Columbia Pictures Industries, Inc. v. American Broadcasting Companies, Inc., and Columbia Broadcasting System, Inc. , 501 F.2d 894 ( 1974 )

MOORE, Circuit Judge:

Plaintiffs-appellants¹ appeal from an order of Judge Palmieri denying their motion for a preliminary injunction which sought temporarily to enjoin “the defendant American Broadcasting Companies, Inc. (‘ABC’), during the pen-dency of this case, from exhibiting or offering on the ABC television network any theatrical feature film produced or financed in whole or part or acquired on negative pick-up by ABC or a subsidiary of it . . .

The complaint in this action was filed on September 28, 1970, and in substance alleges a violation by d^udants of federal antitrust laws (Sherman Act, 15 U. S.C. §§ 1-3). Appellees interposed an answer, defenses and counterclaims. Under date of July 3, 1973, plaintiffs by motion sought the preliminary injunction. During this almost three-year period, extensive discovery has taken place and on at least one occasion appellants sought the aid of the court to restrain defendants from exhibiting their films.² The long period of “big case” preparation appears to be drawing to a close because even as of July 3, 1973, discovery was proceeding “apace” and could “be expected to be expeditiously completed.” (A120.)

Voluminous affidavits have been submitted in support of, and in opposition to, the motion. In addition, letters, documents, interdepartmental correspondence, financial statements, etc., form part of the record consisting of some 999 pages before Judge Palmieri. One of the affidavits supporting the motion alleged that ABC “has advised us [presumably the plaintiffs] of its plans to show four of its own films on its own television network in the forthcoming television season [1973-74] and indicates that more will follow.” The four films are “Lovers and Other Strangers,” ³ “For Love of Ivy,” “Charly” and “Krakatoa/East of Java.”⁴

Against the background of a highly-concentrated industry,⁵ appellants’ underlying assertion is that ABC, by exhibiting its own-produced films over its own network is violating the federal antitrust laws by “self-dealing.” ⁶ The exhibition by ABC of its own films it is argued, eliminates its need to buy appellants’ films, thus depriving appellants of a principal market for feature films. They also inject a “public interest” argument which, viewed in one light, is as much to say that they believe the public has more of a right to view their films than those of ABC; in any event, the public’s interest in “ ‘the widest possible dissemination from diverse and antagonistic sources,’ ” Mt. Mansfield Television, Inc. v. FCC, 442 F.2d 470, 478 (2d Cir. 1971), quoting Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), is, we do not have to be reminded, of the greatest importance. Cf. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969).

Despite appellants’ expressed fears that over the years ahead ABC may show a large number of self-produced films, although apparently with 39 it has stopped production, at this time and for purposes of this decision we will consider only the four films which ABC has indicated it would show during the 1973-74 season. To be sure, both parties have argued the case otherwise— ABC as if it were now free to show any of its feature films, appellants as if ABC were about to show them all. It is also true that the district court’s denial of the temporary injunction is not by its terms limited to those four films. The injunction was sought, however, only when ABC scheduled those four. The district court opinion appears to us premised on the proposition that only those four are sought to be shown before the case proceeds to trial on the merits.'⁷ It refers to “the four feature films in question.” ⁸ Its discussion of irreparable harm is based upon the exhibition of only these four films.⁹ Thus, while for strategic reasons ABC would like to treat the denial of a temporary injunction as a carte blanche, and appellants apparently for similar reasons would like to have us treat the ease here and now on the merits, we see no reason to do so. The trial may be under way by the autumn of 1974 and, if not, the trial judge will be available to consider such further relief as may be warranted.¹⁰ Thus our affirmance of the denial of preliminary relief by the district court is only to the extent of permitting the other three films to be shown, though by virtue of the date of entry of this decision it is immaterial to us whether they are shown in the 1973-74 or the 1974-75 season.

