BEACON THEATRES v. WESTOVER

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Argument of Jack Corinblit

Chief Justice Earl Warren: Number 45, Beacon Theatres, Incorporated, Petitioner, versus The Honorable Harry C. Westover, Judge of the United States District Court of the Southern District of California, et al.

Mr. Corinblit, you may proceed.

Mr. Jack Corinblit: Mr. Chief Justice, Associate Justices, may it please this Honored Court.

This case presents the issue as to whether the respondent in this case has improperly denied petitioner a jury trial as to issues related to violations of the antitrust laws.

And whether the rules of law announced by the Court of Appeals to accomplish this result are or are not contrary to the Rules of Civil Procedure promulgated by this Court, adopted by the Congress and are contrary to the Seventh Amendment of the Constitution.

The case briefly arose in the Southern District of California wherein a complaint was filed by Fox West Coast Theatres Corporation.

The complaint was captioned, “Fox West Coast Theatres Corporation versus Beacon Theaters, Inc.”

It was entitled a complaint for declaratory relief.

After the petitioner here, was named defendant there, filed a motion to dismiss on the grounds of lack of jurisdiction and that was denied.

Petitioner filed an answer in which he raised an affirmative -- filed an answer in affirmative defense, filed a counterclaim against the plaintiff and in other party and demanded jury trial as to the complaint, the answer and the counterclaim.

The grounds upon which the petitioner argued that it was entitled to a jury trial as to the complaint -- as to the complaint standing alone were as follows.

The first, that the Seventh Amendment guarantees a jury trial as to actions of law, actions of common law.

This was an action for declaratory relief which is not an action at common law nor is it an action traditionally known as an action in equity.

That the right to trial by jury and an action for declaratory relief turns upon the basic nature of the case and turns upon the -- the kind of the case for which the declaratory action is a substitute.

That in this action, it was apparent from the face of the complaint, from the allegations contained therein that it was a substitute for an antitrust damage suit and that its basic issues were those issues.

And that since under well-established rules, in antitrust damage suits, a -- the plaintiff and defendant are both entitled to a jury trial that therefore plaintiff or defendant -- petitioner here was entitled to a jury trial.

The complaint to make this point was not a very lengthy one.

It alleged, first, that -- it alleged, first, that it was brought under the declaratory relief provisions of the judicial code.

As to page -- at page 10, the complaint appears in our record.

It alleged, first, that it was brought under the Federal Declaratory Judgment Act.

It was entitled, “Complaint for Declaratory Judgment”.

But in the second paragraph of the complaint after the first, as one sentence, there was alleged that there was a controversy in excess of $3000.

And that the matter in controversy arises under the law of the United States to which Sections 1 and 2 of the Act of Congress of July 2nd entitled, “An Act to protect trade and commerce against unlawful restraints and monopolies”, commonly known as the Sherman Act and the Section 4 of the Act of October 15, 1914, the amendatory thereof commonly known as the Clayton Act.

That Section -- Section 4 of the Clayton Act is the statute which gives private persons who are injured, by violations of the antitrust laws, a right to sue.

It is the damage provision of the antitrust laws relating to private individuals.

So that in paragraph 2, there is a rather straightforward statement that the complaint arises under the antitrust laws and under the section of the Clayton Act which gives a private right to damages.

The complaint then alleged that described the parties, the plaintiff, Fox West Coast Theatres Corporation as a company organized in -- operates in the neighborhood of 150 motion picture theatres primarily on the West Coast.

The defendant, Beacon operated the theatre -- opened the theatre, a drive-in theatre just outside of San Bernardino, California where Fox West Coast had for many years, operated a conventional theater as a theater with four walls and a ceiling.

The complaint alleged, then, that there were eight major companies in the United States that produced films.

And these were these -- and the complaint expressly stated that they constituted in the aggregate, this is at page 13 of the record, constant in the aggregate, the major distributors of motion pictures in the United States.

Thereafter, the complaint alleged that there had been a prior antitrust case between the Government and these major suppliers of motion pictures.

It was the case known as United States against Paramount which -- which started with the District Court, came to this Court, went back to the District Court openly affirmed.

It was then alleged that there was a dispute between the parties.

The complaint alleged that the plaintiff, Fox West Coast Theatres Corporation had for many years operated a theatre in San Bernardino on what was known as a first-run in clearance basis.

That is, Fox West Coast had for many years licensed from this major distributors, the privilege or whatever you will call it, or at least there was a practice at that time to license to it a first-run.

This Court has reviewed that problem often.

First-run is the right to exhibit a picture exclusively first and that license clearance.

The clearance is an agreement that you'll find in the cases and recognize in the industry as an agreement between a distributor of motion pictures and the exhibitor.

The two parties agree that during the time that that exhibitor will exhibit the motion picture, that no other theatre will be permitted to exhibit that picture for a given period.

It's in the nature, it's been called, analogized to the common law agreements on not to compete.

That is analogized to those cases where a seller of a business selling goodwill agreed with the buyer that he would not compete for a given period of time.

The Court will recall those -- those agreements were held finally to be unlawful if unreasonable.

That is, if extended it too far, too greater area or extended into a length of time.

They were analogized -- they have been analogized by this Court to those common law, unreasonable restraints of trade.

And the -- the courts have held, in the motion picture industry, this Court among them, that such clearances were lawful if reasonable, unlawful if unreasonable.

One aspect of unreasonability, the courts have held, is whether the clearance is granted between theatres that are not substantially competitive.

Again, analogizing it to the common law rules.

For if an agreement by a seller of a business as to goodwill, that if there was an agreement that he would not compete within an area broader than it was -- than was necessary, such agreements were not enforced because they were unnecessary and because they were basically restraints of competition.

And since they were unnecessary, they would not be enforced by the courts.

For that they would then be unreasonable.

That rule of law, namely, that the clearances between theatres which are not substantially competitive is an-- is an unreasonable restraint of trade as a proposition of law which I understand neither party to contest here based upon this Court's decisions on the recognized decisions in other courts.

And so the complaint alleged that for many years, Fox West Coast had operated the -- its theatre on this basis, an exclusive running clearance over theatres in the area.

And it -- it was alleged that a controversy had arisen because of the -- of the opening -- because a theatre -- a new theatre was about to come into existence, namely, petitioner's theatre here, a drive-in theater located some 11 miles from downtown San Bernardino.

The allegation was that the petitioner, Beacon Theatres made this contention.

It contended that its drive-in theater was not and would not be substantially competitive with the downtown San Bernardino theatre.

And that it contended, therefore, that if any distributor granted clearance, entered into a restrictive agreement that I've described, such a -- such an agreement would be unlawful under the antitrust laws.

The complaint alleged that Fox, on the other hand, took a contrary position.

That it contended those two theatres were not or were substantially competitive.

And that, therefore, if either of them licensed, they first run and either of them obtained an agreement, a clearance agreement, that such an agreement would not be unlawful within the meaning of the law.

The complaint there, then alleged that in -- restated this proposition in terms of rights, that is to say, it stated that -- that the plaintiff, Fox West Coast, contends that it had an equal right with Beacon to negotiate with each distributor independently for that prior running for a clearances between the two theatres.

The -- this was the end of this -- after the completion of this paragraph, there then was alleged a paragraph XII, which became of some importance to the Court of Appeals which is what I mentioned.

It was alleged in this -- in the next paragraph that petitioner, Beacon Theatres had threatened Fox West Coast and had told Fox that it -- that it had threatened the distributors.

That if any distributor granted clearance between these two theatres, that the petitioner, Beacon, would file an antitrust case, a damage antitrust case against -- against any distributor who so did.

While its not alleged, if you will recall, that in the prior paragraph, it is alleged, but not in this paragraph that the -- the difference of opinion was as to whether these theatres were competitive such a clearance will be unlawful.

And so it was alleged that petitioner told Fox and told Fox that it had told the distributors, that if any such contract was entered into, it would file a damage suit under the antitrust laws.

It was then alleged that these threats which it has alleged in the complaint were made to Fox and Fox had been informed that we had threatened the distributor.

It was alleged that these threats exercise a coercion upon the distributors and resulted in the fact -- and resulted in depriving Fox from obtaining first-run and clearance in that area.

A complaint, then alleged, to follow.

The plaintiff was without any speedy or adequate remedy at law and will be irreparably harmed unless and I'm quoting, “Defendants and its officers, agents and employees are restrained and enjoined from instituting any action under the antitrust laws against the plaintiff and said distributors or any of them based upon the facts hereinabove alleged, during the pendency of this action and until such time as the Court shall determine whether or not the plaintiff and defendant have an equal and correlative right to license a prior run with clearance on behalf of their respective theatres."

This is the body of the complaint in which the allegation was made that -- that unless the plaintiff -- the petitioner here, Beacon, is restrained from suing for damages under the antitrust laws, during the pendency of the case that there will be irreparable injury.

Thereafter, the complaint set forth its prayer, the prayer is a fairly simple.

The first one, asked the Court, the word is used to decree that a grant of clearance between a first-run theatre in San Bernardino between the Fox Theatre and the petitioner's theatre is not a violation of the antitrust laws and is not a violation of the decree in the Paramount case.

Secondly, that it be decreed that the distributors are each them entitled to negotiate with the plaintiff and defendant and other operators of theaters in the competitive area equally for a prior run in the said area.

Third, that the Court declares such, otherwise, for that pending file decision of the Court herein defendant Beacon and its theatres and its officers, agents and employees be restrained and enjoined again from commencing any action under the antitrust laws against plaintiff and the distributors hereinabove named arising out of the facts or controversies.

This was the complaint.

And the petitioner here, Beacon, when it made its demand for jury trial, in the trial court, as to the complaint took a very simple position and stated that -- that this was a complaint for declaratory relief, and a complaint for declaratory -- in a complaint for declaratory relief if the action is a substitute, for a suit at law, namely, a suit for damages under the antitrust laws that the petitioner is entitled to a -- that the defendant, either side was entitled to a jury trial and that this was on the face of the complaint an action for declaratory relief brought under the section of the antitrust laws relating to private damages and was not -- and that therefore, we were entitled to a -- to a jury trial.

I might point out that it may not be an important point.

The complaint I might say was not verified.

This maybe of some significance because Rule 65 of the Federal Rules provide that if you want a preliminary restraining order, you've got to verify or you've got to put in an affidavit that during the entire pendency of these proceedings, all the time the matter was in the trial court, no application was made for injunction to restrain us from filing the antitrust case or any other type and no pleading, no papers were filed which will sustain such a -- such a request.

The argument that we're entitled to a jury trial on this -- on the complaints standing -- standing alone was based not only upon the -- these allegations which seem straightforward based upon the analogy of the common law, to the common law covenants not to compete, based -- based also upon the fact well known to these -- to Fox West Coast that these problems of -- of restraints of trade by clearances have long been litigated in damage cases.

That is as a fairly common -- common matter that appears in case after case involving these -- involving Fox.

Justice John M. Harlan: Can I ask you a question?

Mr. Jack Corinblit: Yes, sir.

Justice John M. Harlan: Was this application for a jury trial before you filed your counterclaim?

Mr. Jack Corinblit: It was -- it was endorsed upon the same pleading, Your Honor.

Justice John M. Harlan: Same pleading but this –- this demand for a jury trial was independently of the issues raised with the counterclaim.

In other words, you said you were entitled --

Mr. Jack Corinblit: Yes.

Justice John M. Harlan: -- to the jury trials just as if you'd filed no counterclaim --

Mr. Jack Corinblit: That's correct.

