United States v. International Boxing Club of New York/Opinion of the Court

by Earl Warren

United States Supreme Court

348 U.S. 236

United States  v.  International Boxing Club of New York

 Argued: Nov. 10, 1954. --- Decided: Jan 31, 1955

This is a civil antitrust action brought by the Government in the United States District Court for the Southern District of New York. The defendants-three corporations and two individuals-are engaged in the business of promoting professional championship boxing contests. ^[1] The Government's complaint charges that the defendants, in the course of this business, have violated §§ 1 and 2 of the Sherman Act. ^[2] After this Court's decision in Toolson v. New York Yankees, Inc., 346 U.S. 356, 75 S.Ct. 78, 98 L.Ed. 64, the defendants moved to dismiss the complaint. The District Court granted the motion in reliance upon the Toolson decision and Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 42 S.Ct. 465, 66 L.Ed. 898. ^[3] The case, together with United States v. Shubert, 75 S.Ct. 277, is here on direct appeal under the Expediting Act, 15 U.S.C. § 29, 15 U.S.C.A. § 29.

The Government's complaint alleges that promoters of professional championship boxing contests

'make a substantial utilization of the channels of interstate trade and commerce to:

'(a) negotiate contracts with boxers, advertising agencies, seconds, referees, judges, announcers, and other personnel living in states other than those in which the promoters reside;

'(b) arrange and maintain training quarters in states other than those in which the promoters reside; '(c) lease suitable arenas, and arrange other details for boxing contests, particularly when the contests are held in states other than those in which the promoters reside;

'(d) sell tickets to contests across state lines;

'(e) negotiate for the sale of and sell rights to make and distribute motion pictures of boxing contests to the 18,000 theatres in the United States;

'(f) negotiate for the sale of and sell rights to broadcast and telecast boxing contests to homes through more than 3,000 radio stations and 100 television stations in the United States; and

'(g) negotiate for the sale of the sell rights to telecast boxing contests to some 200 motion picture theatres in various states of the United States for display by large-screen television.'

The promoter's receipts from the sale of television, radio, and motion picture rights to championship matches, according to the complaint, represent on the average over 25% of the promoter's total revenue and in some instances exceed the revenue derived from the sale of admission tickets. ^[4] The complaint alleges that the defendants have restrained and monopolized this trade and commerce-'the promotion, exhibition, broadcasting, telecasting, and motion picture production and distribution of professional championship boxing contests in the United States'-through a conspiracy to exclude competition in their line of business. The conspiracy, it is claimed, began in 1949 with an agreement among the defendants and Joe Louis, then heavyweight champion of the world, that Louis would resign his title, that he would procure exclusive rights to the services of the four leading title contenders in a series of elimination contests which would result in the recognition of a new heavyweight champion, that he would also obtain exclusive rights to broadcast, televise, and film these contests, and that he would assign all such exclusive rights to the defendants. The defendants have allegedly sought to maintain and effectuate this conspiracy by the following means: by eliminating the 'leading competing promoter' of championship matches; by acquiring the exclusive right to promote professional boxing contests in all the 'principal arenas' where championship matches can be successfully presented; and by requiring each title contender to agree, as a condition of fighting for the championship, that if he wins he would, for a period of three (and sometimes five) years, take part only in title contests promoted by the defendants. As a consequence of these acts, the complaint alleges, the defendants have promoted, or participated in the promotion of, all but two of the 21 championship matches held in the United States between June 1949 and the filing of the complaint in March 1952.

These allegations must of course be taken as true at this stage of the proceeding. And the defendants do not deny that the allegations state a cause of action if their business is subject to the Sherman Act. The question thus presented is whether the defendants' business as described in the complaint-the of professional championship boxing contests on a multistate basis, coupled with the sale of rights to televise, broadcast, and film the contests for interstate transmission-constitutes 'trade or commerce among the several States' within the meaning of the Sherman Act.

