UNITED STATES v. R. C. A.

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Argument of Rankin

Chief Justice Earl Warren: Number 54, United States of America, Appellant, versus Radio Corporation of America and National Broadcasting Company, Incorporated.

Mr. Solicitor General.

Mr. Rankin: Mr. Chief Justice, may it please the Court.

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

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

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

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

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

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

It came up --

Justice William O. Douglas: Would you mind telling what happened before the Commission?

Mr. Rankin: Yes.

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

Justice William O. Douglas: Did the Department of Justice appear that the administrative proceedings --

Mr. Rankin: It did not but it was given notice.

Justice Hugo L. Black: (Inaudible)

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

There was no hearing.

There was no adversary proceeding.

There was no opinion.

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

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

Mr. Rankin: The Government does not think so.

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

Now, this was not a comparative proceeding.

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

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

Mr. Rankin: We -- we believe that stipulation involves this.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Justice John M. Harlan: Supposing the Government, a response to its notification by the Commission had gone and said this is -- this is -- this is part of a conspiracy to violate the antitrust law.

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

The Commissioner said we're not concerned, we'll -- we'll -- we'll take it all.

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

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

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

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

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

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

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

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

Does that answer the question?

Justice John M. Harlan: Well, I understand your point of view and --

Mr. Rankin: Now --

Justice William O. Douglas: (Inaudible) [Laughs]

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

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

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

Now, they held no hearing in this matter.

And RCA, the other conspirator was not a party.

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

We had no hearing on this Section 1.

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

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

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

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

Mr. Rankin: I don't think so.

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

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

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

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

Or as to civil damage suit then?

Mr. Rankin: The Government contends that it cannot.

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

Justice Hugo L. Black: Do the other parties take that position?

I'm not talking about your position but --

Mr. Rankin: I think they would --

Justice Hugo L. Black: -- they discussed what would happen in a case of a civil action for damages by someone who claims had been injured, should there be a plea of res judicata or collateral estoppel?

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

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

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

Justice Hugo L. Black: Well, if it's a legal adjudication, I suppose it --

Mr. Rankin: It should be binding both ways.

Justice Hugo L. Black: Yes.

Mr. Rankin: Now --

Justice William O. Douglas: I suppose if the Commission had made explicit findings here at least we can find that this did not violate the antitrust laws, we'd be here -- not here then?

Mr. Rankin: No, I would still contend that that was not --

Justice William O. Douglas: (Voice Overlap) -- but it was -- its purpose for it.

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

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

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

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

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

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

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

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

Mr. Rankin: That's the Federal Trade Commission.

Justice John M. Harlan: I see, I'm sorry.

Justice Hugo L. Black: May I ask you just one other question, practical -- of the practical effect.

You're prepared to answer it.

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

Justice William O. Douglas: (Inaudible)

Justice Hugo L. Black: -- therefore in order to determine it, you'd have to have a full-fledged trial of all the evidence relating to reasonableness and so forth, so far as antitrust charge is concerned.

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

Mr. Rankin: Well, but that's one of complaints that the Commission makes in its showing we have before the Court.

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

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

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

Now this --

Justice Hugo L. Black: Does it -- does the right to trial by jury have any connection with the proceedings, if it has that effect?

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

Mr. Rankin: Well, they often obtain it by asking, maybe waive it by not asking, and they certainly would -- I would think would raise it.

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

But there was no adversary proceeding of any kind.

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

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

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

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

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

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

Mr. Rankin: Well --

Justice John M. Harlan: The Government couldn't insist without a trial, isn't it?

Mr. Rankin: It couldn't have insist that on a trial but I don't want to mislead the Court.

We didn't ask for it.

I want that --

Justice John M. Harlan: (Voice Overlap) --

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

Justice Charles E. Whittaker: It isn't quite correct that (Inaudible) to say that the issue before the Commission were built on these.

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

Mr. Rankin: Well that's our contention.

We say that the whole theory --

Justice Charles E. Whittaker: But, they go on.

Mr. Rankin: Yes.

Justice Charles E. Whittaker: Is it for public interest (Inaudible) then the Commission was not to determine whether this application was for public interest.

Mr. Rankin: That's right.

Justice Charles E. Whittaker: Isn't it?

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

Mr. Rankin: Well, it could.

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

You have this one exchange between these two parties.

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

Justice Charles E. Whittaker: Well, there's one factor and is determined the adversity then the Commission could not find (Inaudible) for the public interest, did they?

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

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

And this Court said you can't do that.

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

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

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

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

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

They certainly have programming ability.

They have the financial capacity.

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

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

Should that in itself be conclusive, that's the -- that's the issue.

And the Government says it should not.

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

Justice Charles E. Whittaker: Well, it didn't (Inaudible)

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

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

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

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

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

There was no finding as such.

Justice Charles E. Whittaker: Well, would it be -- I have this document (Inaudible) if this practically consistent.

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

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

Mr. Rankin: Well, that was the position of the lower court.

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

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

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

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

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

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

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

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

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

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

Mr. Rankin: Well, in effect I think that's what they did in the District Court.

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

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

Justice Hugo L. Black: Well, not merely that company but the other one too, I would suppose.

Mr. Rankin: Yes, both of them.

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

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

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

Justice Hugo L. Black: If merely -- if only one of them however, had been indicted here before, let's take the Court proceeding.

Mr. Rankin: Yes.

Justice Hugo L. Black: Only one of them had been indicted.

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

But B wasn't indicted.

And they -- the Court and jury found A innocent.

Could B be prosecuted after that?

B wasn't party to it.

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

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

There was no adversary proceeding of any kind.

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

Justice John M. Harlan: What's the citation, Solicitor General with the Mackay case (Inaudible), if we don't hold it up?

Mr. Rankin: I think it's 346.

Justice John M. Harlan: 346.

Mr. Rankin: 346 U.S. 86, it's cited in the appellee's brief.

Justice John M. Harlan: Thank you.

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

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

Justice William O. Douglas: What kind -- what kind of violation were they talking about?

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

Mr. Rankin: No.

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

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

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

That's the conspiracy charged.

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

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

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

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

And we -- and that's the allegations of the Government in that regard.

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

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

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

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

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

Justice Charles E. Whittaker: (Inaudible)

Mr. Rankin: It was investigated.

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

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

Justice Hugo L. Black: Of the record?

Mr. Rankin: No, of the Government's brief, in italics.

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

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

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

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

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

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

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

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

The conference report is set out on page 33.

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

Justice John M. Harlan: This language was in (Inaudible) at the time of this proceeding?

Mr. Rankin: It was not.

Justice John M. Harlan: It was not?

Mr. Rankin: No.

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

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

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

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

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

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

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

And that is the position of the Government here.

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

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

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

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

Justice John M. Harlan: Was it -- Commission obligated to give the Attorney General notice, the United States notice?

Mr. Rankin: No, it is not.

It was -- that was merely a matter of courtesy.

Justice John M. Harlan: They did that --

Mr. Rankin: They didn't --

Justice John M. Harlan: (Inaudible)

Mr. Rankin: I can't say whether they do it always or not.

They do it --

Justice John M. Harlan: But, in contrast, the word telephone company (Inaudible)

Mr. Rankin: Well yes, that's correct.

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

Justice John M. Harlan: Yes.

Mr. Rankin: But here they can't.

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

Justice Charles E. Whittaker: (Inaudible) violation of the antirust laws is one, would the Commission nevertheless go on and give you a (Inaudible)

Mr. Rankin: Yes.

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

Justice Charles E. Whittaker: That would still be contrasting with public interest to approve the transfer, the (Inaudible) and purpose.

Mr. Rankin: Well, it might, depending upon the situation, and in this particular situation you'd have the way against it.

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

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

All of those things would have to be weighed.

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

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

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

And NBC should be granted.

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

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

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

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

Justice Charles E. Whittaker: Or under the Sherman Act, it takes more under the Sherman Act for the (Inaudible) before the Commission would be denying a passport, isn't that what you're arguing?

