William H. Rehnquist: We'll hear argument first this morning in No. 88-293, Community for Creative Non-Violence, et al., versus James Earl Reid. Mr. Garrett.
Robert Alan Garrett: Mr. Chief Justice, and may it please the Court: This case, your Honors, involves a dispute over who has the rights, under the 1976 Copyright Act, to authorize reproductions of a statue entitled "Third World America". The Community for Creative Non-violence, which is a homeless activist organization located here in Washington, originally had Third World America produced in order to serve as a symbol of the cause that they espouse and to help raise national consciousness about the plight of the homeless here in America. Consistent with that purpose, we would like to be able to disseminate as widely as possible throughout the United States reproductions of Third World America in the form of Christmas cards, posters, and other media, and then to apply whatever revenues are generated by those reproductions to help fund the work that we do with the homeless. Mr. Reid, however, says that we cannot do so without negotiating his permission. Mr. Reid claims that he and he alone has the right to authorize reproductions of Third World America and to profit... and to derive any of the profits that are associated with those reproductions. Now, there's no written agreement in this case between Reid and CCNV. We basically had a handshake agreement. CCNV, which depends upon volunteers to perform all of its services, asked Mr. Reid to donate his services to sculpt figures in Third World America. Mr. Reid agreed to do so, saying that he too was concerned about the homeless. And believing that all parties here were pursuing a common objective, we then proceeded to pay Mr. Reid $15,000 to cover his expenses, such as the rent on his studio, the various utilities, bills, the cost of his assistants, and the materials. After the project was completed, after we had paid Mr. Reid the $15,000, and after we had given him the experience that we had of years of dealing with the homeless and our creative direction in sculpting the statue, Mr. Reid told us for the first time that his concerns for the homeless did not extend so far as to relinquishing his claim to what he considers to be the very valuable reproduction rights in Third World America. Believing that this was inconsistent with the spirit of the arrangement that we had worked out with Mr. Reid to begin with, and believing that any revenues that should be derived from Third World America should go to the benefit of the homeless and not to the benefit of any single individual, we filed this litigation. The issue before the Court--
Antonin Scalia: Excuse me. It goes to some individual, either to Mr. Reid or to your organization. If your organization chooses to give it to the homeless, that's certainly your organization's business. You don't assume... you don't assert you're bound to give it to the homeless.
Robert Alan Garrett: --We will--
Antonin Scalia: You just assert you're entitled to it.
Robert Alan Garrett: --We will in fact use it--
Antonin Scalia: So it really isn't the homeless against Mr. Reid. It's you against Mr. Reid, as I understand the case.
Robert Alan Garrett: --We will in fact use the revenues that are derived from this, your Honor, to benefit the homeless, to help fund the various programs that--
Antonin Scalia: Well, that's nice, but you don't have to.
Robert Alan Garrett: --That is correct, your Honor.
Antonin Scalia: And Mr. Reid could come in and say the same thing. It wouldn't make any difference to the case.
Robert Alan Garrett: Our only purpose, your Honor, is to serve the homeless. The only programs that we run are for the homeless. There is no other place that we will use the--
Antonin Scalia: But that has nothing to do with this case. Your legal position would be unchanged if you were going to use the money to... whatever... for any other purpose, right?
Robert Alan Garrett: --That is correct, your Honor.
Antonin Scalia: Okay.
Robert Alan Garrett: The legal issue before the Court is whether during that seven-week period that Mr. Reid worked full-time on the Third World America project he and CCNV had an employment relationship within the meaning of the work-for-hire provisions of the 1976 Copyright Act. In resolving this issue, the Court will effectively establish guidelines for determining the circumstances under which one who hires an artist to produce a work will be the copyright owner of that work absent a written agreement to the contrary.
Sandra Day O'Connor: Mr. Garrett, I take it the principle to be established, though, has far-reaching consequences and would affect software programs commissioned by a company or employer.
Robert Alan Garrett: That is correct, Justice O'Connor.
Sandra Day O'Connor: And written work and research that's ordered to be produced by someone.
