated.

In 1949, immediately after this agreement with Joe Louis.

Now, what did -- what did they do as the judge found?

He found that they were essentially paperbookkeeping organizations.

They -- they serve no useful purpose except to serve as the device for funneling profits as between the Chicago group and the New York group.

He found that they have nominal assets, no assets.

Now, his initial reaction to the proposal for dissolution of the I.B.C. was -- he was requiring to commit Harry Caray, that's what he said.

That's what he said on May 20th.

On June -- on June 20th -- on May 29th, record page 821 after he had heard some evidences to what the I.B.C.'s were doing and what the function they serve, he said, “Well, he's -- I'm reluctantly heading in the direction of dissolution,” that's on page 821.

On June 28th, he engages in the colluqoy with Mr. Elkins, one of the trial counsel for the Government.

Mr. Elkins says as far as the Government is concerned, the dissolution of the I.B.C.'s is not a substantial part of the --of the Government's remedy.

They don't particularly care about it.

The -- the main reason for asking the dissolution of these I.B.C.s was to service as a convenient way of -- of eliminating these contingent exclusive contracts that I.B.C. had entered into with the -- with the competitors --

Justice Tom C. Clark: (Inaudible)

Mr. Philip Elman: I beg your pardon.

Justice Tom C. Clark: (Inaudible)

Mr. Philip Elman: No, those are -- they're enjoined and they're declared invalid.

Now --

Justice Tom C. Clark: (Inaudible)

Mr. Philip Elman: Well, that's -- that's why it's very difficult, from the Government's point of view, to see what the shooting is about because as Judge Ryan said and Mr. General Royall has repeated here, there's nothing in this decree that prevents the parties from forming new corporations tomorrow.

One called International Boxing Club Madison Square Garden, International Boxing Club of Chicago Stadium.

Those corporations could continue to perform the function of -- of promoting the bouts, making the contracts to the boxers and so on.

That -- that function continues -- will certainly be continued as to nonchampionship fights and as to these two --

Justice Tom C. Clark: (Inaudible)

Mr. Philip Elman: Pardon?

Justice Tom C. Clark: -- down by the restrictions and limitations that he put into decree with reference to (Inaudible)

Mr. Philip Elman: Oh, yes, yes.

To the extent of defendant's control these new corporations are, of course, be found by them.But consider this as -- as a separate independent provision of the decree, the dissolution of these paper organizations is really just a paper act.

Justice Felix Frankfurter: Well, why do --

Mr. Philip Elman: And --

Justice Felix Frankfurter: -- why should equity do a useless thing if let's say they --

Mr. Philip Elman: Well, it's not useless.

Justice Felix Frankfurter: -- substitute -- well, then, if -- what is the use?

Mr. Philip Elman: The use?

Justice Felix Frankfurter: If the next day, they can have other paper -- issue a paper.

Mr. Philip Elman: Well, the useful purpose -- the -- in the first place, the reason why they were dissolved, ordered dissolved by the -- by the judge is a reason which -- which has a -- a sound legal basis.

These were instrumentalities created for the purpose of effectuating the conspiracy.

And -- and it's certainly abundant law, which I need not cite to Your Honors, as to the adequacy and appropriateness of -- of eliminating the devices for carrying -- for carrying out conspiracy.

Justice Felix Frankfurter: Not if you can substitute.

Not if you can produce an identic replica the next (Voice Overlap) --

Mr. Philip Elman: Well, that -- that goes only to the claim that this is harsh and drastic.

The -- it seems to us that the burden of -- of showing that this provision of the decree should be eliminated, rest upon the defendant who has been found to have violated the law and who says this decree really goes much further than necessary.

It seems to what it all adds up to is this doesn't amount to very much, it doesn't hurt them and perhaps it doesn't serve very much of a purpose.

Now, we think it serves a -- a useful purpose in that it's a kind of a shorthand way of wiping out all of these unexecuted contract arrangements which are -- which were declared illegal in the -- in the other portion of the decree.

So that you can now start from scratch.He -- the judge is wiping the slate clean and saying, “Well, let's -- let's eliminate these corporations.”

That seems to be perfectly reasonable proper and -- and it's hard to see who's hurt by it.

Justice Felix Frankfurter: But when you say the decree is harsh --

Mr. Philip Elman: I don't.

Justice Felix Frankfurter: Did you say it was harsh?

Mr. Philip Elman: I didn't say it was harsh.

Justice Felix Frankfurter: I mean, it bares on the fact that it just doesn't rank they were on.

Mr. Philip Elman: Well, that was his -- that was his first reaction when he read it.