Mr. Rankin: Well, I -- I'm arguing that under the Sherman Act there is a trial of the very question of whether or not there is a violation of the Act filed under the Communications Act.

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

Now, --

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

Mr. Rankin: Well, the -- assuming the allegations of the complaint here.

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

Justice Hugo L. Black: Well, are you making -- are you making a mistake in talking about the competitive factor, and making it wholly and completely synonymous proven violation of the law both criminal and civil.

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

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

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

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

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

That's the kind of a situation (Inaudible)

Mr. Rankin: Yes, Mr. Justice.

All except the, "Ignore it."

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

Justice John M. Harlan: Yes.

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

Mr. Rankin: Yes.

Justice John M. Harlan: Yes.

Mr. Rankin: And they could say now that isn't enough.

We put it down the scales.

Justice John M. Harlan: Yes.

Mr. Rankin: That we won't -- it doesn't weigh enough so that we can deny this license.

Justice William O. Douglas: But if they went up on -- on a 402 case in the Court -- to the Court of Appeals, the opposition could get a reversal on it definitely.

Mr. Rankin: Well, who's going to go up on this proceeding?

Justice William O. Douglas: I say not this one but the second case, where there's an adversary.

Mr. Rankin: Well, if you had a comparative hearing --

Justice William O. Douglas: Yes.

Mr. Rankin: -- then you'd --

Justice William O. Douglas: Or if the Department of Justice had intervened, it would make yourself a party, do you think?

(Inaudible)

Mr. Rankin: Yes.

And it's stipulated that we could have appealed and we could have asked --

Justice William O. Douglas: Suppose that --

Mr. Rankin: -- for reconsideration.

Justice William O. Douglas: Yes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Rankin: No, I -- I don't base it upon the question of proof.

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

Justice Hugo L. Black: But I'm not talking about that proof.

I'm talking about the case before the Commission.

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

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

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

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

Mr. Rankin: I think they could.

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

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

Justice John M. Harlan: What about the last point in Judge Kirkpatrick's opinion, forget all about what we've been talking about --

Mr. Rankin: The delay?

Justice John M. Harlan: -- (Inaudible) which is --

Mr. Rankin: Well --

Justice John M. Harlan: -- discretionary finding of fact made by a good judge, a competent man, does that doctrine apply in your view in the case of this kind?

Mr. Rankin: I don't think it should at all to the Government in a violation of the Sherman Act.

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

And --

Justice John M. Harlan: Perhaps you're going to come to that phase of the case.

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

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

They were not deliberate and planned like this.

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

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

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

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

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

Justice Hugo L. Black: May I ask you a question, that is to see -- what's your position.

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

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

What would you say to that?

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

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

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

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

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

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

Justice Hugo L. Black: Well, then your basic contention is -- I'm having -- only see if I'm rather wrong.

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

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

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

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

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

Justice Hugo L. Black: You tried any cases that hold or how they held if the Government cannot be estopped by it's vagueness for that being in a prosecution?

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

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

Justice John M. Harlan: And suppose you wouldn't concede that you were negligent you just needed a good judgment, that's your position.

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

Justice Hugo L. Black: But did you ask the Commission to hold up by (Inaudible)

Mr. Rankin: No, we didn't.

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

So we're involved in that.

Justice Potter Stewart: Did you make that position known to the appellees all the way through?

Mr. Rankin: Well, there -- I don't know whether the petitioner made it known or not.

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

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

Justice Potter Stewart: You -- you said you took the position all the way through, was it?

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

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

Mr. Rankin: Well, I gather from the record that's all I can give you.

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

Justice Potter Stewart: And it did nothing.

Mr. Rankin: It did nothing and the investigation went on.

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

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

Chief Justice Earl Warren: Mr. Segal.

Argument of Bernard G. Segal

Mr. Bernard G. Segal: May it please the Court.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And in any event they worked out a deal.

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

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

Westinghouse would get an additional $3 million.

Now, that's the whole deal.

That's the entire transaction.

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

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

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

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

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

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

No price fixing for advertises were remotely upturned.

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

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

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

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

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

Now, Your Honors --

Justice John M. Harlan: Mr. Segal, what -- when was this antitrust suit started?

Mr. Bernard G. Segal: The antitrust suit was started in 1955, in December 1956, pardon, in December 1956.

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

Justice John M. Harlan: What happened to it in the end of the -- was it awaiting the decision in this case?

Mr. Bernard G. Segal: Waiting the decision in this case.

Justice John M. Harlan: In suspense.

Mr. Bernard G. Segal: It's in suspense by virtue of the Government's argument that the facts were so simple quite contrary to the issues today that they could be stipulated.

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

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

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

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

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

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

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

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

What happened here?

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

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

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

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

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

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

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

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

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

And again the Broadcast Bureau filed its decision.

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

There's no protesting.

The Department of Justice has had plenty of notice.

It hasn't come in.

It hasn't done a thing.

It hasn't shown an interest in this thing.

It hasn't indicated the things such a violation.

Why have a hearing?"

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

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

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

No one has ever argued.

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

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

But let me get back to the stipulations.

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

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

Now, there we have it.

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

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

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

I want to talk more about that in a moment.

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

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

Chief Justice Earl Warren: We'll recess now -- we'll recess now, Mr. --

Print this transcript Transcript: 

Argument of Bernard G. Segal

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

Mr. Bernard G. Segal: Your Honor.

I was just in the midst, when the recess came, of addressing myself to Mr. Justice Harlan's inquiries concerning the MacKay case.

I had pointed out that that was quite a different type of regulated party than in this case.

In that case, it involved a regulated common carrier.

Well, of course it's different in many ways from the one involved here.

And all the Court held there was that the Federal Communications Commission could not grant the application of MacKay solely in order to increase competition.

That couldn't be the sole standard it used regardless of other factors where a telegraph common carrier was involved.

But I might point out there quite different from the position taken by the Solicitor General here today and I quote from the Government's brief in this Communications Commission case, “It has settled laws,” said the Government there, “that the public interest embraces national policies reflected in general legislation and judicial decision.

Thus, the national policy in favor of competition which is reflected in the antitrust laws becomes a part of -- becomes a part of any statute which sets forth a public interest standard.”

Now, Your Honors, I was going through the stipulation and I'm almost through with it, I've gotten through the point that they had all the evidence on all of the antitrust issues.

They had a duty to consider the antitrust issues and I come to paragraph 9, which says not only did they have a duty to consider but the FCC decided all issues relating to the exchange which it could lawfully decide.

It left nothing -- left nothing undecided.

And then the question is, well, might could have been invalid, might have not be pursuant for the Act when we come to paragraph 10.

The FCC granted the exchange applications.

It was argued, the date is given.

Its action was a valid exercise of its jurisdiction and was taken pursuant to and in accordance with the Act.

So, there's no question about the validity of what is here in issue as I shall show.

Justice Charles E. Whittaker: You have --

Justice Potter Stewart: Mr. Segal, excuse me.

Justice Charles E. Whittaker: (Inaudible)

Mr. Bernard G. Segal: I say to Your Honors that the stipulation was batted out by the Government and by us.

What happened was, we were in a long, long hearing before the judge and the Government was present.

And saying that all the facts are simple and I was saying, “Well, would you concede this fact?”

And the Government said, “Yes, we would concede it, we think it's present.”

“Would you concede this fact?”

And in that way, the transcript was gotten up and finally, it happened that I left for the meeting of the American Bar Association in London and I couldn't participate in my associates and the -- the members of Department of Justice got up a stipulation which Judge Kirkpatrick read and approved as being in accord with the transcript.

And by the way, for some reason, I don't understand that too has been put in the transcript of the record -- of testimony in this case by the Government.

They have certified it up as part of the transcript of record.

All that argument and all our argument below is somehow rather has crept up into this transcript.

Justice Hugo L. Black: Do you think if the stipulation as to the duty of the Commission under the statute is binding?

Mr. Bernard G. Segal: I think, Your Honor that quite clearly it's not binding.

