Beacon Theatres, Inc. v. Westover/Opinion of the Court

by Hugo Black

United States Supreme Court

359 U.S. 500

Beacon Theatres, Inc.  v.  Westover

 Argued: Dec. 10, 1958. --- Decided: May 25, 1959

eti tioner, Beacon Theatres, Inc., sought by mandamus to require a district judge in the Southern District of California to vacate certain orders alleged to deprive it of a jury trial of issues arising in a suit brought against it by Fox West Coast Theatres, Inc. The Court of Appeals for the Ninth Circuit refused the writ, holding that the trial judge had acted within his proper discretion in denying petitioner's request for a jury. 252 F.2d 864. We granted certiorari, 356 U.S. 956, 78 S.Ct. 996, 2 L.Ed.2d 1064, because 'Maintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care.' Dimick v. Schiedt, 293 U.S. 474, 486, 55 S.Ct. 296, 301, 79 L.Ed. 603.

Fox had asked for declaratory relief against Beacon alleging a controversy arising under the Sherman Antitrust Act, 26 Stat. 209, as amended, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2, and under the Clayton Act, 38 Stat. 731, 15 U.S.C. § 15, 15 U.S.C.A. § 15, which authorizes suits for treble damages against Sherman Act violators. According to the complaint Fox operates a movie theatre in San Bernardino, California, and has long been exhibiting films under contracts with movie distributors. These contracts grant if the exclusive right to show 'first run' pictures in the 'San Bernardino competitive area' and provide for 'clearance'-a period of time during which no other theatre can exhibit the same pictures. After building a drive-in theatre about 11 miles from San Bernardino, Beacon notified Fox that it considered contracts barring simultaneous exhibitions of first-run films in the two theatres to be overt acts in violation of the antitrust laws. ^[1] Fox's complaint alleged that this notification, together with threats of treble damage suits against Fox and its distributors, gave rise to 'duress and coercion' which deprived Fox of a valuable property right, the right to negotiate for exclusive first-run contracts. Unless Beacon was restrained, the complaint continued, irreparable harm would result. Accordingly, while its pleading was styled a 'Complaint for Declaratory Relief,' Fox prayed both for a declaration that a grant of clearance between the Fox and Beacon theatres is reasonable and not in violation of the antitrust laws, and for an injunction, pending final resolution of the litigation, to prevent Beacon from instituting any action under the antitrust laws against Fox and its distributors arising out of the controversy alleged in the complaint. ^[2] Beacon filed an answer, a counterclaim against Fox, and a cross-claim against an exhibitor who had intervened. These denied the threats and asserted that there was no substantial competition between the two theatres, that the clearances granted were therefore unreasonable, and that a conspiracy existed between Fox and its distributors to manipulate contracts and clearances so as to restrain trade and monopolize first-run pictures in violation of the antitrust laws. Treble damages were asked.

Beacon demanded a jury trial of the factul i ssues in the case as provided by Federal Rule of Civil Procedure 38(b), 28 U.S.C.A. The District Court, however, viewed the issues raised by the 'Complaint for Declaratory Relief,' including the question of competition between the two theatres, as essentially equitable. Acting under the purported authority of Rules 42(b) and 57, it directed that these issues be tried to the court before jury determination of the validity of the charges of antitrust violations made in the counterclaim and cross-claim. ^[3] A common issue of the 'Complaint for Declaratory Relief,' the counterclaim, and the cross-claim was the reasonableness of the clearances granted to Fox, which depended, in part, on the existence of competition between the two theatres. Thus the effect of the action of the District Court could be, as the Court of Appeals believed, 'to limit the petitioner's opportunity fully to try to a jury every issue which has a bearing upon its treble damage suit,' for determination of the issue of clearances by the judge might 'operate either by way of res judicata or collateral estoppel so as to conclude both parties with respect thereto at the subsequent trial of the treble damage claim.' 252 F.2d at page 874.

