Motion Picture Herald (Mar-Apr 1947)

DECREE OR NOT DECREE? THAT IS THE QUESTION Legal Arguments on What Should Be Stayed Delay Signing of Court Order by RAY LANNING The industry was operating in a limbo this week with no decree to guide it. A stay order which will postpone for the eight defendant companies all provisions of the New York District Court's decree affecting distribution, including competitive bidding, but excluding the prohibition of franchises, and which will stay the District Court's order to dissolve the Decree arbitration system, was agreed to Wednesday by company counsel and sent to Robert L. Wright, Government counsel. The joint stay order was to be presented for signature to Supreme Court Justice Stanley Reed Friday morning at 10:30. Last Friday, March 28, during a Washington hearing, the Justice had informed counsel that he would sign such an order. Agreement Reached Over Protest of 20th-Fox Agreement was reached over the silent protest of 20th Century-Fox, which did not send its legal representative to Wednesday's New York meeting. However, since Justice Reed had said he wanted a single order representing all companies, the order reads as applying to all defendants. But in a covering letter with the stay order the seven companies in agreement made clear to the Justice that they were not representing 20th-Fox. That company, whose counsel, John Caskey, argued against the stays during the Washington hearings, is apparently free to protest its inclusion in the stay order. When counsel for that company failed to appear ' at Wednesday's meeting in the New York office of Davis, Polk, Wardwell, Sunderland and Kiendl, counsel for Loew's. a call was put through to the home office and information given that the meeting was in process, but still no brief case delegate put in an appearance. The show went on. Displeased with the New York Decree, the eight defendants had gone to Washington March 28 and after three hours of fast talking had been told by Justice Reed he would sign a stay order on all those provisions of the decree requested. Counsel Told To Draw Single Stay Order The lawyers were instructed to get together and decide on the wording of a single stay order embracing the requests of all eight companies. According to one of the lawyers, that order, but for trains some counsel had to catch, could have been written Friday in Washington. The Justice's signature could have been appended, the stay, made law, and the April 1 deadline met. Yet on April 2, one day after the distribution portions of the decree, with the exception of competitive bidding, were to go into effect, the company lawyers were still meeting in New York, still arguing over what was to be put into the stay order and what was to be kept out. Decree Would Have Been Effective on April 1 Technically, the Decree should have been enforced April 1. The stay order was not law. Even though the Justice had decided for a stay, he had signed no order. The entire industry, as if it were the victim of some ingenious April Fool's joke, was suspended in mid-air waiting for the lawyers, who had talked them into that uncomfortable position, to talk them down to earth again. Columbia, Universal and United Artists were in agreement among themselves on the form the stay should take; the five major distributors were not — notably Twentieth Century-Fox. The stay, in effect, puts the distribution end of the industry right back where it was in 1938 before the Department of Justice filed its anti-trust suit in July of that year. No stay was requested of the Decree's provisions affecting pools, leases, or theatre acquisition. Perhaps most confused by the last minute arguments of the lawyers were the company sales chiefs, who did not know what they were going to do about the stay on competitive bidding, which was to have gone into effect on July 1. During the Washington meeting only Paramount, alone among the five majors, asked at first for a sta}' of competitive bidding. Later, when it became apparent that Justice Reed would grant the competitive bidding stay requested by UA, Universal and Columbia, Loew's and Warners asked that competitive bidding stays also be granted their companies. RKO counsel was noncommittal on the issue; 20th-Fox opposed it. Bidding Stay Can Apply To All Defendants However, the bidding stay can apply to all defendants. Metro-Goldwyn-Mayer, RKO and 20th-Fox have conducted numerous bidding experiments recently: others, tentative experiments. Under the promised stay order, these experiments may be continued or discontinued. The distribution injunctions, in addition to bidding, to be stayed by the Supreme Court are those which would have prohibited the distributors after April 1 : 1. From granting any license in which minimum admissions to a theatre are fixed. (Thus road shows will be permitted until the Supreme Court hears the appeal.) 2. From agreeing with each other or with any exhibitors or distributors to maintain a system of clearances. 3. From granting any clearance between theatres not in substantial competition. 4. From granting or enforcing any clearance against theatres in substantial competition with the theatre receiving the license for exhibition in excess of what is reasonably necessary to protect the licensee. 5. From making or furthering any formula deal or master agreement to which it is a party. 6. From performing or entering into any license in which the right to exhibit one feature is conditioned upon the licensee's taking one or more other features. 7. From arbitrarily refusing the demand of an exhibitor to license a feature to him for exhibition on a run selected by the exhibitor, instead of licensing it to another exhibitor for exhibition in his competing theatre on such run. (Lawyers for the five majors were arguing at mid-week whether they should place this provision of the Decree in their stay order.) Additionally, the provision placing the burden of proving the legality of clearance upon the distributor is stayed. All of these provisions were to become effective April 1. After the stay order is signed they can be ignored until the Supreme Court hears the appeals from the Decree— and the hearings may not begin until a year from now. Appeal Date Depends on Printing of Documents The exact date on which the appeal will be heard by the high court depends on how many of the records will have to be printed for the Supreme Court. Any record that an}' defendant wishes to submit has to be printed. The consent decree arbitration system, which was to have been dissolved April 1 except for those tribunals considering cases, was given a new lease on life when Justice Reed informed counsel for the defendants that a stay would be granted on the New York Court order stating: "The provisions of the existing Consent Decree are hereby declared tf> be of no further force or effect, except insofar as may be necessary to conclude arbitration proceedings now pending and to liquidate in an orderly manner the financial obligations of the defendants and the American Arbitration Association, incurred in the {Continued on page 16, column 1) MOTION PICTURE HERALD, APRIL 5, 1947 13