I think it's correct, and I think to the extent that it shows that here are two litigants whose horns are locked in battle, who have divergent interest, agree that this is the law, is at least persuasive.

That if the Department of Justice and counsel for RCA and NBC think it's the holding, at least to enlighten me of what it is Your Honor that it is, I agree it's not binding.

I may say to you that I think all of the stipulations except perhaps that part of it, relate the to the fact that are not involved.

The -- paragraph 11 I referred to and it just shows that we did exchange in for -- that the FCC and the Department did exchange information, but more than that, that the Department kept -- the Depart -- Federal Communications Commission kept the Department fully informed.

Paragraph 12, I shall not belabor, that simply is a statement of all of the four or five procedures that the Department of Justice couldn't take it.

It didn't have to come in the beginning of the proceeding when maybe it didn't know what was on.

It could have come in at any stage of the proceeding.

It could have asked for a hearing, it could have filed a protest in the 30 days after the decision.

It could have filed a petition for rehearing and then could have taken an appeal for the Court.

And finally on --

Justice Potter Stewart: Could it, Mr. Segal, have asked the FCC to defer its decision pending of further investigation demanded by the Department of Justice?

Mr. Bernard G. Segal: I assume it could but I want to emphasize here, Your Honor that I can see a very good reason for it.

Actually, my friend, the Solicitor General has talked about the statutory practices in good -- this is a governed capsule transaction.

And the reason in answer to who wrote the stipulation that Mr. Justice Whittaker asked, the reason of stipulation was not difficult to get to at, is it -- with such a simple statement of fact.

Here, two companies had a transaction and here they agreed on it.

And here, the FCC had said that the affiliation was a two-year proposition and RCA had -- NBC had the right either to renew it or not to renew it.

Now, to answer Mr. Justice Stewart's question very directly, the fact was that the parties had come to an agreement and there were no other facts that the Department of Justice had to look into, but had the Department needed more time, the record is clear it didn't because they discovered no facts but the FCC didn't know.

I haven't the remotest doubt that the Communications Commission would have grant time.

And they say, Your Honors, it took seven months if it was, to decide this case from the date of application to the time we could make our exchange.

Justice Potter Stewart: There's one other thing, Mr. Segal.

As I -- and I -- did I correctly understand you to state as to say at the outset of your argument that in -- on many, many occasions, the Department of Justice has intervened in cases of this nature before the Federal Communications Commission.

Mr. Bernard G. Segal: No.

This Court has had just quite recently the, (Inaudible) case where the Department of Justice, even where they had the power to grant exemption, where the Department of Justice went in and carried the proceeding before the Federal Maritime Board.

The McLean Trucking case where the associated trucking tried to absorb six or seven companies.

The Department of Justice Antitrust Commission went in before the Interstate Commerce Commission and tried the case to argue that it would be a violation of the antitrust laws for them to perform for the ICC to authorize this.

It would -- it -- it's not at all unusual in our jurisprudence more than to come into these cases.

Now, I don't think they come in to this case but neither, Your Honor, have they filed this kind of proceeding anywhere.

I take it that it's simply because they haven't taken the position that the very grant of a permit or a license which is what they're taking here is the grant of the license that they say as I shall show, violates the law.

And not all this extraneous business that's been talked about and I want to get to the complaint in a minute.

It's the back that the department now takes the position that in granting the application, ipso facto, a violation to antitrust law was authorized in perpetrators.

I would take it if there's a conspiracy here that as much a conspirator would be -- well I -- I believe that I was going to say that the Department didn't act.

The FCC did act.

We acted pursuant to it and if there's any conspirator, I take it we're not one.Now --

Chief Justice Earl Warren: Mr. Segal, at -- at what precise point in this procedure did the Government lose its jurisdiction to prosecute --

Mr. Bernard G. Segal: I think it --

Chief Justice Earl Warren: -- an action of such as it's here, prosecuted?

Mr. Bernard G. Segal: I think, Your Honor that when I get to the complaint and show you what they're asking for here.

I can persuade Your Honors that the -- when the FCC approved this transaction and when the parties -- and that's paragraph 13, I was getting through in the stipulation which says that, “We acted in reliance on the determination and affecting the exchange.”

When we did act in reliance on that determination and that's paragraph 13 of the stipulation.

When we acted in reliance when the time to appeal to the United States Court of Appeals for the District of Columbia had expired, when the Department of Justice and everyone else with full knowledge of all of the facts refrained from doing anything and when we went ahead and effected these large business transactions involving the uprooting of people from Philadelphia to Cleveland and Cleveland to Philadelphia and all the rest of what's in Judge Kirkpatrick's opinion, then the Department lost its right to say that the very transaction approved by the Federal Communications Commission, it could ask the District Court to disapprove.

Chief Justice Earl Warren: One of the thing -- things that's crossing my mind is this.

The -- the facts within the knowledge of the Government now might be the same as they were at the time that they were asked to come into the case by the Federal Communications Commission.

But if the case was under investigation by the Department of Justice, needed necessarily know at that time that -- that it knew all of the facts and that they wouldn't change and that there wouldn't be more upon which it could base a successful charge of conspiracy.

Mr. Bernard G. Segal: I submit to Your Honor that in this field and I don't think it is.

But if this field is a field in which any government agency needs more than the time that Congress has prescribed, then it's for Congress to enlarge the time.

Here, seven months elapsed during which the Commission investigated and re-investigated.During which they asked for information and more information.

During which they notified and re-notified the Department of Justice.

If that seven-month period and if the time allowed for appeal is inadequate for the Department of Justice not to attack any general conspiracy, I'm going to get to that.

But to attack this very transaction, then I submit Mr. Chief Justice, that it is for Congress to say that the time shall be enlarged.

I may say to you that I think the Department of Justice had more than adequate time and subsequent events have so demonstrated.

And while I'm on that question, I may ask to answer the question Mr. Justice Douglas asked which was followed up by another question from Mr. Justice Stewart.

Mr. Justice Douglas asked whether the position of the Department was made known to the Apellees and Mr. Justice Stewart followed that up by asking whom did the Government tell?

Well, my answer to Mr. Justice Douglas is “No” and my answer to Mr. Justice Stewart is “Nobody.”

Actually, when 11 months after the department has been notified that they were antitrust issues, it instituted a grand jury proceeding.

Nobody could have been more surprised than we were.

We had no prior knowledge of any kind that that proceeding would be called or that that proceeding would be forthcoming.

We were going likely on our way in the belief that in investing millions of additional dollars to put in colored television and all else that was done in Philadelphia, we were doing so with the greatest security that a party could have, a licensee could have a license from the agencies setup by Congress.

The license, the very transaction which the Federal Communications Commission did license and I'll just get to one other matter --

Justice John M. Harlan: Does the -- excuse me, sir.

Mr. Bernard G. Segal: Sure.

Justice John M. Harlan: Does the -- does the record show what has been expanded by your client?

Mr. Bernard G. Segal: It does not, Your Honor.

Justice John M. Harlan: Other than the $3 million for the purchase?

Mr. Bernard G. Segal: It -- it does not, except it does show that we did take over the Philadelphia stations in reliance that they did take over to Cleveland and somewhere in the interrogatories that were printed which I hesitate to ask -- as to refer to because I don't think they were properly printed.

It does refer to the fact that a great many people were uprooted from one city and transferred to another.

But except as its common knowledge of what was done in Philadelphia, the colored television and all else, it's not in this record.

Now --

Justice Hugo L. Black: You cannot then rely on special circumstances to show that --

Mr. Bernard G. Segal: I'm sorry --

Justice Hugo L. Black: -- if you're entitled to have to say that there was some kind of estoppel or laches or something.

It has to be on the basis of what was actually done and deprive to all other cases in both special circumstances here.

Mr. Bernard G. Segal: Oh, yes Your Honor.

Justice Hugo L. Black: Oh, they are.

Mr. Bernard G. Segal: Here -- here, and I'll come to it a little more fully, but here, we're acting on a Federal Communications Commission determination and the stipulation of states.