Justice Felix Frankfurter: Well, even --

Mr. Philip Elman: That -- that's --

Justice Felix Frankfurter: -- he wants to stay, even when it came to his stay, he took into account that these were unusual and unprecedented provisions, isn't that true?

Mr. Philip Elman: Well, when it came to the -- when it came to the question of states, it's true that Judge Ryan said he wanted this -- this decree to be presented to this Court before it was made effective which is certainly justifiable.

Justice Felix Frankfurter: Yes, but do you --

Mr. Philip Elman: But it -- it's a big jump to go from that to say that he conceded that this -- he didn't -- he certainly didn't say at the time he entered the decree that there was anything harsh or drastic or punitive about it.

Justice Felix Frankfurter: I didn't say he said that.

I said he said these were unprecedented provisions.

Mr. Philip Elman: Well --

Justice Felix Frankfurter: Did he said that --

Mr. Philip Elman: I -- I don't think --

Justice Felix Frankfurter: -- to stay.

Mr. Philip Elman: I don't think --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Philip Elman: -- he was referring to the dissolution.

Justice Felix Frankfurter: Page 905.

Mr. Philip Elman: I think -- I don't think -- yes, I think he was referring to his own -- his own proposal for compulsory leasing of the arenas.

Now --

Justice Felix Frankfurter: As an example, he gave that.

Mr. Philip Elman: Yes, now, I think that's what he was thinking.

If that was the one that he brought in to the case --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Philip Elman: -- it is true there are no --

Justice Felix Frankfurter: -- principles of law which we are -- there are a number of principle of law which we are applying here for the first time.

Mr. Philip Elman: Well, it's a relevant -- there was the argument of irrelevant market.

And at that time, it was -- the -- the law was somewhat uncertain in view of the division in the Court and so on.

There was -- there was -- a district judge in that situation would naturally want this Court to pass on his decree before putting in to effect.

But I don't think that there's anything in that that -- that supports the -- the suggestion that after he had gone through this process of weighing and pondering and deliberating of it, that at that time, he thought he was doing something that went beyond the necessities of the situation and --

Justice Tom C. Clark: I don't want to take much of your time.

I want you to tell us in few words, what are those provisions in the decree (Inaudible)

Mr. Philip Elman: Yes, well, there are five -- there are five phases of the decree.

Justice Tom C. Clark: One is dissolution (Inaudible)

Mr. Philip Elman: One is dissolution of the I.B.C.

I think I've said all I can say on that.

Justice Tom C. Clark: The divestiture.

Mr. Philip Elman: Divestiture, and I think that's been covered.

There's compulsory leasing of the stadium, the Madison Square Garden and the Chicago Stadium.

Justice Tom C. Clark: (Inaudible)

Mr. Philip Elman: Well, that -- that provision in -- is -- as I say, is drafted by the defendants and it says -- it says, “Where -- where an independent promoter comes to the Garden on a night which is otherwise available and asked that he read it, if there's any disagreement as to what the reasonable terms of the rental, the Court will resolve that disagreement.”

Now, that was there proposal and it seems difficult to understand why we should now object to it.

Justice Tom C. Clark: What --

Justice Charles E. Whittaker: What -- what else could they do (Inaudible)

Mr. Philip Elman: I beg your pardon, sir?

Justice Charles E. Whittaker: What else could they do in that respect?

Mr. Philip Elman: Well --

Justice Charles E. Whittaker: (Inaudible) enjoin them from using the (Inaudible) from using the (Inaudible)

Mr. Philip Elman: Well, the judge -- the judge had indicated that he wouldn't go for that.

The Government had proposed that -- that the defendants, in effect, be put out of the business of promoting championship boxing permanently.

And the judge said that that was too -- that was too extreme.

He didn't think it was necessary to do that.

And he -- he thought he would go along with the defendants' proposal that they remain in the business of promoting championship.

Justice Charles E. Whittaker: (Inaudible) right the fact of the judgment and go for it, the defendants came in and said, “Oh well we want you to and here's the order letter.”

Is that what you mean?

Mr. Philip Elman: The defendants had originally proposed that they be limited to two championship fights each --

Justice Charles E. Whittaker: Yes.

Mr. Philip Elman: -- per year.

Justice Charles E. Whittaker: Yes.

Mr. Philip Elman: The judge said to the Government, “I'm going to approve that proposal of the defendants and I'm not going to approve your proposal that they be barred from -- from the championship boxing.”

