Harrison's Reports (1946)

Entered as second-class matter January 4, 1921, at the post office at New York, New York, under the act of March 3, 1879. Harrison's Reports Yearly Subscription Rates: 1270 AVENUE OF THE AMERICAS Published Weekly by United States $15.00 (Formerly Sixth Avenue) Harrison's Reports, Inc., U. S. Insular Possessions. 16.50 „. v I, 9f» N V Publisher Canada 16.50 INew IorK zu» n' 1 • P. S. HARRISON, Editor Mexico, Cuba, Spain 16.50 A Motion Picture Reviewing Service Great Britain 15.75 Devoted Chiefly to the Interests of the Exhibitors Established July 1, 1919 Australia, New Zealand, India, Europe, Asia .... 17.50 Itg Editorial Poljcy: No Problem Too Big for Its Editorial circle 7-4622 35c a Copy Columns, if It is to Benefit the Exhibitor. A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXVIII SATURDAY, OCTOBER 26, 1946 No. 43 A Legal Analysis of the Statutory Court's Decision — No. 12 By George S. Ryan (4) Arbitration In its amended supplemental complaint, the Government requested, according to the decision of the Court — ". . . That a nationwide system of impartial arbitration tribunals, or such other means of enforcement as the court may deem proper, be established in order to secure adequate enforcement of whatever general and nationwide prohibitions of illegal practices may be contained in the decree." Such a prayer is unusual. Ordinarily a court cannot deprive a person, without his consent, of his constitutional right to trial by jury of controverted issues in a court of competent jurisdiction. The Expediting Court recognized this established principle of law, when, after commenting upon the right of the parties to apply for modification of the Consent Decree, they said : . . It would seem to follow that we cannot bind any parties to subject themselves to the arbitration system or the board of appeals set up in aid of it without their consent, even though we may regard it as desirable that such a system, in view of its demonstrated usefulness, should be continued in aid of the decree which we propose to direct." Subsequently in the opinion and in the order for decree regarding arbitration, the court again recognized the necessity of consent by the parties. The order contained in the decision provides for arbitration in the following language: . . The decree shall also provide for arbitration of disputes as to bids, clearances, runs, and any other subjects appropriate for arbitration in respect to all parties who may consent to the creation of such tribunals for adjustment of such disputes. It shall also provide for an appeal board generally similar to the one created by the consent decree as to any parties consenting thereto. It shall make such disposition of the provisions of the existing consent decree signed November 30, 1940, as may be necessary in view of the foregoing opinion." From the foregoing it will be observed that arbitration tribunals may be established only as a result of negotiation and agreement between the Government and the defendants, under the supervision and with the approval of the court. The order for a decree and the other language in the decision relating to arbitration give only a general outline of its scope and of the procedure by which it may be put into effect. These subjects are worthy of the most serious consideration, not only by the parties directly affected by the decree, but also by everyone connected with the industry. Before discussing them, however, the writer proposes to give a brief outline of the history of other arbitration tribunals in the industry. The subject will therefore be considered under the following general headings: (a) History of Arbitration. (b) Administration of Arbitration Tribunals. (c) Scope of Arbitration. (a) History of Arbitration In the motion picture industry there have been three kinds of tribunals by which disputes have been arbitrated or otherwise determined without resort to litigation. The first of these tribunals was established in or about 1928 in the various exchange centers of the United States, in accordance with the provisions of the Standard Exhibition Contract. In paragraph 18 of that contract the distributor and exhibitor agreed to submit to a board of arbitration all claims arising under the contract, and to abide by and comply with any award rendered. They stipulated that any such award should be enforcible in any court of competent jurisdiction. They waived the right of trial by jury of any issue arising under the contract. They also agreed that, if the exhibitor failed to consent to submit any claim or controversy to arbitration under the contract, or under any other contract with the distributor or any other distributor, or to abide by and comply with the award, the distributor might demand for its protection, and as security for the performance of all existing contracts, payment of five hundred dollars by the exhibitor under each existing contract, to be applied on its contracts and on any sums due by the exhibitor. In the event the exhibitor failed to pay this sum within seven days, the distributor might suspend service under its contract. Under the rules of arbitration specified in this form of contract, the board of arbitration consisted of six persons, three of whom were members of the local Film Board of Trade — in other words, the distributors' representatives — and three of whom were owners or managers of theatres and were appointed by the local exhibitors' association. In a number of districts, at least, exhibitors filed com' paratively few complaints under this compulsory arbitration procedure, and, not infrequently, they refused even to put in an appearance to answer the demands of the distributors. Apparently one of the chief functions of the board was to secure payment for films under contract, whether or not they had actually been delivered, and to force exhibitors to give dates for undesirable pictures. Perhaps the most objectionable feature, however, was the enforcement of the rules that, upon the refusal of an exhibitor to submit a controversy to arbitration or to comply with an award, he should make an excessive deposit with each distributor for each contract, and that, upon his failure to do so, he should be denied product by all the distributor members of the Film Boards of Trade. Obviously, when confronted by such a boycott, the exhibitor either complied with the distributors' demands or went out of business. By means of these "kangaroo courts," as they were called by exhibitors, the Constitutional guaranty of jury trial was effectively nullified. The Government challenged the arbitration provision in the Standard Exhibition Contract, as well as the rules of arbitration and the boards constituted in accordance therewith; and in 1929 the United States District Court for the Southern District of New York decreed that the adoption and use of the arbitration provision constituted a combination and conspiracy in restraint of interstate trade and commerce." The Supreme Court subsequently affirmed the decree.74 The next important effort to secure the adjudication of controversies without resort to litigation in the established courts of the land was by means of the Code of Fair Competition of the Motion Picture Industry, under the National Industrial Recovery Act." The Code provided for the establishment and maintenance of "Grievance Boards" for the (Continued on lust page)