We just completely overturned the situation.

We're operating -- Cleveland Station ceased to operate them, terminated all our contracts, gave up all our connections, took whatever employees were involved and went to Philadelphia.

Westinghouse did -- did just the reverse and all of these was permitted to go on for close to a year before the Department of Justice first brought it suit.

And even if we -- it might as well, you might say three or four years because, obviously we couldn't then undo it merely because a suit was brought.

Chief Justice Earl Warren: Well, when did you start making this transfer?

Mr. Bernard G. Segal: We started making the transfer as the stipulation states, Your Honor, when the appeal period had elapsed.

Chief Justice Earl Warren: Yes.

Mr. Bernard G. Segal: And I may say further that under the order, we had to do it within 15 days thereafter, because the order gives you 45 days within which to do it.

And I presume the reason is that 30 days is the appeal period and they allow you 15 more days to act after the appeal period has gone by.

Justice John M. Harlan: Could I ask you one more question?

I hate to take your time.

Mr. Bernard G. Segal: Yes, sir.

Justice John M. Harlan: I notice in the record this exchange of memorandum between two of the Commissioners, they're not involved which seems to be that after the dissenting Commissioner who thought there should be a hearing and have hearsay one of the majority came forward and said among other things which I take it's the fair inference you're speaking for the proclamation for all majority that they -- the Commission did not consider that it was binding the Government in any way with respect to bringing a future antitrust suit.

Mr. Bernard G. Segal: Well --

Justice John M. Harlan: And the question that prompts me to ask is this.

That in this field of law, whatever that aspect of the case may turn out to be, being unnoticed that at least the agency didn't consider that it was tying the hands of the Government.

Did you people take any steps to ascertain from the antitrust division whether or not they intended to go forward or whether they were calling acquits or whatnot?

Mr. Bernard G. Segal: And we really considered it, Your Honor, not of much significance.

All that Commissioner Doerfer said was that this wouldn't bar an overall look.

In other words, that the fact did approve, this transfer wouldn't bar the Commission or the Department of Justice from looking into the question of whether generally, the -- the NBC was violating the antitrust laws.

You see, he started by saying it's difficult to see how approvals and preclude others from examining into the transaction.

Justice John M. Harlan: Into this or any other --

Mr. Bernard G. Segal: He says that.

And then he says that such an overall look is still available for the FCC or any other governmental agency.

Now, if what he meant was that after the Commission, as I hope you shall decide that this is in the public interest.

This very transaction and therefore I think inevitably decide that it's not a violation of the antitrust law.

Anyone can come along and say this, “I think he was wrong.”

To the extent that he means that this gives us no immunity, gives us no exemption so that conduct by us in operating under the license or conduct that wasn't an issue here can permit an overall look and he says, “I think it was loose language, can permit an overall look.”

I think he's right and I shall so argue.

So, that this gave us no concern.

Chief Justice Earl Warren: But I think that your answer to Justice Harlan in -- is that you did not take it up with the antitrust division.

Mr. Bernard G. Segal: No, I may say Your Honor that we saw nothing to take up and I still think that is true.

What he said was not shocking and except for a little loose language, was -- was probably very good law as I shall show.

Chief Justice Earl Warren: But didn't too the dissenters on the Commission indicate that there might be antitrust?

Mr. Bernard G. Segal: No.

No.

The dissenter took the position he feared that the Government could not bring it.

He feared the -- the -- Commissioner Bartley said that his fear was that this would forestall the Government.

Chief Justice Earl Warren: Yes, but -- and the --

Mr. Bernard G. Segal: That was the only dissent.

Chief Justice Earl Warren: -- can't we have -- will declare that -- that there might be a violation.

Mr. Bernard G. Segal: Oh, not -- not that there might be a violation, the only question was, “Would this bar the Government?”

Chief Justice Earl Warren: Why would he say to them that the Government would be debarred from -- by this -- by this order?

That he didn't think possibly, there was a violation.

Mr. Bernard G. Segal: I have to read his mind.

But certainly, Commissioner Doerfer couldn't have been more categorical within the portion I read to Your Honors in saying that there wasn't as he said, a scintilla of evidence of any such and he had everything the Department of Justice had.

Now, this present suit, I'd like to point out to Your Honors.

Your Honors will remember that the Solicitor General said that the issue in a Sherman Act case is whether there was a conspiracy and whether the defendants acted in pursuance of the conspiracy.

And in answer to a question, I think for Mr. Justice Black, he said that if there wasn't, then he thought this case fell out.

With that in mind, I would like to ask Your Honors whether you would turn to the complaint, because after all, that does define the issues.

And I ask Your Honors to look first at paragraph 21 at page 7.

And there we find what I think is the gravamen of the complaint.

It complains that on a certain day, May 16th, 1955, a month by the way before the applications were filed, defendant NBC entered into a contract with WBC in an unreasonable restraint of trade and commerce in violation of Section 1 and he tells what the contract provided for.

So, the unreasonable restraint of trade alleged in what is the gravamen in the complaint is the very contract that's authorized here.

Now, I'll come in a minute to a vague allegation of general conspiracy, but first I'd like to fix Your Honors' attention if I may on that.

Might I ask you then to go to 23 where he gives the effects of all of the offenses?

The effects, which I take it is the critical question of what was the result of this conspiracy, what did it do?

And without burdening Your Honors, I say that every single effect related solely and exclusively to this exchange transaction, (a) “Reduce the ability of who?”

WBC, (b) “To preclude competition where?”

In the Philadelphia market, (c) “To preclude competition where?”

In the Philadelphia market, (d) “To reduce the ability of who?”

Westinghouse Electric.

Chief Justice Earl Warren: Where --

Mr. Bernard G. Segal: What -- couldn't mean anywhere.

Chief Justice Earl Warren: You said “Where” to every other, all the other specification, how about that one?

Mr. Bernard G. Segal: Well, I may say there Your Honor, it couldn't mean anything, except in the Philadelphia market because it was in the sale of equipment.

And obviously, the only effect was that in Philadelphia, as they -- as the Government contends, maybe NBC would advertise RCA products more than it would Westinghouse's products.

And it couldn't possibly affect San Francisco for instance, where we have an affiliate.There's no such allegation of any kind.

The allegation is directly that maybe this exchange transaction, the fact that we, instead of Westinghouse owned a station in Philadelphia, would have these effects.

Justice Hugo L. Black: What do you say to 18, 19 --

Mr. Bernard G. Segal: I'm going to come to those if I may Your Honor, if I may just for a moment -- as I said, I want to get to this general conspiracy, but we take --

Justice Hugo L. Black: That's the general conspiracy.

Mr. Bernard G. Segal: There -- well, that's 18 and 19.

They do.

Justice Hugo L. Black: Began in 54 and continued.

Mr. Bernard G. Segal: What did you say?

Yes, I'm going to --

Justice Hugo L. Black: Began in 54 and continued.

Mr. Bernard G. Segal: Yes, I just -- if I may just say about this one, that the relief requested under -- and I'm going to come if I may in just a half a minute Your Honor.

In 21 and 23, the relief requested by the Government is that the District Court ordered the revocation of the Philadelphia licenses and that the District Court ordered the divestiture of the Philadelphia station.

So that its relief on 21 and 23, different from the relief that I'm going to come to, Mr. Justice Black, on the two averments that you referred to.

Its -- its question there is -- its relief there is order them to get rid of the license the FCC granted.Order them to give up the stations which they acquired in the exchange agreement that the FCC approved.

Justice Hugo L. Black: But why could they not do that?

I've got all the references but I don't quite get why they do not find it reviewable.

Mr. Bernard G. Segal: Why, what isn't?

Justice Hugo L. Black: Well, it's not alright for them to order that.

Mr. Bernard G. Segal: Because we --

Justice Hugo L. Black: That if it was true that a year or two before, they had entered into a conspiracy that violates the law, then this could be means -- views of the means to carry out it through.