The District Court's finding that the Complaint for Declaratory Relief presented basically equitable issues draws no support from the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, 28 U.S.C.A. §§ 2201, 2202; Fed.Rules Civ.Proc. 57. See also 48 Stat. 955, 28 U.S.C. (1940 ed.) § 400. That statute, while allowing prospective defendants to sue to establish their nonliability, specifically preserves the right to jury trial for both parties. ^[4] It follows that if Beacon would have been entitled to a jury trial in a treble damage suit against Fox it cannot be deprived of that right merely because Fox took advantage of the availability of declaratory relief to sue Beacon first. Since the right to trial by jury applies to treble damage suits under the antitrust laws, and is, in fact, an essential part of the congressional plan for making competition rather than monopoly the rule of trade, see Fleitmann v. Welsbach Street Lighting Co., 240 U.S. 27, 29, 36 S.Ct. 233, 234, 60 L.Ed. 505, the Sherman and Clayton Act issues on which Fox sought a declaration were essentially jury questions.

Nevertheless the Court of Appeals refused to upset the order of the district judge. It held that the question of whether a right to jury trial existed was to be judged by Fox's complaint read as a whole. In addition to seeking a declaratory judgment, the court said, Fox's complaint can be read as making out a valid plea for injunctive relief, thus stating a claim traditionally cognizable in equity. A party who is entitled to maintain a suit in equity for an injunction, said the court, may have all the issues in his suit determined by the judge without a jury regardless of whether legal rights are involved. The court then rejected the argument that equitable relief, traditionally available only when legal remedies are inadequate, was rendered unnecessary in this case by the filing of the counterclaim and cross-claim which presented all the issues necessary to a determination of the right to injunctive relief. Relying on American Life Ins. Co. v. Stewart, 300 U.S. 203 21 5, 57 S.Ct. 377, 380, 81 L.Ed. 605, decided before the enactment of the Federal Rules of Civil Procedure, it invoked the principle that a court sitting in equity could retain jurisdiction even though later a legal remedy became available. In such instances the equity court had discretion to enjoin the later lawsuit in order to allow the whole dispute to be determined in one case in one court. ^[5] Reasoning by analogy, the Court of Appeals held it was not an abuse of discretion for the district judge, acting under Federal Rule of Civil Procedure 42(b), to try the equitable cause first even though this might, through collateral estoppel, prevent a full jury trial of the counterclaim and cross-claim which were as effectively stopped as by an equity injunction. ^[6]

Beacon takes issue with the holding of the Court of Appeals that the complaint stated a claim upon which equitable relief could be granted. As initially filed the complaint alleged that threats of lawsuits by petitioner against Fox and its distributors were causing irreparable harm to Fox's business relationships. The prayer for relief, however, made no mention of the threats but asked only that pending litigation of the claim for declaratory judgment, Beacon be enjoined from beginning any lawsuits under the antitrust laws against Fox and its distributors arising out of the controversy alleged in the complaint. Evidently of the opinion that this prayer did not state a good claim for equitable relief, the Court of Appeals construed it to include a request for an injunction against threats of lawsuits. This liberal construction of a pleading is in line with Rule 8 of the Federal Rules of Civil Procedure. See Conley v. Gibson, 355 U.S. 41, 47-48, 78 S.Ct. 99, 102-103, 2 L.Ed.2d 80. But this fact does not solve our problem. Assuming that the pleadings can be construed to support such a request and assuming additionally that the complaint can be read as alleging the kind of harassment by a multiplicity of lawsuits which would traditionally have justified equity to take jurisdiction and settle the case in one suit, ^[7] we are nevertheless of the opinion that, under the Declaratory Judgment Act and the Federal Rules of Civil Procedure, neither claim can justify denying Beacon a trial by jury of all the issues in the antitrust controversy.

The basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies. ^[8] At least as much is required to justify a trial court in using its discretion under the Federal Rules to allow claims of equitable origins to be tried ahead of legal ones, since this has the same effect as an equitable injunction of the legal claims. And it is immaterial, in judging if that discretion is properly employed,tha t before the Federal Rules and the Declaratory Judgment Act were passed, courts of equity, exercising a jurisdiction separate from courts of law, were, in some cass, allowed to enjoin subsequent legal actions between the same parties involving the same controversy. This was because the subsequent legal action, though providing an opportunity to try the case to a jury, might not protect the right of the equity plaintiff to a fair and orderly adjudication of the controversy. See, e.g., New York Lie Ins. Co. v. Seymour, 6 Cir., 45 F.2d 47, 73 A.L.R. 1523. Under such circumstances the legal remedy could quite naturally be deemed inadequate. Inadequacy of remedy and irreparable harm are practical terms, however. As such their existence today must be determined, not by precedents decided under discarded procedures, but in the light of the remedies now made available by the Declaratory Judgment Act and the Federal Rules. ^[9]

