Appendix — Hustler Magazine, Inc. v. Eastman Kodak Co.
Supreme Court brief1983
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SUPREME COURT OF THE UNITED STATES
October Term, 1982
HUSTLER MAGAZINE, INC.,
a corporation, and
CHIC MAGAZINE, INC.,
a corporation,
Petitioners,
vs.
EASTMAN KODAK COMPANY,
a corporation,
Respondent.
WRIT OF CERTIORARI
To The United States Court Of Appeals
For The Ninth Circuit
APPENDIX A TO
PETITION FOR WRIT OF CERTIORARI
RICHARD D. AGAY
COOPER, EPSTEIN & HUREWITZ
A Professional Corporation
9465 Wilshire Blvd., Suite 800
Beverly Hills, California 90212
(213) 278-1111
Attorneys for Petitioners
TABLE OF CONTENTS
ORDER
ORDER
JUDGMENT
ORDER GRANTING MOTION TO DISMISS
AS TO COUNT ONE AND GRANTING
PARTIAL SUMMARY JUDGMENT, SUMMARY
JUDGMENT AS TO COUNTS TWO, THREE
AND FOUR
REPORTER'S TRANSCRIPT OF
PROCEEDINGS
CONSTITUTIONAL PROVISIONS AND
STATUTES
6.1. AMENDMENT I
6.2. AMENDMENT XIV
6.3. TITLE 18, §1461
6.4. TITLE 18, §1462
6.5. TITLE 18, §1465
6.6. TITLE 28, §2201
6.7. TITLE 42, §1983
6.8. CALIFORNIA PENAL CODE,
§311.2
APPELLANTS' BRIEF
APPELLEE'S BRIEF
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT tur
t
HUSTLER MAGAZINE, Inc., a corporation ) Nos. 80-5861/6077
and CHIC MAGAZINE, Inc., a corporation, ; D.C.# CV 80-561-IH
Plaintiffs-Appellants, ) ORDER
)
Vv. )
) RECEIVED
EASTMAN KODAK COMPANY, a corporation, ) .
) 2) 1982
Defendant-Appellee. » coorta, cpatein s nunswnta
) AP. Cs
Appeal from the United States District Court
for the Central District of California
Irving Hill, Districc Judge, Presiding
Argued and submitted September 10, 1982
Before: WRIGHT, TANG, and SCHROEDER, Circuit Judges.
We affirm the grant of summary judgment for the
reasons announced by the district court.
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IN THE UNITED STATES COURT OF APPEALAny 15 j929
) 1982
FOR THE NINTH CIRCUIT
Nos. 80-5861/6077
HUSTLER MAGAZINE, Inc., a corporation )
and CHIC MAGAZINE, Inc., a corporation, ) D.C.# CV 80-561-IH
) ORDER
Plaintiffs-Appellants, )
)
Vv. )
)
EASTMAN KODAK COMPANY, a corporation, ) RECEIVED
) NOV 17 1982
Defendant-Appellee. )
) coorEr. + 1 muRewils
Before: WRIGHT, TANG, and SCHROEDER, Circuit Judges.
A majority of the panel as constituted above has
voted to deny the petition for rehearing and to reject the
suggestion for rehearing en banc.
The full court has been advised of the suggestion
for rehearing en banc, and no judge of the court has
Tequested a vote on the suggestion for rehearing en banc.
Fed. R. App. P. 35(b).
The petition for rehearing is denied and the
suggestion for rehearing en banc is rejected.
i am Pi
/
JOHN R. McDONOUGH Kew dIVED
J. STEVEN GREENFELD in 1980 FILED
BALL, HUNT, HART, BROWN AND BAERWITZ
450 North Roxbury Drive, Suite SOQ emmy 4 ang
Beverly Hills, California 90210 - & Wey
ee SITS LODGED afte wnaitcl O@ tates
‘
Attorneys for Defendant OT véruly
“Ep 28 1980
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UNITED STATES DISTRICT COURT oe ;
Cit U = rae me. 6}
CENTRAL DISTRICT OF CALIFORNIA ceiiieth Lists CF Get
BY ys
HUSTLER MAGAZINE, INC., a CIVIL ACTION NO. 80 00561 IH
corporation, and CHIC
MAGAZINE, INC., a corporation,
JUDGMENT
Plaintiffs,
EASTMAN KODAK COMPANY, a
corporation,
)
)
)
)
)
)
vs. )
)
)
)
)
Defendant. )
)
There came before the Court for hearing on September 22,
1980, a motion by Defendant filed June 30, 1980, denominated as a
motion for summary judgment. The Court announced that the motion
would be considered in some respects as a motion to dismiss and in
other respects as a summary judgment motion. Appearances were:
for Defendant-moving party, Ball, Hunt, Hart, Brown and Baerwitz by
John R. McDonough, Esq. and J. Steven Greenfeld, Esq. For
Plaintiffs-respondents, Cooper, Epstein & Hurewitz by Richard
Agay, Esq.
4/
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The Court having heard argument and having considered
the evidence, Points and Authorities and other documents filed
in support of said motion and in opposition thereto, on
September 29, 1980 made its "Order Granting Motion to Dismiss as
to Count Cne and Granting Partial Judgment, Summary Judgment, as
to Counts Two, Three and Four." In said Order, the Court (1)
granted Defendant's motion, as a motion to dismiss, with respect
to Count 1 of the complaint and gave Plaintiffs until October 2,
1980 to file an amended complaint stating in separate counts the
causes of action under §1 and §2 of the Sherman Act, with detailed
allegations of harm and (2) granted Defendant's motion for
summary judgment as to Counts 2, 3 and 4 of the complaint.
Plaintiffs did not file an amended complaint by October 2, 1980
nor have they filed such a complaint to the date of this judgment.
In light of the foregoing, it is hereby ORDERED, ADJUDGED
AND DECREED as follows:
1. Count 1 of the complaint is hereby dismissed, with
prejudice, and Plaintiffs Hustler Magazine, Inc. and Chic
Magazine, Inc. shall take nothing thereby against Defendant
Eastman Kodak Company.
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2. Plaintiffs Hustler Magazine, Inc. and Chic Magazine,
Inc. shall take nothing and Defendant Eastman Kodak Company is
hereby granted judgment against Plaintiffs in respect of
Counts 2, 3 and 4 of the complaint.
3. Each side shall bear its own costs.
[VeVonne
DATED: 6ctobewr/4 , 1980
rq) FILL
TRVING HILL, Judge
United States District Court
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SEP 3 1980 2/7 CALFCEA
CLERK, US wait: COURT
CENTRAL DISIRIC] OF CAQtORN A
BY otPulY
RECEIVED
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UNITED STATES DISTRICT COURT
coormtR. ay me mumtwls
CENTRAL DISTRICT OF CALIFORNIA —
NO. CV 80-561-IH
ORDER GRANTING MOTION TO DISMISS
AS TO COUNT ONE AND GRANTING
PARTIAL JUDGMENT, SUMMARY JUDGMENT,
= TO COUNTS TWO, THREE AND
UR
HUSTLER MAGAZINE, INC.,
a corporetion, et al,
Plaintiff,
Vv.
EASTMAN KODAK COMPANY,
a corporation,
Defendant.
There came before the Court for hearing on September
22, 1980, a motion by Defendant filed June 30, 1980, denominated
as a motion for summary judgment. The Court announced
that the motion would be considered in some respects as
a motion to dismiss and in other respects as a summary
judgment motion. Appearances were: for Defendant-moving
party, Ball, Hunt, Hart, Brown and Baerwitz by John R.
McDonough, Esq. For Plaintiffs-respondents, Cooper, Epstein
& Hurewitz by Alan Isaacman, Esq.
The Court having heard argument and having considered
the evidence, Points and Authorities and other documents
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filed in support of said motion and in opposition thereto,
ORDERS, ADJUDGES AND DECREES AS FOLLOWS:
1. As to Count 1, which incorporates causes
of accion under Sections 1 and 2 of the Sherman Act, the
motion is granted as a motion to dismiss. Plaintiffs are
given until October 2, 1980, to file an amended complaint
stating in separate counts the causes of action under Section
1 and Section 2 of the Sherman Act with detailed allegations
of harn.
2. As to the second and third causes of action,
Defendant's motion is granted. The Court finds that there
is no bona fide dispute of material fact and that Defendant
is entitled to judgment as a matter of law. As to the
second and third causes of action, Plaintiffs Hustler Magazine,
Inc. and Chic Magazine, Inc. shall taking nothing by their
action and Defendant Eastman Kodak Company shall have judgment
against Plaintiffs.
3. As to Count four, Defendant's motion is granted.
The Court find’ that there is no bona fide dispute of material
fact and that Defendant is entitled to judgment as a matter
of law. As to the fourth cause of action, Plaintiffs Hustler
Magazine, Inc. and Chic Magazine, Inc. shall taking nothing
by their action and Defendant Eastman Kodak Company shall
have judgment against Plaintiffs.
4. The Court's further findings of fact and
conclusions of law and a statement of its reasons are contained
in a transcript of the proceedings in open court on September
22, 1980, which transcript is ORDERED filed upon its
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preparation. In the event of any appeal as to any of the
matters decided on September 22, 1980, the appellant shall
furnish a copy of said transcript as a part of the record
to the Court of Appeal.
5. AS to any summary judgment granted herein,
each side shall bear its own costs.
6. The Clerk shall transmit a copy of this Order
by United States mail to counsel for both sides.
DATED: September Zz , 1980.
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IRVING HILL, Judge
United States District Court
/
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CASE NUMBER
CV 80-561-1H
ustler Magazine PLAINTIFF(S)
vs
plireeeiiand NOTICE OF ENTRY
DEFENDANT (S)
TO THE ASOVE NAMED PARTIES AND TO THEIR ATTORNEY(S) OF RECORD:
You are hereby notified that Order granting motion to dismiss :
to count one and granting partial judgement ,summarv judgment,as to
counts two,three and tour
in the above entitled case was entered in
the docket on 9-30-80
You are also notified that if this case was tried and you introduced
exhibits into evidence, they must be claimed at this office after the expiration
of thirty days from the receipt of this notice. (After sixty days in cases in
which the United States, its officers or agencies were parties) Unless they
are claimed within thirty days after the expiration of the above period, they
will be destroyed pursuant to Local Rule 20(a). If an appeal is taken they will,
of course, be held until the Appellate Court finally determines the matter.
Exnibits which are attached to a pleading will not Se destroyed but will remain
as a permanent record in the case file.
(over)
Civ 26 ( 10/78 NOTICE OF ENTRY
b-4
CERTIFICATE OF MAILING
I, Edward M. Kritzman, Clerk, United States District Court,
Central District of California, and not a party to the within action, hereby
certify that on 9-30-80 , I served a true
copy of this notice of entry on the parties in the within action by depositing
true copies thereof, enclosed in sealed envelopes, in the United States Mail
in the United States Post Office mail box at Los Angeles, California, addressed
as follows:
Ball,Hunt Hart & Brown
450 N.Roxbury Dr.
Beverly Hills,Calif. 90210
Cooper,Epstein & Hurewitz
9465 Wilshire Blvd.
Beveriy Hills,Calif, 90212
EDWARD M. KRITZ4AN, CLERK
Summer 4. Leary
By
oe ae :
NOTICE es LeU y
IN ACTIONS ARISDWG UNDER THE ECONOMIC
STABILIZATION ACT, THE EVERGENCY y
PETROLELM ALLOCATION ACT, AND THE
ENERGY POLICY AND CONSERVATION ACT,
NOTICES OF APPEAL TAKEN FROM THIS
JUDGYENT MUST 3E FILED IN THE
TEMPCRARY EMERGENCY COURT OF APPEALS
TN ACCORDANCE WITH THE RULES OF
PROCEDURE OF THAT COURT.
Ci7 26 (10/78)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
HONORABLE IRVING HILL, CHIEF JUDGE PRESIDING
HUSTLER MAGAZINE, INC., et al.,
Plaintiffs,
Vv.
EASTMAN KODAK COMPANY,
Defendant.
ee eee ee eee eee
REPORTER'S TRANSCRIPT
COPY
Cv 80-561-IH
OF PROCEEDINGS
Los Angeles, California
Monday, September 22, 1980
XAVIER MIRELES, CSR
Federal Court Reporter
419 U.S. Courthouse
312 North Spring Street
Los Angeles, California
90012
Appearances:
For the Plaintiff Hustler:
COOPER, ESPTEIN & HUREWITZ
BY: RICHARD D. AGAY
VICTOR VITLIN
9465 Wilshire Boulevard, 800
Beverly Hills, California 90212
For the Defendant:
BALL, HUNT, HART, BROWN & BAERWITZ
BY: JOHN R. McDONOUGH
J. STEVEN GREENFELD
450 North Roxbury Drive
Beverly Hills, California 90210
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LOS ANGELES, CALIFORNIA; MONDAY, SEPTEMBER 22, 1980; 3:00 P.M.
THE COURT: Good afternoon, gentlemen.
Call the case, Mr. Clerk, but let me get my calendar
in shape here first.
Go ahead.
THE CLERK: Item 8, CV 80-0561-IH: Hustler Magazine,
Inc., et al., v. Eastman Kodak Company.
Counsel, announce your appearances, for the plaintiff
fisst.
MR. AGAY: Richard D. Agay and Victor Vitlin,
of Cooper, Epstein & Hurewitz.
THE COURT: Which of you gentlemen will handle
the argument?
MR. AGAY: I will, Mr. Agay, your Honor.
THE COURT: All right.
MR. MCDONOUGH: John R. McDonough and Steven
Greenfeld for the defendant Eastman Kodak Company.
THE COURT: Are you going to handle it, Mr. McDonough?
- MR. MCDONOUGH: Yes, I will, your Honor.
THE COURT: Okay. In this case, plaintiffs are
publishers of two national magazines, Hustler ane Chic.
They sue defendant Eastman Kodak under the antitrust laws
and various Civil Rights and constitutional provisions of law.
They allege Eastman refuses to process anc deliver
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color film which the magazines have given to Eastman for pro-
cessing and delivery.
Somewhere in the papers, a little is made that the
film is owned by the magazines who give the film to photo-
graphers; and I don't know whether these photographers
are employees or independent contractors. The photographers
take the pictures, and the photographers go to Eastman for
development of the film and apparently printing the film,
and give Eastman Kodak the film under their own names,
meaning the photographer's name; is that right, Mr. Agay?
MR. AGAY: Yes, your Honor.
Although there are also instances where the film
is given to Kodak under the company name. I don't think
any of these particular films were given under the company
name.
THE COURT: And those photographers are, in your
view, what? employees? or independent contractors?
MR. AGAY: They would be independent contractors,
but the film as we alleged remains ours at all times.
THE COURT: Okay. The motion before me filed June
30 is denominated as a Motion for Summary Judgment.
In some aspects where facts are not involved, it
could have been brought anc denominated as well as a motion
to dismiss. It might be that in my discussion of the
various aspects of the motion, some aspects will be treated
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as a motion to dismiss; and I will try to delineate such
aspects as I get to them; but there is no doubt that in many
aspects, this is a true summary judgment motion; so I want to
follow my normal practice of listing the evidence to make sure
I have not overlooked any.
The evidence for the defendant moving party is as
follows: We have an affidavit from Mr. McClasky; a declarati:,
of Mr. Fisher in Eastman Kodak Customer Service; an affi-
Gavit of Mr. Allenger; an affidavit of Mr. Shock; a declaration
of Mr. Stephenson.
Defendants have filed copies of plaintiffs'
magazines, at least one copy of each.
We have a group of affidavits from some of the
defendants’ laboratory managers saying that they can't find
any film belonging to Hustler or Chic that has been retained
by Eastman.
On this small subject, there may well be a conflict
of material fact because the magazines -- the plaintiff says
that film belonging to the magazines has been retained by
Eastman, and Eastman responds by saying that they cannot
find the film under the photographers’ names.
So I think we have a conflict of fact, but that
conflict is irrelevant to the issues that are raised by this
notion.
I am going to assume for the purpose of all issues
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that are discussed and decided today that defendant Eastman,
as alleged, has retained and refused to deliver the processec
version of the films that plaintiff has left them, with
Eastman, for developing, and has refused tS return even the
negatives.
Now, let me check with you, Mr. McDonough, have
you listed all the evidence?
MR. MCDONOUGH: Yes, I have, your Honor. |
And we accept that assumption that the film belongs
to them.
THE COURT: Very good.
Now, for the plaintiffs respondents, I have the
following evidence: A declaration of the Vice-President,
Mr. Faer, F-a-e-r; and an affidavit of Mr. DiMarco, one of
the photographers.
MR. AGAY: Excuse me, your Honor. He was not one
of the photographers. He was Production Chief, I believe
it was.
THE COURT: He is not a photographer?
MR. AGAY: No. He is a former employee.
THE COURT: Former what? production chief?
MR. AGAY: May I look at his affidavit?
THE COURT: Sure. I don't mind.
I thought I had it right.
MR. AGAY: I'm sorry.
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THE COURT: He says, "I worked as an Assistant
Photographer.”
MR. AGAY: That was during this period; then it
says, "Thereafter, I went to work for Hustler Magazine,”
and I don't know exactly what his title was.
I think there is an affidavit by the plaintiffs
which attributes a title to him.
THE COURT: Well, if you look at the first paragraph,
you will see what threw me off.
MR. AGAY: Yes. It is ill-organized.
THE COURT: He doesn't tell who he worked as an
Assistant Photographer for.
MR. AGAY: Right.
THE COURT: Do you think he did not work for
Hustler as an Assistant Photographer?
MR. AGAY: I know he didn't. I am just trying to
figure out exactly what his title was, but I know that it
wasn’t an Assistant Photographer.
THE COURT: All right. Let's not characterize it
by title.