Mr. Bernard G. Segal: Well, Your Honor in the first place, to the extent -- to the extent that they allege that there was a conspiracy to acquire this station, that was all gone into by the Federal Communications Commission.

As a matter of fact, that was all the Federal Communications Commission went in, in the quotation I read from Your Honors.

“Was there coercion?

Did they use these methods?

Did they illegally use power?”

And the Commission getting extensive evidence on that question concluded as Commissioner Doerfer says that there wasn't a scintilla of evidence, that there was illegal coercion or that RCA or NBC exercised coercion on Westinghouse incidentally, a much greater and more powerful, both in size and wealth corporation.

And Commissioner Doerfer says it's just is no evidence.

Now, they passed on that Your Honor.

Justice Hugo L. Black: Suppose there was -- suppose -- suppose there was no question here about how they got registration.

Would be alright, they get it, everybody knew this.

But the Government came in and said that two years before they come to that decision.

Can a conspiracy violate the antitrust laws, because they found there had been one?

Why -- why would they not have some power?

Mr. Bernard G. Segal: Well, even unrelated to this one.

Justice Hugo L. Black: Required to give it up if it was to be used as a means for carrying on --

Mr. Bernard G. Segal: Well --

Justice Hugo L. Black: -- the conspiracy which they found has begun long before this thing is served.

Mr. Bernard G. Segal: They didn't do that Your Honor.

Justice Hugo L. Black: But that --

Mr. Bernard G. Segal: This -- we have a stip --

Justice Hugo L. Black: -- that's what they allege.

Mr. Bernard G. Segal: No.

We have a stipulation here that every fact pertaining to every antitrust issue which the Department of Justice now has, the Federal Communications Commission had at the time it decided, this case is nothing new.

There's no general conspiracy of a nature that doesn't relate to this particular transaction.

It all relates to this transaction, this is the conspiracy they allege.

This is the conspiracy to get this Philadelphia station.

Now, the FCC passed on that necessarily.

This was what it had presented to it in the form of testimony.

And having had it presented to it in the form of testimony, the Federal Communications Commission said “No, we conclude that there isn't anything conspiratorial here.

We see nothing improper.

We find no coercion such as might possibly be charged, then we therefore find it to be in the public interest.

And therefore necessarily not a violation of the antitrust law for them to own this particular station and operate it in the City of Philadelphia.”

Now, the -- the fundamental proposition of what we say here Your Honor is, that when the FCC determines that a transaction is in the public interest, meets the standard of public interest which is the primary function which the Congress gave to the Federal Communications Commission.

What is its primary function here?

To license people and to license them, how?

To license them if they meet the public standard.

Now, that is the keystone, that's the keystone of the system and having created the Federal Communications Commission to make that finding, we then come to the question of what does the finding entail?

We think that basically, the public interest must encompass the basic economic policy of the United States, namely the antitrust laws.

And that's what Judge Kirkpatrick found.

He said there's no doubt whatever that in finding this was in the public interest, his language was, if the FCC necessarily decided that the exchange did not involve a violation of the law which declares and implement a basic economic policy of the United States but we go further than that, that would be true if not for Section 313.

But here, in the very Communications Act as the Solicitor General has pointed out, we find Section 313 which appears at page 5 of the brief of the Government which says that, “All laws of the United States relating to one lawful restraints, monopolies, combinations and so on are hereby declared to be applicable to the manufacturer, to the interstate or foreign radio communications.

So we have not only the general law that the antitrust laws would be imported into the determination of public interest, but we have a mandate in the Communications Act from Congress to the Federal Communications Commission that when it decides the things in the public interest, it cannot decide so, if that particular transaction which it is approving would violate the antitrust laws.

Now, I take it that in inevitable corollary in answer to some of the questions of Your Honors is that the Federal Communications Commission cannot license an act or a transaction which itself constitutes a violation of the antitrust laws.

And if it did, then whether with the Department of Justice or a party in interest who isn't protested, that appeal to the Court of Appeals for the District of Columbia, the Court would strike it down as being outside the power of the Federal Communications Commission.

Justice John M. Harlan: Assuming that the Government did file its complaint the day after the FCC issued its order, what will be your position in that sort of circumstances?

Mr. Bernard G. Segal: My position would be that it would be an invalid suit, one that could not be brought because its endeavored to strike down after the -- you say the day after the order?

Justice John M. Harlan: No, I'll make it even more than that from my point.

Supposing that they brought suit before the Commission, after the hearings had concluded but before the Commission had issued its opinion.

Mr. Bernard G. Segal: Oh I have no doubt.

We would have been put to a hearing and we couldn't have objected to it.

No doubt whatever.

If it did after the order, Your Honor, there is a specific provision for a petition for rehearing and the Commission could then have granted a hearing and we would have been put to a full dress proceeding there as to whether this should or shouldn't be granted, subject to appellate review to the District Court, to the Court of Appeals, and certiorari to this Court.

No doubt in my mind whatever.

Chief Justice Earl Warren: Well, if it -- would the Government be entitled to maintain an action in the District Court at that particular time?

Mr. Bernard G. Segal: Oh, if they had brought it in the District Court, Your Honor --

Chief Justice Earl Warren: Yes.

Yes.

Mr. Bernard G. Segal: -- we would have come here and we would have said that Your Honors decisions in the Far East and in Cunard and in the whole line of cases starting with Abilene and Chief Justice White 50 years ago, would require that that suit be set aside and that it'd be tried before the Federal Communications Commission if this had happened before.

Justice John M. Harlan: Well that my question was -- perhaps I misspoke myself was what the Chief Justice has now amended and clarified, I'm talking about an antitrust action brought to the Court by the Government.

Mr. Bernard G. Segal: Well I'm sorry.

I thought you meant before the FCC, then my answer would be that I gave the Chief Justice that under the primary jurisdiction doctrines, this case would have had to go to the Federal Communications Commission and the Court would have said as this Court has many times said before with respect to many regulatory bodies, you go to the Commission and try your case there.

And the Department of Justice couldn't have said, “It isn't our practice to try such cases because at that very time, they would have been engaged in (Inaudible) case before the Interstate Commerce Commission arguing that the dual rate setup was invalid because of violation of the antitrust laws.”

Chief Justice Earl Warren: Would your answer be the same if it was the day after the -- the order of the Commission?

Mr. Bernard G. Segal: If it was the day after the order, it would be the same.

But if it was the day after the last day for appeal, then my answer would be what it is today.

Chief Justice Earl Warren: Well, but will your answer would be the same if it was a day after the order was made as -- as it would be if it was -- the action was filed a day before.

Mr. Bernard G. Segal: Yes, it would be exactly the same.

Exactly the same.

Because Your Honor -- because Mr. --

Chief Justice Earl Warren: Then in those circumstances, does the stipulation in any way weaken the Government's case, does that -- does that take away any further rights that the Government had, that stipulation?

Mr. Bernard G. Segal: Well, what the stipulation demonstrates, Your Honor, is one of the reasons that I say the District Court couldn't entertain a suit because the stipulation makes clear that the Department of Justice would then have a -- had a complete remedy even at that time before the Federal Communications Commission.

It clarifies the right of the --

Chief Justice Earl Warren: It's important but --

Mr. Bernard G. Segal: Or it -- or confirms.

Chief Justice Earl Warren: But it doesn't -- it doesn't give away any rights of any kind, the stipulation itself?

Mr. Bernard G. Segal: Oh, no.

I think if -- I think, Mr. Chief Justice, if by any chance the Department of Justice and we were wrong and they didn't have the rights that the stipulation says they had, the stipulation couldn't give it to them.

Chief Justice Earl Warren: Yes.

Now, let me ask you just one more question along that line.

Suppose the Commission had not notified the Department of Justice and had just gone along and -- and made this order in this case, would your answer to the question of Justice Harlan and -- and me be exactly the same?

Mr. Bernard G. Segal: Well, that isn't our case of course --

Chief Justice Earl Warren: Well, wouldn't you be --

Mr. Bernard G. Segal: -- and it's a more difficult case but my answer would be the same.