Viewed in this manner, the use of discretion by the trial court under Rule 42(b) to deprive Beacon of a full jury trial on its counterclaim and cross-claim, as well as on Fox's plea for declaratory relief, cannot be justified. Under the Federal Rules the same court may try both legal and equitable causes in the same action. Fed.Rules Civ.Proc., 1, 2, 18. Thus any defenses, equitable or legal, Fox may have to charges of antitrust violations can be raised either in its suit for declaratory relief or in answer to Beacon's counterclaim. On proper showing, harassment by threats of other suits, or other suits actually brought, involving the issues being tried in this case, could be temporarily enjoined pending the outcome of this litigation. Whatever permanent injunctive relief Fox might be entitled to on the basis of the decision in this case could, of course, be given by the court after the jury renders its verdict. In this way the issues between these parties could be settled in one suit giving Beacon a full jury trial of every antitrust issue. Cf. Ring v. Spina, 2 Cir., 166 F.2d 546. By contrast, the holding of the court below while granting Fox no additional protection unless the avoidance of jury trial be considered as such, would compel Beacon to split his antitrust case, trying part to a judge and part to a jury. ^[10] Such a result, which involves the postponement and subordination of Fox's own legal claim for declaratory relief as well as of the counterclaim which Beacon was compelled by the Federal Rules to bring, ^[11] is not permissible.

Our decision is consistent with the plan of the Federal Rules and the Declaratory Judgment Act to effect substantia pr ocedural reform while retaining a distinction between jury and nonjury issues and leaving substantive rights unchanged. ^[12] Since in the federal courts equity has always acted only when legal remedies were inadequate, ^[13] the expansion of adequate legal remedies provided by the Declaratory Judgment Act and the Federal Rules necessarily affects the scope of equity. Thus, the justification for equity's deciding legal issues once it obtains jurisdiction, and refusing to dismiss a case, merely because subsequently a legal remedy becomes available, must be re-evaluated in the light of the liberal joinder provisions of the Federal Rules which allow legal and equitable causes to be brought and resolved in one civil action. ^[14] Similarly the need for, and therefore, the availability of such equitable remedies as Bills of Peace, Quia Timet and Injunction must be reconsidered in view of the existence of the Declaratory Judgment Act as well as the liberal joinder provision of the Rules. ^[15] This is not only in accord with the spirit of the Rules and the Act but is required by the provision in the Rules that '(t)he right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States shall be preserved * * * inviolate.' ^[16]

If there should be cases where the availability of declaratory judgment or joinder in one suit of legal and equitable causes would not in all respects protect the plaintiff seeking equitable relief from irreparable harm while affording a jury trial in the legal cause, the trial court will necessarily have to use its discretion in deciding whether the legal or equitable cause should be tried first. Since the right to jury trial is a constitutional one, however, while no similar requirement protects trials by the court, ^[17] that discretion is very narrowly limited and must, wherever possible, be exercised to preserve jury trial. As this Court said in Scott v. Neely, 140 U.S. 106, 109-110, 11 S.Ct. 712, 714, 35 L.Ed. 358: 'In the Federal courts this (jury) right cannot be dispensed with, except by the assent of the parties entitled to it; nor can it be impaired by any blending with a claim, properly cognizable at law, of a demand for equitable relief in aid of the legal action, or during its pendency.' ^[18] This long-standing principle of equity dictates that only under the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate, ^[19] can the right to a jury trial of legal issues be lost through prior determination of equitable claims. See Leimer v. Woods, 8 Cir., 196 F.2d 828, 833-836. We as have shown, this is far from being such a case.

Respondent claims mandamus is not available under the All Writs Act, 28 U.S.C. § 1651, 28 U.S.C.A. § 1651. Whatever differences of opinion there may be in other types of cases, we think the right to grant mandamus to require jury trial where it has been improperly denied is settled. ^[20]

The judgment of the Court of Appeals is reversed.

Reversed.