He also said to the -- to the party after he had heard this testimony from Mr. (Inaudible) about the need for giving the independent promoters a break and letting them have an opportunity to get into the Garden, he said, “I think, I -- he said, “I -- I -- it seems to me,” he said, “these cases on the licensing of patents at reasonable royalties give us -- are analogous here and I think I've got the power to direct them to enter into these leasing arrangements with independent promoters”.

Now at that stage, the defendants, far from objecting to his idea of compulsory leasing, embrace their proposal.

They submitted to -- submitted that proposal as to compulsory leasing -- leasing in their proposed decree.

That's on page 61 of the record, Your Honor, you will find that page.

Justice John M. Harlan: Was there -- was there a full text to the decree, proposed decrees submitted by each side?

Mr. Philip Elman: Yes, they were -- they were --

Justice John M. Harlan: (Inaudible)

Mr. Philip Elman: The -- the Government submitted its proposal as to relief April 8th, 1957.

Justice John M. Harlan: Is it printed?

Mr. Philip Elman: That's in their printed record Volume 2, page 602.

That provided through divestiture within six months, permanent injunction against championship contest, dissolution, no provision is compulsory leasing and so on.

The defendants submitted theirs two weeks later on April 22nd.

Justice Charles E. Whittaker: And that's in --

Mr. Philip Elman: That's R-608.

And the -- the proposal that I'm referring to, Mr. Justice Whittaker, they submitted -- this was their proposed judgment as modified on May 29th, 1957.

It's in the record at 618, begins at 618 and number 616.

My -- my notes say 618.

And the compulsory leasing provision is on page 621.

Now, that's divestiture dissolution compulsory leasing.

The limitation -- the fourth of the five aspects of the relief is a limitation on promotion of championship bouts to two a year.

That's -- then its proposal, they said that that's adequate, certainly no contests for that.Now, the final point which they make is the provision which bans the exclusive contracts with boxers and the provision which bans the exclusive leasing of stadia extends not only the championship fights but also applies to all fights.

Now, why did Judge Ryan make it as broad as that?

He gives us his reasons on page 896 of the record in his opinion.

He says, “The relief here must be broader than the championship field because the evil to be remedied is broader by terminating all exclusive contracts and leases, then joining them in the future, the way will be open for those who wish and have the financial ability and otherwise meet local and state requirements to enter into the promotion of championship boxing contest.”

In other words --

Justice John M. Harlan: (Inaudible)

Mr. Philip Elman: No, it was -- it was much milder.

The Government proposed divestiture in six months.

It -- it proposed -- the other major feature of the Government's proposal was that the defendants be completely removed from promotion of championship boxing.

Now, the -- the judge substantially modified the divestiture provision as -- in terms of the time.

He cut down the ban on their promotion to two a year.

Now, the -- the finding was that they're only between 9 to 13 championship fights a year.

So he allowed them to stay in -- as to four within a year which still gives them a substantial piece of the business.

And he wanted to keep them in.

He didn't want to drive them out of this.

He -- he recognized that once competition was -- was restored, their -- their capital, their know-how and so on could be put to good use.

Now, that -- that -- it's -- now, summing it all up, it seems to us that this is essentially a fact case.

The -- it's -- it's governed by familiar principles which have been declared as to the respect to be attached to the findings of fact, respect to be attached to the exercise of judgment made by the man who devoted months to considering the problems that Your Honors have had presented to you in this -- in this afternoon, who had this record.

He had more than the printed record.

He had -- he had ample time and -- and resources to go over the case.

We think that what he did here was consistent with the -- with the standard that's applied in to trust cases.

You got the evils.

The -- the -- its function is not merely to remove the evils but to restore and create condition which will prevent recurrence of those evils.

Chief Justice Earl Warren: Mr. Royall.

Argument of Kenneth C. Royall

Mr. Kenneth C. Royall: May it please the Court.

I'm not allowed to talk about burden of proof and what we've got to show -- and truth about it is that the judge's findings, and we speak of them generically, you're likely to forget the fact that the great majority have more conclusions from basic facts.And the judge himself said the basic facts were not in dispute.

And what he meant by that necessarily were the facts that I stated to you in my argument which they have not yet challenged, the basic facts are not in dispute.

Now, it's difficult in the case like this for counsel to -- not to make some mistakes in statements of fact.

And when I call attention to a few that had been made by Mr. Elman, and there is no sense, the design is any reflection on it.

But some of them are pretty serious.

I'll just to call attention to one or two of them.

He argued considerably about the fact that we had proposed this compulsory leasing.

The circumstances are that -- and I'll read from our proposal and made in late in the hearing, the defendants --

Chief Justice Earl Warren: What date is this?