Continuing: After DiMarco, we have a declaraticn
of Mr. Elia, who was the Photo Director.
We have a declaration of Mr. Clatt, C-l-a-t-t,
another photogracher; declaration of Mr. Baes, another
photographer.
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Is that all the evidence, Mr. Agay?
MR. AGAY: Yes, your Honor.
THE COURT: All right. Now, before I get to this,
I note that there is now going con in state court an action
between the same parties; and I gather that means it is
brought by both magazines, Hustler and Chic, to get their
negatives and/or developed pictures back.
The action is in the nature of conversion and
replevin.
I know the number of the case. You furnished that
to me. It is LASC case No. C 313377. I do not know the
title of that case. I assume that it was filed before the
federal court case was filed. |
Can you straighten me out on those matters?
MR. AGAY: As to the title, it would be identical
except there would be some DOES aéded to the defendant list.
THE COURT: So it's Hustler Magazine and Chic
Magazine v. Eastman?
MR. AGAY: Right.
And as to the date of the filing, I don't have that
with me, but I would susvect that it was filed about the
very same day.
THE COURT: Very well. All right.
I note that action because it seems to me that
it will necessarily involve many of the contract issues
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involved in this federal case and may set up a collateral
estoppel or res judicata bar.
All of this is principally stated. I now want
to return to what I believe are the problems that are posed
by this motion.
I think the motion poses problems that break down
into four subdivisions; and the first is the Sherman Act,
Section 1. That is included in the First Cause of Action,
although the First Cause of Action is broader than the Sherman
one alone.
The second problem is the Sherman Act, Section 2,
which is always part of the First Cause of Acticn.
The third problem is the question of the Stete
action as involved in Causes of Action 2 and 3; and the
fourth problem is the declaratory judgment prayer set up as
a separate Cause of Action in Cause of Action No. 4.
Those are the subdivisions as they appear to me.
I will discuss them separately, hear argument on each after
I have indicated my tentative decision.
Let's go right to Sherman, Section 1.
Section 1 of the Sherman Act makes unlawful any
contract, combination, or conspiracy in restraint of trace.
So far as I can see, this case involves no combina-
tion and no conspiracy. None can be alleged, and none has
been alleged; so we are left with the question of contract.
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In a minute, I am going to ask you, Mr. Agay,
to outline the nature of the alleged contract; but before I
do, I want to say one thing on a different subject.
The defendant has contended that there can be no
Section 1 liability unless there is what defendant calls a
multiplicity of actors on the defense side of the case.
I think the defendant relies here on some language
in the Supreme Court that was, when it was uttered, less than
careful on the part of the court, and that the court is
against this contention.
I believe a single actor can violate Section 1.
There has to be a contract between actor and the plaintiff or
someone else of which the plaintiff can take advantage, but
there is no requirement under Section 1, as I understand the
law, for a multiplicity of actors.
Mr. Agay, come up now, if you don't mind, and
describe to me the essentials of the contract that you think
exists between plaintiffs and Eastman that give you an access
to Section 1 of Sherman.
MR. AGAY: I don't believe there is a contract
between the plaintiffs and Eastman Kodak that gives rise to
a Section 1 claim. The contracts to which we refer are contracts
that Eastman Kodak makes with others.
We are not sure of exactly who all of those others are
THE COURT: What others?
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MR. AGAY: Developers. Other developers, competitors.
THE COURT: You mean other people who give them
film to develop?
MR. AGAY: No. No. No. Other laboratories who
are working under license agreements granted by Kodak.
THE COURT: Oh, you lost me. I don't see any sign
of that in the Complaint. Is that in there?
MR. AGAY: I was trying to find the exact portion,
your Honor. I am not certain that it is well pleaded.
THE COURT: I may have missed this. This comes
to me, not only as a startling thing, but also almost shocking.
Let me turn to the Complaint, and let's see if
there is ever an intimation of that in here.
Hold on. Hold on.
All right. The Complaint was filed February 13.
I have it.
Pirst Cause of Action is Sherman I. Where is that?
MR. AGAY: I may have been overly restrictive.
There is a contract conceivably -- never mind. I am sorry,
your Honor.
I don't think -- I confess, I don't believe the
Complaint is well pleaded for that particular element.
I think that --
THE COURT: If I gave you the opportunity to repleac
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MR. AGAY: Your Honor, if I could just --
THE COURT: Hold on one second.
Describe the contract you would rely upon, and how
it violates Section 1 of Sherman, and the way it gives you
rights.
MR. AGAY: The contract or contracts between defercart
and competing laboratories by virtue of which they obtain
chemicals and/or licensing of equipment upon which Kodak has
a patent restricts our ability -- that is, plaintiffs’ ability
-- to obtain quality pictures.
THE COURT: Well, I know that under Section 2 of
Sherman you contené that Eastman has uniquely the best service
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so that you are deprived of that service. You ought to make
that a separate market. We will get to that.
Let me have this other again, the contract.
MR. AGAY: We have not, of course, conducted any
discovery, but we believe that each one of these competitors
operates to the extent --
THE COURT: Now, “competitors” are people who also
Gevelop color film for she public; is that right?
MR. AGAY: Pight.
THE COURT: Go ahead.
MR. AGAY: They operate to the extent they develop
Kodachrome color film through the patents and licenses of
the patent -- granted the licenses that is granted by fodak.
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THE COURT: Just Kodachrome? not Ektachrome?
MR. AGAY: It doesn't make any difference what
but Kodachrome is the only film that we are involved with
that case.
Those contracts we believe are contracts that w
violative of Section l. It is to those contracts that w
refer.
I should say: Those are the contracts that we
would refer.
THE COURT: These are contracts with other phot
finishing laboratories that somehow that restricts them i
some fashion?
MR. AGAY: | Yes, your Honor.
THE COURT: To what effect does that restrict t!
What happens? How do you get to the Complaint about that
MR. AGAY: The effect is that we are unable to
pictures developed by others of equal or acceptable quali
THE COURT: That is the same monopolization cha
that you made under Section 2, isn't it?
MR. AGAY: Right. The damage is the same. The
charge is different.
THE COURT: We are going to take a brief recess
(Brief recess.)
THE COURT: Mr. McDonough, would you come to th
podium.
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MR. MCDONOUGH: Yes, sir, your Honor.
THE COURT: Were you as surprised as I at the
dimensions of the Sherman 1 claim, or did you understand
that was the Sherman 1 claim?
MR. MCDONOUGH: No. I have to confess that I was
equally surprised, your Honor; and it seems to me that counsel
has really acknowledged that we both should have been surprise.
He has said that it was not well pleaded. As I understand
him, he said that, given the opportunity, he would allege
the existence of some agreements which he says may exist
between Kodak and some other laboratories. He doesn't
apparently have a shred of evidence in his hands or in his
possession that any such agreements do exist. He hasn't,
apparently, made any investigation or asked anybody whether
tney do exist; and what I think he is asking this court to
let him do is this: To allege that they do exist and engac
in a large program of discovery to see if he can turn up
out of our files or somebody else's some such agreement, and
I don't believe that it was anywhere signaled in his Complaint
as originally filed so that it is --
THE COURT: That is a problem that neither side
addresses in its briefing.
The Ninth Circuit, my bosses, are reasonably liberal
in stating that even though certain theories of action are
net even hinted at in the Complaint, before you grant judgment,
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you have to give some opportunity for amendment.
Now, whether that would apply to a case like this,
I don't know. We have here a mixup in one Cause of Action,
Section 1 of Sherman and Section 2 of Sherman, and the only
language about denying competing laboratories access to
anything is in the paragraph that deals with Section 2 of
the Sherman Act with the monopolization paragraphs.
Now, counsel has conceded -- first, the court
has ruied there is no combination and what?
MR. MCDONOUGH: Conspiracy, your Honor.
THE COURT: Conspiracy.
Counsel has conceded that there is no contract upon
which he relies on between the defendant onl plaintiffs.
MR. AGAY: There is no contract, but there is an
agreement which I believe amounts to the same thing.
THE COURT: An "attempted contract” is a word --
that is a group of words I never heard about.
MR. AGAY: It is sométhing which the defendants
claim to be a contract; to wit, the, quote, Exhibit A; their
exhibit in which they set forth the conditions under which
they will accept film.
THE COURT: You have to be specific, and you just
can't keep backing and filling in a situation like this.
Do you allege a contract between either/or both
plaintiffs and Eastman, or not?
h- 24
1 MR. AGAY: No. We believe that that contract was
never entered into, but they have told us that they would
3 not deal except under those terms.
4 I think that that amounts to the same thing for the
5 purposes of Section l.
6 THE COURT: Let me find out if there is any contract.
7 Have you got any case that says that a contract,
& || which is a word of art -=- you all know what it means.
9 You learned it in the first semester of law school, whether
10 it be an offer and acceptance, or an unilateral contract;
11 without a contract, what makes you think you have a Section l
12 || claim?
!
| ; :
13 MR. AGAY: I don't have it at my fingertips, but I
14 believe what the case says is that you don't need a plurality
al of actors. It involved cases where an attempt was made to
|
16 || impose certain conditions upon the plaintiff, who rejectec
|
i , ,
17 || those conditions; and the claim was that this was the contract.
18 THE COURT: Let's hear what those are. Cite them.
19 || Discuss them with me.
20 MR. AGAY: I believe Parke Davis was one of those
21 which was cited in our brief, I believe. If you would give
22 || me a second to find the pages.
23 THE COURT: Is Parke Davis a Section 1 case?
24 MR. AGAY: I believe so, your Honor.
25 THE COURT: But does it go off on this question?
A- AS
18
MR. MCDONOUGH: In those cases, your Honor,
2 there was an allegation that Parke Davis contracted with
3 some of its customers to restrict competition in the business.
4 THE COURT: Those others could complain of that?
5 MR. MCDONOUGH: Yes, that one was damaged by the
6 contractual arrangements between Parke Davis.
7 Those, as I recall it, were re same-price-maintenance
8 agreements or agreements to divide up territory, or whatever;
9 but there were existing contracts between Parke Davis and the
10 other principal plaintiffs in those cases -- or principal
11 defendants -- and some people to make certain arrangements
12 to restrict competition in a market; and the person or the
13 plaintiff was complaining of the fact that those contracts
{
14 || had been made. |
15 | THE COURT: Let's assure -- and I want to tell
16 | you both -- that based on the allegations of the complaint,
17 I am preparec to grant the motion finding no dispute of |
18 |} material fact -- that is, as to Section 1, Sherman -- no |
19 |} dispute of material fact and entitled to judgment as a matter |
20 |i} of law. |
21 Now, I know of no authority that says that a
22 summary judgment motion cannot be addressed to the Complaint
23 || as pleaded; and when the other sice does not seek a continuance
24 for further discovery nor did it seek an opportunity to amend
25 || the Complaint until the hearing of the Motion for Summary
A- 26
19
Judgment, that the court cannot go forward and grant summary
judgment; and that is what I propose to do. I think we will
go forward.
I want the record to be cuite clear that there
was no request for a continuance of this summary judgment
motion herein for the purpose of discovery or any other
purpose on the part of the plaintiffs.
Now, excuse me a second. Let me get my paners
in order, and we will go forward.
MR. AGAY: Your Honor, may I -=-
THE COURT: Hold on, please. I have to get my
papers in order.
: I have a trial going, and I have a benchful of
papers from that and another benchful of papers from other
matters today; so you will have to stay with me.
Here are the papers in the 20th Century matter,
Mr. Clerk. Let’s get them cleared out of here.
The clerk is going to check in chambers. I think
I left my notes there.
One drowns in a sea of papers.
Among the reasons that I would grant the summary
judgment ane find the defencant entitled thereto as a matter
of law as to Sherman I is that as pleaded, the arrangement
complained of in terms of the photofinishers market is not
anticompetitive. It is, in fact, procompetitive because,
A- 27
as pleaded, we find the defendant staying out of this part
of the business and thus benefiting every one of its potential
competitors who is willing to develop this type of picture.
It is procompetitive.
Moreover and as a separate reason, we have here
in my view a proper application of rule of law enunciated
some 60 years ago by the Supreme Court in U.S. v. Colgate.
That rule of law, to be sure, has been limited in its factual
application in the intervening 60 years, but the Supreme Court
continues to cite it with approval where the facts are
appropriate; and the rule of law is this: That a business
person, a trader, or manufacturer in private business is
free to exercise an independent discretion as to the eartion
with whom he will deal, announcing in advance the circumstances
under which he will refuse to sell. That is a paraphrase of
the languase from U.S. v. Colgate and has been cited many
times with approval since that case was decided.
It appears to me also that if by any chance under
Sherman 1 there is any restraint of trace involved, it
certainly looks to me like a reasonable one.
Now, I want to press on to Sherman, Section 2.
Sherman 2 outlaws monopolies in interstate commerce,
conspiracies to monopolize, and attempts to monopolize.
As plaintiff agrees, there can be no conspiracy
in this case in view of the single defendant.
A-38
esl
1 Plaintiff does allege an attempt to monopolize and an actual
2 monopoly.
3 Plaintiff says that Kodak's photofinishing service
4 in the development and printing of still photography on colored
5 film is so much superior to all others that it should be
5 deemed to constitute a market in and of itself. On that,
7 I think there is probably a dispute of material fact in the
8 evidence. Whether this is a market and a market in and of
9 itself involves factual matters; and there is a dispute in
10 the declarations that I have.
1] If there is a separate market on on part of Kodak,
12 it is a monopoly thereof of Kodak. That monopoly may turn
13 out to be either illeesl cx beaien. ond that gets us back
14 to the question of the predatory aspects, if any, in the
15 history of that monopoly by which it was created or is
16 attempted to be created.
17 || I have to tell you that although under the briefs
18 both sides seem to assume that one developer out of hundreds
19 or thousands of photo labs, one developer may constitute a
20 market in and of itself if its product is greatly superior;
21 so I have accepted that assumption, but I sure want you to
22 try to marshal some further authority on it if the issue
23 comes up again.
24 I know a little bit about photography as an amateur
25 photographer and about developing, and I know and it would
fe - 14
ocmUlUC NnmlUCOUW
24
25
not be difficult to take judicial notice of the fact that
hundreds of custom finishing labs exist in the various
cities of this country who are prepared to and do solicit the
developing and printing of colored film; and those labs and
many of them, (A), charge more money than Kodak, a lot more;
and, (B), they sell their services as being vastly superior
to Kodak's; and I am therefore a little bit skeptical about
this legal claim that this is a separate market so superior
that it must be regarded as a market in and of itself. Those
are factual matters.
Our Circuit in the Industrial Building case notes
the claim made by one of the parties that one person's
procuct -- in our case, it's one person's services -- can be
so distinctively better as to constitute a market all by
itself; and that the Circuit, in noting that claim, expressed a
lot of doubt about it, but they did say that there should be an
opportunity to show it factually; and I think for that reason
that I would decline any summary judgment at this point on
Sherman 2.
The case I have in mind -- I don't know if you
cited it -- is Industrial Building Materials v. Interchemical
Corp., 437 F.2d 1336.
It’s black-letter law, gentlemen, that even if
there is a monopoly or an attempt to monopolize in a market,
it is not redressable under Section 2 unless the monopoly
4-30
was achieved by predatory methods or the attempt is being
made by predatory methods and with a predatory intent.
MR. McDONOUGH: Your Honor, before you pass beyond
Section 2, may I be heard briefly?
THE COURT: I haven't passed yet. I am still
ruminating about Section 2. If you will be seated, I will
finish ruminating, and then we will let you speak, and we
will hear from you.
I will talk a little bit about this: Defendants
make an argument that if they have a monopoly under Section 2,
plaintiffs are nut hurt by that monopoly; and, thus, the
complaint on the Cause of Action for Section 2 ought to be
dismissed. a bcos:
Maybe, Mr. Agay, you will come to the podium and
tell me what injuries you say that you have suffered from
the alleged monopoly or attempt to monopolize, and where
that injury is alleged in the Complaint.
MR. AGAY: May I have one moment, your Honor?
THE COURT: Sure.
MR. AGAY: The question, I believe, is whether or
not we are within the target area cf the acts that we
complain of. We are the direct customer of -- the potential
direct customer of Kodak. I don't know how much more direct
we could be than that. We are the ones that are injured by
the fact that they have the monopoly. We are the ones who
ae
A- 3}
24
w
24
25
are unable --
THE COURT: Well, let me put this to you: What is
the injury? Is it the fact that you can't get your pictures
quite as nice as you think Kodak and Kodak alone can develop
them? :
MR. AGAY: Well, that is the primary injury. The
ancillary injury is that we are restricted in our ability to
compete with other magazines.
THE COURT: Well, first of all, Kodak's policy --
and there is no conflict in the evidence on this -- is applied
across the board to everybody who wants them to finish this.
kind of picture, isn't it?
MR. AGAY: Well, there is thet allesstion, vous
Honor. We have information that that isn't true, but we
haven't had a chance at discovery to prove that.
THE COURT: Well, again, I have to take the evicence
as I find it; and here it is: That this is Kodak's policy
across the board fairly and evenly applied to everybody,
Magazines or nonmagazines.
MR. MCDONOUGH: Right.
THE COURT: They have announced publicly that they
will not develop this kind of picture; so don't give them
the rolls to develop. That is what they say.
Now, how can you be ineenes competitively if
every other magazine is in the same boat?
ene
R- 32
25
MR. AGAY: Every other magazine doesn't use this |
subject matter.
THE COURT: Every other magazine built around the
pictures of nude ladies. I think that should be stated as
a basis in posing this whole case. Your two magazines are
built around and centralized around pictures of nude ladies,
isn't that true?
MR. AGAY: I don't know if it's centralized. It is
certainly --
THE court: We have the two exemplars. They speak |
for themselves. . . | | | |
MR. AGAY: Yes.