Mr. Justice FRANKFURTER took no part in the consideration or decision of this case.

Mr. Justice STEWART, with whom Mr. Justice HARLAN and Mr. Justice WHITTAKER concur, dissenting.

Notes

1. Beacon allegedly stated that the clearances granted violated both the antitrust laws and the decrees issued in United States v. Paramount Pictures, Inc., D.C., 66 F.Supp. 323; 70 F.Supp. 53, affirmed in part and reversed in part, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, subsequent proceedings in the District Court, 85 F.Supp. 881. The decrees in that case set limits on what clearances could be given when theatres were in competition with each other and held that there should be no clearances between theatres not in substantial competition. Neither Beacon nor Fox, however, appears to have been a party to those decrees. Their relevance, therefore, seems to be only that of significant precedents.
2. Other prayers aside from the general equitable plea for 'such further relief as the court deems proper' added nothing material to those set out.
3. Fed.Rules Civ.Proc., 42(b) reads: 'The court in furtherance of convenience or to avoid prejudice may order a separate trial of any claim, cross-claim, counter-claim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues.' Rule 57 reads in part: 'The court may order a speedy hearing of an action for a declaratory judgment and may advance it on the calendar.'
4. See, e.g., (American) Lumbermens Mut. Cas. Co. of Illinois v. Timms & Howard, Inc., 2 Cir., 108 F.2d 497; Hargrove v. American Cent. Ins. Co., 10 Cir., 125 F.2d 225; Johnson v. Fidelity & Casualty Co., 8 Cir., 238 F.2d 322. See Fed.Rules Civ.Proc., 57, 38, 39.
5. Compare Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, with American Life Ins. Co. v. Stewart, 300 U.S. 203, 57 S.Ct. 377, 81 L.Ed. 605. See also City of Morgantown, W. Va. v. Royal Ins. Co., 337 U.S. 254, 69 S.Ct. 1067, 93 L.Ed. 1347; Peake v. Lincoln Nat. Life Ins. Co., 8 Cir., 15 F.2d 303.
6. 252 F.2d at page 874. In Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 192, 63 S.Ct. 163, 164, 87 L.Ed. 176, this Court recognized that orders enabling equitable causes to be tried before legal ones had the same effect as injunctions. In City of Morgantown, W. Va. v. Royal Ins. Co., 337 U.S. 254, 69 S.Ct. 1067, 93 L.Ed. 1347, the Court denied at least some such orders the status of injunctions for the purposes of appealability. It did not, of course, imply that when the orders came to be reviewed they would be examined any less strictly than injunctions. 337 U.S. at page 258, 69 S.Ct. at page 1069.
7. See, e.g., Smyth v. Ames, 169 U.S. 466, 515, 18 S.Ct. 418, 42 L.Ed. 819; City of Detroit of Detroit Citizens' Street R. Co., 184 U.S. 368, 378-382, 22 S.Ct. 410, 414-416, 46 L.Ed. 592; cf. Matthews v. Rodgers, 284 U.S. 521, 52 S.Ct. 217, 76 L.Ed. 447.
8. E.g., State of Pennsylvania v. Wheeling & Belmont Bridge Co., 13 How. 518, 561, 14 L.Ed. 249; Parker v. Winnipiseogee Lake Cotton & Woollen Co., 2 Black 545, 551, 17 L.Ed. 333; Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440.
9. See, e.g., Cook, Cases on Equity (4th ed.), 18; 4 Pomeroy, Equity Jurisprudence (5th ed.), § 1370; 5 Moore, Federal Practice, 154-158; Morris, Jury Trial Under the Federal Fusion of Law and Equity, 20 Tex.L.Rev. 427, 441-443. Cf. Maryland Theater Corp. v. Brennan, 180 Md. 377, 389, 24 A.2d 911; Hasselbring v. Koepke, 263 Mich. 466, 248 N.W. 869, 93 A.L.R. 1170. But cf. 1 Pomeroy, Equity Jurisprudence (5th ed.), §§ 182, 183. Significantly the Court of Appeals itself relied on the procedural changes brought about by the Federal Rules when it found the plea for equitable relief valid, for it did so by relying on Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80, which emphasized the liberal construction policies of the Rules.