Justice John M. Harlan: -- at all?

Mr. Jack Corinblit: That's correct.

Since the --

Justice John M. Harlan: Is that issue before us?

Mr. Jack Corinblit: Yes, Your Honor, squarely.

It was raised by -- the first issue was raised in our brief.

The -- I was saying that the -- the matter of -- of the trial -- of issues of substantial competition and clearance had long for many years been part of the damage cases brought by litigants where they thought they had a right.

A -- a typical case in this connection is one that we cited -- cited in our brief.

It's the case of J&J. Theatres, Inc. a Second Circuit case, 212 F.2d 840 in which the -- in that case, the contention was by an individual theatre that it was unlawfully being deprived of the opportunity to play pictures on a given run by reason of unreasonable clearances and clearances over its theater which was not competitive.

In that case, the instruction was given, as follows, which is of some interest as to demonstrate the way in which this issue arises.

If you find that this -- there -- there was substantial competition between the two theatres, then plaintiff has failed to establish the element of te prior run and clearance in favor of the Park Plaza over the Luxor was unreasonable.

And your verdict should be for the defendants.

That is, the issue is one of unreasonable restraint of trade.

If there is a conspiracy to impose clearance and the clearance is between theatres that were not competitive, you've got an unreasonable restraint of trade.

That issue, I might say, goes not only to the unreasonable restraint of trade but, of course, to the issue of conspiracy itself because, if a court were to conclude or jury trial, if that were to conclude, that these clearances were unreasonable and that they were uniformly granted.

A trier of fact would be entitled to infer, not required to infer, as this Court held, the Theatre Enterprises case.

But entitled to infer, that it was pursuant to a conspiracy in the sense that you can infer from uniform unreasonable acts in a business circumstance.

To put the -- the picture together, a jury is ordinarily permitted to make such -- such an inference.

So, that this issue had been litigated and was regularly litigated as part of private treble damage cases in jury trials and known by the plaintiff, Fox West Coast to be -- to -- that that was known by them.

Their company has been the defendant in a number of antitrust cases, as the major distributors have, arising out of this Court's -- out of the -- out of the Sherman Act as well as out of the Paramount case itself.

When in a -- we made a demand for jury trial as to the complaint in the answer.

In the answer, I might say, we raised the -- the fact that the plaintiffs were violating the antitrust laws.

We filed an affirmative defense which said we thought that they were violating the antitrust laws and then we filed a counterclaim.

It's one document, the answer from the defense in counterclaim and endorsed upon the document as request for jury trial as to the complaint, the answer in the counterclaim is expressed.

The counterclaim raised the antitrust issues and sought damages as well as other conjunctive relief.

The proceedings then took place as follows.

The motion was filed to strike our demand for jury trial as to the complaint in the answer.

The motion was granted.

The motion was filed to strike our allegations and our answer in affirmative defense that the defendants were violating the antitrust laws.

This motion was granted.

A motion was filed to sever the complaint for the counterclaim and to try the complaint first, ahead of the counter claim.

And this motion was granted.

The -- upon these motions, I -- I've broken them up but of course the motions were in one and that there were three parts if I'd describe them independently.

We filed a --a petition for writ of mandamus in the Court of Appeals.

We based our request for mandamus upon this Court's seemingly long line of opinion, decisions which said -- and other Courts of Appeals including the Ninth Circuit which seemed to indicate that in jury trial matters, where a jury trial has been denied that that was one of those exceptional issues which Courts of Appeals should hear by way of mandamus.

I like to say that the Court of Appeals never passed upon that question.

That is when they ultimately --

Justice John M. Harlan: What decisions in this Court do you rely on for that proposition?

Mr. Jack Corinblit: I rely primarily, Your Honor, on the line of cases beginning with -- with Ex parte Simons.

Now, I will submit that that was mandamus out of this Court and not mandamus out of the Court of Appeals.

There has not been any -- there have not been any law to the effect that really makes a distinction between the two and the Courts of Appeals, they have granted mandamus and jury trial.

I have argued that there is not a distinction between the two.

The point that I -- I wish to make is that I do -- don't believe that that question is before you here unless you conclude that this is a matter of jurisdiction of the Court of Appeals because there is no cross-petition of certiorari in this case.

There is no issue raised that there was -- that the discretion was abused because the Court of Appeals distinctly refused to pass upon that.

It went to the merits of the case without passing upon whether, in its discretion, it would or would not issue mandamus.

And they said so in their opinion.

And we didn't raise that question and when we raised our three questions in the petition for certiorari, no cross-petition was filed by the other side and if the matter was in -- and -- and therefore, no issue of the willingness or unwillingness to exercise discretion, is I believe, before this Court at this time.

In the Court of Appeals, when we filed, I might say an application for leave to the file a writ of mandamus, the Court of Appeals for Ninth Circuit follows that practice.

I -- I'm not sure that it's not filed -- followed everywhere but at least it is in the Ninth Circuit.

You just can't file automatically and they -- they considered it and they decided we ought to be granted a leave.

We were permitted to file a petition.

And the respondent judge was ordered to show cause why -- why the petition shouldn't be granted.

He filed a response.

Justice Potter Stewart: Hasn't the statute been changed since this Court decided Ex parte Simons?

Mr. Jack Corinblit: Yes.

The -- the statute -- the statute has been changed although the language of -- of present -- of the present mandamus statute, I don't think, changes the -- the ultimate result.

At least I felt that La Buy versus Howes, although it was a subject to considerable argument, indicated that -- that there was at least a power in the Court of Appeals to act.

But the question was to be one of discretion.

And again, that issue of the exercise of the Court's discretion has not been brought here in my judgment in this case.

The Court of Appeals, after I might say, keeping the matter under consideration for some time because I think the Court thought it was an important question, that rendered its opinion.

And it -- it denied our petition for mandamus.

What the Court did, was to say in the first place that we were right.

If this complaint had only been a complaint for the declaratory relief, the Court said we were right.

That is to say, you can't in the complaint for the Court declaratory relief, reverse positions and destroy the right of jury trial.

You can't anticipate a case or -- and destroy the right of jury trial by suing declaratory relief.

But the Court said that this really wasn't an action for declaratory relief.

This was an action which it was not willing to label "In equity."

And the basis for the contention that the -- that the whole case was in -- was in equity is the paragraph 12 in which the --

Justice Charles E. Whittaker: May I ask you, do I understand that you argue by an action for declaratory relief may not be in equity?

Mr. Jack Corinblit: No, sir.

It may be in equity.

Justice Charles E. Whittaker: It maybe either.

Mr. Jack Corinblit: Either in equity.

Justice Charles E. Whittaker: I -- I see.

Mr. Jack Corinblit: Yes.

The Court of Appeals held here that this action was in equity based upon the allegations of paragraph 12 of the complaint.

That is to say, the allegations of the petitioner here threatened Fox with an antitrust case, that had interfered with their business.

But the Court went further.

In holding that was was in equity, the Court of Appeals did not say that the issue of the threats alleged, alone, would be tried by the Court.

But all of the issues and the complaint would be tried with the Court without -- and no -- no jury.

That is to say, the issues of unreasonable restraint of trade, the issue of substantial competition would be tried by the Court, as well as the question of the threats and whether some kind of an injunction should be issued.

Now, I might point out that the Court ignored the fact that the only prayer in the complaint and the only substantive allegation in the complaint asked for an injunction, pendente lite.

There was never a single prayer or a permanent or any permanent injunctive relief, just during the course of the proceedings.

And yet the Court of Appeals used this paragraph of the complaint and that prayer unless it relied on a general prayer, to conclude that the whole case was thereby in equity.

Justice Charles E. Whittaker: You assume the fact that there might be problems (Inaudible) by this injunction to await the declaratory judgment.

Mr. Jack Corinblit: Yes.

Justice Charles E. Whittaker: And hence no need for any kind of injunction if the judgment in the suit declared the rights of the party, is that it?

Mr. Jack Corinblit: The purpose -- yes.

The purpose of that pendente lite injunction would be to prevent us from filing an antitrust case, I might say.

This is the prayer.

This is what we will ask, not the threats.

The Court later inferred that.

But filing antitrust case, while will the declaratory relief suit was being tried?

But what the Court did was to say that the declaratory relief issues would be tried to the Court and not to the jury and hang -- hung its hat on the proposition that the -- that the substantive allegation in that prayer made it a case in equity which -- which deprived us, which was permitted to deprive us of the right of jury trial.

Justice Charles E. Whittaker: As in any equity case.

Mr. Jack Corinblit: As in equity case.

But, Mr. Justice Whittaker, the Court was if you please -- here characterizing the whole complaint by reason of this pendente lite request because this is all the Court of Appeals used to find that this was an action in equity.

This pendente lite request in the -- in the substantive paragraph and in the prayer.

The -- we submit, of course, that the Court's action in finding that an action for declaratory relief or allegations of declaratory relief, which are substituted allegations for a suit at law, namely, suit for damages.

That such an action is converted into an action in equity and all of the issues to be tried in equity by reason of an allegation of threats of litigation is not sound, is contrary to this Court's rules and is contrary to the spirit of the Federal Rules in uniting law and equity.

We say it is not sound historically.

Historically, the courts were always very careful to see to it that a complainant did not blend issues at law and issues in equity, possibly in equity, in the same complaint and thereby eliminate the right of jury trial.

A case which -- which makes this statement directly is the case of Scott versus Neely which we cited in which the Court there, in that case, Mississippi had decided that you could sue in the state court in equity and become a creditor and get a lien executed on at the same time.

And you do all that in equity.

And a plaintiff tried to accomplish that result in the federal court.

And the federal court said, “They may do that in the Mississippi state courts but the Seventh Amendment binds us here as -- and --and we cannot do it and they said --

Justice Hugo L. Black: Did you say that case was cited in your brief?

Mr. Jack Corinblit: Yes, sir.

Justice Hugo L. Black: Scott versus Neely?

Mr. Jack Corinblit: Yes, sir.

If I can finally -- oh, I'm sorry.

It's -- it's in the reply -- in the reply, Your Honor.

I beg your pardon.

Scott versus Neely, 140 U.S. 106.

And the Court in that case said, “In the federal courts, this right -- right of trial by a jury cannot be dispensed with except by the assent of parties entitled to it nor can it be impaired by any blending with the claim properly cognizable of law of a demand for equitable relief in aid of a legal action or during its pendency.”

Now, of course, the Federal Rules of Civil Procedure has been designed precisely to blend, that is, in the sense of giving a litigant the right and the obligation to bring all his claims in at the same time.

The whole purpose of the -- of the uniting the rules under the Federal Rules was to --to encourage that, to get it all settled at one time.

And so, whether you got an action at law or equity, you bring it in.

As a matter of fact, if you don't, you're barred.

But, when this Court -- when Congress passed the enabling statute which sure led to the adoption of this rule, Congress said that in adopting these rules, you shall not incur the right of trial by a jury.

And of course, Rule 38 said the same thing.

And there was never any intent indicated by any decision of this Court that the mere adaption of the rule which now permits a litigant to bring actions of law and actions of equity, at the same time, to destroy the right of jury trial.

So, that if blending couldn't be permitted to destroy the right of jury trial prior to the rules, surely, it is not permitted to destroy the right of jury trial under the rules.

And the interpretation by the Court of Appeals here had that result because, looked at correctly in a sense, it can be -- if you're going to argue that there's any equitable features at all in this complaint, properly construed.

That -- that pendente lite to equitable request will -- will be permitted to result in holding that all of the issues are to be tried with the Court and not with the jury.