The standard factors which this court now considers upon an application for a preliminary injunction are well known: (1) clear likelihood of success on the law and the facts then available and possible irreparable injury, or (2) sufficiently serious questions on the merits making them fair ground for litigation and a balance of the equities tipping decidedly in favor of preliminary relief. Sonesta International Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973); Gulf & Western Industries, Inc. v. Great Atlantic & Pacific Tea Co., 476 F.2d 687, 692-693 (2d Cir. 1973). The district judge’s careful opinion read as a whole demonstrates that he gave full consideration to all of the factors involved in the light of the facts available to him, and, while another judge might have arrived at a different result, we cannot say that this result constitutes an abuse of the wide discretion normally accorded a district court on the issue of preliminary relief. Stark v. New York Stock Exchange, 466 F.2d 743, 744 (2d Cir. 1972).

Here it is sufficient to say, without in any way indicating our views on the merits, that there are “substantial, serious, difficult and doubtful” questions so “as to make them a fair ground for litigation and thus for more deliberate investigation.” Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1953). As we have said, plaintiffs assert that ABC’s entry into production of feature films and its exhibition on its own network, in light of ABC’s own position in the television industry, would violate antitrust laws. ABC responds that its course of action was and is merely vertical integration by internal expansion which is not per se illegal and which could under certain circumstances be pro-competitive.”¹¹ Legality, ABC argues, depends upon purpose or intent, as to which the trial court found that “(1) the defendants have apparently acted without any intent to injure the plaintiffs, [and] (2) they appear to have acted against the background of a product shortage and rapidly escalating prices for the licensing of film product for television production.” The trial court found, and we agree with it, that there are “vast and intricate problems of fact and law . . . which cannot be fairly resolved short of . .a trial ff

On this basis, it would be impossible for either party to make out a clear showing of probable success on the merits, thus eliminating the basis for a grant of a preliminary injunction under the more traditional test of clear showing of probable success plus a showing of irreparable injury. This finding, however, certainly satisfies the first prong of our more recently articulated test for injunctive relief — that prong being the presence of complex legal and factual issues.

Appellants argue that the district court never actually “balanced the equities” after finding that appellants had met the first prong of the applicable test. We disagree. It appears to us that the district court, in balancing the “equities,” first gave thorough consideration to the type of damage appellants claimed that they would suffer were preliminary injunctive relied to be denied. The district court concluded that appellants “failed to make a persuasive showing that they are in hanger of immediate irreparable injury if this temporary relief is not granted.” This conclusion was based on the following two findings:

1. “[T]he injury feared by plaintiffs is represented only in small part by the four films which ABC proposes to exhibit,” and “The essence of plaintiffs’ claim of injury at this point clearly is not the showing of four movies by ABC, but plaintiffs’ prognostications as to subsequent practices by ABC . . .,” “as to the basis of [which] predictions” plaintiffs have offered “no persuasive evidence.”

2. Neither prospective difficulty in computing damages nor the fact that computations will be based on the effects of foreclosed competition necessarily preclude such computations; the damages alleged “are susceptible to monetary computation.”

Appellants dispute each of these findings, as follows. They argue that for every feature film that is shown a valuable network spot is foreclosed, thereby not only making it harder to sell films to ABC for television licensing, but delaying the flow of revenues from the licenses already purchased from appellants by the network. But we are talking, as the district court was talking, about only four films; as to these ABC is on notice, concededly and from the district court’s opinion, that it may be liable in treble damages. We refuse, as we say, to treat this case as if ABC were showing a substantial number of films before the trial on the merits; it will be open to appellants to seek a temporary injunction anew if ABC goes beyond these four.¹² Moreover, all seven appellants operated more profitably than ABC in 1972. And, while damages may be difficult to compute, they are provable by inference from the acts and their tendency to injure, as well as from evidence of business, prices, profits and values, Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264-265, 66 S.Ct. 574, 90 L.Ed. 652 (1946), as to which on the issue of causality ABC if found liable would appear to have the burden of proof. Klinger v. Baltimore & Ohio Railroad Co., 432 F.2d 506, 516 (2d Cir. 1970).