10. Since the issue of violation of the antitrust laws often turns on the reasonableness of a restraint on trade in the light of all the facts, see, e.g., Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 60, 31 S.Ct. 502, 515, 55 L.Ed. 619, it is particularly undesirable to have some of the relevant considerations tried by one factfinder and some by another.
11. Fed.Rules Civ.Proc., 13(a).
12. See 28 U.S.C. § 2072, 28 U.S.C.A. § 2072; Fed.Rules Civ.Proc., 39(a), 57. See also Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 382, note 26, 69 S.Ct. 606, 614, 93 L.Ed. 741; United States v. Yellow Cab Co., 340 U.S. 543, 555-556, 71 S.Ct. 399, 407, 95 L.Ed. 523.
13. See 36 Stat. 1163, derived from Act of Sept. 24, 1789, § 16, 1 Stat. 82. This provision, which antedates the Seventh Amendment, is discussed in 5 Moore, Federal Practice, 32. See, e.g., Hipp v. Town of Babin, 19 How. 271, 277-278, 15 L.Ed. 633; Insurance Co. v. Bailey, 13 Wall. 616, 620-621, 20 L.Ed. 501; Grand Chute v. Winegar, 15 Wall. 373, 21 L.Ed. 174; Buzard v. Houston, 119 U.S. 347, 351-352, 7 S.Ct. 249, 251-252, 30 L.Ed. 451.
14. See Fed.Rules Civ.Proc., 1, 2, 18. Cf. Prudential Ins. Co. of America v. Saxe, 77 U.S.App.D.C. 144, 134 F.2d 16, 31-34; Morris, Jury Trial Under the Federal Fusion of Law and Equity, 20 Tex.L.Rev. 427, 441-443.
15. See 1 Pomeroy, Equity Jurisprudence (5th ed.) §§ 251 3/4, 254, 264(b); 5 Moore, Federal Practice, 32; but cf. id., 209-211. See also, Note, The Joinder Rules and Equity Jurisdiction in the Avoidance of a Multiplicity of Suits, 12 Md.L.Rev. 88. Of course, unless there is an issue of a right to jury trial or of other rights which depend on whether the cause is a 'legal' or 'equitable' one, the question of adequacy of legal remedies is purely academic and need not arise.
16. Fed.Rules Civ.Proc., 38(a). In delegating to the Supreme Court responsibility for drawing up rules, Congress declared that: 'Such rules shall not abridge, enlarge or modify any substantive right and shall preserve the right of trial by jury as at common law and as declared by the Seventh Amendment to the Constitution.' 28 U.S.C. § 2072, 28 U.S.C.A. § 2072. The Seventh Amendment reads: 'In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.'
17. See Hurwitz v. Hurwitz, 78 U.S.App.D.C. 66, 136 F.2d 796, 798-799, 148 A.L.R. 226; cf. The Genesee Chief v. Fitzhugh, 12 How. 443, 459-460, 13 L.Ed. 1058.
18. This Court has long emphasized the importance of the jury trial. See Parsons v. Bedford, 3 Pet. 433, 446, 7 L.Ed. 732. See also Galloway v. United States, 319 U.S. 372, 63 S.Ct. 1077, 87 L.Ed. 1458. Id., 319 U.S. at page 396, 63 S.Ct. at page 1090 (dissenting opinion).
19. For an example of the flexible procedures available under the Federal Rules, see Ring v. Spina, 2 Cir., 166 F.2d 546, 550.
20. E.g., Ex parte Simons, 247 U.S. 231, 239-240, 38 S.Ct. 497, 498, 62 L.Ed. 1094; Ex parte Peterson, 253 U.S. 300, 305-306, 40 S.Ct. 543, 544-545, 64 L.Ed. 919; Bereslavsky v. Caffey, 2 Cir., 161 F.2d 499; Canister Co. v. Leahy, 3 Cir., 191 F.2d 255; Black v. Boyd, 6 Cir., 248 F.2d 156, 160-161. Cf. Bruckman v. Hollzer, 9 Cir., 152 F.2d 730. But cf. In re Chappell & Co., 1 Cir., 201 F.2d 343. See also La Buy v. Howes Leather Co., 352 U.S. 249, 77 S.Ct. 309, 1 L.Ed.2d 290.