But if this rule were adopted, that it would be a serious -- have serious effect upon -- upon all litigants in the federal courts.

The Rules of Civil Procedure would have become a trap.

Justice William J. Brennan: (Voice Overlap) you are from this alternative arguments first that in any event, this is really only a declaratory judgment proceeding, in lieu of the law action and therefore the issue is to be tried to the jury and that the prayer for pendente lite relief does not but change --

Mr. Jack Corinblit: Yes, sir.

Justice William J. Brennan: -- in that sense.

And alternatively, if it does change it, then the argument you're now making (Voice Overlap) --

Mr. Jack Corinblit: Yes, sir.

Thank you.

You clarified it, sir.

With respect -- of course, we think that looked at, the complaint correctly and often times, when these complaints are filed and deciding whether there's a right to trial by jury, there is a question of history to be analyzed.

What is this complaint like?

What would there have been prior to the rules?

We urged in our brief and we think it's -- it's sound that -- that really this -- this complaint without the prayer for a moment, states no action for -- for equitable relief at all.

That it's nothing but an action for declaratory relief.

And that paragraph 12 does not have the result the Court of Appeals thought it had.

Justice Hugo L. Black: Was there any allegation of -- of the usually equitable nature that could not have been determined when a suit of law alleged in the petition declaratory judgment?

Mr. Jack Corinblit: None -- none that I know of Your Honor.

Justice Hugo L. Black: No --

Mr. Jack Corinblit: There was an -- a statement of irreparable injury, an allegation made of irreparable injury.

Justice Hugo L. Black: If a suit should be allowed to be (Inaudible)

Mr. Jack Corinblit: If the suit should be allowed to be made.

Justice Hugo L. Black: But was there any issue in connection with the transaction which was the basis of this previous lawsuit as to the substance of it which would -- whereby, it showed that they would be deprived of some relief that they could get in equity as a substantive answer to the charging --

Mr. Jack Corinblit: No, sir.

Not in any way, shape or form.

Justice John M. Harlan: May I ask if the construction of the Paramount was included?

Mr. Jack Corinblit: They did.

Justice John M. Harlan: That very question?

Mr. Jack Corinblit: The factual question as to whether there is competition between theatres and as to whether there is unreasonable clearance, is in my judgment a jury question.

Justice Hugo L. Black: But what if it's a jury question or not is there anything to keep the Court from -- the question I ask if you will permit me.

What I had in mind was, was there anything that the -- that the relief they sought either which required the interpretation by the Court, or a decision of fact by the jury which could not have been fairly tried out in the suit of law.

Mr. Jack Corinblit: None at all.

Justice Hugo L. Black: That was what I have in mind.

Mr. Jack Corinblit: The -- I was saying that -- that you could -- it -- it seemed to me as a classical matter here that this complaint, in no way, with substantive allegations, even alleged a proper suit in equity.

Justice Potter Stewart: You refer, Mr. Corinblit, to the necessity sometimes of making a historical analysis --

Mr. Jack Corinblit: Yes.

Justice Potter Stewart: -- and as I think it would -- I'd certainly agree with that necessity.

What is lacking here from a traditional equitable suit what they called quia timet?

I have the name right?

I think I do.

Mr. Jack Corinblit: You have the name right and my understanding was that quia timet or quia timet whichever it is --

Justice Potter Stewart: You -- you pronounce it your way.

Mr. Jack Corinblit: -- is -- was traditionally had to do with real property.

And I must say that -- that this is, as about as much as I know, about -- about quia timet, sir.

But I will say this, Your Honor.

That with respect to the usual, to the attempt in this complaint to use the fact that we had warned somebody, they -- they called a threat.

We can't do anything about it.

It's in their complaint.

But that we had warned somebody that we thought that what they were going to do, violate the antitrust laws.

It has been the rule and was the rule at the -- almost the time of the adoption of the Constitution that that kind of -- an assertion could never form the basis of an action in equity unless it was asserted.

That the man who made that claim was doing it in bad faith and was unwilling to test his right in court.

These are cases which I'm sure, Your Honors, you're all familiar with.

There -- it was -- there was a long bitter battle over the question as to whether equity could even do it -- could even enjoin the second situation.

That is, where there was bad faith, but no court that -- that no court had held.

That unless that you could have a -- a case in equity, unless you made that allegation in that assertion because it was fundamental.

The argument was in the case, one case came to this Court that if you've got a right to file under the antitrust laws, you have a right to -- to warn somebody of your rights and that that warning by itself is not the grounds for -- for an injunction.

That what makes -- what may turn that into a case, is if you're doing it simply.

You're warning and then pulling back, you're warning and pulling back and refusing that -- to have that right tested.

But this case, the complaint on its face demonstrates that we, that if the petitioner here was anxious to have the matter litigated.

Not only does it fail to allege these facts that are simply described, but the -- but the contrary is directly shown because the allegation is, that the petitioner has threatened an antitrust case and Fox West Coast wants to keep us from filing an antitrust case by way of an injunction.

And they say they'll be hurt by the filing of the antitrust case, unless we're enjoined.

Justice Charles E. Whittaker: Did you in your by warning, if I understand this complaint, say not only if they did do, but was anticipated, then a suit would be filed, isn't that right?

Mr. Jack Corinblit: That is the complaint, Your Honor.

You've got to understand that this was set up in the Fox's complaint.

They were describing what we were alleged to have done.

And as they described it, they're in your words, that -- that is to say that if they did what we thought was unlawful, we would sue under the antitrust laws for damages.

Justice Charles E. Whittaker: Yes.

So, your contention then is, that they were entitled not to the adjudication of that status to relation but they had to go ahead and commit what you thought was a violation of the law before the right could be tested?

Mr. Jack Corinblit: No, sir.

We do not contend that these alleged warnings were not a sufficient basis to go in to a court for declaratory judgment.

We think now, that this is what declaratory judgment is for and that paragraph 12 is part and parcel of the declaratory relief action.

But doing that, we say, we're entitled to a jury trial.

Justice Charles E. Whittaker: Do you say the (Inaudible) cause of action alleged was legal in character and not equity?

Mr. Jack Corinblit: That's correct.

This is --

Justice Charles E. Whittaker: That's all -- that's all there is to it.

Mr. Jack Corinblit: That's all there is to it.

And that's -- that's the theory that we have in this case.

Justice Potter Stewart: Well, now, doesn't paragraph 12 allege that their very threats of filing a suit -- that your very threats of file -- of filing a suit has in fact deprived them of their right to negotiate on a first-run clearance basis --

Mr. Jack Corinblit: Yes.

Justice Potter Stewart: -- with the distributors.

And certainly, if that's true and it's understandable how that could be true.

It wouldn't be necessary for you to file any law suit in order to -- in order to -- to deprive them of their right that they're asserting isn't that true?

Just to -- the -- the mere threat of it could succeed.

Mr. Jack Corinblit: Well, I -- this is an inference.

This is -- is what you've got to do to infer.

You've got to say that the threat has been made and they want to enjoin us from suing.

Now, the -- the same paragraph has the allegation that they wanted to enjoin us from suing.

Justice Potter Stewart: Do you agree that it -- that it alleges there that the threat to sue has operated to deprive them of a right to their suit?

Mr. Jack Corinblit: Yes, it -- it does so allege.

I would come back to that point again on analogizing this to the historical case that it was always true that if you warn the man of the rights that you honestly believe you had, and I might say this complaint by alleging the dispute, certainly sets up that there is a dispute in good faith.

There's not single word in this allegation that suggest that there's any bad faith on either side with regard to the declaratory relief allegation.

That if you have a right to make that kind of a warning in good faith, that that may have some effect upon the supplier.

Remember, if the Court please, that these suppliers whom they described are our suppliers as well as Fox's suppliers.

The allegation is made on the complaint that they have the pictures.

They -- we must go to them for supply of pictures as well as Fox West Coast.

And so that when we made the alleged -- the alleged warning, the alleged warning might have had that effect.

But again, there's no allegation of bad faith, no allegation that we are unwilling to test our right in Court.

And we suggest that under the cases and under the general analysis that these -- these warnings were sufficient to permit Fox to -- to require us to test our claim in a court.

But they were not sufficient to destroy our right of jury trial because the substantive issue was the same.

Were -- was there a violation of the antitrust laws.

Was there a clearance between theatres which were not competitive.

Was there unreasonable clearance?

Justice Charles E. Whittaker: (Inaudible) the Paramount issue would be a determination with the question of whether or not you were in competition?

Mr. Jack Corinblit: That would be a -- that would be a Paramount issue.

Although, Your Honor, the issue of unreasonable clearance is, stated is, sometimes somewhat broader than merely the question of competition.

That there are other factors of some kind.

But I think this complaint primarily emphasizes the matter of substantial competition between the parties.

That this was an issue triable -- triable at law.

And I'm arriving to a conclusion that if their -- if there isn't substantial competition, clearance would be unlawful.

If there's -- if there were no substantial competition, clearance would be unlawful under the cases.

Justice Charles E. Whittaker: The determination of that question in the setting of this complaint was a legal in character.

Mr. Jack Corinblit: Yes, sir.

This is our -- this is our contention.

Justice William J. Brennan: Mr. Corinblit, what about the language duress and coercion?

Mr. Jack Corinblit: Well, the -- again --

Justice William J. Brennan: (Inaudible) though of an implication in that allegation of bad faith in the --

Mr. Jack Corinblit: In duress and coercion which is stated by way of a conclusion in which, of course, no facts are alleged other than the mere making of the statements, Your Honor please.

We submit (a), without the affirmative allegation of facts showing that they were in bad -- that there was bad faith.

You cannot, we say, obtain an action in equity but -- and without these affirmative allegations.

Historically, you never could.

And the Courts were even concerned that you could even do it then.

There were cases that held you couldn't do it even if there was bad faith there.

The Courts were worried of whether -- whether equity was destroying the right of jury trials.

But always, there had to be affirmative positive of allegations of fact.

And I know of no case which has ever permitted an implication to be drawn from the conclusion and resulting in the right of jury trial being lost.

But, and again we come back to the secondary point.

That even if you grant that, if you give them the benefit of every doubt, that there is something in equity there, this had never have been the basis for deciding that the substantive questions are not to be decided by a jury.

Even if the Court will want to decide the question of bad faith, if there is such in -- with respect to the injunction by the Court.

Again, relating to the fact that our rules don't mean that you have to -- that it is all or nothing.

Some matters can be decided but the jury (Voice overlap) --

Justice William J. Brennan: Well, actually this gets down to really the issue of competition, as you feel was decided by a jury even if all the other issues in the case were tried by the judge.

Mr. Jack Corinblit: That's correct.

Justice William J. Brennan: That's what it all comes down to.

Mr. Jack Corinblit: That's what it -- and you said it as -- a lot better than I could.

Unknown Speaker: (Inaudible)

Mr. Jack Corinblit: We do put it -- someone to counterclaim, Your Honor.

It's a kind of a third line of defense in this case.

That is to say, we -- we argue and it is I concede a -- a little more difficult problem.

Let's assume that the whole complain is an equity.

Let's assume that our counterclaims at law and let's assume that there are common issues involved in the complaint and the counterclaim.

That's the only way in which the counterclaim becomes a material.

We say if you sue --

Justice Hugo L. Black: But how would it be material then?

Mr. Jack Corinblit: I beg your pardon?

Justice Hugo L. Black: How would it be material then?

Mr. Jack Corinblit: It would then be material in that -- we say that in -- that a suit in equity in anticipation of a suit at law which raises common issues requires under the Federal Rules of that the Court procedure in such a manner as to protect our right of -- to jury trial.

