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July 5, 1972


Gurfein, District Judge.

The opinion of the court was delivered by: GURFEIN

GURFEIN, District Judge.

The plaintiff, American Documentary Films, Inc. (ADF), is a corporation organized under the Membership Corporation Law (now the Not-for-Profit Corporation Law) of the State of New York in July 1969. *fn1" Its principal purpose is to act as a distributor of films, and it describes itself as building an alternative to commercial mass media. As an implementation of that purpose it has from time to time over the past several years transported into the United States and exhibited films made in many countries, including North and South Vietnam and Cuba.

 According to the plaintiff, in about July or August 1971, an officer of ADF named Michael Myerson discussed with the Cuban Film Institute in Havana the possibility of a series of festivals in the United States of films produced and directed by Cubans in Cuba. The Cuban Film Institute spokesman for the filmmakers agreed to the festivals and suggested that prints of a number of films were then located in Canada. Thereafter, in August or September and again in November 1971, the ADF officer brought into the United States a number of films of Cuban origin, crossing the border between the United States and Canada and making no customs declaration. In the period between November 1971 and March 1972 elaborate promotional and exhibition activities were undertaken in the New York area in anticipation of the opening of the first of the festivals at the Olympia Theatre in New York on March 24, 1972.

 Apparently the Foreign Assets Control section of the Federal Reserve Bank learned of the extensive promotional activities being conducted respecting these films. On March 6, 1972, on orders from Washington, a special representative of the Office of Foreign Assets Control visited the premises of ADF and made inquiry concerning the origin of the films, that is, how the films were brought into the United States and how any payment therefor was effected. Mr. Myerson refused to supply any information until he could consult with his attorney. The next interview was on March 20, 1972 when Mr. Myerson, in the presence of an attorney, stated that the Cuban origin films had been listed in an application for a Treasury license which was filed March 17 and which contained the entire list of Cuban films that had been imported by ADF. He conceded that on two occasions in September and November 1971 the films had been imported by him from Canada in the trunk of his car, and that no customs declaration of entry for such films had been made on either occasion. It appears that the day before the license application was made ADF had been advised by its present firm of attorneys that, since the films had a Cuban source of origin, the license was required. In the application for the license the applicant stated that no financial consideration, direct or indirect, had gone or was to go to a designated national.

 Subsequent to Myerson's admission that he had brought the films into the United States without a declaration of entry or the payment of duty, the Foreign Assets Control wrote the plaintiff a letter on March 22, 1972, requesting "1. all exchanges of correspondence and other documents with the Cuban and Canadian parties relating to the films in question; 2. names and addresses of the Canadian party or parties from whom the films were obtained." At the March 20 meeting with the special representative of the Office of Foreign Assets Control, Mr. Myerson had refused to disclose the name and address of the party or parties in Canada from whom the films had been obtained. On March 23 a customs special agent and the special representative of the Foreign Assets Control visited the premises of ADF and requested that the films be turned over. This request was refused.

 In the meantime, the film festival of Cuban films was scheduled to begin at the Olympia Theatre on March 24, 1972. On that day, the office of the United States Attorney requested the names of the Canadian parties and this information was again refused. The following day, on March 25, search warrants were obtained for the premises of ADF and of the Olympia Theatre. No films were seized, however, except one film which was in the possession of Jerrold Stoll, President of ADF. Several days later, on March 28, two administrative orders issued by the Acting Director of the Office of Foreign Assets Control were served on ADF, requiring it to make available for examination certain of its books and records and to appear and furnish information regarding films of Cuban origin imported, transported or offered for sale or rental since May 1, 1970. The President of the company appeared subsequently and refused to answer questions; but at that visit of April 5, 1972 he and his attorney did present on behalf of ADF some documents for examination, among which was a piece of paper bearing the handwritten notation: "Goes to highest bidder in city. Canadian -- no mention of Embassy, just say we haven't permission. No individual film rentals. Must be a package -- we're not the distributor of the film -- we're just responsible for tour of the festival." There were also produced several invoices purportedly showing that at least two of the films allegedly imported in September and November 1971 were actually in ADF's possession as early as May or June 1971.

 In a letter of May 4, 1972 plaintiff was advised by the Federal Reserve Bank of New York that its application for a license had been denied by the Treasury Department, but that it would be reconsidered upon receipt of full and complete answers to the above-quoted questions posed in the letter of March 22, 1972. Plaintiff has still not supplied the information requested.

 Counsel for ADF had been informed by the Acting Director of Foreign Assets Control on April 5, 1972 that there had apparently been violations of law in the transaction, and that licenses could not be issued until the investigation was completed and a decision reached on the criminal aspect, even if the Canadian intermediaries' identities were disclosed. That official denies that he ever told anyone that if ADF made full disclosure and if no substantive violations were found he would, nevertheless, refuse a license.

 ADF maintains that it had no prior knowledge of any requirement for filing a declaration of entry for films obtained as gifts. The Government counters by stating that in May 1969 David Castro, an agent of ADF, had actually been detained by United States Customs Officials at Champlain, New York and that a film found in his possession, which he had not declared, was seized and subsequently forfeited for customs law violation. The Government infers from this that ADF did know that a customs declaration was required and that it, therefore, knew that it had brought the motion pictures in suit into the United States illegally.

 Several films listed on ADF's license application were actually shown in May 1972 at Columbia University under the sponsorship of "Books for Cuba Committee" and the Teachers College Student Senate. Also, on April 18, 1972, ADF filed an application for a license to import posters of Cuban origin. The Office of Foreign Assets Control asked a number of questions designed to assist in clarifying the issue of whether or not there would be any direct or indirect commercial or financial benefit to Cuba from the purported transaction. All of these questions were fully answered by ADF to the satisfaction of Foreign Assets Control. A license authorizing importation of these Cuban posters was issued promptly after Foreign Assets Control received ADF's reply to those inquiries.


 On these facts, which are virtually undisputed, plaintiff moves for an injunction pursuant to Fed. R. Civ. P. 65 enjoining the defendants from interfering with the importation or exhibition of these films of Cuban origin, for summary judgment and for a declaratory judgment declaring that 31 C.F.R. §§ 515.101 et seq. and particularly 31 C.F.R. §§ 515.601, 515.602, 515.801 are unconstitutional on their face and as applied to the plaintiff in that (1) they abridge the right of free speech and press, and act as a prior restraint in violation of the First Amendment of the United States Constitution; (2) they deprive persons of property arbitrarily and without due process of law, contain no ascertainable standards, shift the burden of proof that no crime has been committed and that the regulations have been complied with to the applicant, require self-incrimination, provide no right to a hearing and no review of adverse determinations, all in violation of the due process and self-incrimination clauses of the Fifth Amendment. In addition, the manner of administering the regulations with respect to ADF allegedly violates the equal protection clause incorporated within the due process provision of the Fifth Amendment.

 The defendants cross-move for summary judgment.

 A principal contention of the plaintiff is that free speech is impinged by the actions directed against it by Foreign Assets Control and that the standards are too vague to be consonant with due process. It also asserts that its license application has not been reviewed under the same standards by which others have been licensed, and that, accordingly, the equal protection clause is violated. In short, the plaintiff treats ...

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