Robert Alan Garrett: Yes, your Honor. I think from various amici briefs that have been filed in this case it is clear that the issue to be decided here has ramifications well beyond our organization and extends generally throughout the entire copyright community. After our two-day bench trial, the district court found that we had the right to artistic control of the production of Third World America. In applying what has been referred to as the historic control standard that had originally been developed by the courts under the 1909 Copyright Act the district court held that there was a work-for-hire employment relationship between CCNV and Reid and, thus, Third World America is a work-for-hire. Now, before the district court, the choice of the standard to be applied under the 1976 Act was essentially non-controversial. Both Mr. Reid and CCNV agreed that that was the standard by which one determines an employment relationship not only under the 1909 Act but under the 1976 Act which, of course, we were proceeding under. The case was therefore tried on the basis that there really was no dispute between the parties as to the legal standard. The district court, as I said, applying that standard held that this is a work-for-hire. And no one disputes in this case... and, indeed, the D.C. Circuit did not dispute... that if one applies that historic control standard, that this is a work-for-hire employment relationship. Now, rather, the dispute that has come before this Court turns on whether that standard, the historic standard, is the correct standard under the 1976 Copyright Act. We agree with the position of the Second, the Seventh and Fourth Circuits, as well as Professor Nimmer, that the historic standard is indeed the correct standard and the district court acted properly in applying it in this case here. Reid and his various amici, however, have suggested that Congress abandon the historic test of the 1976 Act and they have provided to this Court a variety of different possibilities of tests that the Court could adopt in place of the old historic test. One interesting fact from our perspective is that neither Mr. Reid not, with one exception, any of his amici, actually urged that this Court adopt the standard on which they won before the D.C. Circuit, which was essentially an agency law standard. Now, we believe that the reason that so much distance has been placed between the court of appeals agency law standard and the historic standard is that there really is not much difference between the two. Both turn on the right-to-control. Now, while there may be some differences that are unexplained by the court of appeals below and by the Fifth Circuit which also adopted that test, again, they basically are going to be looking at the same totality of circumstances to determine whether the hiring party here has the right-to-control.
Sandra Day O'Connor: Well, Mr. Garrett, I take it the Register of Copyrights supports your... the Respondent's view here.
Robert Alan Garrett: That is correct, Justice O'Connor.
Sandra Day O'Connor: And presumably there would be some deference owing, perhaps, to the Register's understanding of the copyright law?
Robert Alan Garrett: Your Honor, as we have pointed out in our brief, for a period of almost ten years following the passage of the 1976 Copyright Act the Copyright Office agreed with our position, that it is a right-to-control standard that determines whether there is an employment relationship under the meaning of not only the 1909 Act but the 1976 Copyright Act. They took that position consistently in communications with Congress and in various publications that they made to the public. And had the Copyright Office maintained that position consistently, I would agree with you, your Honor, that he should be entitled to some deference. But they haven't done that. A couple of weeks ago, in the context of filing amicus brief in this case, the Copyright Office announced for the first time that it was switching from the historic standard to what they call a formal salaried employee approach.
Antonin Scalia: Mr. Garrett, can you tell me your proposed standard. You say it's right-to-control, but the Respondent's really assert that what you're applying is a de facto control. Is your test whether control could be asserted or could have been asserted, or whether it in fact was asserted?
Robert Alan Garrett: Justice Scalia, our position is the historic test, and the historic test is a right-to-control test. As we point out on page 19 of our brief, it is a right-to-control test. But the fact of the matter is that in a litigation context that we have here and in most of the cases that arise in the work-for-hire doctrine it's going to be very difficult to establish that right without showing actual supervision and control. Actual control. And, in fact, that is what happened in this case. Much of the testimony that was heard by the district court over the two-day bench trial focused on actual control in order to establish that right-to-control. But it is right-to-control.
Antonin Scalia: May I ask you another question? You say there is not much difference between your right-to-control standard and the common law employee standard. You say they're pretty much the same.
Robert Alan Garrett: Yes, your Honor, in the sense that they both turn on concepts of right-to-control.
Antonin Scalia: But I... you see, I understand what you mean by right-to-control, the right-to-control the product. Whether the statute should have these characteristics and what not. And I don't think that's at all what the common law agent... master/servant law means by right-to-control. That is to say, even... even if... even if you nave no right to... even if you rave the right-to-control the product, the individual may still be an independent contractor. You can tell the independent contractor, "I want the wall with eight angles. " then you may change your mind and say, "No, I want it with nine angles. " And he has to do your bidding. But he could still be an independent contractor. What is needed is the right-to-control his physical activity. To tell him, "I want you to put the bricks in this way. " "Knock off at 12:00, come back at 2:00. " and so forth. And you're not asserting anything like that. You're just asserting the right-to-control the nature of the work. That's quite different from the master/servant law... common law, as I understand it.
Robert Alan Garrett: Justice Scalia, I believe you are correct. And that is the difference, as one... as we would see it. They both turn on the right-to-control. They both talk about looking at the totality of the circumstances to determine whether some kind of control is present. Ours is control of the artistic production here. It is the test, as Professor Nimmer notes in his treatise, that is a variant of the agency law standard. It is one that has been adopted, really, to serve the purposes and policies underlying the Copyright Act, as opposed to serving the purposes and policies underlying tort law or agency law.