If I anticipate that you are about to sue at law and I sue in equity and I stated merely a good claim in equity I -- I put my pleading in -- in shipshape order, and then the counterclaim is filed at law that under -- in that --

Justice Hugo L. Black: What is your counterclaim?

Mr. Jack Corinblit: I beg your pardon?

Justice Hugo L. Black: What is your counterclaim?

Mr. Jack Corinblit: Our counterclaim is for damages for violation of the antitrust laws.

We do attach a request for injunction, as well.

But, it is primarily a complaint for damages under the antitrust laws triable as of right to a jury.

And we contend --

Justice Hugo L. Black: Is that one of the grounds of your -- are you asking us to pass the fact here?

Mr. Jack Corinblit: Well, we are asking Your Honor, we would of course ask you to take the -- the question if you -- if you rule with us on the first portion of it, we have no desire to have your rule upon the latter.

But, I must say that each of those questions was raised by our petition for certiorari?That all three of the questions are avoided.

Justice Hugo L. Black: Are you raising your question in whatever the complaint charge and whether or not it was could have been adjudicated in equity when you filed your counterclaim raising precisely the same issues that it was the duty of the Court to try that counterclaim?

Mr. Jack Corinblit: Duty of the --

Justice Hugo L. Black: Are you raising that question?

Mr. Jack Corinblit: Duty of the jury to raise -- duty of --

Justice Hugo L. Black: Duty -- that it was the duty of the Court to try -- try the counterclaim for jury, are you asking that question?

Mr. Jack Corinblit: We did raise it by our petition for certiorari, Your Honor.

We -- I'm not -- these are alternative points.

Each of them is raised by the petitioner.

I have to concede that we did raise it as we came -- came up to the Court of Appeals, and we raised it here.

Justice Hugo L. Black: Are you abandoning?

Mr. Jack Corinblit: No, sir.

I will not abandon it.

I -- I think their proposition is sound.

Where the equity suit is -- is in anticipation of a suit at law, that you cannot anticipate a suit at law and substitute a suit in equity.

And thereby deprive a litigant of the right to jury trial.

That here, the anticipation is evidenced by the very complaint itself wherein it is stated that we warned of the filing with antitrust case and they want to enjoin us from the filing of antitrust case.

And that therefore, since there are common issues in the -- in the complaint and counterclaim, we're entitled to a jury trial.

Now, what are those common issues?

They're precisely the same issues that were raised in the complaint.

There's a question of competition, the question of clearance which are part and parcel of the counterclaim.

As I pointed out before, the -- the -- those issues have been tried regularly under a plaintiff's -- in plaintiff's cases under the antitrust laws.

They go to the question of the unreasonability of the restraint.

They go to the question of conspiracy because if you find that there is uniform adoption of an unreasonable way of doing business, surely with other facts, a jury is permitted, not required, but permitted to infer conspiracy.

And therefore, those issues are common to our counterclaim.

And therefore, on that basis, we urge that the Federal Rules mean that if you had that -- that anticipatory filing of an equity case raising issues common with the counterclaim requires jury trial and the --

Justice Potter Stewart: Don't you find this in a similar situation quite frequently in the patent field where -- where an alleged infringer will bring a suit for declaratory judgment for declaration that he's not infringing?

Alleging that the patentee is threatening to sue for infringement?

I suppose the answer -- the reason we haven't had this problem arise, the stricter problem is that neither side wants a jury trial in --

Mr. Jack Corinblit: In that --

Justice Potter Stewart: -- those patent cases

Mr. Jack Corinblit: Ordinarily, it --

Justice Potter Stewart: Yes.

Mr. Jack Corinblit: -- it happens sometimes.

There's been a couple of patent cases are jury cases on the West Coast.

But, in those cases where a counterclaim would be for -- for a -- by the patentee he would counterclaim for damages for an infringement, the right to jury trial would exist and it would be that patent.

Justice Potter Stewart: This case would be in theory if not in practical effect very similar to that case.

Mr. Jack Corinblit: Yes.

Yes, it was.

On this last third portion of -- of our argument.

Justice Hugo L. Black: Why do say that (Inaudible) entitled to -- do understand that if the -- the controversy over the validity of a patent and the patentee comes in and asks for an interpretation of the patent in equity, and the other side says that -- I mean, not the patentee, the man who said there had been --

Mr. Jack Corinblit: Alleged infringer.

Justice Hugo L. Black: Yes.

The other man comes in and says, “I want to sue him on there and not put in a counterclaim.”

Do you mean that the cases have held that there could be a jury trial there?

Mr. Jack Corinblit: Yes, sir.

Justice Hugo L. Black: Have you cited those?

Mr. Jack Corinblit: No, sir.

We did not -- we did not cite the cases.

And I have --

Justice Hugo L. Black: What's the basis of the jury trial there?

Mr. Jack Corinblit: The basis is that -- that if the pleading show anticipation that this is being -- the equity is being made use of as a technique for avoiding what would otherwise be -- be a trial -- be a trial at law.

And that's -- and a theory for example, some of the insurance cases which have held, the cases in which an insurance company anticipating a suit on the policy wants to set it aside for fraud and they sue in rescission in equity.

And the courts say that if a counterclaim is imminent, not only filed, but imminent, the Court, the usual way of handling it in the past was, of course, even to dismiss the cause of action in equity on the grounds that the -- that the legal remedy -- that the legal remedy was adequate.

Justice Hugo L. Black: I think you have not cited it?

Mr. Jack Corinblit: I think they are cited in --

Justice Hugo L. Black: I didn't find them in your brief.

I thought your adversary cited them as on his side.

Those insurance cases --

Mr. Jack Corinblit: Yes.

Justice Hugo L. Black: -- Enelow and the others.

Mr. Jack Corinblit: Enelow, Your Honor.

Your Honor will find it's cited in our brief --

Justice Hugo L. Black: Did you cite it?

Mr. Jack Corinblit: Yes, sir.

I think we've cited that was -- cited Enelow, specifically.

That's at page 31 of our brief.

And I think we cite the leading case on that subject the (Inaudible), a very important case on the subject.

I think would like to leave sometime for reply and therefore will cease at this point.

Chief Justice Earl Warren: Mr. Johnston.

Argument of Frank R.j Ohnston

Mr. Frank R.j Ohnston: Mr. Chief Justice, may it please the Court.

I must confess at the outset that the complaint which is here for construction by the Court is not a model of pleading as -- as observed by Judge Pope in the court below.

However, I think viewed fairly and liberally as pleadings must be viewed now, it does state a cause for equitable relief and states it clearly.

Now, I would like to correct one misapprehension that may have been created, by my friend, Mr. Cornblit.

And that is this, in the complaint, we sought not an award of first-run by the distributors but the right to negotiate for first-run with clearance, equally with, Mr. Cornblit's client, free of threats and duress.

We couldn't demand that any distributor give us a first-run.

All we seek -- all we ask for here is the right to not have the door shut in our face.

That is the extent of the remedies sought.

Now, I have a minute perhaps in which I can answer Mr. Justice Black's inquiry of Mr. Cornblit as to whether, and I maybe paraphrasing, traditional equitable allegations are made here.

I will refer to page 18 of the record, paragraph 12 of our complaint and after having alleged that if clearance is granted, a treble damage action will be filed, we say further that said threats and the duress and coercion upon the distributors arising out of and resulting from said threats of litigation, threaten to and have in fact deprived plaintiff and its said California theatre of the right to negotiate for motion pictures upon their first-run in the San Bernardino area and to negotiate for clearance over theatres in competition with plaintiff's said theatre upon said first-run including defendants Bel-Air Drive-in Theatre.

Then I come to this which is a traditional and conventional allegation in suits of equity, that plaintiff is without any speedy or adequate remedy at law and will be irreparably harmed --

Chief Justice Earl Warren: We'll recess now.

Print this transcript Transcript: 

Argument of Frank R. Johnston

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

Mr. Frank R. Johnston: If it please the Court.

At the recess I was in the middle of reading from the complaint in trying to demonstrate that there is an equitable issue posed by the complaint which could not, under the allegations of the complaint, be determined if in an action of law.

And if the Court will bear with me, I'll resume reading at the first of the sentence, I have started thusly.

And I'm reading from page 18 again of the record.

“That said threats and the duress in coercion upon the distributors arising out of and resulting from said threats of litigation, threaten to and have, in fact, deprived plaintiff and its said California Theatre of the right to negotiate for motion pictures upon their first-run in the San Bernardino area, and to negotiate for clearance over theatres in competition with plaintiff's said theatre upon said first-run, including defendant's Bel-Air Drive-In Theatre.

That plaintiff is without any speedy or adequate remedy at law and will be irreparably harmed unless defendant and its officers, agents, and employees are restrained and enjoined from instituting any action under the antitrust laws against plaintiff and said distributors, or any of them, based upon the facts hereinabove alleged during the pendency of this action.

And until -- and until such time as the Court shall determine whether or not the plaintiff and defendant have equal and correlative rights to license a prior run with clearance on behalf of their respective theatres.”

I should say also that the traditional hallmark of a suit in equity, that is the absence of a prayer from monetary damages, is apparent here in our prayer.N

ow --

Justice Potter Stewart: Of course, generally no declaratory judgment action ever prays for monetary damages, does it?

Mr. Frank R. Johnston: It's conceivable it can.

I agree, Mr. Justice Stewart, but the general rule would be out of line.

Justice Potter Stewart: You ask for a judgment.

Mr. Frank R. Johnston: You asked for a judgment for a declaration of rights.

Justice William O. Douglas: I suppose -- I suppose counsel that if the issue of competition was resolved against you, that is, that there is -- there was a finding of competition that was settled in the lawsuit, wouldn't it, on the Paramount case?

Or if there's a finding that there was no competition, it would settle it the other way, wouldn't it?

Mr. Frank R. Johnston: Not necessarily, Your Honor.

I believe that regardless --

Justice William O. Douglas: What I'm getting at and perhaps you don't want to answer it at this time, but sometime I'd like to have your views on it.

Suppose that the -- just a general denial had been entered here, to this complaint, would or would not be, the parties, they would go to trial on -- before a jury in the declaratory judgment action?

Mr. Frank R. Johnston: I would think not, Your Honor.

For the reason that the gravamen of the complaint constitutes or is constituted by the threats of duress, which we say were unlawfully exercised or wrongfully exercised.

Justice William O. Douglas: Because there was competition.

Mr. Frank R. Johnston: Because there was competition.

Now, there is a collateral aspect to that, too, to answer your question fully, Mr. Justice Douglas.

I can conceive of the situation in which a party has the right to negotiate for a prior run without clearance.

That is, I can see that a supplier of motion pictures has, absent a conspiracy, the right to pick his costumers as he sees fit.

And that, I think also could be the subject of adjudication under this complaint heard as an equity action.

Now, as I say, the gravamen of this action is the allegation of threats and the effect those threats have had.

That is a fact to be determined by the Court sitting in equity.

As is the question of competition may very well be a fact to be determined by the Court sitting in equity.

Now, I must pause there and say that if an equity action is properly alleged, it's of course within the power of the Chancellor to decide questions of fact.

We can only turn to the -- or need only turn to the familiar examples of a specific damage or a specific performance, action based of the -- an action for damages on contract or an action to quiet title versus an action in ejectment.

Those two sets of examples present, and I could modify them, present situations in which the Chancellor and the Court or the law side of the Court have equivalent duties and equivalent powers.