Mr. Kenneth C. Royall: This is in May.

Chief Justice Earl Warren: May 20 --

Mr. Kenneth C. Royall: May what?

22nd.

Unknown Speaker: Where is this?

Mr. Kenneth C. Royall: It's on page 616.

This is a rather serious error because he based to get this argument on.

“The defendants pursuant to the suggestion of the Court respectfully submit without prejudice to their rights the following modification of the form of judgment suggested by them.”

That's where it came in, this compulsory leasing.

That's a rather far cry from saying that it came at the suggestion of the defendants.

Now, there are some other things that --

Justice Hugo L. Black: Can you point in the record (Inaudible) in the record?

Mr. Kenneth C. Royall: Well, I don't know, sir.

Justice Hugo L. Black: If it's not (Inaudible)

Mr. Kenneth C. Royall: I'm not sure there's any.

We can find this.

I'm sure.

Justice Hugo L. Black: (Inaudible)

Mr. Kenneth C. Royall: Now --

Justice Felix Frankfurter: (Inaudible)

Justice Hugo L. Black: (Inaudible)

Mr. Kenneth C. Royall: It's in the minutes, I know but -- but I'll find --

Justice Felix Frankfurter: That's in 338.

Mr. Kenneth C. Royall: 338.

Now, the -- another situation is -- in some of the beginning matters, you said the tournament of champions was in -- had vast resources, the record shows exactly the contrary.

Chief Justice Earl Warren: Well, in general, is that the only difference of opinion between you and Mr. Elman about this matter?

That -- that -- in this -- in these defendants' suggested modifications you said without prejudice to their rights, that's the only difference, otherwise -- otherwise you agree as to what happened.

Mr. Kenneth C. Royall: Yes, I agree that it happened but he said we suggested.

Chief Justice Earl Warren: Yes, I -- I --

Mr. Kenneth C. Royall: We did not suggest it.

Chief Justice Earl Warren: I -- I say (Voice Overlap) --

Mr. Kenneth C. Royall: The judge had suggested it.

Chief Justice Earl Warren: Yes.

Mr. Kenneth C. Royall: We were merely implementing what the judge asked us to do.

Chief Justice Earl Warren: Yes.

Mr. Kenneth C. Royall: That is the only the difference, yes, sir.

I'm not -- now, he spoke of -- of exclusive contract about a French transaction.

These are minor illustrations.

That was on the ground of -- the dispute was whether to be -- the fact would be here or in France, nothing to do with any other exclusive feature.

He stated inadvertently that the word “drastic” was stated by the judge early in the session.

Well, as a matter of fact, the statement by the judge was on the -- after the decree when we were discussing the judgment.

He said, “I have directed some very drastic steps,” that's on page 904.

So that was the opinion of the judge even after the decree was made.

And I will call attention to the fact that the judge himself said he wanted this matter of review considered by this Court because he thought that it was -- they were unusual and drastic provisions.

The -- we'll find that -- he -- he said the -- the dissolution, and I know he was -- thought he was entirely correct, originated later in the hearing.

It was proposed by the Government in April of 1947.

Now, Your Honor, the -- I don't want to lightly dismiss this matter of market.

I'm just going to say a word about it.

They can use special and unique.

But the facts are not denied, the facts I presented this morning, the facts set forth in our brief and that is just a gradation and not one that is a difference in kind.

There was no denial in his argument, at least no --

Chief Justice Earl Warren: Now, on that, generally, are you -- are you stating the facts as you read them or are you stating the findings of the Court?

Mr. Kenneth C. Royall: Well, I'm stating the -- the facts as undisputed as to basic facts.

Chief Justice Earl Warren: Now, what was the finding of the Court on that if any?

Mr. Kenneth C. Royall: On which question, sir?

Chief Justice Earl Warren: On the one you just told us about.

Mr. Kenneth C. Royall: Well, the finding of the Court, as I said -- this is -- this finding was that it was special and unique.

And I said that as a conclusion and not a factual -- not a basic factual finding.

I stated at the beginning that the judge made a number of findings which are conclusions from basic facts.

As to those, they are to be considered as conclusions as the Court has said time and again, their inferences.

Now, the -- we were -- the judge has said also that -- in -- at the time he rendered his decree or approximately that time, that in his opinion, we had -- had committed no more wrong and that a majority of the people thought that what we did was entirely all right.

“It was not prohibited” was his words.

And that is a consideration which this Court, I know, will have in mind in -- in granting what the Court himself says as a drastic remedy.

Justice Felix Frankfurter: Is that in his findings of fact or conclusion?