THE COURT: Now, if you accept that every other
magazine similarly stressing those pictures must meet the
Same policy problems that you do, thus you are not competitively’
|
disadvantaged; isn't that correct?
MR. AGAY: With all due deference, your Honor,
I don't say that we compete with Cosmopolitan and every other
magazine. Perhaps the magazines we would compete more with
are magazines with pictures that are slanted on this --
THE COURT: Is there any affidavit that you have
furnished me that says that you compete with Cosmopolitan or
anybody else?
MR. AGAY: We compete with all magazines. I am
not certain -- there is no affidavit that says that we don't,
h - 33
26
which is the problem here at hand.
THE COURT: Except I have the exemplars of the
Magazines, and it would appear to me strange -- if I can
take judicial notice of Cosmcpolitan, and I have seen it
many times -- that to be told that you are competing with
that magazine. You are saying that is factual now, and it is
raised by the evidence; is that it?
MR. AGAY: I couldn't point to the evidence.
All I can say is that there is no request for judicial
notice nor could there be judicial notice that the only
magazines we do compete with are others equally affected by
this formulation of policy.
THE COURT: Can you tell me anything else about
the injury from this monopoly or attempted monopoly? What
other injuries are there?
MR. AGAY: I would say that our competition, cur
ability to compete with other magazines, is the damage that
we suffer in connection with the Section 2 claim.
May I point out one other thing? In answer to
several comments the court has made and in particular this
one, we Co point out at the threshold of our brief that
there has been no discovery; and many of these matters are
peculiarly within the knowledge solely of Kodak.
THE COURT: What do you think the court is supposed
to do?
!
A - 34
Let's now discuss the summary judgment practice.
Are you saying that a court, met with a summary judgment motion
and not confronted with any request to continue for the
purposes of discovery or anything like that, can say, "Oh, sure.|
They are entitled to a summary judgment on the evidence I have,
but maybe the plaintiff will get some other evidence somewhere,
sometime; so I'd better not give the summary judoment.”
Is that the way you see summary judgment practice
in the federal court?
MR. AGAY: I believe that is what the authorities
cite. A chance should be given for discovery, especially in
antitrust cases.
THE COURT: Isn't there an obligation to seek a
continuance for that purpose?
MR. AGAY: Not in the case that we have cited and
reviewec, your Honor, starting at page 7 --
THE COURT: Hold on. Let's take a look at them.
Gentlemen, we are getting so late in the day that
we will probably have to continue this to another day.
I want to look at your response and look at the
cases you are talking about. Hold on.
I find your declarations, but I can't find your
opposition memo. What page?
MR. AGAY: Starting at page 7, your Honor.
THE COURT: Let's hear one of those cases.
A - 35
28
What are the facts in that case? What was the motion? to
dismiss? or for summary judgment?
MR. AGAY: I believe in each of these, it was for
summary judgment.
THE COURT: Was it a Rule 12 or a different kind of
rule?
MR. AGAY: I believe each of these was a Rule 56
or a motion for summary judgment. I confess not to have the
facts in mind.
THE COURT: How about that, Mr. McDonough?
Let's discuss such summary judgment practice.
MR. MCDONOUGH: Yes, your Honor.
It seems to me that the practice is very clearly
set forth in Rule 56(f£), which provides that in the event that
someone confronted with a motion for summary judgment feels
that he needs more time to be able to respond, he is supposec
to file an affidavit with the court in which he sets out
uncer oath what it is that he thinks he can get, and why
he thinks that would he material or make a motion under
Rule 56(£) which would justify the court in continuing the
moticn, which is precisely what the rule says; and that is
what the practice is, as I understand it, and what the
practice should have been if the plaintiff wasn't prepared
to respond to the motion and either fall or win on the basis
of the record now before the court.
|
|
h-36
THE COURT: Well, Mr. Agay, that is what 56(f) says;
and I do not find any affidavit from you that meets the
requisites of Rule 56(f).
Did I miss it?
MR. AGAY: No. The only discussion we have of that,
your Honor, is on these pages on the Memorandums of Points
and Authorities.
The only discussion that we have for the need of
delay is on page 7.
THE COURT: There is no motion, and there is no
affidavit.
Let's take another brief recess. I want to take
a quick look at some of the learning under 56(f).
(Brief recess.)
THE COURT: Are you telling me, sir, that the
cases cited at the top of page 8 in your memo are like this?
You have no affidavit and no request for continuance but a
statement by the Appellate Court that you can't take the
record as you find it. Even thouch they haven't asked for
any ccntinuance, you have to give them time? Is that what
the law is?
MR. AGAY: I don‘t want to make that representation
without rereading the case, your Honor.
THE COURT: All right.
Gentlemen, I will teli you later what I am going
t- 39
to do with respect to the First Cause of Action, which has a
jumble of claims under Sherman 1 and Sherman 2.
I now am going to proceed to the Second Cause of
Action and to the Third Cause of Action, which will be Giscussec
together.
Counts Two and Three are Federal Civil Rights claims
under Section 1983 of Title 42. That is Count Two, the 1983
Claim; and Count Three is a Fifth Amendment claim. Both
depend on state action or governmental action.
Defendants have before us evidence uncontradicted
indicates there is no state action. Their evidence is
they have had no threats of prosecution or contacts
the state of federal officials although they admit that
the motivation for their policy for not developing this type
15 of film rests in the state obscenity laws and their fear of
16 || prosecution thereuncer.
17 Plaintiffs claim first that the requisite govern-
18 || mental action is furnished by state and federal trademark laws |
19 and federal patent laws. I do not find requisite government
20 action from those laws.
21 I think plaintif£s are similarly wrong on the
22 law, and they have cited no persuasive authority to support
23 this claim.
24 It is my tentative view that a refusal to provide
25 service anc to deal based on fear of prosecution under state
4-38
24
law does not constitute state action sufficient to support
the Second and Third Causes of Action, and I propose to grant
the motion as to then.
There are several ways of rationalizing this result.
In the first place, the case here is not a race discrimination
case; and our own Circuit has recognized that state action
requirements are different in race discrimination cases than
they are in other cases. The decision I have in mind is
Adams, decided in 1973, 492 F.2d 324.
The plaintiffs argue that it is improper to
distinguish between race discrimination and First siimistiiasiiine
type cases, which they say the instant case is.
where are cases, however, finding no state action
even though the rights claimed are of the First Amendment
type. One of those that was typical of that group is a
case called Grafton v. Brooklyn Law School, 478 F.2d 1137
Gecided by the Second Circuit in 1973.
Additionally, I think the law is tending to a
recognition that borderline obscenity material that might
well fall within obscenity laws is not entitlec to the same
panoply of protection as are other First Amendment-type
materials.
Four members of the Supreme Court have alreacy
articulated this concept in Young v. American Mini Theatres;
and I believe the law is tending in that @irection. That
A- 39
is just really another reason for saying that our case is
different from the cases where Southern restaurant owners
did not serve blacks and/or their white supporters for fear
of prosecution under Southern municipal ordinances segregating
the races.
Another factor should be mentioned. In all of
those race cases, as the Supreme Court has said a couple of
times, the statutes involved were clearly and beyond cispute
invalid. Invalid, really, the Supreme Court said, on their
face; and here the statute that is being discussed is quite
Kodak is concerned about state anc federal statutes
which carefully track the decisions of the Supreme Court,
the recent decisions on obscenity. Those statutes are
presumptively and probably valid. They have been adcjucicated
in those restaurant cases.
There is ancther factor that, at least, ought to
be hinted at or put on the table. There may well be a
privilece that constitutes a defense in both an antitrust
economic context and a Civil Rights context where the action
complained of is for the purpose of avoiding contravening,
0
Cc
~
o
ct
presumptively valid statutes of this kind. I don’t arti
that as a privilege, but the law may also be developing in
A-40
that direction.
Now, I want to move on to Count Four; and when
I am through, I will let counsel discuss Counts Two, Three,
and Four together.
Count Four seeks declaratory relief in the form
of a declaration that both state and federal obscenity laws
are unconstitutional. Count Four seeks to have both state
and federal obscenity laws declared unconstitutional as
applied to Kodak or someone else in Kodak's position who is
merely a developer and photofinisher of photographs.
It is clear that these laws, both sets, have been
adjudicated as valid in criminal cases and other contexts.
My tentative view is to dismiss Count Four. I Say,
“dismiss.” It could just as easily be a summary judgment,
but I say “dismiss.” It would be a holding, if I used
summary jucgment, that there is no bona fide dispute of
Material facts and that no entitlement has been shown as a
matter of law.
The reason to grant the Motion to Dismiss is
that there is no case or controversy; and there is no
constitutional issue involving either federal or state
obscenity laws -- particularly state -- when the case is
pending in the federal court, nor should it be deciced in a
federal court without a case or controversy.
Kodak tells us it has no interest in upholding
A- 4]
34
either set of laws; and, as I have stated, neither set of
laws has been asserted by the government involved against
Kodak. There has been no threat of prosecution or other
action yet posed. In essence, if the court went forward,
we would have a collusive action or certainly one in which the
interests of both the state and federal government are not
represented in the sense of the laws challenged as unconsti-
tutional.
Plaintiff says, however, that there is a way of
having those governmental interests represented.
Plaintiff points to 28 U.S.C. Section 2403.
That section permits this court to notify state and federal
officials of the pendency of this action and permits ieee
government officials to intervene in this case, if they
choose to do so.
There is, however, case law that the existence
of 28 U.S.C Section 2403 does not make what is otherwise no
case or controversy into an actual case or controversy.
The courts read Section 2403 as merely permitting intervention
where the state government and federal government and their
officiais are not Girectly nameé as defendants. The courts
have persisted in the holding that there is no case or
controversy Cespite the existence of that statute.
The cases that so hole are U.S. v. Johnson,
319 U.S. 302, and Ruotolo v. Ruotolo, that's R-u-o-t~-o-l-o,
A- 42
35
572 F.2d 336, decided by the First Circuit in 1978. So my
proposed action is to grant the motion and dismiss without
any leave to amend Counts Two, Three, and Four. My proposec
action as to Count One with respect to both the Sherman 1 and
Sherman 2 claims is to grant a Motion to Dismiss with a right
to plead over, which pleading, if it is made, will separately
state Sherman 1 and Sherman 2 claims with some specificity;
then the pleintitts may do one of two things. They may move
immediately to dismiss -- not for summary judgment, but to
dismiss -- those claims, Section 1 and Section 2; or they
may wait for discovery, a reasonable period being 60 Senn:
to allow plaintiff to discover and may thereafter move for
summary judgment. sass i. oe eee
Now, I will hear from plaintiffs first, bearing
in mind two things: The lateness of the hour and the fact
that I have obvicusly given considerable thought to this
matter.
MR. AGAY: If the court please, Kodak has come up
with a policy which does not track with either law, doesn't
use the words "patently offensive," is totally dissimilar to
the policy in the federal act and state act, and now refuses
to return the victures under its censorship.
THE COURT: Now, so far as returning, that is a
matter pending in the state court, which is a far better
tribunal for the adjudication of that matter.
A- “43
MR. AGAY: As the affidavits point out, to get
those pictures back two years later would be of little value,
if any.
What is needed is a determination as to whether or
not in this intermediate step which -- I ran across a case
which I didn’t know before, which California has already
held that you can’t stop somebody in an intermediate stage.
I can give the citation later, if need be -- to say that in
this intermediate stage the law is going to permit or to allow
a private party to act as to have a pris
there is no remedy either by challenging the application o
the act under the Fourth Cause of Action; and assuming that
it is proper, then Kodak's action is improper under the
Second or Third Cause of Action grants to everyone
to claim that this act permits them to do anything
withhold property or to do anything under the fear of prose-
cution; and if the government did that, there would be no
doubt but that there were a prior restraint which would be
struck down; and the cases we have cited show that if a
private party does it, the same results obtain.
The court pointed out that there is maybe a distinc-
tion in the quantum of proof necessary to find state action
in discrimination cases as opposed to First Amencment cases.
I have some difficulty with those decisions which
state that there is a different standard. Either the state
&- 4A
is involved, or it is not involved. What the court does not
mention is that we have also cited the abortion case; and
there has been no statement that I have heard from the court
or that I have read that says also in the abortion cases
* we'll have to come up with a different standard than we will
in the instance of freedom of speech; so the statement dicta
Or otherwise say that we have got different ground rules when
we are determining whether there is a state action in the
discrimination cases would not apply to the doctor prohibited
from performing the abortion in the case that we have cited.
There they found state action because of the nm
guess it was feceral funds to construct the hospital in that
particular instance so that if there can be state action :
there, why not here where the party admits, "The only reason
we are not doing this is because of a federal law and a state
law; and, therefore, we can interfere where the government
could not in the return of the property.”
We believe and the court has stated that there has
never been a threat against Kodak of prosecution, although
they have been doing this for years. There has never been a
threat against Kodak for any prosecution.
Why is it now that they should be able to withhold
it under the color of these laws which the government cannot
do because it would constitute a prior restraint if the
government did it, clearly.
bets
Why can they do indirectly, when the cases say
they can't, why can they do indirectly -- the government --
what they cannot do directly.
The brief points out, and it is clear that the
effect of what is going on is Kodak is acting as a censor.
It looks at every transparency and says, "This is good, this
one's not. This one's good, this one's not,” for a magazine
publisher, not for the amateur user, who doesn't care whether
he gets it back the next day or next week.
For the magazine publisher, this censorship totally
or dramatically interferes with his ability to publish. In the
noted cases, they tell us, "Don't interfere with the editorial
rules. Don't get involved with the editorial rules.”
THE COURT: Even though it is on notice and assumes
the risks when it delivers that film for processing by Kodak?
MR. AGAY: Maybe if Kodak had said, "ie make the
Getermination ourselves that we don't want to be involved
in this." Maybe it would be a different problem in that
they are avoiding state action; but when Kodak says, "We do
this under threat of law.” And they claim that is the reason
they are doing it because of this law, then so far as state
action is concernec, there is state action.
Insofar as the other elements the court mentioned,
if it is unconstitutional to do, then the contract of adhesion,
if it is a contract, would not be valid anyway for the reasons
|
|
|
A - +l
39
we pointed out in our brief, that this simple notice cannot
constitute a waiver in and of itself especially of a constitu-
tional right.
Now, at the time those transparencies are returned,
nobody knows what will be the ultimate content of the magazines;
and to allow the proscription of the return -- or to permit |
the proscription of the return of negatives and bar someone |
from getting those negatives or transparencies in a fashion :
that is usable, at least to the standards of this magazine and
others, under the threat of federal law, so they claim, and
under the threat of state lew, so they claim -- I don't know
| how there could be clearer state action unless the state }
|
said, “And we mean that Kodak or developers shall not even
permit the transmission of those transparencies.”
We don't believe the laws were intended to apply
|| to Kodak. We believe that the court has stated that the
proof lies in the pudding that nobody ever made any noises
against Kodak; and yet we are standing here on the horns of |
a dilemma. We can’t attack the law directly. The federal
law we certainly can't attack in the state court very
efficaciously; and we can't attack their failure to return
the pictures because the mere --
THE COURT: How long are you going to need to
argue this matter?
MR. AGAY: I think I'll be through very briefly.
A- +7
40
19
THE COURT: I don't mean to rush you. I just want
to know because I have some engagement which I want to be sure
I get to; and I want to give the other sice a chance.
MR. AGAY: Rather than rushing, as the court
indicated earlier, maybe we could continue it. I would prefer
that because obviously the effect of the court's order would
be --
THE COURT: How long will you need, Mr. McDonough?
You heard the court's indicated decision.
MR. MCDONOUGH: Yes, your Honor. I am satisfied
with that indicated decision. I am not totally satisfied
with it, but it seems to me it disposes the matters that
were brought to the court today in our favor.
As I understand it, it gives him the opportunity
to present --
THE COURT: I will give you five or six minutes
more.
MR. AGAY: May I ask for a continuance? I think
the court indicated earlier that --
THE COURT: That will be denied. I'd rather finish.
I have an important case in trial, and I just can't
interrupt it; and I don't know when it would ever end so
that I can get back tec this one.
MR. AGAY: May I review my notes?
THE COURT: Of course. Take your time.
|
|
A -u4&
MR. AGAY: The court pointed to the fact that it
believes that there is a broadening of the law that if there
is something akin to obscenity, then it doesn't receive the
same protection as other materials.
I respectfully disagree especially if that deter-
mination is made in advance of the publication without viewing
the entire publication which, of course, would be impossible
until the pictures are ultimately published.
THE COURT: The consequence of your argument is
that even though there is criminal responsibility for aiding
and abetting a criminal violator, that one must take the risk
if he is asked to process part of a magazine or what may go
into a magazine which may seem to that processor obscenity
and put him in liability as an aider and abettor because he
doesn't know what is going to be in the magazine as a whole?
Is that your position? It is just too bad if the magazine
as a whole turns out to be obscene? Then he can be held,
but he can't do anything about it?
MR. AGAY: No, that is not my position. That is
why I believe the Fourth Cause of Action is the appropriate
cause of action and the appropriate way of dealing wi i
First of all, the answer to the court's question
is that same question could have been posed with respect to
the abortion matter. The hospital party was subject to
criminal --
th this.
a
A-44
42
THE COURT: That is the Fourth Circuit. That is
not our Circuit, and it stands alone. Everybody else,
including the Ninth Circuit, indicates that there is a differ-
ence between the rule of those restaurant cases as extended
in via Fourth Circuit to the abortion cases and the rest.
MR. AGAY: Well, to the extent that there be a
dilemma, if there really be a dilemma, and I question that
for the same reasons as before that there never has been a
prosecution, to the extent that there is a dilemma that the
court foresees for these people and to the extent that there
is a counterclaiming problem aw het here we have a nee
party setting itself up as the censor and the determiner of
what it is that can be published and what it is that can't.