So, I say here, simply because there are factual issues for the resolution of the judge sitting as an equity judge does not ipso facto deprive him of equity jurisdiction.

I'm of course stating obvious law but you cannot dismiss this complaint or characterize it as an action of law simply by saying there are various factual issues which under other circumstances might well be tried by a jury.

We've asked for a very narrow relief here.

This is not a substitute for an antitrust action in the traditional sense.

We've asked for only one thing.

That we be allowed to negotiate equally with the other party, with the defendant for a first-run with clearance.

Now, the fact this is --

Justice William O. Douglas: Oh --

Mr. Frank R. Johnston: -- not a subject --

Justice William J. Brennan: (Inaudible) in competition.

Mr. Frank R. Johnston: We would not be entitled to clearance, Mr. Justice Brennan, unless they were competition.

Justice William J. Brennan: I mean, can negotiate it but you can't --

Mr. Frank R. Johnston: That's -- that's correct.

Justice William J. Brennan: (Inaudible) this competition.

Mr. Frank R. Johnston: That's right.

Except --

Justice William O. Douglas: (Inaudible)

Mr. Frank R. Johnston: He says there is no competition.

Except I must qualify that in the example that I, perhaps, put in perfectly to Mr. Justice Douglas, that I can conceive of situations in which either party might have the right to negotiate for a first-run without respect to clearance, simply on the proposition that a supplier and a purchaser can deal together outside of the Public Utility Law or some comparable field.

Chief Justice Earl Warren: Well, in addition to that one point, you did also ask for an injunction, did you not?

Mr. Frank R. Johnston: We did, Mr. Chief Justice.

Chief Justice Earl Warren: What -- what is your answer to -- to the argument of counsel that you did not follow the rules concerning injunction that you neither -- neither verified your complaint nor filed an affidavit?

Mr. Frank R. Johnston: We did not pursue the summary remedies that are available such as getting a temporary restraining order or a preliminary injunction which we would have to do by affidavit or verify a complaint.

And I must go outside the record to answer your question fully, if I may.

Chief Justice Earl Warren: Good.

Mr. Frank R. Johnston: The Court had set our case down for trial after these motions and so forth, as I recall it in July of 1957.

So that -- and we had constantly urged upon the Court, and this does appear in the record, that it set our case down for an early trial.

We -- we followed all the provisions of the rules, so far as I am aware of them, with respect to our getting an injunction on a full hearing.

We would have had to do additional things to secure a preliminary injunction or restraining order, I conceive that.

Now, going back to the matter, of whether or not this is in fact a substitute for the provisional treble damage action, I would say that the proof that it is not is found in the type of action that ultimately, the defendant filed by way of counterclaim.

In that, and the specifications of conspiracy that are there alleged are found starting at page 39 of the record.

Preliminarily, I should like to call attention.

This is in the counterclaim, to make it intelligible, of the defendant.

Preliminarily, I should like to mention that on page 39, in paragraph (e), it is alleged that for the purpose of establishing and maintaining a monopoly of exclusive, and I emphasize the word “exclusive”, first-run exhibition, and for the purpose of establishing and maintaining a monopoly of first-run patronage, three exhibitors entered into a combination conspiracy attempt to monopolize and so forth, as herein after alleged.

Now, that is much broader than the narrow thing we seek in the complaint.

We acknowledge that the defendant here has an equivalent right with us to first-run.

So, the adjudication of the issue put or posed in our complaint would be neither the defense to the charge that is made here in (e), or would it be necessarily adjudicated by a jury finding on (e).

We certainly, according to our complaint, have not sought and do not seek an exclusive first-run.

We simply seek, as I have repeated, perhaps ad nauseam, the right to negotiate equally with the defendant.

Now, following along with the various specifications, I shall try to paraphrase them and they're found at pages 39, 40, and 41 of the record, that the specifications are seven in number.

One, six, and seven charge a conspiracy among the three exhibitors there mentioned, to arrogate to themselves a monopoly of first-run exhibition in San Bernardino.

And in one of those specifications, there is broader language that says in other areas, I believe.

Specifications 2 and 3 deal with an allocation of product among the three exhibitors, sometimes called in the parlance of the industry as split of product.

Chief Justice Earl Warren: A split of what?

Mr. Frank R. Johnston: A split of product.

Chief Justice Earl Warren: Oh, yes, yes.

Mr. Frank R. Johnston: That's an industry not a legal phrase.

Specifications 4 and 5 deal with imposing clearance in favor of the three exhibitors for the purpose of protecting the monopoly of first-run exhibition in those three exhibitors.

Again I say, and I answer that as I answered Specifications 1 and 2.

We do not seek an exclusive right to first-run exhibition, simply a correlative one and the right to negotiate for it.

Now, counsel has made some reference to so-called anticipatory suits citing the Di Giovanni case and perhaps others.

I think, fairly read, our complaint does not indicate the anticipation of a suit.

In the Di Giovanni case, the facts of the complaint or the allegations, I should say the complaint was that the defendant has threatened and is about to sue.

In other words, the eminence of a suit at law, which was to be brought, was apparent from the pleading of the plaintiff there.

There is no comparable allegation in our complaint.

We couldn't allege, of course, that the plaintiff did not intend to sue because that would render the allegations of the threat being harmful to us that are rather empty thing.

It is a question and a problem of -- and the anxiety or doubt as to whether the defendant would sue that gives rise to our cause of action.

As long as this club was held over our heads and was working, there was really no haste.

There was no real purpose in the defendant filing a suit.

The defendant was achieving its purpose by keeping us from the mark.

Chief Justice Earl Warren: Well, Johnston, one of the thing --

Mr. Frank R. Johnston: Yes, sir.

Chief Justice Earl Warren: -- that crosses my mind is this.

If your -- if your complaint did not have in mind that the threat included the possibility of them filing an antitrust case, why -- why did you ask in number 4 the pending final decision of the Court maybe restrained and enjoined from commencing an action under the antitrust laws?

Mr. Frank R. Johnston: I may answer that this way, Your Honor.

The possibility of their filing a suit was always present in our minds.

The certainty of it was not present.

In other words, we did not know whether or not a suit would be filed.

It was that doubt, that anxiety that permeated our thinking in the drafting of this.

But if -- if -- should eventuate that suit should be filed, which ultimately it was, then the prayer might have some force and effect.

Now, we perhaps may have conceived -- misconceived our remedy here, perhaps as Judge Pope pointed out.

What we should have done was to seek in our prayer not an injunction against a suit.

And I question, quite candidly, whether such an injunction would lie.

What we perhaps should have done in drafting the prayer was to seek an injunction against the continuation of the threats of suit.

But again, I can only say, Mr. Chief Justice, in answer to your question that there was a doubt as to whether a suit would be brought.

Had we been certain that suit was to be brought, we would have alleged as the plaintiff did in Di Giovanni that the defendant was about to institute suit.

And you will find no such allegation in our complaint.

Chief Justice Earl Warren: Suppose there had been no threat but merely the filing of a suit, would you sought to restrain them from proceeding with that suit until -- until you could do that in adjudication on this matter?

Mr. Frank R. Johnston: If in that suit we felt that we could not have adjudicated the right that we seek to have adjudicated in this complaint, we may have sought that.

Chief Justice Earl Warren: We'll let's take the very -- the very pleading that we have here the custom of the counterclaim.

Mr. Frank R. Johnston: I would say we would perhaps have sought a restraining order or an injunction pendente lite with respect to that suit.

We would have -- in other words, we would have sought the same order of trial that we now seek.

Chief Justice Earl Warren: Now, wouldn't they then be deprived to the -- to have a right to a jury trial?

Mr. Frank R. Johnston: No, Your Honor.

Chief Justice Earl Warren: If you determine these issues first?

Mr. Frank R. Johnston: No, Your Honor, because I say that the issues in the two suits that have actually been filed are so disparate that the jury trial of the counterclaim is not going to serve as an adjudication of our rights under the complaint nor of what -- what is found as a complaint served as a defense to the charges contained in the counterclaim.

Chief Justice Earl Warren: Well, but if you're -- if you prevailed on your -- your number 4, paragraph 4 in your -- in your complaint and they had been restrained from filing such a damage suit, you -- you would've effectively blocked them from having such cause of action, wouldn't you?

Mr. Frank R. Johnston: It's just pendente lite during the pendency of this suit.

After that, they could've filed a suit if they did file and have a full determination by the jury of the issues that are -- there presented in their counterclaim.

Chief Justice Earl Warren: Well, was that --

Mr. Frank R. Johnston: The claim --

Chief Justice Earl Warren: Oh pardon me.

I'm just going to ask, was that all you wanted?

Didn't you seek permanent relief against -- against them finding an antitrust suit against you?

Mr. Frank R. Johnston: No, no, Your Honor.

Chief Justice Earl Warren: You didn't?

Mr. Frank R. Johnston: No, Your Honor.

And we -- I doubt that we could seek such relief.

I -- I think that would be -- that would be beyond the process of the Court to issue such an injunction.

Chief Justice Earl Warren: Yes.

Well, I --

Mr. Frank R. Johnston: I -- I can't conceive that we could -- we might ask for it, but I can't conceive of a Court granting it.

Chief Justice Earl Warren: Yes, well, I was just wondering if you did pursue that and asked for it to and find the judgment.

Mr. Frank R. Johnston: Oh, no, we couldn't and didn't intend to ask for a permanent injunction against a filing of the suit perpetually by the defendant.

And as I say, it would be an abuse, I think of any court's discretion to or power to grant such an injunction.

Chief Justice Earl Warren: But I think where I'm confused is if you had been granted all the relief that you sought in your complaint, would these people have been -- had available to them a legal action for -- for damages for the things they claimed in their counterclaim?

Mr. Frank R. Johnston: They would.

Without equivocation, I'd say they would.

There would be no estoppel, adjudication, res adjudication -- res judicata of their rights.

They would be entitled to go forward with their complaint or I should say their counterclaim or if they filed it independently a complaint alleging the same things that they have alleged.

And what had been decided in our complaint would not be a defense to the charges that they make.

Justice Hugo L. Black: In whole or in part?

Mr. Frank R. Johnston: In whole or in part.

Justice Hugo L. Black: Why wouldn't it be res judicata as far as the determination on the fact is of concern?

Mr. Frank R. Johnston: Oh, one issue.

If -- if they chose to raise this issue, there would be an adjudication of whether or not there was competition between the two theatres.

On that single issue.

Justice Hugo L. Black: That's the vital issue on the antitrust case, isn't it?

Mr. Frank R. Johnston: It might or might not be.

It isn't in this counterclaim.

In the suit that was actually found or in the suit that was actually filed, the matter of competition is -- is not set forth as a paramount or even a vital or collateral issue as I read it.

Justice Hugo L. Black: As to your complaint, maybe I'm wrong about your --

Mr. Frank R. Johnston: No.

Justice Hugo L. Black: -- complaint -- but I thought your complaint was to set up certain facts, reasons why you were not guilty of violating the Antitrust Law.

Mr. Frank R. Johnston: Well, that's --

Justice Hugo L. Black: Is that not right?

Mr. Frank R. Johnston: That is not right, Your Honor.

Justice Hugo L. Black: Would those -- if -- if what you say was true, would that have had no effect whatever on an antitrust proceeding, as a defense?

Could you not have set this up as a defense to the antitrust action?

Mr. Frank R. Johnston: Only if the issue of competition were raised in the antitrust action, which I say it was not raised.

Justice Hugo L. Black: Well, the antitrust action is usually based somewhat on the restraint of competition, isn't it?