My answer would be --

Chief Justice Earl Warren: It would be the same.

Mr. Bernard G. Segal: -- that it was for Congress to prescribe whether -- once the Federal Communications Commission acted and approved the pleadings, the condition is under which anyone else could act to set aside that very transaction with no new facts.

Now, of course if they discovered new facts, they would have had a right to go to the Federal Communications Commission on the usual principles of that, the discovered evidence.

Chief Justice Earl Warren: Well, in other words, the Federal Communications could --

Mr. Bernard G. Segal: Because they had a right of revocation.

Chief Justice Earl Warren: -- on a proceeding of this kind -- on a proceeding of this kind, the Federal Communications Commission could act in the backroom so far as the Department of Justice was concerned and the Justice Department would be debarred from maintaining a suit under the antitrust laws after it had decided.

Mr. Bernard G. Segal: Assuming, Mr. Chief Justice, the facts here that there were no new facts and no new issues and they discovered nothing that the FCC didn't have, I think that's true.

And I may say to Your Honors that it doesn't shock me at all.

This is what Congress said the Federal Communications Commission up to do.

Chief Justice Earl Warren: But that is --

Mr. Bernard G. Segal: It is true that some agencies of Government don't have all the knowledge that some other agencies had in a particular transaction.

Chief Justice Earl Warren: But that's in spite of the fact that this was not an adversary proceeding and that all three of the parties involved in the transfer agreed to the action of the Commission.

You -- you don't think that makes any difference?

Mr. Bernard G. Segal: I suggest to Your Honor it wasn't adversary because there was nothing improper about it.

If --

Chief Justice Earl Warren: That's to be that's -- that's involved, isn't it?

Mr. Bernard G. Segal: No.

I think the question involved here is whether that hasn't been decided, whether we aren't passed the time to decide whether there was anything improper.

The Commission has decided there's nothing improper and I submit to Your Honor, Mr. Chief Justice that the Commission having decided it, no one else can again say that.

That's precisely what I mean in saying that it's not now to be decided whether there was anything improper, the -- the time to have decided that was one that was before the Commission.

And if that's wrong, it's for Congress to change it.

And I may say I doubt whether Congress would ever hold that a finding by the Commission after thorough investigation just because nobody protested.

What it would mean, Your Honor, would be that if the matter were one in which nobody protested and there are plenty of potential or possible protest.

Every other station in Philadelphia could have protested if this were monopolization or if this were improper or if NBC were predatory.

There's not a scintilla predatory practices charged in this case.

Now, if that had happened, then the FCC would have decided if they couldn't grant the permit, the license, Your Honor, they couldn't grant the license if there was a violation of the antitrust laws.

Chief Justice Earl Warren: You -- you don't think there is any distinction between the case of this kind and -- and a comparative proceeding where the issue, antitrust issue is raised before the Commission and decided by it.

Mr. Bernard G. Segal: Oh, it was raised here, Mr. -- Commissioner Doerfer went into at length in his opinion.

Chief Justice Earl Warren: Well, it was not in my --

Mr. Bernard G. Segal: Well, and Your Honor --

Chief Justice Earl Warren: -- by a party, was it?

Mr. Bernard G. Segal: Well, we have a stipulation.

Chief Justice Earl Warren: Was it raised by a party?

Mr. Bernard G. Segal: Well, I don't think that it's very important.

The adverse party there was the Broadcast Bureau, the investigating arm of the Federal Communications Commission.

This is how Congress wanted it.

And -- and we have a stipulation here that every antitrust issue in the complaint was considered by the Federal Communications Commission.

This isn't a case where a new issue has risen or a new fact.

This is to me an ipso facto case.

We can imagine more difficult ones but they're not present in this situation, Mr. Chief Justice.

Now --

Justice Hugo L. Black: Did I -- did I understand you to say, should -- did I understand you to say that if the Government had filed a suit for violating the Antitrust Act, while this was pending, they could not have tried it?

Mr. Bernard G. Segal: Oh, sure, that's Your Honors decision.

That's Your Honors decision in Far East and in Cunard, starting way back in Abilene.

They've got to wait to see what the administrative agency does.

Justice Hugo L. Black: Well, suppose they wanted to try just this antitrust case.

Mr. Bernard G. Segal: The general antitrust case?

Justice Hugo L. Black: Yes.

Mr. Bernard G. Segal: Oh, sure.

That I wanted to come to --

Justice John M. Harlan: But they couldn't -- they couldn't include any allegation about that?

Mr. Bernard G. Segal: Oh, I think they could include allegations about it.

Let me -- let me just say to Your Honor what 313 means because it's been referred to, and that is the provision which gives the Department of Justice the right to go to a court to ask for an injunction or to ask for an order that the license be revoked.

Now, the Solicitor General has said in view of -- in view of that Section 313 and I refer to the provision that Mr. Justice Harlan went into with the Solicitor General, whenever in any antitrust suit a licensee is involved, the Court has the right to -- as one of the penalties, an additional -- additional penalty to ask for revocation.

For that, it seems to me not at all out of line with what is involved in this case.

Suppose for example, the NBC had entered into an agreement with General Motors, that if General Motors would use no other media for advertising, NBC would not permit Ford and Chrysler to use the NBC Philadelphia station.

And suppose the Government brought an antitrust suit not a doubt in the world, it can revoke this license under Section 313.

But in ordering the revocation of the license, it's not doing it.

It's not ordering it on the basis that a transaction which the FCC approved on no new facts was invalid.

There's nothing here which gives NBC an immunity or an exemption from the antitrust laws.

All we have is and all our narrow issue is that once the Commission has approved a specific transaction, the Government can't come along and ask that that transaction be declared null and void and particularly whereas here, it's on the same questions.

But if NBC misuses its license, then the Government can certainly come along and ask for its revocation.

Now, I want to get into --

Justice John M. Harlan: Suppose your --

Mr. Bernard G. Segal: -- Mr. Justice Black's --

Justice John M. Harlan: -- you're stating as broadly enough so that what you're saying here would apply to any administrative commission assuming comparable facts where an antitrust law or an antitrust consideration with the fact here on the administrative determination.

Mr. Bernard G. Segal: Yes.

Justice John M. Harlan: You'll go as far as that?

Mr. Bernard G. Segal: I go as far as saying -- well I -- I -- it's a little difficult, Mr. Justice Harlan but I would say if the facts were the same, yes, the conclusion would be the same.

Justice John M. Harlan: I -- I have put that in my question here.

Justice Hugo L. Black: (Voice Overlap)

Mr. Bernard G. Segal: Now, I'd like to answer Mr. Justice Black.

Justice Hugo L. Black: Well, in connection with that question, you wouldn't say would you that if an action is pending before the Federal Trade Commission, the Court -- the Government would be barred from going into federal court to prosecute, would you?

Mr. Bernard G. Segal: If their purpose was to --

Justice Hugo L. Black: The same.

The same.

Mr. Bernard G. Segal: Undo this transaction?

Justice Hugo L. Black: The same.

Mr. Bernard G. Segal: I'd say no other government agency can undo what --

Justice Hugo L. Black: I'm not talking about undoing, I'm talking about filling at the same time.

Mr. Bernard G. Segal: Well, it would depend what the purpose was, the FCC --

Justice Hugo L. Black: But suppose the FCC -- the Federal Trade Commission was -- they charge them with violating the antitrust action, in fact in a certain way and they file a lawsuit which charge them in violating in the same way with the fact that the proceeding started and the Federal Trade Commission barred the Government from that prosecution.

Mr. Bernard G. Segal: It wouldn't bar the Government from bringing any lawsuit involving NBC in any antitrust violation if the purpose of the lawsuit were not to have declared null and void what the Federal Communications Commission had advertently authorized.

Justice Hugo L. Black: You mean after they've acted?

You -- I had understood you to say that the argument troubled the situation where this suit was merely pending before the agency.

