The opinion of the court was delivered by: RYAN
The petitioners, Madison Square Garden Corporation, a Michigan corporation, and Madison Square Garden Boxing, Inc., its wholly owned New York corporate subsidiary, have moved for an order declaring that the final judgment has no application to them, or, alternatively, construing paragraphs 4 and 16 of the final judgment. As to paragraph 4, petitioners ask that it be construed as not prohibiting them from entering into a contract with a boxer providing for the promotion of more than a single professional boxing contest between that boxer and others within 8 months or, alternatively, modifying this paragraph so as to permit petitioners to contract with a boxer providing for the promotion of more than one bout. As to paragraph 16, petitioners ask that it be construed as having expired, or, alternatively, to modify the said paragraph by providing that the prohibition of the said paragraph shall expire upon this decision.
This suit under the anti-trust laws was filed in 1952 against International Boxing Club of New York, Inc., a New York corporation, International Boxing Club of Illinois, an Illinois corporation, Madison Square Garden Corporation, a New York corporation, James D. Norris and Arthur M. Wirtz. After trial a final judgment and decree was entered on July 2, 1957 (United States v. International Boxing Club, 171 F.Supp. 841 (S.D.N.Y.1957)). The decree was affirmed by the United States Supreme Court. International Boxing Club v. United States, 358 U.S. 242, 79 S. Ct. 245, 3 L. Ed. 2d 270 (1959).
Paragraph 4 of the decree provides:
'The defendants, and each of them, are restrained and enjoined from entering into, directly or indirectly, any contract, agreement, or understanding, which provides, in terms or in effect, that a boxer shall not engage in a professional boxing contest for any person other than the defendants, or any of them. Provided, however, that nothing in this Section Four (4) shall be construed to prevent the defendants, or any of them from entering into a contract with a professional boxer providing for the promotion of a single professional boxing contest. After five (5) years from the date of entry of this Final Judgment, this provision shall not prevent the defendants, or any of them, from entering into a contract with a professional boxer providing for the promotion of a single professional boxing contest which contract may contain a provision that the contracting defendant shall have the right to promote one (1) return professional boxing contest between the same boxers within a period of not more than eight (8) months from the date of such professional boxing contest.'
Paragraph 16 of the decree provides:
'For a period of five (5) years from the date of entry of this Final Judgment, the defendant Madison Square Garden Corporation is hereby restrained and enjoined from promoting, directly or indirectly, more than two professional championship boxing contests held during any period of twelve (12) consecutive months.'
On the hearing of this application, we ruled that the injunction of paragraph 16, which prohibited defendant from promoting more than two championship bouts in a year, had expired on July 2, 1962, which was the end of the five-year period set by the decree, irrespective of the stay imposed during the pendency of the appeal. In spite of the fact that the injunction was rendered inoperative from October 29, 1957 to February 6, 1959, when the mandate from the Supreme Court became effective, we think that this was a sufficient time in which remedial and corrective measures by way of Governmental regulation, if any were to be imposed, or voluntary reformation could be effected. Whether or not it was voluntary, it appears from petitioners' brief that neither it nor its predecessor has during this time promoted more than two championship bouts a year. We also ruled that the decree applied to petitioners from the time they acquired the assets of defendant Madison Square Garden Corp., New York, including its stock and the arena Madison Square Garden, not only because petitioner succeeded to the title of defendant Madison Square Garden Corp., New York, but particularly in view of the fact that the ownership and control of the Garden as an arena suitable for presenting boxing contests was one of the principal means by which the conspiracy was made effective.
The command in the decree that defendant International Boxing Club of New York, Inc., be dissolved and that Norris and Wirtz divest themselves of their stock in Madison Square Garden Corp., makes it clear that a reorganized defendant to be bound by the prohibition of the decree was contemplated, or the decree would become a nullity.
This leaves for determination but one aspect of the relief sought by defendants and that is a construction of paragraph 4, which would not prohibit defendants from contracting for the promotion of 'more than a single professional boxing contest' within 8 months or less or, in the alternative, a modification of paragraph 4 to so enable defendants. It is conceded by petitioners that there is no ambiguity in the first sentence of paragraph 4 and it is conceded by the Government that the 5-year period provided for in the third sentence has expired.
We, therefore, have an express prohibition against defendants entering into an exclusive contract with one boxer -- be it with the same or different opponents -- with an exception against this prohibition made in favor of one return bout between the same boxers within a period of not more than 8 months. So that under the unambiguous terms of this paragraph, beyond this 8-month return bout, defendants may not in the one contract sign up one boxer for any further bouts.
Any other interpretation makes nonsense of the entire paragraph, if not the decree.
The sole question, therefore, is whether conditions have so changed in the past five years as to justify a modification of the paragraph to lift this contractual prohibition and permit petitioner to sign up a boxer in the one contract to one or more contests with other boxers.
A hearing was held by the Court at which defendant and the Government presented evidence in support of and in opposition to such a modification respectively.
According to petitioners, the severe competitive disadvantage suffered by them is that, in the course of their business at considerable cost, they bring a boxer to New York from another state or a foreign country and are then precluded from deriving adequate financial benefits from the venture because they may not initially in the one contract sign the boxer up to any more than one fight; that the boxer goes home, necessitating a new expenditure to bring him back on a second contract; that this financial prejudice is particularly evident and unreasonable in the frequent cases where they spend money and incur great financial risk and 'knowhow' to promote and introduce an unknown boxing figure on their national television program -- money and time which they can never recoup by signing him up to various bouts because, after introducing him to the public, he is 'snatched' and signed up by other promoters upon whom no contractual restriction is laid and who have run no financial risk. This, according to petioners, is particularly unfair to them because, after they have enhanced the ...