Having thus found that there had been no showing by appellants of harm of either “great” or “irreparable” dimensions, the district court turned to consideration of other factors relevant to a balancing of the equities in this case. That court referred to three matters as follows:

1. The plaintiffs did not seek injunc-tive relief until almost three years after the litigation began;

2. Plaintiffs are to some extent in pari delicto as some of them have engaged in “block-booking,” i.e., requiring ABC to license feature films in groups which include low quality films;

3. Institution of litigation by the Justice Department against the networks together with continuous regulation by the FCC, takes the ground from under appellants’ argument that they are the vindicators of the “public interest” ; indeed, the public’s interest is transcendent of and more complex than, not eo-extensive with, the appellants’ own interests.

The district court concluded that “the equitable considerations militate against” the grant of preliminary in-junctive relief. We agree.

Apparently on oral argument for a stay pending appeal the trial judge qualified his finding of laches by saying “I don’t charge you with laches but with the unhurried pursuit of the remedy,” and appellants argue that they moved promptly on July 3, 1973, as soon as ABC announced its planned showing of the four films on April 6, 1973. In weighing the equities, however, it certainly was proper for the trial court to take into account that the action itself was not instituted until three years after appellants learned of ABC’s making of films and that the motion for injunc-tive relief was not made until three years after the action was begun.

Appellant United Artists argues that it was not involved in block-booking, and all appellants claim that ABC plans to use films of its own of low quality.¹³ But these are issues for trial and the trial court was certainly justified in considering that appellants were not as pure as Pauline in their peril. It is true that the in pari delicto doctrine is not a defense on the merits, Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 138-140, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968), but the practice of block-booking certainly can be taken into account in determining the equities as a prelude to ruling on a preliminary injunction, at least where a clear showing of “public interest” has not been made out. See Heldman v. United States Lawn Tennis Association, 354 F.Supp. 1241, 1249 (S.D.N.Y. 1973).¹⁴ Appellants assert that “The preservation of competition is the fundamental public interest underlying the antitrust laws.” (Appellants’ Brief at 34.) But here the question is whether it is in the public interest to condemn in advance of trial.

Appellants are fearful that ABC’s alleged monopoly over the air waves will give ABC a monopoly over the ideas broadcast. Presumably appellants would by means of judicial assistance substitute their ideas for those of ABC. However, it is too premature (and scarcely feasible, if material) at this stage to determine whether ABC or plaintiffs gives the public better, “social, political, esthetic, moral, and other ideas and experiences . . . .” Red Lion Broadcasting Co. v. FCC, 395 U.S. at 390, 89 S.Ct. at 1807. As in many cases, one detects less concern with the public’s interest than with appellants’ financial interests.

Of no small importance in reviewing Judge Palmieri’s denial of a preliminary injunction is the fact that under the individual calendar system he will be the judge who will preside over the trial. His present judgment as to issues of fact and law still unresolved should be entitled to the greatest consideration. In his opinion, “[T]he essence of plaintiffs’ claim of injury at this point clearly is not the showing of four movies by ABC, but plaintiffs’ prognostications as to subsequent practices by ABC, and CBS against whom plaintiffs do not seek a preliminary injunction.” When, and if, these “subsequent” practices become threatened realities, application can be made for such relief as the circumstances may warrant. For the moment we are concerned only with the threatened showing of the four films previously mentioned. This threat Judge Palmieri has found to be insufficient to warrant the granting of a preliminary injunction. In our opinion his exercise of discretion in denying the motion and the order entered thereon should be affirmed, without prejudice to renewal in the event ABC plans any further showing of its own films before trial.

Affirmed.

1 . Plaintiffs/appellants are a number of major independent film producers and distributors, from whom ABC has purchased prime-time programming amounting in 1969-73 to some $288.9 million, or over 50 per cent of its total dollar expenditures for such programming. CBS is a codefendant but participated in this appeal only as ami-cus curiae since, because it had not indicated any intent to exhibit on its network telecasts any films it had made, it was not sought to be enjoined.