If, as we have indicated, it is the only one who gives a good
product, and if we pose a different example, what if it were
a motion picture that we were involved in that they were
‘developing, and what if they got the dailies and just saw
some frames. They'd say, "Which pictures can be seen ulti-
mately on the screen or which can't?"
What if they were getting excerpts from Ulysses
in little bitty parts? Instead of photographing it, they
were printing it, and they said, "This part is no good. You
can't have it back. This part is good. You can have it
back." We'd never have the opportunity of seeing the finished
work if what the court is saying is correct, that we apply
A -50
the statutes to the developer and we apply these statutes to
the person that made the paper.
If these statutes were applied to the one that made
the paper, they would say, "Well, if I sell them to Hustler,
maybe they are going to be used in a magazine. Maybe I can
be prosecuted.”
The answer is that the statute is not intended to
be so broadly construed, and there is no forum to get that
construction especially when our cispute is with Kodak in the
10 first place and there has been no threat of prosecution by
11 the U.S. Attorney so that I believe that this is the apere- !
12 priate place.
“ai ~ “'"T'" Kodak doesn't have the concern although it _
14 fought pretty hard on the Fourth Cause of Action, if Kodak
15 really doesn't have a concern, I believe that there is a dispute
16 between us that should be declared that Kodak is not subject
17 to these sanctions when it merely returns first edition film.
18 Maybe a different stancard applies if we sent in
19 pictures for redevelopment.
20 THE COURT: I'm sorry, sir, but your time has now
21 expired.
22 The court's indicated decision will be the court's
23 decision of findings and those that I have orally expressed.
24 I would like the defendants to order a transcript,
25 please, of all proceedings this afternoon. That transcript,
A-S|
24
25
as soon as it is prepared, will be filed and will constitute
the court's findings and conclusions.
Let it be clear that to the extent that I have
granted any summary judgment, I have found that both parties
dispute the material facts and that the moving party is entitled
thereto as a matter of law.
Now, as to the First Cause of Action, the new
complaint setting forth in separate counts and with some
specificity the Sherman 1 and the Sherman 2 claims must be
filed 10 days from today; and then, the plaintiff thereafter
will have 60 days for discovery before the defendant can file
any summary judgment motion, but defendant is not barred
from filing a motion to dismiss earlier than that. e
All right, gentlemen. Court is adjourned.
MR. MCDONOUGH: Thank you, your Honor.
as_|
os
:
IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
EUSETLER MAGAZINE, INC.,
et al.,
Plaintiffs,
Vv. CV *0-0561-IH
EASTMAN KODAK COMPANY,
Defendant.
GreRrAS CCA tT SE
I siaies certify that I ama mae appointed, caualified,
ané acting Federal Court Reporter of the United States District!
Court for the Central District of California.
I further certify that the forecoing 44 paces are 2
true and correct transcript of the proceedings hac in the
above-entitled cause on Monday, Sentemrber 22, 1989,
and that said transcript is a true and correct transcription
of my stenccraphic notes.
Dated at Los Anseles, California, this
29th day of Sevotember » 3996...
Kare
XAVIER MIRELES
Federal Court Peporter
h- 53
CONSTITUTIONAL PROVISIONS AND STATUTES
TEXT OF AMENDMENTS TO THE
CONSTITUTION
AMENDMENT [1]
Congress shall make no law respecting an establishment of reli-
gion, or prohibiting the free exercise thereof; or abridging the free-
dom of speech, or of the press; or the right of the people peaceably
to assemble, and to petition the Government for a redress of griev-
ances.
AMENDMENT XIV
Section 1. All persons born or naturalized in the United States,
and subject to the jurisdiction thercof, are citizens of the United
States and of the State wherein they reside. No State shall make
or enforce any law which shall abridge the privileges or immunities
of citizens of the United States; or shall any State deprive any
person of life, liberty, or property, without due process of law; nor
deny to any person within its jurisdiction thc equal protecticn of
the laws.
TITLE 16
§ 1461. Mailing obsceno or crime-inciting matter
Every obscene, lewd, lascivious, indecen:, filthy or vile article, matter,
thing, device, or substance; and—
Every article or thing designed, adapted, or intended for producing
abortion, or for any {odecent or immoral use; and
Every articie, instrument, substance, drug. medicine, or thing which is
advertised or described in a manner calculated to lead another to use or
apply it for producing abortion, or for any indecent or {mmoral purpose;
and
Every written or printed card, letter, circular, book, pamphiet, ad-
vertisement, or notice of any kind giving information, directly or indirect-
ly, where, or how, or from whom, or by what means any of such men-
tisped matters, articles, or things may be obtained or made, or where or
by whom any act or operation of any kind for the procuring or producing
of abortion will be done or performed, or how or by what means abortion
may be produced, whether sealed or unsealed; and
Every paper, writing. advertisement, or representation that any article,
inatrument, substance, drug, medicine, or thing may, or can, be used or
applied for producing abortion, or for any indecent or immoral purpose;
aod
Ere-y tecerintion celculxte-! to Induce or ircite a person to 79 ure oF
apply avy such article, instrument, substance, drug, medicine, or thing—
Ia declared to be nonmailable matter and shall not be conveyed in the
mails or delivered from any post office or by any letter carrier.
Whoever knowlogly uses the maiis for the mailing. carriage in the
mails, or delivery of anything declared by this section or section 3001(e)
of title 39 to be nonmatlable, or knowingly causes to be delivered by ma!!
according to the direction thereon, or at the place at which it is directed
to be delivered by the person to whom it is addressed, or knowingly takes
any such thing from the mails for the purpose of circulating or disposing
thereof, or of aiding io the circulation or disposition thereof, shall be
fined not more than $5,000 or imprisoned not more than five years, or
both, for the first such offense, and shal! be fined not more than $10,000
or imprisoned not more than ten years, or both, for each such offense
thereafter.
The term “indecent”, as used in this section includes matter of a char-
acter tending to incite arson, murder, or assassination.
§ 1462. Importation or transportation of obscene matters
Whoever brings into the United States, or any place subject to the
juriadiction thereof, or knowingly uses any express company or other
common carrier, for carriage in interstate or foreign commerce—
(a) any obscene, lewd, lascivious, or filthy book, pamphlet, pic-
ture, motion-picture film, paper, letter, writing, print, or other mat-
ter of indecent character; or
(bd) any obscene, lewd, lascivious, or filthy phonograph recording,
electrical transcription, or other articie or thing capable of producing
sound; or
(c) any drug, medicine, article, or thing designed, adapted, or
intended for producing abortion, or for any indecent or immoral
use, oF any written or printed card, letter, circular, honk, pamphiet.
advertisement, or notice of any kind giving information, directly or
indirectly, where, how, or of whom, or by what means any of such
mentioned articles, matters, or things may be obtained or made; or
Whoever knowingly takes from such express company or other common
— any matter or thing the carriage of which is heretn made unlaw-
~
Shall be fined not more than $5.000 or imprisoned not more than five
— = be for the first such offense and shall be fined not more
1an $10,000 or Iinprisoned not more than ien years, o th '
such offense thereafter. ati ae
fp - S56
§ 1465. Tracsportation of obscene matters for sale or dis-
tribution
Whoever knowingly transports in interstate or foreign commerce
for the purpose of sale or distribution any obscene, lewd, lascivious,
or filthy book, pamphlet, picture, film, paper, letter, writing, print,
silhouette, drawing, figure, image, cast, phonograph recording, elec-
trical transcription or cther article capable of producing sound or
any other matter of incecent or immoral character, shall be fined
not more than $5,000 or imprisoned not more than five years, or both
The transportation as aforesaid of two or more copies of any
Puulication or two or more of any article of the character described
ibeve, or a combined total of five such publications and articles,
shall create a presumption that such publications or articles are in-
tended for sale or distribution, but such presumption shall be re-
buttuble.
When any person is convicted of a violation of this Act, the court
in its judgment of conviction may, in addition to the penalty pre
scribed, order the confiscation and disposa! of such items describe?
herein which were found in the possession or under the immediate
control of such: person at the time of his arrest Added Junc 28, 1955
¢. 190, § 3, 69 Stat. 183
§ 2201. Creation of remedy
In a case of actual controversy within its junsdiction, except with respect
to Federal taxes other than actions brought under section 7428 of the Inter-
nal Revenue Code of 1954 or a proceeding under section 50S or 1146 of title
11, any court of the United States, upon the filing of an appropnate plead-
ing, may declare the mghts and other legal relations of any interested party
seeking such declaration, whether or not further relief 1s or could be sought
Any such declaration shall have the force and effect of a fina] yudgment or
decree and shal] be reviewable as such
A-S6
*ITLE 42
§ 1983. Civil action for deprivation of rights
Every person who, under color of any statute, ordinance, regula-
tion, custom, or usage, of any State or Territory or the District of
Columbia, subjects, or causes to be subjected, any citizen of the
United States or other person within the jurisdiction thereof to the
deprivation of any rights, privileges, or immunities secured by the
Conatitution and laws, shall be liable to the party injured in an ac-
tion at law, suit in equity, or other proper proceeding for redress.
For the purposes of this section, any Act of Congress applicable ex-
clusively to the District of Columbia shall be considered to be a
statute of the District of Columbia.
CALIFORNIA PENAL CODE
$311.2 Sending or bringing into state for sale or distribution; printing, exhibit-
ing, distributing or possessing within state; exemptions
(a) Every person who knowingly sends or causes to be sent, or brings or causes
to be brought, into this state for sale or distributiun, or in this state possesses,
prepares, publishes, or prints, with intent to distribute or to exhibit to others, or
who offers to distribute, distributes, or exhibits to others, any obscene matter is
guilty of a misdemeanor.
(b) Every person who knowingly sends or causes to be sent, or brings or causes
to be brought, into this state for sale or distribution. or in this state pozsesses,
prepares, publishes, or prints, with intent to distribute or to exhibit tc others for
commercial cousideration, of who ofters to distribute, distributes, or exhibits to
others for commercial consideration, any obscene mutter, knowing that such muat-
ter depicts a persun under the age of 18 years personally engaging in or personally
simulating sexual intercourse, masturbation, sodomy, bestiality. or oral copulation
is gulity of w feluny and shali be punished by imprisonment in state prison for
two, three, or four yeurs, or by a fine not exceeding fifty thousand dollars ($50,000),
in the absence ef a finding that the defendant would be lucapahle of paying such
a fine, or by Loth such fine and imprisonment
(c) The provisions of this section with respect to the exhibition of, or the pos-
Scasion with intent to exhibit, any obscene matter shall not apply to a motion
Picture operator or projectionist who is employed by a person licensed by any
city or county and who is acting within the scope of his employment, provided
that such operatur or projectionist hus no financial Interest in We place wherein
he ls so employed.
(d) Except as otherwise provided in subdivision © * * fer, the provisions of
subdis i-!on (a) or (b) with respect to the exhibition of, or the pussession with Ja-
tent to exhibit, any obscene matter shall not apply to any person who is employed
by a person licensed by any city or county aud who is acting withiv the scope of
his eniploywent, provided that such cmploym) person hus no floancial interest in
the place wherein he is so employed und has no cuntrol, directly or indirectly,
over the exhibition of the obscene matter.
A- 519
NO. 80-6077 & 80-5861
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HUSTLER MAGAZINE INC., a corporation, )
and CHIC MAGAZINE, INC., a )
corporation, )
)
Plaintiffs-Appellants, )
) APPELLANTS’ BRIEP
vs. )
)
EASTMAN KODAK COMPANY, a corporation, )
)
)
Defendant-Appellee.
1. ISSUES PRESENTED FOR REVIEW. This appeal raises the
following issues:
1.1. Does censorship of speech in the form of
picturesl/ "based upon fear of criminal
prosecution*2/ under federal and state laws constitute state
action2/ by one who has received state and federal trademark
and patent grants?
1/ In this case the pictures are in the form of
transparencies. Pictures are within the ambit of
protection of the Pirst Amendment of the United States
Constitution ("Pirst Amendment”). N. 7 in Erznoznik v. City of
Jacksonville, 422 U.S. 205,211, 95 S.Ct. 2268,2273 (1975).
ays, motion pictures and photographs are protected forms
of expression, Joseph Burstyn, Inc. v. Wilson, 343 U.S.
495,502, 72 S.Ct. 777 (1952)." St. Martin's Press, Inc. v.
Carey, 440 F.Supp. 1196,1204 (S.D.N.Y. 1977). Magazines are
likewise protected, and are presumptively protected material
under the First Amendment. Penthouse Intern., Ltd., v.
McAuliffe, 610 P.2d 1353,1359 (5th Cir. 1980). "It is of no
Significance that expression which is protected by the PFirst
Amendment takes place in a commercial setting. Bantam Books,
Inc. v. Sullivan, 372 U.S. 58, 83 S.Ct. 631 (19635).” La Rue vy.
State of California, 326 F.Supp. 348,354 (C.D. Calif. °
2/ Trial court's finding. (Excerpt ("Ex.") 389:25.)
3/ The second count of the instant Complaint is brought under
$1983 which requires that the challenged conduct be (Cont'd)
- 4-58
1.2. If pictures are confiscated by a film processor,
acting by reason of state and federal laws
purportedly requiring such confiscation, without due process or
compensation, is a magazine publisher who owns the pictures
entitled to a determination of the constitutionality of the
application of such laws where the pictures have not yet been
subjected to editorial process from which it is determined if
the picture should be published, if so what portion, if so in
what context within the individual article, and if so the
overall content of the magazine?
2. STATEMENT OF THE CASE.
2.1. NATURE OF THE CASE. Appellants ("Plaintiffs")
seek damages and injunctive relief under 42
U.S.C. §1983 ("§1983") and the Pirst and Fourteenth Amendments
to the Constitution of the United States ("Amendment (s)") by
reason of Appellee's ("Defendant” or "Kodak") interference with
3/ (Cont'd) done “under color of any statute, ordinance,
regulation, custom or usage, of any State or Territory.” "The
under color of law requirement of §1983 has been treated as the
equivalent of the state action requirement of the Pourteenth
Amendment.” Adams v. Southern Calif. Pirst Nat. Bank, 492 F.2d
324,329 (9th Cir. 1973). Por purposes of determining whether a
Private party is subject to prohibitions of the Amendments to
the Constitution, “state action” includes both federal action
and action by one of the several states (Simkins v. Moses H.
Cone Memorial Hospital, 323 P.2d 959,967 (4th Cir. 1563)), But
might technically better be described generically as
"governmental action” (footnote 5, Jackson v. Statler
Foundation, 496 F.2d 623,627 (2nd Cir. 1974)). Defendant
concedes that in light of the third count, seeking recovery
based upon the Pirst and Fourteenth Amendments, the
determination of governmental action (state action) must
consider not only the involvment of the State of California,
but also the United States. ‘2x. 64:17.) Acknowledging the
Jackson statement that “governmental” would be a better
escriptive word, since the words “state action” as including
both federal and State actions have been repeatedly so used, we
shall refer to “governmental action” or “state action”
interchangeably to include both federal and State action.
-2- A- 374
Plaintiffs' exercise of their rights of free speech through
Defendant's refusal to return Plaintiffs' pictures to
Plaintiffs on the basis of §311.2 of the California Penal Code
("§311.2") and 18 U.S.C. §§1461, 1462 and 1465 ("§§1461-5") and
Plaintiffs further seek a declaration that §§311.2 and 1461-5
cannot be applied so as to subject a film processor to criminal
prosecution by reason of returning pictures to the owner for
possible subsequent use in a magazine.
2.2. COURSE OF PROCEEDINGS. Plaintiffs filed their
Complaint and Defendant filed its Answer. The
Complaint is in four counts, the first of which is for
anti-trust violations, the second is under §1983, the third is
for violation of First and Fourteenth Amendment rights and the
fourth is for declaratory relief. Pursuant to court order,
counsel met to discuss a discovery program. Within a few days
thereafter, and prior to the initiation of any discovery (and
none has been undertaken), Defendant filed a motion for summary
judgment. On September 22, 1980, the trial court announced its
decision to grant the motion as to the second, third and fourth
counts and to grant the motion (to dismiss) the first count,
with leave to amend within ten days. The Court ordered that
the transcript of those proceedings would constitute its
findings and conclusions. (Ex. 402:25.)
2.2.1. Appealable Order. On September 29, 1980, the
district court entered its order dismissing
count 1 and granting summary judgment as to counts 2, 3 and 4.
(Ex. 407.) Plaintiff did not amend. On November 14, 1980,
final judgment was entered. (Ex. 412.)
2.2.2. Timeliness. Because of uncertainty as to
.. 4-60
whether the order was intended as a final
judgment ,4/ plaintiffs timely filed a Notice of Appeal on
October 28, 1980 (Docket No. 80-5861) with respect to the
September 29, 1980 order (Ex. 415), and thereafter a Notice of
Appeal with respect to the final judgment (Docket No. 80-6077)
on December 15, 1980 (Ex. 417). On January 22, 1981 this Court
ordered consolidation of the two appeals.
2.3. NINTH CIRCUIT RULE 13.
2.3.1. Jurisdiction--District Court. The second
count seeks redress by virtue of actions
under color of State law. The district court had subject
matter jurisdiction thereof under 28 U.S.C. §1343(3). The
third and fourth counts arise under the First Amendment and
with respect to federal laws and the district court had subject
matter jurisdiction under 28 U.S.C. §1331.
2.3.2. Jurisdiction--Court of Appeals. This appeal
is from a final judgment. This Court has
jurisdiction under 28 U.S.C. §1291.
