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TROPIC FILM CORP. v. PARAMOUNT PICTURES CORP.

July 31, 1970

Tropic Film Corp., Plaintiff,
v.
Paramount Pictures Corp., Paramount Film Distributing Corp. and Motion Picture Assn. of America, Inc., Defendants


Lasker, D. J.


The opinion of the court was delivered by: LASKER

LASKER, D. J.:

In this suit challenging the legality of the Motion Picture Code and Rating Program ("Program") adopted in 1968 by major trade associations within the motion picture industry, the plaintiff moves for preliminary relief. The cast of characters consists of:

 Joseph Strick ("Strick"), producer and director of a motion picture entitled "Tropic of Cancer." Strick maintains this suit pursuant to authorization on behalf of plaintiff Tropic Film Corporation.

 Tropic Film Corporation ("Tropic"), a Swiss corporation owning a 50 percent interest in the motion picture "Tropic of Cancer."

 Paramount Pictures Corporation (successor by merger of its former wholly owned subsidiary, Paramount Film Distributing Corporation) ("Paramount"), a producer and distributor of motion pictures. Paramount owns the remaining 50 percent of the film "Tropic of Cancer."

 Motion Picture Association of America, Inc. ("MPAA"), a motion picture distributors trade association.

 Tropic sues under Section 16 of the Clayton Act (15 U.S.C. § 26) for injunctive relief against all parties defendant and for treble damages under Section 4 of the Act (15 U.S.C. § 15) against MPAA. The present application is for a preliminary injunction restraining defendants from carrying on an asserted industry-wide refusal to deal in and distribute, advertise and exhibit plaintiff's film "Tropic of Cancer" without an "X" rating affixed to it and to its advertising. The complaint alleges that defendants and co-conspirators have conspired, in violation of Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2), to refuse to exhibit, distribute or advertise the film without such a rating affixed.

 In 1968 (under date of July 30 but signed November 19) Strick, *fn1" on behalf of "a company to be designated by him" (which in fact is Tropic Film Corporation), entered into an agreement with Paramount for the production and distribution of a motion picture based on Henry Miller's novel Tropic of Cancer. The picture was produced in accordance with the terms of the contract. Paramount financed the film, which cost approximately $1,750,000, $400,000 of which was paid to Strick *fn2" and is not recoverable by Paramount. In early 1970 the film, which was produced abroad, cleared United States Customs and was presented for rating to the committee established under the Program for that purpose. The committee rated the film X, and it has been distributed and advertised with an X rating affixed.

 I.

 Before outlining the contentions of the parties it is necessary to describe the procedure of the Program, which is the latest of a series of self-policing plans of the motion picture industry distinguishing films appropriate for adult viewing only from those appropriate for viewing by children. Although such programs or codes have existed since 1930, the current Program was initiated only in November 1968 and was largely influenced by the explosion of films containing explicitly sexual material both as to subject matter and photographic display. *fn3" A further impulse to establishment of the current Program emanated from the 1968 decisions of the United States Supreme Court in Ginsberg v. New York, 390 U.S. 629, 20 L. Ed. 2d 195, 88 S. Ct. 1274, and Interstate Circuit v. Dallas, 390 U.S. 676, 20 L. Ed. 2d 225, 88 S. Ct. 1298. Ginsberg held constitutional a New York statute which made it unlawful to sell to a minor a ticket to a motion picture which depicts "nudity, sexual conduct or sado-masochistic abuse and which is harmful to minors." Dallas found unconstitutionally vague an ordinance of the City of Dallas relating to the exhibition of "sexual promiscuity" or related matters to minors, but the decision taken together with Ginsberg was regarded by the industry as implying that a properly drawn ordinance might be found constitutional.

 Desirous of continuing to exhibit films dealing frankly with sexual matters, and at the same time wishing to avoid what they felt might constitute an onslaught of legislative censorship, MPAA, together with the two other principal motion picture industry trade associations, International Film Importers and Distributors of America, Inc. ("IFIDA") and the National Association of Theatre Owners ("NATO"), announced the establishment of the Program on October 7, 1968. The affidavit of Jack Valenti (MPAA) and statements of Messrs. Podhorzer (IFIDA) and Rifkin (NATO) (attached to Valenti Affidavit) make it clear that the primary objective of the Program was "a concern for children." Indeed, there is no question that the Program rates films by any standard other than the suitability of viewing by children, or that it makes any attempt to rate the esthetic qualifications of a film. Under the present procedure, effective March 1, 1970 (not substantially different from its predecessor) the ratings are as follows:

 
G: ALL AGES ADMITTED. General Audiences.
 
GP: ALL AGES ADMITTED. Parental Guidance Suggested.
 
R: RESTRICTED. Under 17 requires accompanying Parent or Adult Guardian.
 
X: NO ONE UNDER 17 ADMITTED. (Age limit may vary in certain areas.)

 MPAA is composed of nine producing-distributing motion picture companies who produce or distribute a very substantial majority of the films shown in this country. The members of MPAA have agreed to submit their films for rating. A picture designated X does not carry the word "Approved" or the seal of MPAA, whereas pictures otherwise rated do. This distinction applies also to advertising of a rated film which the members of MPAA (including Paramount) have agreed to. Although MPAA members have agreed to abide by the provisions of the Program, no producer or distributor is required to submit a film for rating, and even as to MPAA members there is no sanction for failure to adhere to the agreement. (Valenti Affidavit, pp. 7-8).

 In this connection it is significant that at least one major exhibitor in the metropolitan area of New York (The Walter Reade Organization, Inc.) which is a member both of MPAA and IFIDA has consistently refused to abide by the Program, and that a major foreign import, "I Am Curious-Yellow" has been distributed and exhibited in many parts of the country, although it was not submitted for rating under the Program nor did its producers voluntarily rate it.

 Although NATO has not obligated itself or its members to enforce the Program, it has "pledged to ask its members to cooperate with the Rating Program and to voluntarily adhere thereto," but does not sanction members who refuse to do so. (Valenti Affidavit, pp. 6-7).

 The Program provides procedural safeguards, including the right of an applicant to appeal a rating to the Code and Rating Appeals Board, comprised of the President of MPAA, 12 persons who are directors of MPAA or executive officers of its members, eight exhibitors chosen by NATO, two by IFIDA, and two producers designated by Producers Guild of America. The Appeals Board has enacted regulations providing a detailed procedure permitting both written presentation and oral testimony. The rating of "Tropic of Cancer" was not appealed.

 II.

 Contentions of the ...


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