The question is perhaps a novel one in that this Court has never before considered the antitrust status of the boxing business. Yet, if it were not for Federal Baseball and Toolson, we think that it would be too clear for dispute that the Government's allegations bring the defendants within the scope of the Act. A boxing match-like the showing of a motion picture, United States v. Crescent Amusement Co., 323 U.S. 173, 183, 65 S.Ct. 254, 259, 89 L.Ed. 160, or the performance of a vaudeville act, Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271, 43 S.Ct. 540, 67 L.Ed. 977, or the performance of a legitimate stage attraction, United States v. Shubert, 348 U.S. 222, 75 S.Ct. 277, 'is of course a local affair.' But that fact alone does not bar application of the Sherman Act to a business based on the promotion of such matches, if the business is itself engaged in interstate commerce or if the business imposes illegal restraints on interstate commerce. Apart from Federal Baseball and Toolson, it would be sufficient, we believe, to rest on the allegation that over 25% of the revenue from championship boxing is derived from interstate operations through the sale of radio, television, and motion picture rights. ^[5] Compare United States v. Yellow Cab Co., 332 U.S. 218, 225-226, 67 S.Ct. 1560, 1564, 91 L.Ed. 2010; Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 602, note 11, 73 S.Ct. 872, 877, 97 L.Ed. 1277; Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 227-235, 68 S.Ct. 996, 1001-1006, 92 L.Ed. 1328; United States v. Frankfort Distilleries, 324 U.S. 293, 297-298, 65 S.Ct. 661, 663-664, 89 L.Ed. 951; United States v. Women's Sports-wear Mfrs. Ass'n, 336 U.S. 460, 464, 69 S.Ct. 714, 716, 93 L.Ed. 805; United States v. Employing Plasterers Ass'n, 347 U.S. 186, 189, 74 S.Ct. 452, 454, 98 L.Ed. 618; and cases collected in the Shubert opinion. See also Currin v. Wallace, 306 U.S. 1, 10, 59 S.Ct. 379, 384, 83 L.Ed. 441; Wickard v. Filburn, 317 U.S. 111, 127-128, 63 S.Ct. 82, 90-91, 87 L.Ed. 122.

Notwithstanding these decisions, the defendants contend that they are exempt from the Sherman Act under the rule of stare decisis. They, like the defendants in the Shubert case, base this contention on Federal Baseball and Toolson. But they would be content with a more restrictive interpretation of Federal Baseball and Toolson than the defendants in the Shubert case. The Shubert defendants argue that Federal baseball and Toolson immunized all businesses built around the live presentation of local exhibitions. The defendants in the instant case argue that Federal Baseball and Toolson immunized only such businesses as involve exhibitions of an athletic nature. We cannot accept either argument.

For the reasons stated in the Toolson opinion and restated in United States v. Shubert, 348 U.S. 222, 75 S.Ct. 277, Toolson neither overruled Federal Baseball nor necessarily reaffirmed all that was said in Federal Baseball. Instead, '(w)ithout re-examination of the underlying issues,' the Court adhered to Federal Baseball 'so far as that decision determines that Congress had no intention of including the business of baseball within the scope of the federal anti-trust laws.' (346 U.S. 356, 357, 74 S.Ct. 79) We have held today in the Shubert case that Toolson is not authority for exempting other businesses merely because of the circumstance that they are also based on the performance of local exhibitions. That ruling is fully applicable here.

Moreover, none of the factors underlying the Toolson decision are present in the instant case. At the time the Government's complaint was filed, no court had ever held that the boxing business was not subject to the antitrust laws. ^[6] Indeed, this Court's decision in the Hart case, less than a year after the Federal Baseball decision, clearly established that Federal Baseball could not be relied upon as a basis of exemption for other segments of the entertainment business, athletic or otherwise. Surely there is nothing in the Holmes opinion in the Hart case to suggest, even remotely, that the Court was drawing a line between athletic and nonathletic entertainment. Nor do we see the relevance of such a distinction for the purpose of determining what constitutes 'trade or commerce among the several States.' The controlling consideration in Federal Baseball and Hart was, instead, a very practical one-the degree of interstate activity involved in the particular business under review. It follows that stare decisis cannot help the defendants here; for, contrary to their argument, Federal Baseball did not hold that all businesses based on professional sports were outside the scope of the antitrust laws. The issue confronting us is, therefore, not whether a previously granted exemption should continue, but whether an exemption should be granted in the first instance. And that issue is for Congress to resolve, not this Court. See United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 561, 64 S.Ct. 1162, 1178, 88 L.Ed. 1440.

The issue was, in fact, before Congress only recently. In 1951, four identical bills were introduced in Congress-three in the House and one in the Senate-forbidding the application of the antitrust laws 'to organized professional sports enterprises or to acts in the conduct of such enterprises.' ^[7] Extensive hearings on the three House bills were conducted by the Subcommittee on Study of Monopoly Power of the Committee on the Judiciary; no hearings were held on the Senate bill. ^[8] At the conclusion of its hearings, the House Subcommittee unanimously declared its opposition to the four bills. Its report states: ^[9]

'The requested exemption would extend to all professional sports enterprises and to all acts in the conduct of such enterprises. The law would no longer require competition in any facet of business activity of any sport enterprise. Thus the sale of radio and television rights, the management of stadia, the purchase and sale of advertising, the concession industry, and many other business activities, as well as the aspects of baseball which are solely related to the promotion of competition on the playing field, would be immune and untouchable. Such a broad exemption could not be granted without substantially repealing the antitrust laws.' (Italics added.)