2.3.3. Attorney's Pees. Although 42 U.S.C. §1988
provides for an award of attorney fees in the
Court's discretion, without stating the need for a showing of
bad faith, frivolousness or vexation, in addition to the trial
court's not making any such award, we believe the cases
interpreting the section require such a showing. If
nonetheless Defendant again seeks an award of attorney fees
from this Court, then as a protective measure, we do likewise.
4/ A stipulation by Plaintiffs and Defendant was proposed to
the district court to clarify that it was not, but such
stipulation was rejected. (Ex. 421.)
a A-l!
2.4. STATEMENT OF PACTS. Plaintiffs gave film to
Defendant for developing. Defendant refused to
return the developed pictures. (Ex. 365:°8.) Defendant has
adopted a policy and practice of confiscating film delivered to
it for the purpose of developing if it determines the film to
be obscene. (Ex. 103:11-104:9, 106 and 107.) Plaintiffs are
unable to obtain quality processing from other sources. (Ex.
279:14, 296:5, 301:19, 306:16, 310:22.) Defendant's practice
was adopted because of its fear of prosecution under, and
therefore under color of, both federal and State laws. (Ex.
400:90.)3/
Defendant's developing film for a publisher is merely
an early intermediate step in Plaintiffs’ publication process
(Ex. 274:15-278:21) and Defendant is aware of that fact (Ex.
S/ Defendant's own evidence states that: “Because of Federal
and State laws relating to pornography Eastman Kodak does
not wish to handle pictures that show sexually explicit
conduct. .. Pilm sent to Kodak for processing which depicts
such subject matter will not be returned because of the
potential legal problems mentioned above.” (Ex. 106.)
"There are State an edera atutes which prohibit the
distribution of pictures depicting certain types of sexually
explicit conduct. When Kodak discovers pictures in a customer
order depicting such conduct, it cannot return those pictures
to the customer without risking criminal prosecution for
violating the law. Kodak will not return such pictures to the
customer. x. 107.) (Emphasis added.)
Defendant's proposed finding of fact No. 7 in which
Plaintiffs joined (Ex. 171 and 315) recites that its practice
was adopted "for the purpose of avoiding the injury and expense
that would result if Kodak and/or its employees were accused of
violating the obscenity laws". Defendant makes the same
concession in seven different affirmative defenses in its
Answer (Ex. 18-21) and in admitting Plaintiffs allegations that
its confiscation was done rea inal
prosecution under §311.2 (Ee. 14 ena’ ish ts" pe en Mee da evidence
(Ex. 102:19 to 103:25) and argument in brief (47:13-17,
48:12-49:2, 50:4-22, 54:6-12, 74:24-75:7, 79:15-20, 86:18-87:23
and 92:15-21) are the same.
s- A-b2
124:21.) Although Defendant has the pictures §/ (and
Plaintiffs have not seen them) Defendant's motion neither
attaches nor describes the withheld pictures.2/
Plaintiffs' evidence (Bx. 276-278) shows that none of
the following is known: (1) how the transparencies Defendant
has refused to return would have been altered before
publication, (2) which of the transparencies would have been
used at all, (3) what the size of the pictures in the magazine
would be, (4) the content of the text of article in which the
pictures would appear, or (5) the overall content of the
Magazine. Defendant by footnote to its brief (Ex, 73) without
any supporting foundation in any sworn statement refers to an
attachment which purportedly contains copies of other
publications by the Plaintiffs which obviously do not include
the transparencies which Defendant has withheld. 8/
6/ Plaintiffs submitted clear evidence that while the pictures
held by Defendant may be under others’ names, Defendant
is withholding films belonging to Plaintiffs. (Ex. 289 to 293,
310:8, 312 and 313.) The trial court found that Defendant has
retained and refused to deliver the pictures (Ex. 365:25), and
Defendant at oral argument accepted this finding (Ex. 366:9).
7/ Plaintiffs do not believe that the contents of such
transparencies is relevant in this litigation much less
in this motion. Obviously no one can say what the film never
even presented to Kodak (because of Kodak's confiscation
practice) would have shown.
8/ Assuming the attachments to Defendant's counsel's brief
were evidence, and that they were the product of
Plaintiffs, viewing other magazines published by Plaintiffs is
of no value. Pirst, they do not demonstrate whether these (or
any other) particular pictures in Defendant's hands would ever
be used for the ahove reasons. Secondly, in United States v.
Tupler, 564 F.2d 1294,1297-1298 (9th Cir. 1977), this Court
Stated that evidence “that both the sender and the recipient of
the shipment were known dealers in sexually explicit materials;
that one of the suspects in the case had previously been
convicted of an obscenity offense and was currently under
indictment for another; and that the clerk in the (Cont‘d)
«+ A-63
3. ARGUMENT.
3.1. STANDARD OF REVIEW. This Court in Heiniger v.
City of Phoenix, 625 F.2d 842,843 (9th Cir. 1980)
Stated the standard of review as follows:
"STANDARD OF REVIEW
"A reviewing court will affirm a grant of summary
judgment only if it appears from the record, after
viewing all evidence and factual interferences in the
light most favorable to the appellant, that there are no
genuine issues of material fact and that the appellee is
entitled to prevail as a matter of law.”
In an action under §1983, a defendant moving for
summary judgment has the burden of foreclosing all possibility
that the plaintiff could prevail, and it is the burden of the
moving party to “establish the absence of a genuine issue" and
not upon the opposing party to raise same and “even if no
opposing evidentiary matter is presented." Adickes v. S. H.
Kress and Company, 398 U.S. 144,157, 159,160 90 S.Ct.
1598,1608,1609 (1970).
The foregoing standard of review is consistent with the
elementary rules applicable to motion for summary judgments
which the trial court did not follow: the burden is upon the
moving party to show absence of genuine issue, the inferences
must be drawn in favor of opposing party, the evidence and
legal theories must be viewed most favorably to opposing party
and the court may not weigh conflicting affidavits of
inferences .2/
8/ (Cont'd) consignee bookstore described similarly labeled
films as ‘hard core' do not constitute evidence of the motion
picture film under consideration."
9/ "If under any reasonable construction of the (Cont'd)
-1- A-bY
3.2. CONTENTIONS ~- SUMMARY. Defendant's notice of
motion (Ex. 26} and summary of arguments (Ex. 51)
raises four points in support of motion as directed to the
second, third and fourth counts: as a matter of law and
viewing all evidence and inferences most favorably to Defendant
(1) there is no state action to justify relief under the second
or third counts (Ex. 29:6 and 52:4), (2) as to the declaratory
relief fourth count there is no actual controversy (Ex. 29:19
and 53:26), (3) Defendant was unable to locate pictures under
Plaintiffs’ name (Ex. 30:1), and (4) a claim for replevin would
be adequate relief for Plaintiffs (Ex. 54:14). The third was
specifically rejected by the trial court. (N. 6 above.) As to
the last, the evidence submitted by Plaintiffs shows that
relief in the form of getting back stale pictures is wholly
useless (Ex. 274-284) and Defendant's assertion to the contrary
9/ (Cont'd) evidence and any acceptable theory of law, one
would be entitled to prevail, the summary judgment against him
cannot be sustained.'" Garter-Bare Company v. Munsingwear
Inc. 650 F.2d 975,980 (9th Cir. 1580). "Ke the moving party,
respondent had the burden of showing the absence of a genuine
issue as to any material fact, and for these purposes the
material it lodged must be viewed in the light most favorable
to the opposing party.” Adickes v. S. H. Kress and Co., 398
U.S. 144,157, 90 S.Ct. 1598, ). These principles have
been repeatedly relied upon by this Court in reversing summary
judgments. Bell v. Cameron Meadows Land Com F.2d P
82 L.A.D.J. D-BRD 773 15th Cle, Feby 22,1980} oR. t ; Reed v. Een
Lockheed Aircraft Corp., 613 F.26 757,759 (9th Cir. 1560);
Hoffman v. Babbit Bros. Trading Co., 203 P.2d 636,637 (9th Cir.
19535); and 0.5. v. Western Electric Co., 337 F.2d 568,572 (9th
Cir. 1964). "In ruling on a motion tor summary judgment, it is
not the function of the court to resolve existing factual
issues through a ‘trial by affidavits.’ (United States v.
Diebold, Inc., (1962) 369 U.S. 654, 62 S.Ct. 553. Lane
Bryant, Inc. v. Maternity Lane, Ltd., of California, (Sth Cir.
1545) 73 P.2d 559,565.) The court is to determine BB a ts a
enuine issue of material fact exists, viewing all evidence and
actual inferences ‘in the light most favorable to the party
Opposing the motion.'” Ramirez v. National Distillers and
Chemical Corp., 586 F.2d ’ t fe °
A-6s
merely raises a triable issue of fact.
As to the remaining points Plaintiffs contend that both
individually and collectively Defendant's acting as a censor
under compulsion of State and federal laws, by virtue of State
and federal trademarks and patents, preclude finding that
Defendant has proved as a matter of law that there is no
genuine issue as to the presence of state action in connection
with its confiscation of Plaintiffs’ pictures. Plaintiffs
further contend that Defendant has not proved as a matter of
law that there is a collusion between it and Plaintiffs
demonstrating an absence of adversity to negate jurisdiction
for declaratory relief.
Plaintiffs further contend that if Defendant is to be
permitted to confiscate Plaintiffs' pictures by reason of its
fear of prosecution under application the relevant statutes,
then Plaintiffs must be afforded the opportunity to challenge
the constitutionality of such application by the action for
declaratory relief, for otherwise Plaintiffs would be left
remediless even though such application of the statutes were
unconstitutional.
Pinally Plaintiffs contend that Defendant is not immune
from these claims, that Plaintiffs did not waive their claims
and the motion, made prior to any discovery, is premature.
3.3. DEFENDANT DID NOT SHOW ABSENCE OF EVIDENCE OF
STATE ACTION. As to counts two and three
Defendant's motion (Ex. 81:6) and the trial court's granting
thereof (Ex. 389:10) are based upon the contention that as a
matter of law there is no state action. If the lack of genuine
issue on this subject exists, the conclusion must be that
»- A-bt
Defendant's actions are state actions. According to Defendant
itself, they are compelled by state and federal laws .10/
We agree with Defendant that a showing of “significant
governmental action and involvement” is required. (Ex. 82:9.)
The evidence, however, demonstrates that not only was the
government involved, it was the catalyst for Defendant's
actions by compelling the same. (N. 5 above.)
Defendant's claim that it did not act by reason of
compulsion of law is premised on the subjective statements that
its policy was not formulated at the request of law enforcement
authorities or for the purpose of enforcing any laws. (Ex.
87:24.) Yet in the next sentence Defendant concedes that its
practice of refusing to return certain pictures was motivated
by the desire to avoid being charged with violation of laws.
3.3.1. State Action Arises Prom Compulsion of
Statutes. State action exists when a party
is acting under compulsion of law. Adickes v. Kress & Co. 396
U.S. 144, 90 S.Ct. 1598 (1970); Robinson v. State of Florida,
378 U.S. 153, 84 S.Ct. 1693 (1964); Peterson v. City of
Greenville, S.C., 373 U.S. 245, 83 S.Ct. 1119 (1963); and Doe
v. Charleston Area Medical Center, Inc., 529 F.2d 638 (4th Cir.
1975).
In Adickes, the defendant refused to serve lunch to the
Plaintiff at defendant's restaurant. The plaintiff sued to
recover damages under §1983. In reversing summary judgment,
10/ Even were that the issue not determined as a matter of law
in favor of Plaintiffs, it surely cannot be determined
against Plaintiffs as a matter of law in face of the evidence
showing such state action.
-0- A-&1
the Supreme Court stated (upper case being Court's emphasis):
"Although this Court has not explicitly decided the
Fourteenth Amendment state action issue,... underlying
the Court's decisions in the sit-in cases is the notion
that the State is responsible for the discriminatory act
of a private party when the State, by its law, has
conpe lied the act. As the Court said in Peterson v. City
° reenville, 373 U.S. 244 (1963): ‘When the state has
commanded a particular result, it has saved to itself the
power to determine that result and thereby ‘to a
significant extent’ has ‘become involved’ in it’.
Moreover, there is much support in lower court opinions
for the conclusion that discriminatory acts by private
parties done under the compulsion of state law offend the
Fourteenth Amendment. In Baldwin v. Morgan, supra, the
Fifth Circuit held that '[t]he very act of posting and
maintaining separate [waiting room] facilities when done
by the [railroad] Terminal as commanded by these state
orders is action by the state.’ The Court then went on
to say: ‘As we have pointed out above the State may not
use race or color as the basis for distinction. IT MAY
NOT DO SO BY DIRECT ACTION OR THROUGH THE MEDIUM OF
OTHERS WHO ARE UNDER STATE COMPULSION TO DO SO.'...
"For state action purposes it makes no difference of
course, whether the racially discriminatory act by the
private party is Cte 8d by a statutory provision or by
a@ custom having the force of law -~ in either case it is
the State that has commanded the result by its law." 398
U.S. at 170-171. 90 S.Ct. at 1615. (Emphasis added.)
In the present case, Kodak claims that it is required
to confiscate certain materials submitted to it because failure
to do so would subject Kodak and its employees to criminal
prosecution under §311.2, 1461-5. What could be a clearer case
of compulsion of law?
In Robinson, supra, the defendants’ convictions for
trespass were reversed because the owner's decision not to
serve Negroes was merely encouraged by a regulation adopted by
the Florida legislature, requiring that in places where Blacks
were employed or accomodated, separate toilets be provided.
The Supreme Court found this to be a sufficient state
involvement to constitute state action, because the requirement
of separate facilities piaced an added burden upon restaurants
“u- A-LY
serving both Whites and Blacks. If the owner's enforcing his
Ownership rights was subject to the Pourteenth Amendment, all
because of the mere regulation which encouraged the
discrimination, then Kodak's confiscation done under compulsion
of state and federal laws must be subject to the Pirst and
Fourteenth Amendments.
Once the compulsion of statute exists, the subjective
motivation for Defendant's act becomes irrelevant. In
discussing Peterson, supra, the court in Robinson, supra,
stated:
"[A] Greenville ordinance which made it unlawfui for
restaurants to serve meals to white persons and colored
persons in the same room or at the same table or
counter. In Peterson the city argued that the manager's
refusal to serve Negroes was based on his own personal
reference, which did not ainount to ‘state action’
Forbidden by the Fourteenth Amendment. But we held that
the case must be decided on the basis of what the
ordinance required people to do, not on the basis of what
the manager wanted to do. We Said: ‘when a state agency
passes a iaw compelling persons to discriminate against
other persons because of race, and the State's criminal
processes are employed in a way which enforces the
discrimination mandated by that law, such a palpable
violation of the Fourteenth Amendment cannot be saved by
attempting to separate the mental urges of the
discriminators'". 378 U.S. at 155-156,84 S.Ct. at 1695.
(Emphasis added.)
According to Kodak it is likewise compelled by law to
confiscate Plaintiff's transparencies. Kodak's argument
(concerning which there is conflicting evidence) that this does
not amount to state action because it unilaterally adopted its
practice (Ex. 53:19) must be equally unavailing.
Doe v. Charleston, supra is extremely similar to the
case at bar. The plaintiff sought declaratory and injunctive
relief against a hospital for refusing to allow the plaintiff's
physician to perform an abortion at the defendant's private
a A-l
hospital. The defendant's policy stemmed from fear of criminal
prosecution under a state law prohibiting abortion unless
necessary to save the life of another. In finding "state
action" for purposes of §1983 the Court stated (with emphasis
added):
"Since state involvement through a custom having the
force of law satisfies the ‘color of law' requirement of
42 U.S.C. §1983, a fortiori the statute in this case
meets the requirement... In this case, a letter from Mr.
Arnwine, president of CAMC, set forth the hospital's
policy and the motivation for that policy as follows:
‘The present policy... with respect to performance of
abortions at its hospital facilities is to literally
adhere to the mandate set forth in Chapter 61, Article 2,
Section [8] of the West Virginia Code. As you are aware,
this statute limits the performance of abortions in the
State of West Virginia to those instances where such act
is done in good faith with the intention of saving the
life of such woman and child...'
"It seems clear that the anti-abortion hospital policy
rests firmly upon what was thought to be the compulsion
of state law. Thus the hospital acted ‘under color of
La sux 529 F.2d at 643-644.
There is no question but that Defendant acted under
compulsion of state and federal statutes. The trial court
concluded that Defendant's "refusal to provide service and to
deal based on fear of prosecution under state law does not
constitute state action” even though it found that the
Defendant's “policy for not developing this type of film rests
on the state obscenity laws and Defendant's fear of prosecution
thereunder”. (Ex 389:13-390:12.) Based on the above
authorities we contend that the exact opposite conclusion must
be reached even without consideration of trademark and patent
grants, or the censorship activity itself.
The trial court's reliance upon cases and issues
briefed by neither of the parties demonstrates great industry,
but incurred the here-realized risk of improper interpretation
3, A-Jo
going unchallenged because of the inability of counsel to
respond.
3.3.1.1. Adams Not Compulsion Case. The trial
court cited Adams vy. Southern Calif.
First Nat. Bank, 492 P.2d 324 (9th Cir. 1973) for the
proposition that race discrimination cases are not applicable
except in other “race” cases. We respectfully argue that the
trial court's reliance thereupon for its rejection of the above
authorities is misplaced for several reasons. First, the
repossession by self-help in Adams was an authorized
alternative, but was not compelled by state law. 11/
3.3.1.2. Compulsion Doctrine Cases Not Limited To
Race Cases. Secondly, the authorities
Plaintiffs had cited to which the trial court was responding
1l/ In Adams the plaintiffs claimed only that state laws
“encouraged” and “sanctioned” the alleged wrongdoing, not
that such laws compelled the same. 492 F.2d at 328-329. At
pages 330 and 334, this Court pointed out that rather than
compelling the self-help repossession, the relevant statute
made same only an "alternative". In discussing Moose Lodge No.
