The opinion of the court was delivered by: GRIESA
This is an action brought by the American Federation of Television and Radio Artists, AFL-CIO ("AFTRA") against the National Association of Broadcasters ("NAB"). AFTRA brings this action on behalf of fifteen AFTRA members who have appeared as program hosts on television programs directed at children. The complaint alleges that the NAB has combined with its members to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, by promulgating a rule which prevents hosts of children's television programs from delivering commercial messages on or adjacent to these programs. In addition the complaint charges that the rule constitutes a deprivation of property without due process of law, in violation of the Fifth Amendment to the United States Constitution. AFTRA seeks injunctive and declaratory relief as well as treble damages.
Both parties have agreed to have the issues in the action determined by the Court on the basis of stipulated facts. For the reasons hereafter set forth, I find in favor of defendant and hold that the complaint should be dismissed.
The NAB is an association of broadcasters organized to promote the interests of owners and operators of commercial radio and television stations and networks throughout the United States. Since 1952 the NAB has continuously promulgated and revised the Television Code of the NAB ("the Code"), setting forth standards for programming and advertising. Subscription to the Code is voluntary and is open to nonmembers as well as members of the NAB. Subscribers to the Code are entitled to display a Seal of Good Practice which indicates subscription to the Code.
The NAB has within it certain bodies charged with overseeing compliance with the Code. Certain procedures are established for handling alleged violations. The only sanction imposed by the NAB for Code violation is suspension of the broadcaster's subscription and the right to display the Seal of Good Practice.
All of the national networks are members of the NAB and subscribers to the Code. Of the approximately 700 commercial television stations licensed by the Federal Communications Commission, 500 are members of the NAB, but only 400 stations subscribe to the Code.
The NAB rule attacked in this litigation came about as follows. Over the years a familiar practice in the television industry was to have a host or an actor in a television program deliver the commercials on that program. Strong complaints arose about this practice in connection with children's television programs. It was thought that the delivery of commercials to children by a character on a favorite television program operated as an overly powerful inducement in favor of the product being advertised. It was thought that ethical conduct in the children's programs required a separation between the persons involved in the television program proper and the persons delivering the commercials.
On February 5, 1970 a group known as Action for Children's Television filed a submission with the FCC. This submission urged the adoption of certain rules, including a rule preventing a television performer on a children's television program from delivering commercials on that program. On February 12, 1970 the FCC issued a public notice describing the receipt of the above submission, and stating that before the FCC considered the matter further, interested persons were afforded the opportunity to submit pleadings. On March 30, 1970 the NAB filed a pleading with the FCC opposing the proposed regulation on the ground that the NAB Code already had certain protective provisions which were sufficient.
On January 26, 1971 the FCC, by public notice, instituted a formal inquiry into children's television programming and advertising practices, and announced that, among other things, the inquiry would deal with the proposed rules recommended by Action for Children's Television.
On February 2, 1971 the chairman of the FCC addressed a meeting of the American Advertising Federation and urged in general terms that the television industry adopt effective self-regulation in respect to children's television programs.
Early in 1971 a group known as The Council on Children, Media and Merchandising developed a code which it hoped would be adopted in the television industry. Part of this proposed code was to the effect that commercials on children's programs would be clearly delineated from the program proper, and that the content and personnel involved in each was to be separate.
On or about March 16, 1971 Senator Frank E. Moss, Chairman of the Subcommittee for Consumers of the Senate Commerce Committee, wrote a letter to the NAB proposing that the NAB consider making its own Code conform to the code proposed by The Council on Children, Media and Merchandising.
On May 1, 1971 the Southern Association on Children Under Six, at its annual conference, endorsed the code proposed by The Council on ...