# Appendix — Hustler Magazine, Inc. v. Eastman Kodak Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_0854%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1983 - **Citation:** 462 U.S. 1108 ## Text Se ee No. MAR 19 | Se nl = re w< [ or . ; : 2 } { } } i ' 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. o f ar 5 -— . a" e 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 iia oii CLERA US OS TArcl couat bow 1 = commas STRICT OF CANT av ’ 1 iJ 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/ A-3 — —— 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. \// // 1// // // // 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 co woeFeesnnawuwest we noe CO WC 8B HJ! CO RHR HF WO WD Nn = i es ———— > & FILED ENTIRED SEP 2 9 9H) £683 6o:2c; Cat CLEP. SEP 3 1980 2/7 CALFCEA CLERK, US wait: COURT CENTRAL DISIRIC] OF CAQtORN A BY otPulY RECEIVED . ocT - 21980 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 1. A-G wo owxnanvra wn - So on A UH SF YB NW ha - -\ 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 2, A-" oclUl OwUlCUCcrOrlhUC Y!TC KU RC OelmULUC PCN 2 4s \ / 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. A } } : oe A Lhy - j ws 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) o onrvrnananuwses w6 Re —- ~—~ oO 12 24 25 — - 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 AI vn oo yw & WwW WN 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 k= 13 4-5 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 --— (3 oo oo vr¥ on Ww 10 il 24 25 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 A - 14 onvuaFlUtllUPelCUMWLUCUWDNU 24 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. A-(S wo RD os a 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. A- Il vy ao Ww 10 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 A-117 — 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. A - Ig o ovroiowsr F&F & 4S NR - oO 2 1l 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? A-19 o oven Ff fehlhUchar U6UNSlUlU rr ee ee | =) : 12 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 it —— A -20 13 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 + @ 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. ee A-2I 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. A-22 15 24 25 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, f-- 23 16 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 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_0854%3A2. Public record. Not legal advice.