107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965 (1972), this Court in
Adams focused on the fact that the Court in Moose Lodge found
that the effect of the law there in question did not amount to
"establishing or enforcing of discriminatory guest policies”.
492 F.2d at 334. Moose Lodge upon which Defendant, and the
Court in Adams, relied is clearly distinguishable from this
case. There was no statute which compelled the challenged
activity. In distinguishing Public Utilities Commission v.
Pollak, 343 U.S. 451. 72 S.Ct. 813 (1952) (mot a race case) in
which state action was found (see analysis of Pollack in
footnote 1, of dissent of Adams, supra at 340) the Supreme
Court in Moose Lodge stated: “Unlike the situation in Public
Utilities Commission v. Pollak, 343 U.S. 451, 72 S.Ct. 813
(1952), where the regulatory agency had affirmatively approved
the practice of the regulated entity after full investigation,
the Pennsylvania Liquor Control Board has neither approved nor
endorsed the racially discriminatory practices of Moose
Lodge." 407 U.S. at 175-176 n. 3, 92 S.Ct. at 1973. If
"approval" or “endorsement” is enough for state action surely
compelling the intrusion upon Plaintiff's free speech must
suffice.
-ua- A-‘TI
were not limited to race cases. Doe v. Charleston, supra.
When this was noted during oral argument the trial court (Ex.
400:1) responded that this Circuit has rejected that decision
of the 4th Circuit. This response is in error. While it is
true that this Circuit has rejected one of the two bases for
the decision in Doe, (i.e. that receipt of Hill-Burton funds
Creates state action, a rejection acknowledged in Doe) the Doe
decision was based on a second ground (acknowledged by
Defendant, Ex. 352:24) that the statute compelled the activity
by the defendant at the risk of criminal prosecution, the exact
circumstance as is here present. 529 F.2d at 638. This Court
has not rejected that alternative ground, and where there are
two grounds for a decision, neither is relegated to mere dictum
and each have precedential value .12/
3.3.1.3. Actual Adams Holding. Thirdly, the Adams
holding was not as stated by the trial
court. The sole expressions to which the trial court could
possibly have been averting appear at 492 F.2d pages 329 and
333. At page 329, this Court merely expressed uncertainty as
12/ "Where an appellate court decision rests on two or more
grounds, none can be relegated to the category of obiter
dictum." Dragor Shipping Corp. v. Union Tank Car Co., 371 F.2d
722,726 (9th Cir. 1576) citing Woods v. Interstate Realty Co.,
337 U.S. 535,537, 69 S.Ct. 1235 (1945). “ft has I6ng Been
settled that all alternative rationales for a given result have
precedential value. ‘It does not make a reason given for a
conclusion in a case obiter dictum, because it is only one of
two reasons for the same conclusion.'” McLellan v. Mississippi
Power and Light Co., 545 F.2d 919,925 (5th Cir. 1977) citing
Richmond Screw Anchor Co. v. United States, 275 U.S. 331,340,
48 S.Ct. 194,196 (1928). “Where there are two grounds of
decision upon either of which an appellate court may rest its
decision and it adopts both, the ruling on neither is obiter
dictum, but each is the judgment of the court and of equal
validity with the other." Morehouse Manufacturing Corp. v. J.
Strickland and Co., 407 FP.2a 881,888 (C.C.P.K. 1565).
1 A-72
to whether the same test for state action applied to both equal
protection and due process cases, and then it proceeded to
analyze the facts as though the same “significantly involved"
test set forth in these equal protection cases applied, and
relied upon Supreme Court race decisions .13/
At page 333 this Court questioned the controlling
nature of race cases, but then followed same immediately by a
statement in footnote 23 that "This should not result ina
hierarcy of rights, or different state action tests for due
process and equal protection..." 492 F.2d at 333. The Adams
language to which the trial court referred was characterized as
merely a "suggestion", not a holding. 492 F.2d at 341.
3.3.1.4. Limited Distinction in Adams. Fourth,
even if Adams were considered as adopting
a hierarchy of rights (as suggested by the trial court, but
rejected specifically in Adams), the only distinction from race
cases possibly drawn by Adams was not as to First Amendment
cases (as here) but rather only to an “economic due process
case" (footnote 24) where the “creditor remedies were based on
economically reasoned grounds of very long standing". 492 F.2d
at 333. The statutes here involved do not involve either
"economically reasoned grounds” nor any other grounds “of very
long standing” nor do they restate that which were "a part of
the common law" as was found in Adams. Id. at 330,333,334.
13/ Adickes v. S.H. Kress & Co., cited at page 330, Burton v.
Wilmington Parking Authority cited at page 331, Moose Lodge
No. I7 v. ic Cited at pages S31, 332 and 334, Evans v. Abne
cited at pages 331 and 336, and Griffin v. Maryland cited at
page 337.
-16- A-13
3.3.1.5. Wo Supreme Court Support for Hierarchy.
Pifth, even assuming that the Adams case
had been intended to hold that a lesser governmental
involvement is required to find state action in a race
discrimination case (the “different state action tests" decried
by Adams itself in footnote 23), there is no Supreme Court
support for such a view, and the logic leads to a contrary
conclusion as acknowledged in said footnote 23.
3.3.1.6. Conclusion Re Adams. For each of these
reasons the trial court's reliance upon
Adams as a basis for rejecting the cases we cited is
misplaced .14/
3.3.1.7. Grafton and Young Cases - Race Case
Reliance. The trial court next justified
its refusal to follow “race” cases based on Grafton v. Brooklyn
Law School, 478 F.2d 1137 (2nd Cir. 1973) and Young v. American
Mini Theatres, Inc., 427 U.S. 50,96 S.Ct. 2440 (1976). (Ex.
390:13 et seq.) The trial court's reliance upon these cases is
improper for each of several reasons. First again note that
the Doe, supra is not a race case.
3.3.1.8. Actual Holding - Grafton. Although there
is dicta from the Grafton decision
suggesting the hierarchy of rights and different state action
tests for different rights which this Court eschewed in Adams,
the holding in Grafton dealt with the argument that the state's
granting of $400.00 for each degree the defendant awarded
14/ No discussion of Adams would be complete without noting the
strong dissent both by Judge Byrne, and by Judge
Huffstedler from the denial of hearing en banc.
-7- A-T4
caused defendant's actions to amount to state action. To this
contention the court responded: “We do not regard the $400
payment as sufficient to carry on its back the particular
constitutional rights that plaintiffs here advance." 478 F.2d
at 1142. Plaintiffs' grounds for contending that state action
is here involved are not remotely siatier in Grafton's Claim
and, therefore, the Grafton holding is not arguably pertinent.
3.3.1.9. Young - Majority. Even as stated by the
trial court the most which can be drawn
from the Young case is that “four members of the Supreme Court”
have stated that “boarderline obscenity material is not
entitled to the same panoply of protection as are other First
Amendment-type materials.” (Ex. 390:18 to 390:24.)
3.3.1.10. Young Not Concerned With State Action.
The Young case neither involved nor
discussed the question of state action. In Young the plaintiff
had challenged a land use ordinance prohibiting certain
locations for new adult movie theatres. There was no issue of
State action; the action was against the state. Whether
Kodak's actions could be justified is a separate issue and
would have no bearing upon the determination of whether state
action were involved. The trial court erroneously confused two
separate legal issues. Young never suggested that the nature
of the grievance had any bearing on the issue of state action.
3.3.1.11. No Showing Of Obscenity. Since Defendant
offered no evidence of the content of the
confiscated pictures, the reference to borderline material is
ae A-S
made without any supporting evidence .15/ (N. 8 above)
3.3.1.12. Validity of Statutes. The trial court
also supported its finding of a lack of
State action and rejection of cases we cited on the basis that
the statutes under consideration in the "race" cases we cited
were clearly invalid on their face. (Ex. 391:6.) This
Statement fails to support the conclusion of a lack of state
action. First, while such statement may appear in some
decision, we do not find it in Peterson, supra, Robinson, supra
or Adickes, supra. Secondly, the statement does not respond to
15/ While the context of the trial court's reliance upon Young
was solely with respect to its determination of an absence
of state action, we note that Young is equally inapplicable to
the question of the violation 6 rst Amendment rights.
Pirst, none of the statements of the lead opinion constitute
the holding of the case because the fifth justice whose
concurring opinion made up the majority did not concur with
those views, but rather joined in the decision upholding the
Ordinance as a proper land use regulation. 427 U.S. at 60 and
73, 96 S.Ct. at 2447 and 2454. Secondly, the plaintiff in
Young acknowledged its being within the coverage of the
Ordinances, but claimed they were nonetheless vaque. 427 U.S.
at 59,96 S.Ct. at 2447. The Supreme Court recognized a right
to challenge a statute on the grounds of vagueness even when
not vague in its application to the plaintiff, but stated that
this right was a limited one. It was in this context of the
issue of standing that the statement to which the trial court
here alluded was made, to wit: the right to assert a claim of
vagueness in application on behalf of third parties is not
recognized where “borderline” material is involved. As the
trial court recegnized, that expression did not receive
majority support. n.1l 427 U.S. at 73, 96 S.Ct. at 2453.
Plaintiffs are not urging a position on behalf of other
persons; they are asserting a claim on their own behalf, and
therefore, the expression to which the trial court alluded is
not applicable. Thirdly, to the extent that the First
Amendment is dealt with, the Court in Young treated the
limitation as one of time place and manner, a long recognized
exception. 427 U.S. at 63, 96 S.Ct. at 2448-9. That
limitation upon tree speech is not here involved. Therefore,
in no respect does Young support the trial court's decision.
Young warned that statements regarding free speech should not
read “literally and without regard for the facts of the case
in which it was made.” 427 C.S. at 65, 96 S.Ct. at 2450.
A-1
Doe, supra, which does not involve race discrimination.
Finally, the issue of state action is determined by the
involvement of the state, not the validity or invalidity of the
statute compelling the action.
3.3.1.13. Conclusion Re Compulsion. An analysis of
the Adams, Grafton, and Young cases
demonstrates that none of them justify the trial court's
rejection of the authorities we cited or the conclusion that as
a matter of law there was an absence of state action in
Defendant's refusal to return the pictures to Plaintiffs under
compulsion of state and federal statutes. The suggestions that
prior approval of a different application of those statutes, or
the risk of prosecution, as a matter of law precludes a finding
of governmental action are equally unsupportable. At a minimum
Defendant's acting under compulsion of state law raises a
genuine issue of governmental action.
3.3.2. State Action Arises from Trademark and Patent
Grants. A second ground for contending a
genuine issue of state action is that the State and federal
trademark and patent rights granted to Defendant cause
sufficient governmental involvement to amount to state action.
Plaintiffs' evidence is that the unique superiority of
Defendant's product is a result of its ownership of numerous
patents and trademarks granted by the United States and the
various States. (Ex. 271-313.) Although Defendant devotes
much of its evidence to support the proposition that
alternative processors capable of equal product are available,
Defendant offered no evidence either that other processors do
in fact produce equal product (and Plaintiffs' evidence is to
-20- A-77
the contrary) or to refute the contention that superior or
otherwise, Defendant's mode of operations is attributable to
patents and trademarks previously awarded to it. Similarly,
while Defendant devoted four pages of argument to the
contention that its trademark and patent rights granted by the
government do not constitute state action (Ex. 84 et seq.),
conceding along the way that this issue has never been decided
by any court (Ex. 87:1), Defendant does not so much as suggest
that it neither had such rights or that they did not contribute
to its processing films.48/
If involvement by reason of leasing of public property
[Burton v. Wilmington Parking Authority, 365 U.S. 715,81 S.Ct.
856 (1961) }22/ is sufficient to constitute state action, we
contend that the granting of trademark and patent rights is
equally sufficient.
Defendant argues that “the mere grant of a corporate
charter is a ministerial government act which does not...make
the latter's business...'state action'.” (Ex. 84:25.) It may
be true that granting corporate charters may be ministerial but
granting patents is not, and Defendant's attempted analogy to
16/ It is Defendant's burden to show absence of state action.
§3.1., above. After Plaintiffs' opposing memorandum
distinguished the corporate charter-permit-license cases which
Defendant attempted to analogize to its patent and trademark
rights, Defendant did not even discuss the subject in its reply
memorandum. (Ex. 251-254 and Ex. 350-352.)
17/ Courts in other circuits have also found state action from
the grant of funds to assist in the construction of
housing (Mcqueen v. Druker, 438 F.2d 781 (lst Cir. 1971)],
exemption from taxation [McGlotten v. Connally, 338 F.Supp. 448
(D.C. 1972)], and the grant of funds for construction of a
hospital [Simkins v. The Moses H. Cone Memorial Hospital, 323
F.2d 959 (4t Fe )}.
-a- A-VUS
the corporate charter cases is therefore improper .28/ The
Patent Office officers perform more than ministerial acts in
reviewing a patent application, in awarding rights and powers
pursuant to the Constitution, and in entering into a contract
with the patentee regarding the scope and exercise of these
constitutional powers .19/
The charter - license cases cited by Defendant are
further inapplicable to trademarks and patents because unlike
the former, the latter are the result of a direct grant of
Powers and rights pursuant to the U.S. Constitution (Art. I,
§8, ci.8), are issued not for private benefit but for the
public good, and in rewarding invention the rights and welfare
of the community must be fairly dealt with. See Sears Roebuck
18/ Discretion and judgment is exercised by the officers of the
Patent Office at every step in the patent procedure until
such time as the bargain is struck with the patentee.
Applications are subjected to extensive review to determine
whether the invention meets the requisite "Novelty" and
"Now-Obvious Subject Matter" criteria. 35 U.S.C. §§102, 103.
The reviewing officer must state his reasons for rejecting an
application. 35 U.S.C. §132. If after rejection, the
applicant persists in his claim, the reviewing officer must
re-examine the application. 35 U.S.C. §132. In certain
circumstances holders of competing patent claims may join in
these proceedings. 35 U.S.C. §135. An applicant whose
claim(s) have been twice rejected may appeal to the Board of
Appeais within the Patent Office. 35 U.S.C. §134. If still
dissatisfied, an applicant may further appeal to the Court of
Customs and Patent Appeals or to the District Court for the
District of Columbia. 35 U.S.C. §§141, 145, 146.
19/ Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct.
449 (1974), relied on by Defendant (Ex. 86:10) is further
distinguishable first, because the Court in Jackson doubted
that the state had ever granted or guaranteed the power Company
a monopoly (419 U.S. at 352, 95 S.Ct. 454), whereas the grant
of a patent or trademark is clearly a grant of monopoly and
secondly, because the Supreme Court there asserted that the
governmentally created rights must have a close relationship to
the challenged authority, a fact here true. The same
distinction was drawn in Taylor v. St. Vincent's Hospital, 523
F.2d 75,77 (9th Cir. 1975).
@22< A “4 I
& Co. v. Stiffel, Co., 376 U.S. 225, 84 S.Ct. 784 (1964),
Griffith Rubber Mills v. Hoffar, 313 F.2d 1 (9th Cir. 1963).
While Defendant's assertion that the federal patents
and trademarks are irrelevant to the second count (Ex. 84:9) is
correct, Defendant overlooks that federal action is reievant to
the third and fourth counts, and State trademarks support the
Claim of state action as to the second count.
Independently, we urge that these patents and
trademarks create state action. Even were this contention in
error, we contend that in combination with the compulsion of
the obscenity statutes, and Defendant's acting as a censor,
they cause state action to exist.
3.3.3. State Action Arises From Defendant's Exercise
of Censorship Function. Here Defendant acts
as a censor in deciding which pictures it will return to the
owners. (See nine separate affidavits filed by Defendant
commencing at Ex. 147.) One of the recognized bases for
finding state action is that the act is one which has
"traditionally been the function of the State." Hall v.
Garson, 430 F.2d 430,439 (Sth Cir. 1970) [seizure of property
to satisfy lien]; Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276
(1946) [functions of town]; Terry v. Adams, 345 U.S. 461, 73
S.Ct. 809 (1953) and Smith v. Allwright, 321 U.S. 649, 64 S.Ct.
757 (1944) [primary elections]; North Georgia Finishing, Inc.
v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719 (1975); Fuentes v.
Shevin, 407 U.S. 67, 92 S.Ct. 1983 (1972) and Sniadach v.
Family Finance Corp. of Bay View, 395 U.S. 460, 89 S.Ct. 1820
(1969) [enforcement of credit remedies}.
Defendant asserts that this Court has not as yet
-23- A- $0
adopted the public function basis and that this Court so stated
in Melara v. Kennedy, 541 F.2d 802 (9th Cir. 1976). (Ex.
89:21.) Yet this Court in Melara did list same as a factor (id
at 802) and specifically distinguished rather than rejecting
Hall _v. Garson, supra, (id at 807) just as it did in Adams,
Supra, where it concluded that the activity involved in Hall
(seizure of property after entering a private person's home)
"had historically been a function of the State of Texas” while
"repossession is not a state function". 492 F.2d at 336. That
distinction cannot be drawn as to censorship because it too has
been “historically a function of the state", a conclusion
Defendant seemingly concedes. (Ex. 90:19.)
Defendant's attempts to establish as a matter of law
the inapplicability of this basis for finding state action
fails. First Defendant asserts that Defendant's censorship
"was not formulated (a) at the request of, in cooperation with,
or with the knowledge of law enforcement authorities or
(b) with the intent or purpose of participating in the
enforcement of the obscenity laws..." That fact was equally
true in the Hall, Marsh and election cases cited above, and
thus cannot be the distinguishing factor. The fact that no
governmental agency asked Kodak to do what it is doing doesn't
mean that Kodak's confiscation doesn't constitute state
action. Formal government demand or request is not required.