2 . “Whatever Happened to Aunt Alice” was scheduled for showing on October 29, 1972, and shown despite appellants’ objection and Judge Palmieri’s warning ABC that it was proceeding at its peril.

3 . “Lovers and Other Strangers” was shown after the preliminary injunction was denied. Another panel of this court refused to stay that showing scheduled for the evening of February 11, 1974, the day the stay argument was heard, but did stay the showing of the other three films pending this appeal.

4 . ABC has a library of 39 theatrical feature films which it has produced. CBS’s library is 34.

5 . Mt. Mansfield Television, Inc. v. FCC, 442 F.2d 470 (2d Cir. 1971), upheld the FCC’s “prime time access,” “financial interest” and “syndication” rules, 47 C.F.R. §§ 73.658(j) & (k), seeking to “provide opportunity — now lacking in television' — for the competitive development of alternate sources of television programs . . . ."Id. at 479 n. 29. Appellants argue here that ABC’s power as a network will enable it to use its theatrical feature films as leverage as well as to support their products, thus resulting in illegal restraints of trade and monopolization.

6 . The United States on April 14, 1972, sued all three national television networks in the Central District of California, Civil Nos. 72-819, -820, -821. NBC does not produce feature films or television programming. Both ABC and CBS own licenses to operate key television stations in five of the larger local markets.

7 . The urgency asserted by plaintiffs as a ground for injunctive relief is based upon ABC’s announced intention to exhibit four of these films on its television network before this case can proceed to trial and specifically in January and February of 1974.

8 . Contrary to the contentions of plaintiffs, the Court is not persuaded that ABC, in proposing to exhibit the four feature films in question, has deliberately embarked upon a policy of selecting inferior programming to its own financial advantage and to the prejudice of plaintiffs.

9 . Plaintiffs allege that they will be irreparably injured if ABC is not enjoined from executing its plan to exhibit four motion pictures that it has produced.

However, it appears from the papers that the injury feared by plaintiffs is represented only in small part by the four films which ABC proposes to exhibit.

Plaintiffs argue that if ABC is permitted to exhibit the four pictures in question the floodgates will be cast open and ABC may be expected to escalate the exhibition of its own films to the full extent that such films are available to it.

Plaintiffs also argue that the result of allowing ABC to proceed with its plan to show these four movies will be to effectively preempt the possibility of adequate relief in the future.

10 . AYe do not think that Judge Palmieri intended to let ABC show any film at all without restriction pending trial.

11 . The circumstances here are a claimed “product shortage” resulting from prior utilization of the major producers’ libraries coupled with the manufacture of fewer films by them (162 in 1966 as opposed to 333 in 1956) while the television consumption of films has been increasing (and is now about 150 per year). There is some indication in the discovery documents that the “majors” foresaw this as early as 1965 and at least by 1967. As with other shortages to which the public has become accustomed, prices have gone up; production costs have risen but there are indications that the average price per feature film license has increased from $100,000 in 1961 to $800,000 in 1967.

12 . The challenged four films would occupy eight hours of prime time programming, less than 14 of 1 per cent of the 3,276 hours of prime time available to the three networks

13 . It gives one pause for thought to follow the suggestion of appellants that ABC rates its films on the basis of their anticipated “audience share” so that an “A” rating means a film that will command “audience shares” of 33 or better. We have been unable to fathom whether there are other criteria for film quality rating but this too will doubtless be a subject for further exploration at the trial.

14 . The sale of films to television networks by block-booking has been held to violate the Sherman Act. E. g., Fields Productions, Inc. v. United Artists Corp., 318 F.Supp. 87, 88 (S.D.N.Y. 1969), aff’d, 432 F.2d 1010 (2d Cir. 1970), cert. denied, 401 U.S. 949, 91 S.Ct. 932, 28 L.Ed.2d 232 (1971).