Appeal from a judgment of the District Court for the Southern District of New York (Edmund L. Palmieri, Judge) convicting a corporation and one of its employees of criminal contempt for violating an antitrust consent decree and imposing fines of $500,000 and $5,000 upon corporation and individual, respectively. Judgment affirmed as to individual; penalty vacated as to corporation for lack of a jury trial.
Newman, Cardamone, and Winter, Circuit Judges.
JON O. NEWMAN, Circuit Judge:
This appeal presents the constitutional question of whether a corporation is entitled to a jury trial in a prosecution for criminal contempt that results in a substantial fine, in this case, $500,000. This question arises on an appeal by Twentieth Century-Fox Film Corporation ("Fox") and one of its employees, Leila Goldstein, from a judgment of the District Court for the Southern District of New York (Edmund L. Palmieri, Judge) convicting them, after a two-day bench trial, of criminal contempt for violating a 1951 consent decree. The decree prohibits motion picture companies and their employees from engaging in various sales practices that violate the antitrust laws.
Although there is ample evidence to support Judge Palmieri's conclusion that Fox and its agent, Goldstein, violated the decree, we conclude that the District Court lacked the power to impose a fine of $500,000 on Fox after denying the corporation's demand for a jury trial. Accepting the contention that at some point the amount of a fine demonstrates that the contempt is a "serious" offense entitling the contemnor, regardless of its financial circumstances, to a jury trial, we hold that this point is reached once a fine exceeds $100,000. Accordingly, we vacate the penalty imposed on Fox for lack of a jury trial. We affirm Goldstein's conviction in all respects.
In 1938, the Government brought an antitrust action against the eight largest motion picture companies in the United States, including Fox. The original complaint alleged that the defendant companies combined to restrain trade in the production, distribution, and exhibition of movies, in violation of the Sherman Anti-Trust Act. The companies engaged in a variety of practices that "[eliminated] the opportunity for the small competitor to obtain the choice first runs." United States v. Paramount Pictures, Inc., 334 U.S. 131, 154, 92 L. Ed. 1260, 68 S. Ct. 915 (1948). One of the most common practices was "block-booking" -- conditioning the licensing of one film or group of films upon the licensing of one or more additional films. After protracted litigation, see United States v. Paramount Pictures, Inc., 66 F. Supp. 323 (S.D.N.Y. 1946), judgment entered, 70 F. Supp. 53 (S.D.N.Y. 1946), aff'd in part and rev'd in part, 334 U.S. 131 (1948), decision on remand, 85 F. Supp. 881 (S.D.N.Y. 1949), aff'd, 339 U.S. 974 (1950), Fox and the other studios agreed to the entry of a consent decree in 1951, United States v. Loew's Inc., 1950-1951 Trade Cas. (CCH) para. 62,861 (S.D.N.Y. 1951). Section II(7) of the decree enjoins Fox from engaging in blockbooking:
The defendant-distributor Twentieth Century-Fox Film Corporation, its officers, agents, servants and employees and its subsidiaries and any successor in interest are hereby enjoined:
7. From performing or entering into any license in which the right to exhibit one feature is conditioned upon the licensee's taking one or more other features.
In 1978 Fox was indicted for violating section II(7) of the decree and, upon its plea of nolo contendere, was fined $25,000 plus costs of $18,170.
The litigation at issue on this appeal was initiated in October 1988, when Fox and Goldstein were charged with criminal contempt, pursuant to 18 U.S.C. § 401(3) (1982), for violating section II(7). During the relevant period, Goldstein was employed by Fox as manager of the company's Indianapolis/Milwaukee/Minneapolis branch office, responsible for overseeing the rental and distribution of Fox films in that region. The indictment charged that between 1985 and 1987, the sales activities of Goldstein's branch office violated the consent decree's prohibition of block-booking. Both defendants pled not guilty and requested a jury trial. Goldstein and the Government agreed, with the Court's concurrence, that her maximum penalty, if convicted, would be six months' imprisonment or a $5,000 fine, that her offense was therefore "petty," and that she was not entitled to a jury trial. As to Fox, the District Court ruled that a corporation, facing only a fine, was not entitled to a jury trial, regardless of the amount of the fine.
The indictment concerned the activities of Goldstein's branch office with respect to four sets of films: (1) Johnny Dangerously and Flamingo Kid (1985); (2) Cocoon and Prizzi's Honor (1985); (3) Aliens, Space Camp, and Big Trouble in Little China (1986); and (4) Mannequin and Black Widow (1987). The Government called eight witnesses: three of Goldstein's subordinates, who were responsible for booking these film releases into movie houses in the Minneapolis territory; three independent film booking agents, who served as middlemen between Fox and smaller theatre operators; and two theatre owners. The subordinates testified that they were instructed by Goldstein to engage in block-booking. For example, when an employee was meeting resistance in booking Johnny Dangerously, but was receiving numerous requests for the concurrently released Flamingo Kid, Goldstein suggested to the employee various methods of forcing the exhibitor to rent the less desired film in exchange for rights to the more desired release. One method was to cancel the more desirable film if an exhibitor called to cancel a less desirable film. The Government also introduced into evidence an inter-office memorandum in which Goldstein announced to her staff: "I do not want to see any COCOON dates in a town that does not have PRIZZI'S [HONOR] dated." The memorandum went on to note that if an exhibitor accused a staff member of block-booking, "[just] advise him you are selling the pictures in order of availability and PRIZZI'S was our first summer release."
The bulk of the Government's evidence concerned the licensing of Black Widow and Mannequin. Fox employees in Goldstein's office testified that they were instructed not to accept any Mannequin play-dates unless the exhibitor agreed to play Black Widow first. If a theatre owner wished to reschedule the Black Widow playdate, Mannequin would also be moved back so that Black Widow would always be shown first. If an exhibitor wanted to cancel Black Widow, then Mannequin would also be cancelled. An independent booking agent testified that he was told by Goldstein's staff that he would have to play Black Widow before he could play Mannequin. Another booking agent testified that when he attempted to cancel Black Widow play-dates, he was told that he would have to play Black Widow in order to keep his Mannequin dates. Finally, one theatre owner, James Wilson, testified that after he refused to book Black Widow into four of his theatres, Goldstein declined to give Wilson Mannequin play-dates for these theatres.
Based on the Government witnesses' testimony and supporting documentary evidence, Judge Palmieri found that Goldstein had willfully violated the 1951 consent decree and imposed a fine of $5,000. Relying on the principle that a corporation is criminally liable for the conduct of its managerial employees acting within the scope of their authority, see United States v. Koppers Co., 652 F.2d 290, 298 (2d Cir.), cert. denied, 454 U.S. 1083, 70 L. Ed. 2d 617, 102 S. Ct. 639 (1981), Judge Palmieri also found Fox guilty of criminal contempt and imposed as a penalty a fine of $500,000 plus $40,397 in costs. In a post-trial ruling, Judge Palmieri supplemented his pretrial ruling denying Fox a jury trial with the ...