Mr. Bernard G. Segal: No I -- I had said, Mr. Justice Black that in the case of a suit to prevent the granting of this license or to prevent the acquisition of this station by NBC that primary jurisdiction rules would have required that that be sent to the Federal Communications Commission.

The rules of this Court I take it are very clear on that.

Justice Hugo L. Black: Well I -- I'm -- I wasn't thinking -- I had understood you to go on the basis that because it was being tried, that issue was being tried before the agency, the Government couldn't file a suit of its own to violate the Antitrust Act.

Now, I thought we'd --

Mr. Bernard G. Segal: No.

Justice Hugo L. Black: -- gone differently with reference to the Federal Trade Commission.

Mr. Bernard G. Segal: That is correct, where the remedy is not the remedy sought in the communications.

Justice Hugo L. Black: The remedies here are different, I think.

Mr. Bernard G. Segal: Well, the remedies are different then the suit would not be barred.

Now I'd like to address myself, Mr. Justice Black --

Justice Hugo L. Black: Well, when would it --

Mr. Bernard G. Segal: -- the paragraph --

Chief Justice Earl Warren: When would it first be barred then?

Mr. Bernard G. Segal: It would be --

Chief Justice Earl Warren: I -- because I understood you the other way, I -- I understood you --

Mr. Bernard G. Segal: It depends on what they are saying --

Chief Justice Earl Warren: I understood you to say that if this action -- if this proceeding was pending before the Commission, that the Government could not bring an antitrust action against the company for -- for the same kind of conduct.

Mr. Bernard G. Segal: Oh, well the same kind of conduct is too broad, Your Honor.

If the purpose of the suit was as it is here, to force them to divest themselves of this station, the validity of the acquisition of which was before the Federal Communications Commission.

Then the Federal Communications Commission had primary jurisdiction over the Court under the decisions of this Court.

Justice Hugo L. Black: Well, that would just be a partial defense wouldn't it, that the remedy wouldn't be a reason for dismissing the suit.

Mr. Bernard G. Segal: Well --

Justice Hugo L. Black: Would it?

I -- I've missed to ask you that.

Mr. Bernard G. Segal: Well, it's just the same as the dual rate case, Your Honor.

They ask that the dual rate be declared illegal.

And they said, “Oh no, you've got to first have the Interstate Commerce Commission decide whether the dual rate is or isn't illegal.”

Justice Hugo L. Black: You're saying here that this can't be as barred because the remedy is the same but there's just one remedy, there could be other remedies, couldn't it?

Mr. Bernard G. Segal: Well, there are no other remedies asked here except one that I'd like to get to before my time is up because it adverts to a very important question Your Honor asked me.

You asked about paragraph 18 or 19 -- and 19.

Justice Hugo L. Black: Yes.

Mr. Bernard G. Segal: Now, I'd like to talk more about that but I must be brief because I have just a few minutes.

Paragraph 18 and 19 in effect say that there is a conspiracy by NBC now having as -- as from the broadcasting system has.

The -- I said I'm going to answer very briefly, Mr. Justice Black --

Justice Hugo L. Black: I was just talking about --

Chief Justice Earl Warren: Well, Mr. Segal, we -- we've taken a lot of your time.

You may take five minutes more.(Voice Overlap) --

Mr. Bernard G. Segal: Well, I thank Your Honors, that's very gracious.

That will enable me to cover the point a --

Justice Hugo L. Black: Yes.

Mr. Bernard G. Segal: -- little more thoroughly.

Mr. Bernard G. Segal: And Mr. Justice Black asked in paragraphs 18 and 19 where it is charged that there was a combination or conspiracy as a continuing agreement and concert of action.

To do what?

The continuing conspiracy is to obtain VHF Television station ownership in five of the eight primary markets.

Now, we now have them in four.

And therefore, what the Commission says is that there's a continuing conspiracy for us to better the Washington station to see if we can't get in the fifth or sixth or seventh or eighth market instead of Washington.

Well, I leave the question of whether to Washingtonians that would seem to be a desirable change as Commissioner Doerfer says mere sales volume isn't the only consideration.But assuming it were, what could happen?

What could happen if the NBC decided that it wanted to acquire another station, it would have to go to the Federal Communications Commission and file an application.

And when it filed its application, if the Department of Justice thought there was anything predatory about its acquisition, it could do there what it could have done here.

There isn't anything and what relief by the way does the Department of Justice asked for this so-called conspiracy to get another better station than Washington?

They can't have more than five under the Federal Communications Regulations.

So if they give up -- if they acquire one, they got to give up Washington.

Now, suppose that happens, what does the Department say?

The Department wants the United States District Court in spite of this extensive system that has been setup by the Congress for the regulation and licensing of its industry to issue a decree that before NBC could acquire a station in this other city, it must get the authority of the FCC now.

It must get the authority of the United States District Court for the Eastern District of Pennsylvania.

If it wants to get a station in San Francisco, if it wants to get one in Boston or Detroit, which are the cities involved.Does it go to the FCC?

Oh no.

That authority as you said if the Government has its way, it goes to the United States District Court.

And it says to the United States District Court, “Won't you please approve my acquisition in San Francisco?”

Well, I state to Your Honors with full deference that the statement of the remedy which is sought in the complaint is as much of an indictment as a statement of the complaint itself.

This is all part and parcel of what was before the Federal Communications Commission.

The Federal Communications Commission investigation related to whether there was such an attempt by NBC to better its position in two markets.

Whether the Philadelphia acquisition was part of that program and they said, “No, there is no such predatory motive.

There is no such predatory practice and we therefore approve the acquisition of the Philadelphia station.”

And under those circumstances, it seems to me if Your Honors please, that not only is the first purpose of the Department of Justice which is to have the United States District Court strike down as invalid what the FCC has advertently approved with no new evidence, no new facts, no new issues, no new anti-trust issues.

But it's second objective which is to have this Court see it as a kind of super economic tribunal in place of the FCC could decide whether they shall acquire is even more shocking than the first objective.

Justice Hugo L. Black: Where is that prayer?

Mr. Bernard G. Segal: The prayer --

Justice Hugo L. Black: The prayer you're talking about, effective one.

Mr. Bernard G. Segal: Well Your Honor, if you will --

Justice Hugo L. Black: I'm looking at the prayer.

Mr. Bernard G. Segal: If you will just look at page 10 of the brief of the Government Your Honor.

They have in their depositions in their interrogatories enlarged what they mean by other relief.

And it's here on page 10 at the top, the Government's brief, the bottom of page 9 says, “The relief requested was --” and then they have -- that you -- you have it Your Honor?

Justice Hugo L. Black: Yes.

Mr. Bernard G. Segal: “Require NBC to divest, revoke the license met justifully and require judicial approval of any further --” it says, “Acquisitions” but it can't mean that because there can only be one acquisition.

Because both Columbia Broadcasting and NBC have stations in the first, second and third and fourth markets.

So this involves --

Justice John M. Harlan: That's an argument that might be made a little later on if you have the antitrust suit that the pre-court can go against you.

This is just a case of a little over enthusiastic drawing to prepare for a release.

Mr. Bernard G. Segal: Well I think it's over enthusiastic drawing with the complaint if I may suggest it Your Honor.

Now, I want to say to Your Honors on the one point, incidentally, all 313 does is that here's an additional penalty in an ordinary antitrust suit that creates no new right, it creates no new cause of action.

It says that if a broadcasting company is involved, then the Government can impose an additional penalty.

I haven't had much time Your Honors to talk about the equitable considerations.

It seems to me apparent that the strong arm of the Government should not be permitted to be raised with a view to striking down what another branch of the Government has expressly approved than all the more in this case where it has conceded that they had full notice, full opportunity and that there are no new facts, no new issues, no new consideration of any kind.

The answer to the question one of the Justices asked as to whether there are cases where the Government has been held to be accountable to follow the equitable considerations of other litigants is in the affirmative and by the dozens.

When the Government invokes the aide of an equity court, as Justice Holmes or Wells said, “It so forth takes the position of a private suitor, is to be bound by the same rules of equity and equitable consideration as the private suitor.”