Kodak's assertion that it does not act as a censor (Ex.
87:22) is belied by the true facts. Kodak reviews the pictures
and transparencies and decides which ones it will return to the
Owner thereof. It does so on the basis of the content of the
film and its evaluation of whether that content is or is not
-2- A - §|
obscene. What else could be involved in censorship?
Kodak contends that it has adopted this policy to avoid
prosecution under the law. (Ex. 88:14.) Rather then negating
State action the authorities (§3.3.1. above) demonstrate that
Same proves state action, and none of the cases suggest this as
an exception to the state function test. Further Peterson,
supra, and Doe, supra found state action notwithstanding risk
of criminal prosecution and the former held also that the
asserted motivation is not determinative once it is shown that
the conduct was done pursuant to state policy or statute. Here
Kodak concedes that its conduct was done pursuant to, and under
compulsion of, the obscenity statutes.
Defendant's attempted distinction of the Marsh case
Supra on the basis that its “position would be analogous to the
company town [in Marsh] only if it appeared that Kodak was an
officialy sanctioned censor..." (Ex. 89:8) is fallacious.
There is no holding in Marsh that the company town was
officially sanctioned to bar the distribution of religious
literature, and that was not the premise for the decision.
Admittedly, Kodak's practice does not totally bar
Plaintiffs' publications. There is nothing cited by Kodak to
Support its conclusion (Ex. 89:16) that only if the entire
publication were barred could Kodak's actions be deemed to be
governmental action. Available alternatives do not save
infringement on free speech. (See §3.4.2.3. below.)
Defendant relies heavily on Flagg Bros., Inc. v.
Brooks, 436 U.S. 149, 98 S.Ct. 1729 (1978). That case
specifically notes that the traditional governmental function
basis is not limited to company town and election cases and
-25- Ae ¥2
holds only that “settlement of disputes between debtors and
creditors" does not come within that basis. 436 U.S. at
161-162,163, 98 S.Ct. at 1736, 1737.
Defendant seeks to expand the reference in Plagg Bros.
to “commercial transaction” to mean that there can be no state
action in commercial transaction. The relationships in Adickes
as well as North Georgia, Fuentes, Sniadach, supra involved as
much a commercial transaction as here. Flagg Bros. dealt only
with the “dispute resolving" aspect of a commercial
transaction, an aspect not here involved.
Additionally, in Plagg Bros. the Court (436 U.S. at
160, 98 S.Ct. at 1735) notes that the statute pursuant to which
the lien rights were exercised provided for adequate remedies
for improper exercise of such rights. The obscenity statutes
do not provide for any such remedies, and other than this
action, there is no meaningful remedy available to Plaintiffs.
Nor can the absence of a State employee in the
litigation be treated as the vital distinguising factor. No
State official was a party in Adickes, or Doe, supra, or in
McQueen v. Druker, 438 ?.2d 781 (lst Cir. 1971), Simkins v. The
Moses H. Cone Memorial Hospital, 323 F.2d 959 (4th Cir. 1963)
or McGlotten v. Connally, 328 F.Supp. 448 (D.C. 1972).
Perhaps the most vital distinction of Flagg Bros. is
demonstrated by its discussion of Adickes, supra:
"Our cases state ‘that a State is responsible for the...
act of a private party when the State, by its law, has
compelled the act.’ Adickes, supra, [citation]. This
Ourt, however, has never held that a State's mere
acquiescence in a private action converts that into that
of the State...
"Here, the state of New York has not compelled the sale
of a bailor's goods, but has merely announced the
-2- A-§£3
circumstances under which its courts will not interfere
with a private sale.” 436 U.S. at 164-166, 98 S.Ct. at
1737-1738. (Emphasis added.)
Here there is not merely “acquiescence”. Kodak
contends that it is acting to avoid prosecution under the
statutes and if one accepts Kodak's application, then in every
meaningful way those statutes compel Kodak's confiscation
policy. That element wholly distinguishes this case from the
Flagg and other cases upon which Kodak relies.
The trial court's findings and conclusions do not
discuss this basis either individually or as an element along
with the other bases herein discussed.
3.4. DEFENDANT DID NOT PROVE ABSENCE OF JUSTICIABLE
CONTROVERSY FOR DECLARATORY RELIEF. Defendant's
position regarding the fourth count (Ex. 54:20) would force
Plaintiffs to incur the enormous risks and injury which arise
when Plaintiffs submit film to Defendant and then the
transparencies are not returned, and to file repeated lawsuits
seeking the mere return of these by then stale transparencies.
An action for mere possession would be fruitless in that by the
time transparencies are returned they would be of little, if
any, value. (Ex. 273:7-284:4.) Declaratory relief is the
proper means of obtaining a definitive adjudication of rights,
thereby avoiding litigation each time a wrong is committed.
See Roe v. Wade, 410 U.S. 113,126, 93 S.Ct. 705,713 (1973); Doe
v. Charleston Area Medical Center, Inc., 529 F.2d 638,644 (4th
Cir. 1975). This case presents a classic example of an action
"capable of repetition, yet evading review". Roe v. Wade,
supra, 410 U.S. at 125.
According to Defendant, application of §§311.2 and
-27- A-&4-
1461-5 requires it to act as a censor to determine which
pictures may legally be returned to Plaintiffs. Plaintiffs
contend that if such statutes so require, then they violate
Plaintiffs' Pirst and Fourteenth Amendment rights and a
declaration of the invalidity of such application should be
made. Especially is this necessary if Plaintiffs are denied
relief under the second and third counts.
3.4.1. There Is Justiciable Case. The trial court's
granting the summary judgment motion on the
declaratory relief (28 U.S.C. §2201) count was based on the
conclusion that “there is no case or controversy” (Ex. 392:19)
but rather this was “a collusive action” (Ex. 393:5) because
"Kodak tells us it has no interest in upholding either set of
laws" (Ex. 392:25). The authorities cited not only by
Defendant, but also by the trial court, as support for reaching
this conclusion as a matter of law are inapplicable, in that
each is premised on a finding of a collusive action or moot
case. Typical is the statement from Moore vy.
Charlotte-Mecklenburg Board of Education, 402 U.S. 47,48, 91
S.Ct. 1292,1293 (1971) quoted in Defendant's moving papers (Ex.
94:28) that “We are thus confronted with the anomaly that both
litigants desire precisely the same result...". There is
surely not one shred of evidence or argument by Defendant that
it joins, or is in collusion, with Plaintiffs in their attack
on the validity of the application of the laws here in
question. To the contrary, Defendant's Answer and Motion for
Summary Judgment prove adversity. Avoidance of collusion is
assured by 28 U.S.C. §2403. The trial court's conclusion that
this would be “a collusive action" is in error.
0. fp -§5
The trial court relied upon U.S. v. Johnson, 319 U.S.
302, 63 S.Ct. 1075 (1943) and Rutolo v. Rutolo, 572 P.2d 336
(lst Cir. 1978). (Ex. 393:24.) In Johnson the landlord
defended a tenant's action on the ground that the Emergency
Price Control Act of 1942 was unconstitutional, and the Supreme
Court upheld the government's claim of collusion in a motion to
reopen the case. 28 U.S.C. §2403 protects against this risk,
and there is no evidence of collusion here.
In Ruotolo, supra, a creditor moved to disqualify a
retired bankruptcy referee from serving as attorney for the
debtor in possession. After denial of the motion the
government intervened, following which the creditor withdrew
its objection, and the retired referee ceased to represent the
debtor. Nonetheless the government appealed the denial of the
disqualification motion. The Court of Appeals held that the
matter had become moot and that there remained no justiciable
issue by reason thereof. Further the Court found that for the
government to proceed it had to have an independent basis, and
that once the parties had resolved their differences, the
government had no such basis, and further that its decision
would merely be an advisory opinion. None of the facts in
Ruotolo are even tangently similar to those here and the
decision in no way supports a conclusion that there is not a
dispute requiring declaratory relief in this case. 20/
20/ The other authorities cited by Defendant are equally
inapplicable. In Golden v. Zwickler, 394 U.S. 103, 89
S.Ct. 956 (1969), the Supreme Court found that the case or
controversy had become moot. In Mendez v. Heller, 530 F.2d.
457 (2a Cir. 1976), the plaintiff sought to challenge a New
York two year residency requirement prior to actually having
attempted to file for divorce in the appropriate (Cont'd)
-29- A-¥6
While Defendant argues that there is a lack of concrete
adverseness (Ex. 91:25), that there is a lack of su’ stantial
controversy between the parties (Ex. 92:2) and that it has no
interest in defending the constitutionality of the challenged
laws (Ex. 93:16), in virtually the next breath, however,
Defendant concedes that it "is only interested in obeying the
laws as they exist”.
Isn't adversity proved by Defendant's Answer and the
manner in which it has pursued this case? If Kodak had no
interest in defending the constitutionality of the statutes and
if all it wanted to do was be secure against possible
prosecution, why did it answer the fourth count?
3.4.2. Prior Determinations - Tracking. The trial
court stated that these statutes have been
"adjudicated as valid in criminal cases and other contexts”
(Ex. 392:11.) and that the state and federal statutes of which
"Kodak is concerned” “track the decisions of the Supreme
Court.” (Ex. 391:12.) While the statutes may "track", the
application by Kodak does not. Here Defendant claims the
compelled application of the statutes requires its prior
20/ (Cont'd) New York State Courts. The courts are more ready
to review threatened deprivations of First Amendment Rights
than in other situations. Zwickler _v. Koota, 389 U.S. 241,254,
88 S.Ct. 391,399 (1967); Wolft v. Selective Service Local Board
No. 16, 372 F.2d 817 (2nd Cir. 1967). In contrast to the
situation in Mendez, all possible events have occurred to
create an actual dispute between the parties. Plaintiffs have
tendered film for processing to defendant and defendant has
refused to return the films to Plaintiffs. Thus, the "exigent
adversity” mentioned in Mendez exists. Finally, the contention
that Granfield v. Catholic University of America, 530 F.2d 1035
(D.C. Cir. 1976) (Def.Br. 68:1) requires the joinder of
representatives of the bodies enacting the statutes is in error
as demonstrated by other cases cited by Defendant itself.
0 A -§7
restraint of free speech in the pre-editorial process which the |
authorities state is improper. No case has yet upheld a
statute's compelling a private person to interfere with free
speech before publication or that these statutes should be so
interpreted, and the censorship cases require procedural due
process which the application Kodak claims is compelled would
violate. Kodak's assertedly compelled application of the
Statutes fails to "track", or comply with, the authorities in
five separate respects: (1) prior restraint at a
pre-publication editorial stage is unconstitutional, (2) the
pictures in pre-publication are not legally capable of being
tested for obscenity, (3) Plaintiffs' magazine must be judged
as a whole and not merely pictures therefrom, (4) the Kodak
tests applied do not comport with the constitutional
requirements and (5) Plaintiffs' have not been afforded the
procedural due process required for censorship.
3.4.2.1. Censorship Limitations - Prior Restraint.
"We must start from the recognition that the films were
presumptively protected by the First Amendment. Roaden
v. Kentucky, 413 U.S. 496, 93 S.Ct. 2796 (1973). Since
seizure of First Amendment-protected materials
constitutes a form of prior restraint, the materials are
entitled to special treatment..." United States v.
Tupler, 564 F.2d 1294,1297 (9th Cir. 1977).
Defendant's policy of confiscation directly affects and
threatens Plaintiffs’ freedom of speech and press by precluding
its expression. This constitutes a prior restraint of speech,
for which the Supreme Court has acknowledged a deep distaste
and which “comes to this Court bearing a heavy presumption
against its constitutiohal validity." Bantam Books, Inc. v.
Sullivan, 372 U.S. 58,76 83 S.Ct. 631,639 (1963) later quoted
in New York Times Company v. U.S., 403 U.S. 713,714, 91 S.Ct.
1h-GE
2140,2141 (1971). See also Southeastern Promotions, Ltd. v.
Conrad, 420 U.S. 546,553-554 95 S.Ct. 1239,1244 (1975) and
Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900 (1940).
If Kodak is required by these statutes to confiscate
films, then these statutes would impose the same evil which was
struck down in the above cases. Plaintiffs' freedom of speech
is subjected to “appraisal of facts, the exercise of judgment,
and the formation of an opinion" by Kodak at the direction of
the government, factors which characterize censorship. See
Southeastern, supra, 420 U.S. at 558-9, 95 S.Ct. at 1246-7, in
which the Court additionally stated:
"It is always difficult to know in advance what an
individual will say, and the line between legitimate and
illegitimate speech is often so finely drawn that the
risks of freewheeling censorship are formidable.”
Here the evidence shows that not only is it "difficult
to know in advance what" Plaintiffs magazines will say or
depict, its impossible.
In Near v. State of Minnesota, 283 U.S. 697,721, 51
S.Ct. 625,633 (1931) the Supreme Court struck down a statute
“authorizing suppression" of materials. Here application of
the statutes according to Defendant requres it to suppress the
transparencies. The Court there stated that it was irrelevant
whether the restraint was directly by the legislature or only
indirectly. In Near the asserted justification for the prior
restraint was the injury suffered from libelous publications.
In this case the alleged injury is the publication of
obscenity. Substituting obscenity for libel, the rule to be
drawn from Near is (bracketed portions representing such
substitutions):
a A §9
"The recognition of authority to impose previous
restraint upon publication in order to protect the
community against the circulation of lokecene matter)
necessarily would carry with it the admission of the
authority of the censor against which the constitutional
barrier was erected. The preliminary freedom, by virtue
of the very reason for its existence, does not depend, as
this court has said, on proof of [non-obscenity].
{citation.]
"Equally unavailing is the insistence that the statute is
designed to prevent the circulation of [obscenity] which
{is undesireable]. [T]he theory of the constitutional
guarantee is that even a more serious public evil would
be caused by authority to prevent publication."
The rule of Near applies in the case of disputes
between private parties as it does in disputes between the
government and a private party [Organization For A Better
Austin v. Keefe, 402 U.S. 415,418, 91 S.Ct. 1575,1577 (1971)
and Goldblum v. National Broadcasting Corp., 584 F.2nd 904,907
(9th Cir. 1979)], and freedom of speech and press applies to
commercial as well as non-commercial speech [New York Times
Company v. Sullivan, 376 U.S. 254,256, 84 S.Ct. 710,713 (1964)
and Quinn v. Aetna Life & Cas. Co., 616 F.2d 38 (2nd Cir.
1980)}.
The obscene content of films would not justify prior
restraint. In Southeastern, supra, the plaintiff was denied
the right to use public property to put on a live performance
of a musical play. The lower court found the play to be
obscene. The Plaintiff raised three arguments: (1) that the
Defendant's refusal was an unlawful prior restraint, (2) that
the wrong test of obscenity was applied and (3) that the record
did not support the finding of obscenity. The Supreme Court
responded: "We do not reach the latter two contentions, for we
agree with the first." 420 U.S. at 552, 95 S.Ct. at 1243.
Thus the Court declared the defendant's conduct was
“3 £-F
unconstitutional regardless of whether the play was obscene.
Once a prior restraint was found, the nature of the speech
became insignificant.
Similarly, the nature of the transparencies here should
be irrelevant. What the State cannot do directly it cannot do
through the back door. If, as Kodak contends, it faces a risk
of prosecution, then the statute which directs Kodak to engage
in prior restraint must be declared unconstitutional in its
application to a film processor, and Kodak's practices done to
aid such prior restraint must be enjoined.
3.4.2.2. Pre-Publication Material Cannot Be
Censored. Plaintiffs and Defendant agree
that the film sent to Defendant by or for Plaintiffs is merely
an early intermediate step in the process of Plaintiffs’
publishing their magazines. (§2.4. above.) Defendant's
threatened and actual confiscation of film directly intereferes
with the Plaintiffs' editorial process and freedom of press by
denying Plaintiffs films which they might use, and therefore,
requires their use of other transparencies and inferior
quality. Application of the statutes as asserted by Defendant
requires it to enter the composing room of Plaintiffs to give
directives as to the content of expression by Plaintiffs. On
the alleged basis of federal and state laws, Defendant has
therefore created its own prior restraint upon Plaintiffs'
speech. The law with respect to such activity is well-stated
in Goldblum, supra, 584 F.2d at 907:
"It is a fundamental principle of the first amendment
that the press may not be required to justify or defend
what it prints or says until after the expression has
taken place. The Government has teen prohibited from
interfering with the editorial process by entering the
+ &-4
composing room to give directives as to the content of
@xpression. The district court proceedings here
Intervened in the editorial process by erderine an
Official of the broadcasting company to produce a film
just before its scheduled broadcast so that it could be
examined for inaccuracies. A procedure thus aimed toward
prepublication censorship is an inherent threat *%o
expression, one that chills speech." (Emphasis added and
eltetions omitted.)
In Goldblum the challenged order did not prevent or
preclude publication. Rather it merely required divulgence to
the court before publication. Nonetheless the order was
reversed (within twenty-four hours). How much worse is
Defendant's position here when its practice has resulted not
only in chilling free speech but also in actual prevention of
publication of the materials it has undertaken to censor.
"The special vice of a prior restraint is that
communication will be suppressed, either directly or by
inducing excessive caution in the speaker, before an
adequate determination that it is unprotected by the
First Amendment.” Pittsburgh Press Co. v. Pittsburgh
Com'n on Human Rel., 413 a3. 376,390, 93 S.Ct. 5554-2561
(1973). (Emphasis added.)
Because of the assertedly compelled application of the
Statutes, Defendant exercises "excessive caution” resulting in
Plaintiffs loss of their freedom of speech. In Baggett v.