Where is that, Mr. Royall?

Mr. Kenneth C. Royall: We cited it in the brief.

Justice Felix Frankfurter: All right, don't -- don't take your (Voice Overlap) --

Mr. Kenneth C. Royall: It's in the brief, sir.

Justice Felix Frankfurter: All right.

Mr. Kenneth C. Royall: We cite that.

Justice John M. Harlan: Am I right in thinking that of the various items that you argued about are the one that (Inaudible) divestiture one?

Mr. Kenneth C. Royall: I think that the divestiture one is the most serious.

I think the compulsory leasing will so encumber and complicated.

The orderly continuity that all boxing arrangements must held that it also is very limited.

Now, I think the divorcement is a totally unnecessary thing which a judge in effect not in the fact that he has found it to be because he suggested himself that we reorganize the same corporation, the I.B.C. of Madison Square Garden.

Unknown Speaker: Dissolution you mean?

Mr. Kenneth C. Royall: Dissolution, I mean, dissolution.

I beg your pardon, sir.

I misspoke myself.

Justice John M. Harlan: Who own the stock of (Inaudible)

Mr. Kenneth C. Royall: Owned by the Garden.

Well, no, it was not.

It was owned -- it was owned by the -- eventually, it changed two or three times.

Justice John M. Harlan: What was (Inaudible)

Mr. Kenneth C. Royall: At the time of the decree, it was owned by the Garden, is that right?

Owned entirely by the Garden.

Unknown Speaker: (Inaudible)

Mr. Kenneth C. Royall: What?

Unknown Speaker: Chief Justice.

Mr. Kenneth C. Royall: There -- I.B.C. of New York was owned by the Garden.

The I.B.C. of Illinois was owned by the Stadium.

Justice John M. Harlan: (Inaudible)

Mr. Kenneth C. Royall: Oh, New York I.B.C.

Justice John M. Harlan: New York I.B.C.

Mr. Kenneth C. Royall: That's right, sir.

Well, sir --

Justice John M. Harlan: (Inaudible)

Mr. Kenneth C. Royall: No, sir, they will not be control.

Justice Charles E. Whittaker: Would there be a market or stock of the I.B.C.'s to (Inaudible)

Mr. Kenneth C. Royall: We -- we don't know, sir.

That was one of the things in desperation.

We suggested to the Court, as I said this morning so -- at -- at public auction.

However, I do not think that would be necessary that I come back to this one thing and conclude.

The -- what we -- what we feel is, to take in into consideration, the admitted good faith in these men in doing what they said, taking into account that the judge himself says and most people thought it was not prohibited, taking into account the fact that they had put a great deal of money into this Garden long before, and his this -- this figure of $50,000 is not correct if you consider the -- the connections that they had which are later in the record.

If you consider those matters and if you do three things that their exclusive contracts with boxers will be prohibited.

Second, the exclusive contracts with stadia be prohibited.

So that they just have to work in their own house and a limitation on the number of championship fights.

You will hurt them but you will permit them to continue and permit them to cover the country with the boxing shows that we believe are good and certainly they are immensely popular and yet leave plenty of room for as much competition as can possibly come.

Justice Hugo L. Black: Mr. Royall, your associate looked and nodded and said you -- you can refer me on the page of that reference.

338, I find nothing with reference (Voice Overlap) --

Mr. Kenneth C. Royall: What?

Justice Felix Frankfurter: Stenographic minutes 338.

Justice Hugo L. Black: Three what?

Justice Felix Frankfurter: Stenographic minutes.

Justice Hugo L. Black: Oh, stenographic.

Mr. Kenneth C. Royall: Yes, it's in -- it's in the record.

Justice Hugo L. Black: (Voice Overlap) it's not in there, right in the minute record.

Mr. Kenneth C. Royall: Yes -- yes it's in there, down on the page (Voice Overlap) --

Justice Hugo L. Black: In a different page, a different number actually.

Justice Felix Frankfurter: (Inaudible)

Mr. Kenneth C. Royall: If -- if it would be --

Justice Hugo L. Black: I can't find it.

Chief Justice Earl Warren: Mr. Elman, do you where --

Rebuttal of Philip Elman

Mr. Philip Elman: Page 738 of (Voice Overlap) --

Justice Hugo L. Black: 738.

Rebuttal of Kenneth C. Royall

Mr. Kenneth C. Royall: 738.

Chief Justice Earl Warren: 738.

Thank you.

Mr. Kenneth C. Royall: I beg your pardon.

Justice Hugo L. Black: It's all right.

It's all right.

It's my fault.