To prohibit and to prevent the trade practices known as "compulsory block-booking" and "blind selling" of motion-picture films in interstate and foreign commerce (1939)

IQ TRADE PRACTICES IN MOTION-PICTURE INDUSTRY I. THE CONSTITUTIONAL QUESTION: DUE PROCESS OF LAW The substance of the proposed act is contained in its third and fourth sections. Section 3 prohibits compulsory block booking and closes the channels of interstate commerce to any films leased in violation of this prohibition. Section 4 declares it unlawful to lease am^ film, unless the distributor shall furnish the exhibitor "a true and complete sjmopsis of the contents of such film." There is no question under the commerce clause. All parties concerned agree that the leasing of motion pictures constitutes an interstate-commerce transaction and is within the field of congressional regulation,25 provided that the regulation offends no other provision of the Constitution. Consequently, in the present instance, Congress is free from any difficulties such as were present in the enactment of N. I. R. A.26 or the Child' Labor Act.27 The sole question is whether the bill, if enacted, would violate the due-process clause of the fifth amendment. "Due process" is the basis of the objections made against the bill on behalf of the Motion Picture Producers and Distributors of America, Inc., by Mr. Pettijohn, general counsel.28 It is also the point of an objection made by Chief Counsel Kelley of the Federal Trade Commission to the synopsis requirement of section 4 and of a question suggested by him as to the validity of the prohibition against interstate shipment of films leased in violation of section 3.29 As against the foregoing memoranda in opposition to the validity of the bill, other memoranda have been submitted in its favor, one by Assistant Attorney General Stephens 30 and one by Mr. Burr, of the Federal Trade Commission.31 Furthermore, the memorandum by Mr. Kelley (already referred to) holds the bill constitutional except for one section, namely, section 4. 32 II. CONSTITUTIONAL RIGHTS ASSERTED ON BEHALF OF THE MOTION-PICTURE INDUSTRY Two sweeping contentions have been made on behalf of the industry, and the arguments in support of those contentions will be considered at the outset. The first is that the motion-picture producers and distributors "in the absence of any purpose to create or maintain a monopoly have the right to select their own customers and dispose of their film in wholesale lots of two or more at prices which in their judgment are adequate, and also to enter into contracts for the future delivery of such films in advance of either production or delivery." 33 That the bill will interfere with this freedom of contract is manifest. But some interference is necessary in order to bring about the desired protection of the public interest. Even if it be assumed that the interference will be substantial, it by no means follows that it is unconstitutional, for such interference mereh7 raises the question of constitutionality and does not furnish the answer. There is no such unrestricted liberty of contract as that for which Mr. Pettijohn contends. Nor do the cases cited bv him and Mr. Kellev hold that there is. United States v. Colgate Co. (250 U. S. 300, 1919) and Federal Trade Commission v. Raymond Bros.-Clark Co. (263 U. S. 565, 1924), cited by Mr. Pettijohn, and Chicago Board of Trade v. Christie (198 U. S. 236, 1905) and United States v. New York Coffee and Sugar Exchange (263 U. S. 611, 1924), cited by Mr. Kelley,3* merely held that certain trade practices did not come under the ban of any existing statutes. In none of these cases is there any discussion of constitutional questions, or any suggestion that Congress lacks power to restrict the normal freedom of contract when necessary in the public interest. Whatever freedom 25 Binderup v. Pathe Exchange (263 U. S. 291 (1923)). Mr. Pettijohn, at p. 1 of his brief submitted on behalf of the Motion Picture Producers and Distributors of America, Inc.. states: "* * * Admittedly the distributors of motion-picture films whom I represent, are engaged in interstate commerce. This has been repeatedlv decided by the courts and there is and can be no question of this point." 26 Held invalid in Schechter Poultry Co. v. United States (295 U. S. 495 (1935)) because, inter alia, Congress exceeded its delegated powers. 27 Held invalid in Hammer v. Vagenhart (247 IT. S. 251 (1918)) because it invaded the reserved powers of the State. 28 This memorandum attacks the Culkin bills (H. R. 2999 and 4757) and the Celler bill (H. R. 8877) along with the Neely-Pettengill bill, the constitutional problems involved being the same. 2» Hearings, Subcommittee on Motion-Picture Films of the House Committee on Interstate and Foreign Commerce, pp. 86-88. &o Ibid., pp. 83-84. ;i Ibid., 88-94. 32 Mr. Kellev finds sec. 3 (1) and 3 (2) valid, although he expresses some doubt as to the latter [3 (2)]. 53 P. 2 of Mr. Pettijohn 's brief. 34 These cases are the sole basis of Mr. Xelley's conclusion that the synopsis requirement of sec. 4 violates due process.