With respect to baseball, the Subcommittee recommended a postponement of any legislation until the status of Federal Baseball was clarified in the courts. ^[10] No further action was taken on any of the bills; Congress thus left intact the then-existing coverage of the antitrust laws. Yet the defendants in the instant case are now asking this Court for precisely the same exemption which enactment of those bills would have afforded. Their remedy, if they are entitled to one, lies in further resort to Congress, as we have already stated. For we agree that 'Such a broad exemption could not be granted without substantially repealing the antitrust laws.'

As in the Shubert case, we are concerned here only with the sufficiency of the Government's complaint. We hold that the complaint states a cause of action and that the Government is entitled to an opportunity to prove its allegations. The judgment of the court below is reversed.

Reversed.

Mr. Justice BURTON, retaining the views expressed in his dissent in the Toolson case, 346 U.S. 356, 357, 74 S.Ct. 78, 79, 98 L.Ed. 64, joins the opinion and judgment of the Court in this case. Mr. Justice REED joins in this concurrence.

The complaint describes the 'Nature of Trade and Commerce Involved' as follows:

10. Boxers usually compete in amateur tournaments as a preliminary to becoming professionals. As amateurs they receive no pay and box under the sponsorship of local independent boxing clubs, associations or other organizations. When they become professionals, they contract to box an opponent on a per bout basis for local promoters and receive a fee. If their skill as professional boxers results in an increasing willingness of the public to pay to view their contests, they can demand higher fees and a greater percentage of receipts from the sale of tickets and other rights. If their skill increases, they engage in preliminary and other bouts throughout the United States and eventually participate in major bouts. The fee for a major bout is usually a sum guaranteed by the promoter or a predetermined percentage of the net receipts from the sale of tickets and motion picture, radio and television rights.

11. The most lucrative asset to a professional boxer is recognition and designation by the various state athletic commissions and others as 'world champion' in the division in which he competes. These divisions are:

flyweight.......................... 112 lbs.

bantamweight....................... 118 "

featherweight...................... 126 "

lightweight........................ 135 "

welterweight....................... 147 "

middleweight....................... 160 "

light heavyweight.................. 175 "

heavyweight........................ All above 175 lbs.

A 'world champion' gains his title by defeating the existing champion or by eliminating all contenders, and remains world champion in his division until he is, in turn, defeated by a contender or resigns the title. Such a title affords to its holder financial returns from personal appearances and exhibitions throughout the United States, from endorsements and other activities, as well as a greater percentage of the receipts from his bouts. The promotion of professional championship boxing contests is also more lucrative than the promotion of other boxing contests.

12. Of the various 'world championships,' the heavyweight division is the most important to boxers and promoters, as it returns the greatest financial benefits. The flyweight and bantamweight divisions are not of substantial importance in the United States because very few American boxers are of such light weights. No championship contest has been held in the flyweight division in the United States since 1935; none in the bantamweight division since 1947.

13. The promotion of professional championship boxing contests, in which the winners achieve 'world champion' titles, includes negotiating and executing contracts with boxers for the main and preliminary bouts, arranging and maintaining training quarters, leasing suitable arenas, such as stadia or ball parks where substantial numbers of the public may be seated to view the contest, negotiating and executing contracts for the employment of matchmakers, advertising agencies, press agents, seconds, referees, judges, announcers and other personnel; organizing, assembling, and arranging other details necessary to the exhibition of the contests; selling tickets and rights to make motion pictures of the contests and to distribute them throughout the United States and in foreign countries; and selling rights to transmit the contests by radio or television throughout the United States and foreign countries.

14. Promoters of professional championship boxing contests make a substantial utilization of the channels of interstate trade and commerce to:

(a) negotiate contracts with boxers, advertising agencies, seconds, referees, judges, announcers, and other personnel living in states other than those in which the promoters reside;

(b) arrange and maintain training quarters in states other than those in which the promoters reside;

(c) lease suitable arenas, and arrange other details for boxing contests, particularly when the contests are held in states other than those in which the promoters reside;

(d) sell tickets to contests across state lines;

(e) negotiate for the sale of and sell rights to make and distribute motion pictures of boxing contests to the 18,000 theatres in the United States;

(f) negotiate for the sale of and sell rights to broadcast and telecast boxing contests to homes through more than 3,000 radio stations and 100 television stations in the United States; and

(g) negotiate for the sale of and sell rights to telecast boxing contests to some 200 motion picture theatres in various states of the United States for display by large-screen television.