Mr. Frank R. Johnston: It -- speaking in general terms, yes, Your Honor.

But I'm speaking in terms of competition between two specific theatres.

Every antitrust action, of course, is based upon a restraint of competition.

But we asked the Court to as an incident of our right for relief from its duress to determine whether there was competition in the technical sense, whether two theatres were drawing from the same pool of patronage.

That's the sense in which I use competition.

In that limited sense, not in the broad general sense, restraint of competition as it's commonly used in -- in private -- treble damage suits.

Justice Hugo L. Black: But the duress you set up was, if they were threatening to sue you for -- on allegations of facts that were not correct, wasn't it?

And that you didn't show the Court they were not and if they allowed them to sue you, it'd cost you irreparable damage.

Allowed them to threaten you, whatever that is.

Mr. Frank R. Johnston: Yes.

Justice Hugo L. Black: It may be a distinction, but I would think that if all you had gotten was an injunction against their threatening to sue you, they would have did -- done exactly what they did in the counterclaim and just sued you.

All you could've gotten was an injunction there against threatening.

Mr. Frank R. Johnston: Well, if -- if I answer the last question first, at least we might've been able to have purchased product from the distributors rather than having the door shut in our face because I assumed that the defendant would respect the order of the Court to desist from the threats that they would sue or -- or it would sue the distributors if they talk to us about getting first-run pictures.

Justice Hugo L. Black: What did they threaten to sue you for?

Mr. Frank R. Johnston: Well, it was put in very general terms.

Justice Hugo L. Black: What do you understand from your complaint that they understand to threaten to sue you about?

What kind of suit are they threatening to file against you?

Mr. Frank R. Johnston: I'm reading from page 18.

“And that plaintiff will be subjected to an action by said defendant for treble damages under Section 4 of the Clayton Act.”

Now, what that action might be, what it might specify as a conspiracy is -- was unknown at the time of the complaint, but as I have just tried to indicate, the counterclaim goes beyond and is broader than the issues, we have sought to have determined in our complaint.

The counterclaim, as I have tried to point out, has as -- it's not the arrogation to Fox West Coast, specific drive-in theatres in Stanley-Warner of the monopoly of first-run exhibition in the San Bernardino area, plus allegations of allocation of product among those three exhibitors.

Mr. Frank R. Johnston: Well, now if they had sued you under the Clayton Act then they could've proven that you'd violated it.

Before a jury they could've gotten a verdict to that.

And you said they were threatening to sue you under the Clayton Act.

Mr. Frank R. Johnston: That's --

Justice Hugo L. Black: And you set up certain facts to bar them from suing you.

Wouldn't those facts have been a defense if they claim what you say you're not guilty of?

Mr. Frank R. Johnston: No, Your Honor.

Justice Hugo L. Black: Could they have sued you for that?

Mr. Frank R. Johnston: They could have sued us for what -- perhaps what we claimed in our complaint or made that the basis of their counterclaim but they didn't choose to do so.

They chose to go beyond that.

Justice Hugo L. Black: But they could amend it yet, couldn't they?

Mr. Frank R. Johnston: If the Court grants (Voice Overlap) --

Justice Hugo L. Black: Do you say that -- in other words, that issue is a material ingredient of a claim that they might have against you for violating the Clayton Act.

Mr. Frank R. Johnston: Not as the pleadings are now framed.

Justice Hugo L. Black: Well, it -- it is an essential ingredient of the offense that you're afraid they'll sue you on, isn't it?

Mr. Frank R. Johnston: They have sued us.

Justice Hugo L. Black: That they've threatened to sue you?

Mr. Frank R. Johnston: They -- and they have sued us, Mr. Justice Black.

They have sued us.

They've not only threatened but now they have sued us.

And that complaint is framed on a different theory if I were -- and that counterclaim is framed on a different theory than is our complaint.

Justice Tom C. Clark: (Inaudible)

Mr. Frank R. Johnston: I beg your pardon?

Justice Tom C. Clark: What about the first paragraph in Section 6 (Inaudible) that has to do with the Clayton Act, doesn't it?But what I want to find out is if it was determined in your suit that there was or was not a competition between you and the issue here, would that bar the res judicata on this suit on number 1, on page --

Mr. Frank R. Johnston: No --

Justice Tom C. Clark: -- of the Clayton Act?

Mr. Frank R. Johnston: No, sir.

Justice Tom C. Clark: That has to do with (Inaudible)

Mr. Frank R. Johnston: Yes.

But there is an additional element that must be proved to support the allegation of number 1, that is a conspiracy, the -- the one -- the one element that would be res judicata is, was there competition between the two theatres?

That would be determined by our complaint.

Did they draw from the same pool of patronage?

Now, whether a conspiracy existed to give clearance, either whether competition is found to exist, or is not found to exist, would still have to be determined under number 1 here.

That is the distinction I make.

In other words, the counterclaim must show a conspiracy.

Our complaint has nothing to do --

Justice Tom C. Clark: But (Inaudible) under the counterclaim.

Mr. Frank R. Johnston: I beg your pardon?

Justice Tom C. Clark: But where a conspiracy would be the counterclaim, it goes through the whole claim and then these specific items over that comes the conspiracy of one being a threat.

And that would depend upon whether or not there's competition.

Mr. Frank R. Johnston: That's right.

Justice Tom C. Clark: And that would be determined in your case, wouldn't it?

Mr. Frank R. Johnston: The competition would be determined, not clearance.

Justice Tom C. Clark: I understand, not clearance.

Mr. Frank R. Johnston: Not clearance, simply the existence of a competition.

Justice Tom C. Clark: Would be determined that -- that was an area in which clearance was in line with legally, (Inaudible)

Mr. Frank R. Johnston: If -- if it were granted absent the conspiracy.

Justice Tom C. Clark: Yes, go ahead.

Mr. Frank R. Johnston: We don't touch upon a conspiracy question in our complaint.

Justice Tom C. Clark: (Inaudible)

Mr. Frank R. Johnston: That is the distinction I tried to make, Mr. Justice Clark.

Justice Tom C. Clark: But don't you think that would have some effect on this case even though he had -- you, of course has to prove the conspiracy?

Mr. Frank R. Johnston: He would have to prove conspiracy.

Justice Tom C. Clark: But he --

Mr. Frank R. Johnston: I -- I don't know how much effect it would have.

I doubt if it would have a great deal of effect if he proves a conspiracy -- let me put it this way.

If the judge in the equity suit finds the existence of competition and instructs the jury that he has so found or it was brought to the attention of the jury in some way, that competition exists and they are not to pass upon that single point.

Now, if the defendant -- the counterclaim adherent, can show a conspiracy in the grant of clearance with competition, let me take one example which had been frequently urged.

Suppose every distributor granted a -- I'll pick a figure out of the air, 7-day or 14-day clearance.

Now, that would be a fact that would go to the jury as to whether or not there had been an agreement among the distributors and the exhibitor to grant a uniform clearance, whether there had been a conspiracy.

That element, that item is not determined under the allegations of our complaint.

We do not ask in our complaint at all to have it determined whether how much clearance should be granted.

We simply say, “Can we negotiate equally with the other theatre for a clearance?”

Justice Tom C. Clark: Was the case construed at the Section 1 that there was conspiracy to -- to create the first-runs in (Inaudible) which would not be your case.

Mr. Frank R. Johnston: That wouldn't be our case.

Justice William J. Brennan: But tell me this though, Mr. Johnston, if it should be a fact-finding by the judge, no competition, (Inaudible) lose the lawsuit?

Mr. Frank R. Johnston: Oh, no, we'd lost ours.

Justice William J. Brennan: Why (Inaudible)

Mr. Frank R. Johnston: Because he alleges other things.

He alleges an agreement to allocate products among the distributors in specifications 2 and 3 of his counterclaim which is --

Justice William J. Brennan: Well, let me put this way.

Are there any specifications alleged in this counterclaim in which the essential element of his right to recovery (Inaudible)

Mr. Frank R. Johnston: Not in my opinion, sir.

Justice William J. Brennan: Not (Inaudible)

Mr. Frank R. Johnston: Not in any of it.

Because I have to take his complaint or his counterclaim as he has pleaded it which is basically two things.

It is an arrogation to three exhibitors of the monopoly of first-run exhibition in the San Bernardino area.

Justice Charles E. Whittaker: (Inaudible)

Mr. Frank R. Johnston: I say not -- whether or not competition exists would not --

Unknown Speaker: (Inaudible)

Mr. Frank R. Johnston: Yes.

Justice Charles E. Whittaker: As to the three the allegations made, if none of the three is in competition with (Inaudible)

Mr. Frank R. Johnston: He can prove it this way.

That the distributors conspired with the exhibitors to grant them first-run in theatres which were in no sense superior to the theatre operated by the defendant.

Justice Tom C. Clark: If it's so, there is no competition here in (Inaudible)

Mr. Frank R. Johnston: He -- no, you're talking about damages in the sense of being able to compare his theatre with one another.

But if he has a theatre which is equally well-situated --

Unknown Speaker: But somewhere else.

Mr. Frank R. Johnston: But somewhere else, which has the same attributes, the same characteristics so as to entitle it to a first-run, and he is denied first run.

And he sees three theatres in San Bernardino being granted first-run, when his theater is equally well-situated, equally well-adapted for the exhibition of first-run pictures --

Justice William J. Brennan: Suppose there's a theatre in Pittsburgh, could he -- could he --

Mr. Frank R. Johnston: Could he --

Justice William J. Brennan: -- make this kind of action based upon these allegations in San Bernardino?

Mr. Frank R. Johnston: I would say not, Your Honor.

Justice William J. Brennan: I don't understand how he could have in California, but remote in the San Bernardino area.

Mr. Frank R. Johnston: Well, to be factual, it isn't remote, it's 11 miles away.

Justice William J. Brennan: That -- that gets down in these parts of competition, doesn't it?

Mr. Frank R. Johnston: It does, but the theatres, of course, the example is -- that you have given of a theatre in Pittsburgh is just quite remote from a theatre in San Bernardino.

Justice William J. Brennan: What I'm trying to get to is instead of area, as I understood --

Mr. Frank R. Johnston: That's right.

Justice William J. Brennan: -- that basically his claim with the existence that he was in competition with these three against the (Inaudible)

Mr. Frank R. Johnston: He won't -- it -- I say he does not have to prove that to prove his case.

I'd say he -- he simply has to prove this, whether or not he is in competition.

If his theatre, being situated where it was, being the character theatre it is, is not accorded the first-run, he has something to go to the jury with and the jury I think could come in with a finding or a verdict in his favor that I have a theatre in --

Justice William J. Brennan: In Pittsburg.

Mr. Frank R. Johnston: All right, say -- let's say in Pittsburg.

Or I have a theatre in Los Angeles.

Or I have a theater in Colton, which is a point a little further than those from San Bernardino.

He should be entitled to equivalent rights if there is -- well, under any circumstances, involving a conspiracy.

Justice Potter Stewart: (Inaudible) of Mr. Justice Brennan's Pittsburg theatre, isn't that -- is that man could recover and could perhaps show in the allegation.

Mr. Frank R. Johnston: He perhaps -- he --

Justice Potter Stewart: A conspiracy to give first-runs to San Bernardino.

Mr. Frank R. Johnston: I -- I could conceive of a situation where that might arise.

Justice Potter Stewart: I have a theatre near Pittsburg, (Inaudible) and so on.

