The Court ruled 7-1 in the government's favor, affirming much of the consent decree (Justice Robert H. Jackson took no part in the proceedings). William O. Douglas delivered the Court's opinion, with Felix Frankfurter dissenting in part, arguing the Court should have left all of the decree intact but its arbitration provisions.
Douglas[edit]
Douglas's opinion reiterated the facts and history of the case and reviewed the District Court's opinion, agreeing that its conclusion was "incontestable".[5] He considered five different trade practices addressed by the consent decree:
Clearances and runs, under which movies were scheduled so they would only be showing at particular theatres at any given time, to avoid competing with another theater's showing;
Pooling agreements, the joint ownership of theaters by two nominally competitive studios;
Formula deals, master agreements, and franchises: arrangements by which an exhibitor or distributor allocated profits among theaters that had shown a particular film, and awarded exclusive rights to independent theatres, sometimes without competitive bidding;
Block booking, the studios' practice of requiring theaters to take an entire slate of its films, sometimes without even seeing them, sometimes before the films had even been produced ("blind bidding"), and
Discrimination against smaller, independent theaters in favor of larger chains.
Douglas let stand the District Court's sevenfold test for when a clearance agreement was a restraint of trade, as he agreed they had a legitimate purpose.[6] Pooling agreements and joint ownership, he agreed, were "bald efforts to substitute monopoly for competition ... Clearer restraints of trade we cannot imagine."[7] He allowed, however, that courts could consider how an interest in an exhibitor was acquired and sent some other issues back to the District Court for further inquiry and resolution.[8] He set aside the lower court findings on franchises so that they might be reconsidered from the perspective of allowing competitive bidding.[9] On the block booking question, he rejected the studios' argument that it was necessary to profit from their copyrights: "The copyright law, like the patent statutes, makes reward to the owner a secondary consideration".[10] The prohibitions on discrimination he let stand entirely.
Frankfurter[edit]
Frankfurter took exception to the extent to which his brethren had agreed with the studios that the District Court had not adequately explored the underlying facts in affirming the consent decree. He pointed to another recent Court decision, International Salt Co. v. United States (332 U.S. 392 (1947)) that lower courts are the proper place for such findings of fact, to be deferred to by higher courts.[11] Also, he reminded the Court that the District Court had spent fifteen months considering the case and reviewed almost 4,000 pages of documentary evidence.[12] "I cannot bring myself to conclude that the product of such a painstaking process of adjudication as to a decree appropriate for such a complicated situation as this record discloses was an abuse of discretion", he said.[12] He would have modified the District Court decision only to permit the use of arbitration to resolve disputes.[13]
Consequences[edit]