15. Motion picture films of professional championship boxing contests are distributed and exhibited in theatres throughout the United States and in foreign countries. Similarly, radio and television broadcasts of such contests are transmitted throughout the United States and radio broadcasts of them are also transmitted to foreign countries.

16. The 21 major professional championship boxing contests promoted in the United States since June 1949 have produced a gross income from admissions and the sale of motion picture, radio and television rights of approximately $4,500,000.00. The total such gross income for all professional boxing contests in the United States during this period, including the championship contests, has been approximately $15,000,000.00.

16(a). A promoter of a professional championship fight usually derives substantially all of his revenue from two sources: (a) sale of tickets of admission and (b) sale of rights to telecast, broadcast and produce and distribute motion pictures of the fight. In such fights, sale of television, radio and motion picture rights account for a substantial proportion of the promoter's total revenue. Since 1949 sale of these rights has represented, on the average, over 25% of the total revenue derived from championship fights, and has exceeded, in some instances, the revenue received from sale of tickets of admission. With the progressive and continuing expansion of television facilities, the proportion of the promoter's total revenue derived from television, radio and motion pictures, has been on an ascending curve, in relation to revenue derived from sale of tickets of admission. In the Marciano-Walcott heavyweight championship fight of May 15, 1953, at Chicago, Illinois, promoted by defendants IBC (N.Y.), IBC (Ill.), James D. Norris and Arthur M. Wirtz, the promoters' receipts from sale of tickets of admission were, after federal admission taxes, $253,462.37, while their television, radio and motion picture revenue was approximately $300,000.

Mr. Justice FRANKFURTER, with whom Mr. Justice MINTON joins, dissenting.

Notes

1. The corporate defendants are International Boxing Club of New York, Inc., International Boxing Club, and Madison Square Garden Corporation. The individual defendants are James D. Norris and Arthur M. Wirtz. The individual defendants, together with Madison Square Garden Corporation, own 80% of the stock of International Boxing Club of New York, Inc., and International Boxing Club. The nature of the business involved is described in an appendix to this opinion.
2. 15 U.S.C. §§ 1 and 2, 15 U.S.C.A. §§ 1, 2. These sections provide:
3. The District Court's opinion was oral and not transcribed. All the parties agree, however, that the dismissal was based on Federal Baseball and Toolson.
4. The complaint further alleges that 'With the progressive and continuing expansion of television facilities, the proportion of the promoter's total revenue derived from television, radio and motion pictures, has been on an ascending curve. * * *'
5. All three media are concededly engaged in interstate commerce. E.g., Federal Radio Comm. v. Nelson Bros. Bond & Mortgage Co., 289 U.S. 266, 279, 53 S.Ct. 627, 633, 77 L.Ed. 1166 (radio); Allen B. Dumont Laboratories, Inc., v. Carroll, 3 Cir., 184 F.2d 153, 154, certiorari denied, 340 U.S. 929, 71 S.Ct. 490, 95 L.Ed. 670 (television); United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260 (motion pictures).
6. Shall v. Henry, 7 Cir., 211 F.2d 226, was decided subsequent to the decision below. So also was Peller v. International Boxing Club, unreported, Civil 52 C 813, April 23, 1954 (D.C.N.D.Ill.). The unreported decision (D.C.N.D.Ill.) which Shall v. Henry affirmed was decided prior to the decision below but after the filing of the Government's complaint.
7. H.R. 4229, 4230, 4231, and S. 1526, 82d Cong., 1st Sess. These bills were introduced 'by friends of baseball because they feared that the continued existence of organized baseball as America's national pastime was in substantial danger by the threat of impending litigation.' H.R.Rep. No. 2002, 82d Cong., 2d Sess., p. 1.
8. The House hearings were stated to be on 'the problem of whether or not organized baseball should be exempted from the operation of the antitrust laws.' Hearings on 'Organized Baseball' before the House Subcommittee on Study of Monopoly Power of the Committee on the Judiciary, 82d Cong., 1st Sess., p. 1.
9. H.R.Rep. No. 2002 (entitled 'Organized Baseball'), 82d Cong., 2d Sess., p. 230. Between the hearings and the report, the Subcommittee on Study of Monopoly Power was reconstituted as the Antitrust Subcommittee. The report was submitted directly to the full House pursuant to H.Res. 95, 82d Cong., 1st Sess.
10. Id., at 134-136, 231-232.