That if you gave him what you gave the San Bernardino theatres, I would make much more money than I'm making, (Inaudible) no competition (Inaudible)

Mr. Frank R. Johnston: I would think such a theory could be developed, and if -- let us pursue your example, Mr. Justice Stewart further.

Suppose a theatre superior in Pittsburg in appointments, in seating capacity, in location and in every other factor was placed upon by the distributors a long delayed run, I would think pointing to inferior theatres in other parts of the country would receive a preferred run, would establish a cause of action in the plaintiff.

Justice Potter Stewart: Even though the theatre were not in substantial competition --

Mr. Frank R. Johnston: I don't think that would be --

Justice Potter Stewart: -- with each other for the same audience?

Mr. Frank R. Johnston: I don't think it's necessary that they compete for the same audience to prove the allegation that he has --

Justice Potter Stewart: A conspiracy as of the kind alleged in the counterclaim.

Mr. Frank R. Johnston: That's right.

And there's another type of conspiracy that is -- which is alleged in -- in Specifications 2 and 3, to divide the product among the three exhibitors.

Now, that isn't a -- an issue in our complaint under any stretch of interpretation.

Justice Tom C. Clark: Do you know of any case which have been filed like the Pittsburg theatre?

Mr. Frank R. Johnston: I -- I don't know, Mr. Justice Clark, but I wouldn't be surprised to -- to hear of one.

Justice William J. Brennan: (Inaudible)

Justice John M. Harlan: Could I ask you a question, Mr. Johnston?

Mr. Frank R. Johnston: Yes, Mr. Justice Harlan.

Chief Justice Earl Warren: (Inaudible) -- go ahead.

Justice John M. Harlan: Do you consider that you have to stand or fall in this Court on the question is to whether -- on the -- on the proposition that there are no common questions of fact involved here?

Mr. Frank R. Johnston: Oh, no.

I -- I -- I don't -- I don't realize --

Justice John M. Harlan: Do you realize the discussion up to date has been on that premise, as I understand it.

Mr. Frank R. Johnston: Yes, because I have taken that line because I conceive that there are no common questions of fact.

But assuming, for the sake of argument, that there are --

Justice John M. Harlan: Perhaps I'm anticipating something.

Mr. Frank R. Johnston: Assuming for the sake of argument, there are and under circumstances here, there could be one common question of fact and that is the question of competition.

I don't deny that it could come into the case.

I suggest it's highly improbable as coming to the defendant's case under his counterclaim.

But assuming that there is a common question of fact or common questions of fact, that does not deprive us of a right to equitable relief.

Well, the reason I mentioned --

Chief Justice Earl Warren: Go right ahead.

Go right ahead, finish your answer.

Mr. Frank R. Johnston: For the reason I mentioned a moment ago, that equity, if it can assume jurisdiction properly, can decide on certain questions of fact.

And the chance that a suit may later be brought, which could litigate those same questions of fact, doesn't deprive equity of jurisdiction.

Chief Justice Earl Warren: Mr. Johnston, if the trial judge had accepted all the allegations in paragraph 12 of your complaint and had granted the injunction pendente lite at the outset of the proceeding, is there any reason why the remainder of the fact should not be tried to a jury?

Mr. Frank R. Johnston: There -- I conceive of -- you're talking about the facts in our complaint, --

Chief Justice Earl Warren: Yes, yes.

Mr. Frank R. Johnston: -- Mr. Chief Justice?

Chief Justice Earl Warren: Yes.

Mr. Frank R. Johnston: There are no other facts.

The facts that we alleged are so interwoven that once the judge had decided those facts, he had decided all the issues posed by our complaint because those issues are very narrow and very limited.

Were there threats?

Was there competition?

Was there irreparable harm?

Was there an adequate remedy of law?

Chief Justice Earl Warren: But if he granted you the equitable relief that you sought through the injunction pendente lite, would -- is there any reason thereafter why the -- the facts, both of your complaint and on the -- on the counterclaim should not be tried through a jury?

Mr. Frank R. Johnston: Well, the facts of the counterclaim would then be tried through a jury.

And --

Chief Justice Earl Warren: Well, is that the procedure that the judge adopted in this case?

Mr. Frank R. Johnston: Exactly, Your Honor.

Chief Justice Earl Warren: Would you -- would you elaborate that a little bit?

Mr. Frank R. Johnston: I will and perhaps, I can elaborate best by referring to the judge's response to the petition for mandamus.

Chief Justice Earl Warren: Oh, yes, yes, I -- I get your point.

You don't need to answer the question, I -- I recalled.

But they would -- but if to take the case in its present posture, there would be some things that would be res judicata at the time they got to a jury, wouldn't it?

Mr. Frank R. Johnston: I conceive of only one that might possibly be, depending upon the proof adduced under the counterclaim.

Chief Justice Earl Warren: Yes.

Mr. Frank R. Johnston: And that is the question of competition, whether the two theatres drew from the same pool of patronage.

That might or might not be an issue in the counterclaim depending upon -- and this I think is a significant thing -- depending upon which tact or how the defendant wished to present its case.

Now, that is one reason that I feel that this equitable action is a problem here.

The defendant can direct his order of proof.

Let us assume for the sake of argument that the defendant decides to prove a conspiracy simply to allocate product.

Then there are -- there are no common issues.

There is nothing that is in this complaint that we can have adjudicated in the counterclaim.

There is nothing that is decided in this compliant that would have served as a defense to that particular specification of conspiracy.

Chief Justice Earl Warren: Now, may I -- if I can ask just one more question.

I'll try not to bother you anymore.

But suppose these people didn't answer at all and you took a judgment against them on your complaint.

And thereafter, they filed a suit against you under Section 4 of the -- of the Clayton Act, to what extent would the defendant be bound by res judicata in that action?

Mr. Frank R. Johnston: It would depend on what type of action he filed and what he sought to prove in the trial of his action.

Chief Justice Earl Warren: Well, let -- let's -- let's say that he -- he tried the same theory that he tried in the -- in the counterclaim here.

Mr. Frank R. Johnston: I -- well, again, I can't answer that in advance, Mr. Chief Justice, because I don't know what he's going to try to prove under his counterclaim.

He may -- if he -- if he goes to the point of competition, if he thinks that that is an issue in the case, then the issue of whether there's competition between these two theatres would be res judicata in his -- in his suit.

Chief Justice Earl Warren: It would be.

Mr. Frank R. Johnston: It would be.

Chief Justice Earl Warren: Yes.

Mr. Frank R. Johnston: If --if --

Chief Justice Earl Warren: Yes.

Mr. Frank R. Johnston: If he decides to develop a conspiracy revolving around that, but I don't know and we don't know yet whether he so proposes or whether he has proof.

That's why I say, and perhaps imperfectly that what we have alleged here is neither a defense to his counterclaim necessarily, a prejudgment of it or will we have the privilege of having it adjudicated during the course of the trial of his counterclaim.

We have -- if I --

Chief Justice Earl Warren: Well, is it (Voice Overlap) --

Mr. Frank R. Johnston: Excuse me.

Chief Justice Earl Warren: Is a question of competition a legal or an equitable issue?

Mr. Frank R. Johnston: The question of whether competition exists between two theatres is a question of fact.

Chief Justice Earl Warren: Yes.

Mr. Frank R. Johnston: The judge would make the finding of fact upon it.

Chief Justice Earl Warren: Well, is it a question of law or is it an equitable question?

Mr. Frank R. Johnston: Well, it can be a question that can be decided by a court of equity.

A court of equity has the power to decide questions of fact such as under --

Chief Justice Earl Warren: Well, if under -- under the decisions, is that the type of question that is normally left to a jury or is it to be -- or -- or can it be arrogated to the Court in an equity proceeding?

Mr. Frank R. Johnston: I think it can in this equity proceeding as it can in any other equity proceeding, be assumed to -- and decided by the judge sitting in equity.

I gave the familiar examples of specific performance.

There the judge sitting as a Chancellor must decide among other things questions of fact.

Was a contract made?

In an action for quiet title, the judge must decide questions of fact.

Where -- where was the title?

Where was possession?

Now, those questions might also be common to a question or to a case, as I put before, for breach of damages for contract or for ejectment in which a jury can be had.

Justice John M. Harlan: Could you save two or three minutes to discuss your mandamus point, your point one in the brief and particularly, Mr. Corinblit's answer to you that this question before us is improbably before us.

Mr. Frank R. Johnston: I will, Mr. Justice Harlan.

I believe, first, to answer your second question, the question is before this Court.

The court below, the Ninth Circuit took the position, if I apprehend it carefully, that there was no violation, no excessive discretion on the part of the trial judge, so that there was no occasion for that Court to issue a writ.

Now, I take it, that is what is before this Court for review, whether the Court was in error in that respect.

Justice John M. Harlan: But you haven't cross-petitioned?

Mr. Frank R. Johnston: That's correct.

Justice John M. Harlan: What's your answer to that --

Mr. Frank R. Johnston: I don't think --

Justice John M. Harlan: (Voice Overlap)

Mr. Frank R. Johnston: -- it's necessary.

I think the case is here before this Court for adjudication on -- properly on the question of whether or not mandamus should or should not issue.

Implicit in the -- in the -- in the opinion of the Circuit Court of Appeals is certainly that mandamus does not lie here.

Justice Hugo L. Black: Does not lie or --

Mr. Frank R. Johnston: Does not lie.

Justice Hugo L. Black: Does not lie or should not be granted?

Mr. Frank R. Johnston: Well, I -- I should say should not be granted.

Justice Potter Stewart: You're relying generally on the proposition that if the -- if the Court is right, even if for the wrong reason, then its action should be affirmed, isn't it?

Mr. Frank R. Johnston: I think I should always rely on that.

Justice Potter Stewart: I mean, in this -- on this (Inaudible) case?

Mr. Frank R. Johnston: Yes, yes.

Unknown Speaker: (Inaudible)

Mr. Frank R. Johnston: Precisely, Your Honor.

Now, going back, Mr. Justice Harlan, to the question of mandamus here in this general sense, I don't know whether I'm foreclosed from arguing by the La Buy case, whether or not the Court should issue mandamus.

I will -- I -- I must say that there are some points of distinction which I do not wish to and I do not have the time to label.

I say only this that let us assume the power.

And I do not wish to concede it, but let us assume the power of the Court to issue mandamus rather than reviewing this by appeal which seems to me the orderly way to review this that I might digress for a moment to say why.

Because after this case is tried, we're simply in a pleading stage here.

After this case is tried or even partially tried, under the new appeal statute, there'll be a remedy available to the defendant, to come to this Court.

But now, talking again about mandamus, conceding the power, I simply say as it's well known to this Court, it's sparingly used and in only exceptional circumstances.

I do not think it should be used here to review the discretion of a trial judge who was simply following the mandate of Rule 42 (b) and arranging its calendar in a way that he deems appropriate.

I do not feel that the promulgation of the rules of procedure have abolished the traditional differences between law and equity.

Equity jurisdiction can still be invoked in the federal courts.

Now, I -- I cannot say more about the power of the Court.

I simply question it.

I say that mandamus here was not a remedy that should have been invoked.

Justice John M. Harlan: I think you'd have to stand on power because it is a pure question of discretion.

I don't see why we should substitute our views to the Court of Appeals.

Mr. Frank R. Johnston: I agree with that, but I --

Justice John M. Harlan: You have to stand on power, you have to deal with that.

Mr. Frank R. Johnston: I -- I have to take the position that the power does not exist.

Justice John M. Harlan: I see.

Mr. Frank R. Johnston: And I might say in closing, that I do not read the record in its present posture.