I -- I say with full deference to the Department of Justice Your Honors, that one of the great functions of our Courts is to protect the citizens against excesses of Government and the overzealousness of its officials.

And I believe that this Court has held and will hold that this is true not only when the issue is the sacred civil rights of individuals, but I think it's true too where the simplest fundamentals of fair play to corporate enterprise is involved.

I thank Your Honors for the additional time.

Chief Justice Earl Warren: Mr. Solicitor -- Solicitor General, we took a bit of your time too, you may have five minutes.

Argument of Rankin

Mr. Rankin: May it please the Court.

I would like to call attention first to the remarks of Senator Dill on page 29 of the Government's brief.

Senator Dill had charged of this Federal Communications Act when it was passed and he was asked because of the great interest of the Congress in what effect this might have on the antitrust laws, what kind of a function the Federal Communications Commission would have in regard to it.

He was in charge of the bill which is the best kind of legislative history and this is what he said, "There is anything in the bill providing in the case the applicant for a permit is found to be acting in violation of the Sherman Antitrust Law or controls a monopoly that the Commission may pass upon the question.”

Senator Dill replied.

That although the bill provided for denial of a license to anybody proved, “has been convicted under the Sherman Antitrust Law or any other law relating to monopoly."

And that relates to conviction.

It “does not attempt to make the Commission the judge as to whether or not certain conditions constitute a monopoly.

It rather leaves that to the Court.”

Now, this is a blow to the whole enforcement of the antitrust laws of this country if this proceeding is upheld.

And it's found that the District Court was right because the whole concept of Congress here is that the Courts should enforce this laws and Senator Dill told the Congress when he was asked that very question about this bill that it wasn't for them to decide this very question that they're trying to tell you was decided in this case against the Government.

Now, let us turn again in 52 to see what the legislative history was on page 31 in the footnote.

And it's a rather long footnote and I commend it all to you, but I want to call attention to the portion beginning more over about the second full -- the second sentence of the third sentence or the second full -- the first full paragraph.

“Moreover, such an argument is particularly pertinent in connection with alleged violation to the antitrust statutes which are the particular problems of the Department of Justice and do not, by any other law, come within the jurisdiction of any independent quasi-judicial agency of government.

So that the emphasis throughout is placed upon the fact that 313 preserves the antitrust enforcement through the Courts.

Now, this conspiracy, we don't say the conspiracy occurred when the Commission ruled on this license or this application for transfer.

The conspiracy occurred when they made their agreement to use the power of their network to try to make Westinghouse give the station up, that's when it occurred.

And we say that it was broader than this one transaction, they decided to get two stations away from somebody else and they certainly have the right to use their network affiliation to contract with the station, we don't question that.

But they had no right to abuse it and use it to force somebody else to give up the station that they have by reason of the power.

And when they could take and threaten Westinghouse with laws of not only Philadelphia, but Boston and -- and not getting one at Pittsburgh.

You can see what it would mean to any little operator that only had one station and his very economic existence will depend upon.

Justice John M. Harlan: Supposing you had brought a complaint that it simply said that the action of the Commission in authorizing this exchange constituted a monopoly in violation with this Sherman Act, period.

No antecedent conspiracy whatnot.

Could you maintain that action?

Mr. Rankin: I wouldn't claim that we could.

I -- I would say that the action of the Commission is a action under the statute which is based upon the public interest and the statutory concept.

And if there was any action where there was a conspiracy or a contract in restraint of trade that would be the basis and not the licensing.

And I -- I take the position that the Government had the right, properly to ask for divestiture here and also ask a court to restrain these people from carrying out the rest of their conspiracy, not that they couldn't go and get a license.

If the Court said under antitrust principles, that they could go ahead, but the conspiracy was not being continued and that this was part of the fruits of it.

But certainly, in all the antitrust cases in this country, the Court would have the right to pass on the question of whether this particular -- these offenders were entitled to get the fruits of this unlawful act and could say after this, just like in the Paramount case, you come into this Court and show us that you're not trying to use the power of your network to get this next station that you acquired.

Justice John M. Harlan: In other words --

Mr. Rankin: That's what we want.

Justice John M. Harlan: -- you -- you really rely on your allegations that there was an antecedent conspiracy here?

Mr. Rankin: Yes.

We certainly do.

Justice John M. Harlan: Would you?

Mr. Rankin: And we say it's continuing and was continuing all the time and is today.

That was the whole philosophy that they were going to acquire not only one, but two and they were going to use the power of their network to do it.

That's the allegations of the complaint.

Now, I'd like to make it plain here, that what they're seeking is immunity from the antitrust laws and there's no place in this country that anything so important, to the free enterprise of this country and competition should ever be lost except by the act of Congress when they should declare that whether or not there should be immunity and Congress has them.

In the Maritime case, this Court has given great thought and consideration to it and there, there's an expressed provision that if the act isn't unlawful as Judge Branson said, the Maritime Commission can give that immunity but they can't go out and give it if the Congress didn't say so.

And the Congress didn't say so in this case.

And the same is true in the ICC cases where the consolidation, the McLean case.

It specifically provided and that's why the Government came into those cases that Justice Stewart was asking about.

The Maritime cases and the ICC case about consolidation, the Government came in because they lose their right for the people if they don't win and protect.

But in this situation, we don't believe they lose those rights because the Congress has said, “These rights with the public interest must be protected in the courts of this country.”

And we have the right to continue to try to protect it.

And there is nothing to this primary jurisdiction principle in this area because always the primary jurisdiction concept deals with the thought that the body, the administrative body has peculiar expertise.

And if you look back at the ICC cases, in the Abilene case, you will recall that the reason for that was the uniformity that had to be in the rates and if that uniformity was taken away by letting independent suits, it would destroy the whole system.

And the same thing is examined in great deal by this Court in the Maritime cases, in the Far East, in Branson and in Cunard in which the -- this Court went in to the fact that the whole concept was a limitation upon competition that Congress had provided for.

But here, they're trying to impose and get an immunity that Congress expressly provided against time after time in this legislative history and it's the destruction of the antitrust laws and the protection, one of the finest and the most imperative things to preserve in free enterprise in this country.

And I suggest to you that the -- the Court of Appeals or the district examined this question in Mansfield -- Mansfield case.

And they found that where there were antitrust considerations and they found the antitrust considerations were enough to borrow the license.

That there was not -- that the Commissions' function was not to decide the antitrust matter as a matter of violation of the Sherman Act.

And they said so in so many words, because its function was to decide the public interest, convenience, and necessity and the antitrust feature was for the Court.

Justice John M. Harlan: Do you read -- excuse me.

Chief Justice Earl Warren: Go ahead.

Justice John M. Harlan: -- as to what --

Chief Justice Earl Warren: Yes, yes.

Justice John M. Harlan: If you will read the -- these two questions.

If you will read ground three of the District Court's holding as being a alternative ground independently of the two others, that is what we call laches here.

Mr. Rankin: Well, I think you heard of it as been on dependent ground.

Justice John M. Harlan: If you were -- if you were --

Mr. Rankin: Yes.

It seems to strike him that there was -- even if he had jurisdiction as I recall the name, that he could -- he would -- it's not that relief because of the equitable consideration of laches.

Justice John M. Harlan: And the second, my -- my second branch of the question is, I don't read this as being laches, in the conventional sense.

I read this as being considerations that move the Court to deny equitable relief, if you read that line?

Mr. Rankin: Yes.

Justice William O. Douglas: Would your argument mean that private treble damages suits could also be brought?

Mr. Rankin: Because of the decision of the Federal Communications Commission?

Justice William O. Douglas: Because of the --

Mr. Rankin: Conspiracy?

Justice William O. Douglas: Conspiracy, yes.

Mr. Rankin: Yes.

Yes, I think that -- assume that they never asked for a license at any time.

The conspiratorial act was when they made the agreement and when they entered into the contract.

We allege both of them as violations of the Act and those were actionable by independent persons, private persons that deal with the Government.