Bullitt, 377 U.S. 360,372,84 S.Ct. 1316,1323 (1964) the Supreme
Court struck down a statute creating a prior restraint because
it forced "[t]hose... sensitive to the perils posed by [the
Statute to] avoid the risk... by restricting their condcuct to
that which is unquestionable safe. Pree speech may not be so
inhibited.”
In reversing @ §311.2 conviction the court in In Re
Klor, 64 Cal.2d 816,620,821 (1966) stated:
"Without the requirement that the defendant be shown to
have prepared the material with intent to distribute it
in its obscene form, the statute wouid apply to matter
-8- A- 42
produced solely for the personal enjoyment of the creator
or as a means for the improvement of his artistic
technique. Such a statute would approach an interdiction
of individual expression in violation of the Pirst and
Fourteenth Amendments. (See Griswold v. Connecticut
(1965) 381 U.S. 479, 482 (85 S.Ct. I678]; American
Communications Assn. v. Douds (1950) 339 U.S. 362,412 [70
"Nor does such conduct occur if the creator intends to
purge the material of any objectionable element before
distributing or exhibiting it. To hold otherwise would
pose grave technical difficulties for the unconventional
artist and would, because of the risk of criminal
sanctions, tend to suppress experimental and tentative
productions that might become, in finished form,
constitutionally protected communication. '‘... [T]he
Fourteenth Amendment requires that regulation by the
States of obscenity conform to procedures that will
ensure against the curtailment of constitutionally
protected expression, which is often separated from
obscenity only by a dim and uncertain line.’ (Bantam
Books, Inc. v. Sullivan (1963) 372 U.S. 58,66 [83 S.Ct.
631).)"
3.4.2.3. Available Alternative Means of
Publication Will Not Save A Prior
Restraint. The evidence shows a conflict as to whether
alternatives are available to Plaintiffs. However, even were
alternatives proved as a matter of law, it would not establish
the absence of genuine issue of state action.
"Whether petitioner might have used some other, ot a ae
owned, theater in the city for the production is of
consequence. There is reason to doubt on this nee
whether any other facility would have served as well as
these, since none apparently had the seating capacity,
acoustical features, stage equipment, and electrical
service that the show required. Even if a privately
owned forum had been available, that fact alone would not
justify an otherwise impermissible prior restraint.
‘[O]ne is not to have the exercise of his liberty of
expression in appropriate places abridged on the plea
that it may be exercised in some other place.' Schneider
v. State 308 U.S., at 163, 60 S.Ct., at 151."
Southeastern, supra, 120 U.S. at 556, 95 S.Ct. at 1245.
If appropriate alternative theaters could not save the
prior restraint in Southeastern, then alternative processors
cannot save Kodak's prior restraint.
26- --93
3.4.2.4. Must Consider Finished Whole Magazine.
Here Kodak at best is judging pictures
which may or may not be included in a magazine and is not
considering the entire magazine, because of course it can't.
Such application of a statute is unconstitutional.
"(A]ppellant would view each separate article and
pictorial presentation, to determine whether each ‘work'
in a 'volume' is obscene under the Miller test. We
conclude that decisions of both the Supreme Court and
this court require us to treat each magazine as a
separate work that is to be taken as a whole.” Penthouse
ppteen a. Ltd. v. McAuliffe, 610 F.2d 1353,1366-126) (5th
tf. *
If it is improper to view only entire articles, how
much more so to view merely pictures from such articles.
In United States v. Tupler, supra the convictions were
reversed because the search warrant did not meet constitutional
requirements. The court there stated:
"The affidavit upon which the warrant was based described
in some detail the photographic labels which were fixed
to the film boxes... These labels did not necessarily
bear any relationship to the content of the films...
"Pirst Amendment standards require that any determination
of obscenity be made considering the material as a
whole...
"A single photographic print or ‘out take' from a roll of
motion picture film... could never establish probable
cause to believe that the film ‘taken as a whole, lacks
serious literary, artistic, political, or scientific
value.'* 564 F.2d at 1297. (Emphasis added.)
If a single “out take" cannot establish the obscenity
of a motion picture, then surely a single picture which may
never be used in a magazine cannot establish that the magazine
"taken as a whole, lacks serious literary, artistic, political,
or scientific value.”
These cases follow the statements of Judge Hand in
-37- A-4Y
U.S. v. One Book Entitled Ulysses, 72 F.2d 705,707 (2nd Cir.
1934) holding that the publication must be “taken as a whole".
Judge Hand quoted from a prior decision of Judge Andrews in
Halsey v. New York Society for Suppression of Vice, 234 N.Y. l,
136 N.E. 219 as follows:
"In referring to the obscene passages, he remarked that:
‘No work may be judged from a selection of such
paragraphs alone. Printed by themselves they might, as a
matter of law, come within the prohibition of the
Statute. So might a similar selection from Aristophanes
or Chaucer or Boccaccio, or even from the Bible. The
book, however, must be considered broadly, as a whole.'
We think Judge Andrews was clearly right, and that the
effect of the book as a whole is the test.”
Nor may reference be made to prior publications of
Plaintiffs. A restraint which “operates to suppress, on the
basis of previous publications" is unconstitutional.
Organization For A Better Austin v. Keefe, 402 U.S. 415,418, 91
S.Ct. 1575,1577 (1971). (Emphasis added) (See also n. 8 above.)
3.4.2.5. Kodak's Policy Does Not "Track". The
standard for obscenity established in
Miller v. California, 413 U.S. 15,25, 93 S.Ct. 2607,2615 (1973)
is a three-pronged test including:
"(a) whether ‘the average person, applying contemporary
community standards' would find that the work, taken as a
whole, appeals to the prurient interest; (b) whether the
work depicts or describes, in a patently offensive way,
sexual conduct specifically defined by the applicable
state law; and (c) whether the work, taken as a whole,
lacks serious literary, artistic, political, or
scientific value.” 413 U.S. at 25, 93 S.Ct. at 2615.
(Emphasis added, citations omitted.)
As discussed under §§3.4.2.2. and 3.4.2.4. above, the
transparencies are (if used at all) substantially altered prior
to appearance in Plaintiffs' magazines. Textual material is
also added. Yet, as noted, Defendant's assertedly compelled
application of the statutes (Ex. 106-7) does not purport to
-1- A- 95
consider the whole magazine, thereby failing to comply with
prongs (a) and (c) of this conjunctive test. Nor does
Defendant's policy require depiction in a “patently offensive
way” so as to meet the second prong. Kodak's policy (Ex.
106-7) does not “track” the case requirements for finding
obscenity as to any of the three tests.
3.4.2.6. Procedural Due Process. Courts have
imposed a substantial set of due process
requirements upon censors. See Freedman v. Maryland, 380 U.S.
51, 65 S.Ct. 734 (1965); United States v. Thirty Seven (37)
Photographs, 402 U.S. 363, 91 S.Ct. 1400 (1971); Blount v.
Rizzi, 400 U.S. 410, 91 S.Ct. 423 (1971); Southeastern
Promotions, supra, Interstate Circuit, Inc. v. City of Dalias,
390 U.S. 676, 88 S.Ct. 1298 (1968).
The basic due process requirements can be summarized as
follows: (1) the standard for determining whether a work is
obscene must comply with constitutional standards of obscenity
and may not be vague, overly broad or imprecise; (2) the burden
of proving that the work is unprotected expression must rest on
the censor; (3) the censor, within a specified brief period,
either issue a license or go to court to restrain the use of
the allegedly obscene material; (4) any restraint imposed in
advance of a final judicial determination on the merits must
Similarly be limited to the preservation of the status quo for
the shortest fixed period compatible with sound judicial
resolution; (5) the censorship procedure must also assure a
prompt final judicial decision to minimize the deterent effect
of an interim and possibly an erroneous denial of a license.
Freedman, supra, 380 U.S. at 58-59; 85 S.Ct. at 739.
- ARG
Interstate Circuit, supra, 390 U.S. at 684-689; 88 S.Ct. at
1303-1306.
Kodak has complied with none of the foregoing and
Plaintiffs have been afforded none of the foregoing rights.
"There must be some judicial determination of obscenity
before a seizure or ‘constructive seizure’ may occur.”
Penthouse, supra, 610 P.24 at 1359.
3.4.3. Conclusion Re Declaration Relief. Por each
of the foregoing reasons, Defendant's
argument that as a matter of law declaratory relief should not
be allowed is in error.
3.5. DEPENDANT HAS NO PRIVILEGE. Defendant complains
(Bx. 351) and the trial court comments (Ex.
400:9) that were Defendant to return the pictures to Plaintiff
Defendant would risk being accused of violating §§311.2 and
1461-5, and therefore the Defendant had what amounts to a
"privilege" (Ex. 391:24) .21/ If the trial court's suggestion
21/ Defendant's conclusion that “transportation of unedited
obscene film in interstate commerce is a federal offense”
(Ex. 354:26) relying upon United States v. Levine 546 F.2d
658,667 (Sth Cir. 1977) is incorect for at least two reasons:
Pirst, the film transported in Levine was a “work print”.
Since the court accepted the final “release print” as evidence
of the work print which the defendant had shipped, it is clear
that the print which defendant did ship was a complete motion
picture. It was not an unedited version. That must be
contrasted with the facts shown here that it is highly unlikely
that any particular picture that Defendant censors by refusing
to return same would ever end up in a distributed magazine.
Secondly, Levine at page 668 specifically states that “whether
a motion picture film is obscene must be adjudged upon viewing
it in its entirety.” That is completely opposite to the
contention that an unedited version can be legally the subject
matter. Defendant's contention that prosecution of a film lab
employee has already been determined as proper based upon Gold
v. United States, 378 F.2d 588 (9th Cir. 1967) (Ex. 351) is in
error. The participation by the defendant in Gold was far more
then merely returning developed film. Additionally the film in
Gold was a completed motion picture, not merely an intermediate
step in the publication of a magazine.
-0- A-497
of privilege is made to avoid “state action", then it was in
error. Whether Defendant's past conduct is to be condoned
because of a legimitate fear of prosecution under state and
federal laws, does not negate a finding of state action as
Defendant has contended and as the trial court has suggested
(Ex. 88:14 and 390:9), but rather supports a finding of state
action. Peterson v. City of Greensville, and Doe v.
Charleston, Etc., supra. 22/
If the contention is made (although not so stated in
moving papers) to show an excuse for Defendant's violating
Plaintiff's right of free speech, then if it be accepted, the
only logical conclusion is to permit Plaintiffs to proceed in
their attack on such an application of those sections. Surely
the result cannot be that the government may do indirectly that
which it could not do directly. Yet, if application of the
Statutes results in the censorship of Plaintiffs' speech in
this manner, it indirectly constitutes an unconstitutional
infringement upon Plaintiffs' right of free speech.
If Defendant is to be immunized against claims under
the second and third counts because of the application of
certain federal and state laws, then surely Plaintiffs are
entitled to their day in court to demonstrate that such laws
cannot legally be so applied. On the other hand, if such laws
cannot be challanged by attacking their application in this
22/ Defendant's reliance upon Associates & Aldrich Company v.
Times Mirror Company, 440 F. F.2d 133 (9th Cir 1971) and Avins
v. Rutgers State University of New Jersey, 385 F.2d 151 (3rd
Cans 1367) (Ex. 356-355) 1S misplaced. Weither decision
suggests that the defendant's practice in those cases was the
direct result of a fear of prosecution under any law, or was a
practice adopted to censor certain speech.
-- A-98
manner, then Plaintiffs must be permitted to seek relief by
reason of such application. Defendant cannot have it both ways
sO as to deprive Plaintiffs of any meaningful remedy.
The uncontradicted evidence (Bx. 274-284) is clear that
the remedy of obtaining pictures through a replevin action is
virtually worthless. Defendant offers no evidence to refute
same. The trial court's decision would enhance a "“Catch-22"
result (rather than avoid it as contended by Defendant, Ex.
351:17), to wit: Defendant is entitled to act as a censor by
reason of the threat of state and federal laws without
following the requirements set down by the case law applicable
to censorship, and Plaintiffs are denied the rignt to obtain a
Geclaration that such application of those laws is improper.
3.6. PLAINTIFFS DID NOT WAIVE CLAIMS. At Ex. 55-56 of
its brief, Defendant argues that it is not
obligated to return material depicting matters described in its
notice because that notice constituted part of a contract
between defendant and plaintiffs. The trial court inquired
into this subject (2x. 397:14) and we therefore discuss it.
3.6.1. Plaintiffs Did Not Agree To Fodak's Policy.
Paragraph 21 of Robert DeMarco'’s opposing
affidavit (Ex. 299) states quite clearly that Plaintiffs never
agreed to Defendant's confiscation policy. At a minimum, this
raises a genuine issue of fact. Kodak contends that Plaintiffs
are bound by Bx. 112 but there is no evidence even suggesting
that it was ever presented to, or known by, Plaintiffs.
3.6.2. There Is No Waiver Prom Kodak's Notice.
"(Waiver] is a voluntary act and implies an abandonment
of a right or privilege--an election to dispense with
something of value or to forego some advantage which one
-2- 4 -4q
might, at his option, have demanded. In no case will a
waiver be presumed or implied contrary to the intention
of the party whose rights would be injuriously affected
thereby, unless by his conduct the opposite party has
been misled, to his prejudice, into the honest belief
that such waiver was intended or consented to." Chase v.
National Indemnity Co., 129 Cal.App.2d 853,858 (1954).
3.6.3. Contract of Adhesion Is Not Enforceable.
There is a genuine issue of fact as to
whether or not the notice could be enforced even if it
constituted a waiver. Assuming the notices formed a contract,
it was one of adhesion. Even unambiguous provisions of a
contract of adhesion will not be strictly enforced if they
result in unreasonable, unjust, or unconscionable forfeitures
or absurd results. See Schilk v. Benefit Trust Life Insurance
Co., 273 Cal.App.2d 302 (1969); Steven v. Fidelity and Casualty
Co., 58 Cal.2d 862 (1962); Cal.Civ.Code, §1670.5.
All the elements of an adhesion contract are present in
this case.23/ Kodak presents its terms and conditions for
accepting material for processing in a standardized printed
form which has been prepared by it. Kodak clearly is in a
superior bargaining position to that of Plaintiffs or at least
this is a genuine issue of fact. As Kodak itself contends, it
will not accept material for processing unless customers comply
23/ The basic criteria for determining whether a contract is an
adhesion contract include: (i) a contract presented in a
Standardize form; (ii) prepared by the party with superior
bargaining power; (iii) due to such disparity and bargaining
Power the contract must be accepted or rejected on a
"*"take-it-or-leave-it" basis by the weaker party; (iv) there is
no realistic opportunity to bargain over terms; and (v) often
arises in situations where the party preparing the contract has
a monopoly (natural or artificial) in the desired goods or
services. See Blair v. Pitchess, 5 Cal.3d 258,275-276 (1971);
Adams v. Egley, 330 F. Supp. 614,620 (S.D.Cal. 1972); Wheeler
= ie Ycssante Hospital, 63 Cal.App.3d 345,356 (1976). ws
“43-. A- loo
with its terms. Kodak's overwhelming position in the market
for superior quality photofinishing and whether Plaintiffs must
utilize the services of Kodak are clearly in dispute. As an
adhesion contract, the contract between Kodak and plaintiffs
would be subject to construction by the court. All ambiguities
Or questions pertaining to the impact and effect of various
Clauses would be construed against Kodak.
3.6.4. Pirst Amendment Rights Are Not Waiveable.
First Amendment Rights such as Freedom of
Speech are interests of society as a whole and cannot be
waived, and even as to non-First Amendment rights, every
reasonable presumption against waiver of fundamental
constitutional rights must be made and such rights cannot be
waived in a contract of adhesion and any waiver must be
clear .24/ Thus, in Fuentes, supra, the Supreme Court
declared that the Plorida and Pennsylvania pre-judgment
replevin statutes were unconstitutional even though the debtor
had agreed in writing that the seller could take back the
merchandise in the event of default. There is clearly no
language within the Kodak notice by which Plaintiffs purport to
waive their constitutional rights. Plaintiffs received nothing
additional from Kodak in consideration of the purported waiver
24/ Abington T.P. Pa. School District v. Shempp, 374 U.S.
203,224-5, 83 S.Ct. 1560 (1963); Johnson v. Sanders, 319
F.Supp. 421, (D.C.Conn. 1970), aff'd 403 U.S. 955, 91 S.Ct.
2292 (1971); Fuentes v. Shevin, 407 U.S. 67,95, 92 S.Ct.
1983,2001-2002 (1972), Adams v. Egley, 338 F.Supp. 614,620
a 1972) and Blair v. Pitchess, 5 Cal.3d 258,274-276
( ).
-4- fol
of these rights.25/
3.6.5. Conclusion Regarding Waiver. For each of the
foregoing reasons, there are genuine issues
of fact as to whether or not Kodak's notice could or did
constitute a waiver of constitutional or other rights
Plaintiffs had to their property and to publish the
transparencies which Kodak has confiscated.
3.7. MOTION PREMATURE. Summary judgment should not be
granted until such time as the party opposing the
motion has had an adequate opportunity to conduct
discovery. 26/ The foregoing rule is particularly true in
situations where the facts necessary to oppose the motion are
in the possession of the moving party, and here Defendant
asserts its subjective intent is a material issue. Defendant's
motion herein was made within a few days after counsel for the
parties first met to discuss discovery and before any discovery
had been taken. Thus, Defendant's motion was premature, and
should therefore have been denied.
4. CONCLUSION - RELIEF REQUESTED. Kodak by virtue of
its trademark and patent grants has by reason of
application of obscenity laws injected itself into the
editorial process of Plaintiffs’ publications, as a censor. In
25/ Whether the material tendered by plaintiffs to Kodak for
processing falls within the ambit of the material
identified in Kodak's notice is still a
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