It shows with requisite, clarity, and certainty that the petitioner here is going to be deprived of a jury trial on any fundamental or basic issue that is now deducible or inferable from the pleadings.

Justice Hugo L. Black: Suppose it's not deducible from the complaint as it had drawn, do you think that's the end of the question?

Mr. Frank R. Johnston: I think it should be the end of it for the purposes of this hearing, Mr. Justice Black.

It might not be on some further appeal.

This is not necessarily the end of this case.

If there is error committed now, which I do not concede, in fact, I think the Court has acted with entire propriety.

But it's if it should and I assume that you are thinking, Mr. Justice Black, of an amendment to the complaint to make it more nearly impinged upon the allegations or fit in the allegations.

Justice Hugo L. Black: Well, what I think about it frankly was this.

You have a situation where you have a constitutional requirement of a trial by a jury in certain cases, you have -- do you raise the question that some of these as -- issues can be put before it comes to the Court, that they wouldn't get a trial.

And if -- if the action is split up into two parts, one which they -- be tried by equity and the one to be tried by court of law, then you have a situation where you don't get a trial by jury on order.

It's capable of being amended.

It's part of a -- of a general controversial opinion.

What reason is that why in a declaratory judgment action aside from all of the other questions that have raised?

The Court shouldn't refrain from exercising its jurisdiction to split up a cause of action which may now and may come for it later and give a trial by jury or the facts of (Inaudible).

Mr. Frank R. Johnston: Because, Mr. Justice Black, the alleged harm by reason of the fact we were not able to get motion pictures.

The judge said that --

Justice Hugo L. Black: But that's because you can't -- you say that if it's left up in the air, the question must be decided.

Well, you are -- you -- you can get it decided, this question of whether you get it decided by a jury or the judge.

Mr. Frank R. Johnston: And the question --

Justice Hugo L. Black: All I see now.

Mr. Frank R. Johnston: And the question of when, Mr. Justice Black.

For this reason, I think the Court can take judicial notice of the length of the ordinary treble damage action.

In our district, I think it is averaged around, in a motion picture industry, around six weeks or thereabouts.

Now, the issues framed by our complaint as I informed the Court were separately filed in July of 1957.

We asked persistently for an early trial date.

That is a reason, I think a sufficient reason why the Court can say you can have this matter tried in which you are alleging irreparable injury which -- which trial will consume a matter of two or three days before we can arrange the calendar so that there can be a full-blown hearing in a trial that may last six weeks or more.

Justice Hugo L. Black: But if you're --

Mr. Frank R. Johnston: In other words --

Justice Hugo L. Black: You're right about the fact of the complaint.

I -- I had rather thought it covered here, both of it.

But if you are right about the fact they hadn't raised that issue and you only have it in that, what's wrong with the Court giving a trial by -- a jury trial in connection with the facts you allege in six weeks?

Or what is there about the rules or anything else that bars the Court?

It says that the statute, anything else, it says when you have a action for declaratory judgment, if you alleged some equitable grounds, you never can get a trial by jury.

Mr. Frank R. Johnston: Well, I -- I say that the Court -- the complaints should be construed as a -- a complaint in equity.

And that -- when I say that, I then say that the jury is not appropriate.

Justice Potter Stewart: Or discretionary over Court.

Mr. Frank R. Johnston: Not even discretionary.

Justice Hugo L. Black: You say that about any petition for declaratory judgment where the Court has absolute discretion, whether you're granted or not.

I think that's usually the case.

Mr. Frank R. Johnston: No --

Justice Hugo L. Black: They even tried it, isn't it?

Mr. Frank R. Johnston: No, Your Honor.

Whether or not a jury can be -- had in a declaratory relief action depends upon the allegations of that particular declaratory relief suit.

If it sounds in equity, it's an equity case.

If it sounds in law, it's a law case and a -- a jury can be demanded.

It is our position that this declaratory judgment, suits, sounds in equity and therefore it is triable not by a jury but by a judge.

Justice Hugo L. Black: It can't -- can't grant it (Inaudible)

Mr. Frank R. Johnston: Not if it's an equity case.

Justice Charles E. Whittaker: (Inaudible)

Mr. Frank R. Johnston: That's right, yes.

But not as a finding, a finder of fact.

Justice Hugo L. Black: Then by splitting up the cause of action, you can always allege some grounds for equity and barred your return, if that's the case.

Take the insurance cases where they come in and say, it held the fellow -- the man has died.

Say he's dead and we think he got this by a clause.

We want to try that question right now and you get it.

You allege that as ground for equity, is that all?

Do they -- can they always defeat a trial by jury that way?

Mr. Frank R. Johnston: Well, in one case, I won't use your phrase, “of a defeat of a trial by jury.”

In one case, an opinion written by Mr. Justice Cardozo in a Stewart case, I think it's in 296, that procedure was followed.

Justice Hugo L. Black: What about Enelow?

Mr. Frank R. Johnston: Enelow?

A -- is an earlier case and it reaches the opposite result but it is a different case in this.

In the -- in the Stewart case, there was an incontestable clause so that the insurance company didn't know whether it could have its right adjudicated within a two-year period which was a period of incontestability or not.

The Enelow case as I recall it, there was no such clause or at least it wasn't the subject of discussion by the Court.

Now, I -- I do not agree with the -- your position that in any case, a jury trial can be defeated by the device, if we choose to call it such, of -- of filing a suit in equity.

Justice Hugo L. Black: Well, I didn't call it a device.

Mr. Frank R. Johnston: Well, --

Justice Hugo L. Black: I said if a lawyer has that method and referred to one trial to the other, I wouldn't call it a device.

Mr. Frank R. Johnston: If -- if he --

Justice Hugo L. Black: But perhaps --

Mr. Frank R. Johnston: If he has a true case in equity and if that case will not dispose of all of the issues which might later be brought or which might later be posed in a legal suit, certainly, then he has the right to have that equity case heard and heard when?

In the discretion of the Court, it's proper to hear it.

Chief Justice Earl Warren: Thank you Mr. --

Mr. Corinblit, you may --

Argument of Jack Corinblit

Mr. Jack Corinblit: Your Honors, just briefly, I want to address myself to two questions, briefly.

First, I think on the question of our right to jury trial on the complaint standing alone.

It's clear that the counsel stands on the right in a court trial of all of the issues upon only upon the grounds that they pray for a injunction pendente lite against the filing of antitrust case.

And I submit that the tail cannot wag the dog in that way.

You cannot characterize a -- a complaint entirely as an equitable manner by an allegation of pendente lite relief or pendente lite relief.

Secondly, on the question of the relationship of the allegations of the complaint to the counterclaim, we allege that there was a -- one of the elements of the conspiracy was a conspiracy to grant clearance between these theatres.

If there were no substantial competition between those two theatres, that would be an unreasonable restraint of trade.

And on that fact, a prior decision by the Court will be res judicata on the counterclaim and will be vital to the allegation and the proof of the counterclaim.

It is not the only issue and we can see it, it isn't the only issue.

There are other grounds for relief or the basis of this -- and other acts in furtherance of the conspiracy which were alleged.

But it is an important one and an essential one with respect to the proof in this case.

And finally, with -- with respect to the question raised about, as to mandamus, I agree with Mr. Justice Harlan so that this matter can only considered by you in a mandamus question with respect to the matter of power.

Justice John M. Harlan: (Inaudible)

Mr. Jack Corinblit: I -- I realize that.

And I think that on the question of power, that the Court has in the past on the formula adopted, agreed that mandamus of -- there was a power of mandamus with the matter of jury trial -- is involved.

I'm going to -- I'd say this --

Justice Potter Stewart: Mr. Corinblit --

Mr. Jack Corinblit: Yes?

Justice Potter Stewart: -- as to that point, correct me if I'm wrong factually on this.

As I understand it now, this Court has the same power that the -- that any United States Court of Appeals has so far as the statute goes.

The same statute governs both the Courts of Appeals and this Court --

Mr. Jack Corinblit: To --

Justice Potter Stewart: -- the All -- the All Writs Act, isn't it?

Mr. Jack Corinblit: To -- to issue on a writ out of this Court --

Justice Potter Stewart: Right.

Mr. Jack Corinblit: -- in the same grounds that you could issue a --

Justice Potter Stewart: Yes.

Mr. Jack Corinblit: -- writ out of if -- out of the Court of Appeals.

Justice Potter Stewart: The same statute covers each -- each (Voice Overlap) --

Mr. Jack Corinblit: That's -- that's correct.

Justice Potter Stewart: Now, one case is like the Simmons case and the Roche case and others were decided.

A different statute governed this Court's power from the one that governed the Court of Appeals' power.

Is that correct?

Mr. Jack Corinblit: That is correct.

Justice Potter Stewart: And is -- has there been any case under the All Writs statute, either here or in the Court of Appeals where a mandamus is issued in a situation like this to where there was a -- where the -- where the issue was whether or not a jury trial?

Mr. Jack Corinblit: Yes.

Yes, Your Honor there has.

And that is in the particular -- I think in both the Second and the Sixth Circuits, a mandamus have --

Justice Potter Stewart: What case is this Sixth Circuit?

Mr. Jack Corinblit: Well, I was thinking of Bereslavsky, there -- Bereslavsky versus Kloeb.

As a matter of fact, the same plaintiff was involved in two Circuits apparently, and both --

Unknown Speaker: (Inaudible)

Mr. Jack Corinblit: Yes.

But in both cases, both Circuits agreed and they reviewed your opinions here.

I think Mr. Justice -- Judge Frank reviewed your opinions and he concluded that the new statute did not make any change and that the cases were still applicable because in a subsequent opinion, after the new statute was adopted, one of you, I -- I believe it was -- I don't recall the name of it, you'll find it in Bereslavsky versus Kloeb or versus Caffey, in that case, that you have referred to the fact the jury trial was one of those exceptional cases in which mandamus was -- was -- permissible.

And the cases begin -- there are a long line of them.

And certainly in the light of this Court's opinion, last term in La Buy, the power is a -- is -- should -- should exist here and --

Justice William J. Brennan: Tell me, what is (Inaudible)

Mr. Jack Corinblit: No.

No, it's in -- in a construction of -- in aid of jurisdiction, 1651.

Justice William J. Brennan: (Inaudible)

Mr. Jack Corinblit: The argument is made that -- that when a trial court refuses to hear a -- hear a case in the way that is in the form before the trier of fact, that it is proceeding in a way which is -- which is in a sense outside of its jurisdiction.

And therefore falls with those cases that hold you may correct jurisdictional defects in the trial court by mandamus.

Justice William J. Brennan: (Inaudible)

Mr. Jack Corinblit: It is hard to think of that.

I concede that, Mr. Justice Brennan, and -- but I say only that the record as of -- of your decisions, this Court's decision to this point, it seems to me sustain the -- sustain the power of the --

Justice William J. Brennan: (Inaudible)

Mr. Jack Corinblit: Court of Appeals.

Justice William J. Brennan: (Inaudible)

Mr. Jack Corinblit: Yes, that's one of the cases --

Justice Potter Stewart: (Inaudible) at this point, I'm sorry to waste much of your time.

This Court has never decided that under the All Writs statute, mandamus is appropriate in this field.

Mr. Jack Corinblit: I think you -- in a -- under the All Writs statute, you made a reference in a -- in a long list of cases you said the jury trial is one of those cases, isn't it?

Except --

Justice Potter Stewart: All right.

Mr. Jack Corinblit: No.

There is -- it's a case prior -- prior to La Buy.

Thank you.