Motion Picture Herald (Mar-Apr 1945)

RIAL AGAIN, COME AUTUMN, N DECREE SUIT, PROBABLY Hober 8 "On Merits" Is Court Order in Action Pending Since 1938 Vhen autumn comes again and the sycajpes in front of the U. S. court house in New -k's Foley Square are shedding leaf by leaf, t Decree case will be going to trial again, bably. It has been pending since 1938. "he date now set is October 8 — for "trial on merits." •leanwhile the Government's demand for ;emporary injunction against "unreasone clearance" awaits a reserved judgment. This time the accent promises to be on orcement of Exhibition from Production;tribution. vVhether this move to October trial is to »ve in fact litigation or another implement negotiation between the Department of Just and the defendant companies will have to determined by developments. The first time that the suit in equity, No. 273, entitled "United States of America sus Paramount Pictures, Inc., et al, defentits" went to trial it ran three days and was ourned while the famed Consent Decree was jotiated. That was in June, 1940, and the -cree was signed in November. ■ be Years of Huddles; vgotiations Now Off From that time on under a sequence of assists to the Attorney General, including Thurin Arnold, Tom C. Clark and now Wendell rge and Robert L. Wright, there have been nferences, negotiations, and conversations out the suit and the Decree. At the moment gotiations are off and the issue goes to court. The consent process was defined as im>ssible by Mr. Wright in court Monday, marking ". . . it was only an experiment." It was all settled and set down last Monday Drning when the defendants and the Departpit of Justice met before firm and grey Judge enry W. Goddard in United States court, ack robed and sitting as stern as an ancient Dman in that oak panelled room which has •ard so much about the intricate concerns of ovieland. The gathering was all official, conting of attorneys and their entourages of sociates, assistants, law clerks and sundry ce assistants. For all its meaning to the reen, there was no fan attendant, no curious ectators. There was however one of the best splays of brief cases ever presented in Foley quare. right's Injunction Quest hen Is Considered There was before the court Mr. Wright's :quest for a trial date on his August 7 petition >r modification of the Consent Decree, resultig in setting it for October 8. Then the conderations moved on to Mr. Wright's quest, reviously filed, for a temporary injunction gainst what he termed "unreasonable clearnee. Judge Goddard set March 26 for a pre-trial Dnference. On that date the Department's rief in reply to the companies' brief defending current clearance practices will be due. The companies filed their document with Judge Goddard Tuesday. Affidavits on the working of the arbitration system were handed up by company counsel, but their use in disposing of the Department's motion was conditioned on Judge Goddard's receiving the Appeal Board decisions in evidence. The October 8 trial date was set by Judge Goddard early in the hearing after Mr. Wright characterized the preliminary relief as a "small aspect" of the case and asked for a day in September to begin the trial, which was "most important." The Government ultimately seeks theatre divorcement, dissolution of affiliated circuits and other radical Decree changes. Says Date in October Will Be Satisfactory to Companies Judge Goddard said that the month of October would be better in view of his vacation schedule. Whitney North Seymour, of Simpson, Thacher and Bartlett, New York law firm representing Paramount, told the court that the date fixed was satisfactory to the companies. Mr. Wright then began his address to Judge Goddard to explain the Department's theory of its motion. The necessity for changes in current clearance practices was his chief topic. Visibly unsympathetic with some of Mr. Wright's contentions, Judge Goddard interrupted several times to question the attorney. Judge Goddard: "What is unreasonable clearance ?" Mr*. Wright: "Unreasonable clearance is clearance which unreasonably restrains competition. The fundamental mistake is that the burden is on the exhibitor to show the restraint is unreasonable." Judge Goddard: "Are all clearances unreasonable ?" Mr. Wright: "No — all are direct restraints unless they can be affirmatively shown to unreasonably restrain competition." Not Any Clearer, Despite Government's Teaching Mr. Wright consumed the first half-hour of the hearing, which began at 10:30 A.M., with his explanation of the Government's position with regard to clearance. At 12:25 P.M. John W. Davis, representing Loew's, told the court, "I know less about the Government's case than when I came in." After Mr. Wright's initial address, Mr. Seymour, for the defendants, objected to receiving the Appeal Board decisions in evidence as proof of anti-trust violations. When asked whether the Department offered the decisions against the non-consenting defendants, too, Mr. Wright answered that they were offered "for whatever they may be worth for all the defendants." Shortly thereafter, Joseph M. Proskauer, representing Warner Bros., began a strong attack on the Department's position. The former New York Supreme Court Justice, often plaintively, sometimes puckishly, with many a reference to "my friend" (Mr. Wright), went down the line in defense of clearance practices under the Decree. Mr. Proskauer questioned the right of the Government to ask for such "drastic relief" as a temporary injunction, pointing out that "here we have a final decree," and that in it the Government agreed that clearance was essential. The anti-trust division, said Mr. Proskauer, not being "Santa Claus," agreed to the decree's clearance provisions because "they had to agree under the law." Stressing that the charges of price fixing were not applicable to the defendants, Mr. Proskauer contended strongly that they were "not selling merchandise, but licensing pictures." Also, Mr. Proskauer defended the arbitration system by saying that "never in my experience have I seen a better body of decisions." "Decree Working Perfectly," Warner Attorney Contends There was no evidence of violations of the Sherman Act, Mr. Proskauer continued. "The Decree is working perfectly," he said, without elaborating. Mr. Seymour followed Mr. Proskauer with argument that the arbitration provisions of the decree were still in effect, that the decree was final and that the only way to change it was by modification, not by injunction. John Caskey, of Dwight, Harris, Koegel and Caskey, attorney for Twentieth Century-Fox, began his address by reviewing the origin of Section VIII of the decree dealing with clearance. He pointed out that the case of U. S. v. Interstate, cited by the Department in support of its motion, had been decided by the Supreme Court before the decree was entered. Mr. Caskey also emphasized that there had been no offer of proof that economic conditions had changed since the decree's entry, and that "the Government must show cogent proof of" emergency." He added, "The Appeal Board decisions have the admiration of everyone who studies them." The "Little Three" were represented by Louis Frohlich, attorney for Columbia, and Edward C. Raftery, president and general counsel of United Artists, for UA and Universal. Mr. Frohlich said Columbia had never been a party to the decree, and that the company should not be bound by the Appeal Board decisions since it had not been involved in the arbitration system. Mr. Raftery made substantially the same objections, pointing out that United Artists had more than 200,000 licenses involving clearance. Goddard Defends Need of Some Clearance Thereafter, Judge Goddard said: "My impression is that a decision of the Appeal Board is not proof of a violation of the Sherman Act. Clearance must exist. It cannot be applied like a yardstick in all cases, but each case must be decided on the individual merits. I think that perhaps some of the American Arbitration Association provisions might be improved. I'm not ready to rule now, however, for if I do, I will rule against you, Mr. Wright." Mr. Wright previously charged that the arbitration provisions "effectively insulate the defendants from contempt." Mr. Proskauer met his attack head on, declaring the system was "worth $1,500,000 to the companies." Asked by Judge Goddard what the Government proposed to substitute for current practices, Mr. Wright answered that it would sub (Continued on following page, column 1) MOTION PICTURE HERALD, MARCH 10, 1945 33