Antonin Scalia: One would think when he uses the word "employee" in a statute that it would connote that brand new thing which is nothing like... which is nothing like what it means at common law.
Robert Alan Garrett: The position that we take, your Honor, is that this is not a brand new thing that is being connoted here, that this is a test of employment that had been developed under the 1909 Copyright Act and applied for a number of years by the courts. And that when Congress chose to use the word 101 of the 1976 Act, it was basically carrying forward the same test of employment that had existed prior to the Act. The position taken by the Copyright Office and Mr. Reid, however, is that it wasn't, even adopting your common law agency stance, but rather some type of formal salaried employee approach.
William H. Rehnquist: Do you see the Copyright Office as taking a third approach as between the court of appeals here and the Fifth Circuit on the one hand and then still the courts of appeals that you rely on?
Robert Alan Garrett: Yes, your Honor. It's a third approach. It's an approach that is styled as a formal salaried employee approach. In fact, the approach that the Copyright Office takes is somewhat different from the approach that Mr. Reid takes and somewhat different from the approach that was taken by the Ninth Circuit in the recent Dumas decision, and it's somewhat different from the approaches taken by various of the amici in this case. They are all united under the rubric of a formal salaried employee approach, but each has his own slightly different version of what is a formal salaried employee. And in our view, none of those versions was a version that was adopted by Congress when it adopted the 1976 Act. Our view is that Congress carried over into the 1976 Act the historic standard.
Sandra Day O'Connor: Well, most of the scholarly writers on the subject, as pointed out by the court of appeals' opinion that we're reviewing here, supported the view, and do support the view, that works made for hire within the meaning of the statutory definition are limited to salaried or like employees and do not include independent contractors even if their work is closely supervised or controlled.
Robert Alan Garrett: Well, your Honor, unfortunately the court of appeals does not point out, nor does Mr. Reid or any of his amici, that Professor Nimmer takes a quite different view.
Sandra Day O'Connor: Well, he stands almost alone in the scholarly writing in taking that view. I... I--
Robert Alan Garrett: I would respectfully disagree, your Honor. He have cited in our reply or brief, on the final two pages or so, a number of other commentators who also take the same position that we do in this case.
Harry A. Blackmun: --Of course, Nimmer is a respected... long-respected voice in the copyright field, isn't he?
Robert Alan Garrett: He certainly is, your Honor, and this court has on other occasions certainly looked to his treatise to help understand the copyright laws. The basic concern in this case, as in any case with statutory interpretation, is, of course, starting with the language of the Act. I think the position of Mr. Reid and the Copyright Office and the other amici in this case, is that Congress in fact changed the law in the 1976 Act because it adopted a definition of the term "work-for-hire" for the first time. There was no such definition in the 1909 Act. The 1909 Act, however, said in the case of a work-for-hire, the employer is considered to be the copyright owner of the work. That was Section 26. In Section 201 of the 1976 Act Congress said in the case of a work made for hire, it is the employer or other person for whom the work has been prepared who is the copyright owner. And I think it's that simple comparison of language that suggests what Congress was doing in the 1976 Act was adding an entirely different category, a new category, the definition of work made for hire. Not those that are prepared by employers... or, by employees acting within the scope of employment. But, rather, those that are being prepared for someone other than the employer. What they were referring to there was, of course, what eventually became subdivision 2 of Section 101 dealing with commission works. The essence of the argument on the other side is that Congress, by dealing with this category of commissioned works in Section 101, had effectively abrogated the old historic right-to-control standard. And we submit that that's not the case. There is a great deal of controversy over what kinds of works ought to be considered commissioned works and treated as works for hire. But throughout that controversy there was no suggestion... and there is no suggestion anywhere in either the Act itself, in the reports accompanying the Act, in the Congressional debates, the hearings, the Register of Copyright Office report... that suggests that the old historic standard is being abandoned and replaced by something called "formal salaried employee" simply because Congress was choosing to deal with commissioned works. Congress did make a change in the 1976 Act. It dealt with commissioned works and established law, or clarified the law, and changed the law in some respects, that had developed under the 1909 Act with respect to commissioned works. But It did not change the law that had developed under this right-to-control test.
Antonin Scalia: Why didn't they just say right-to-control? I mean, if what you say is true, find it extraordinary that they should choose to describe this... what you call this old law by the phrase "a work prepared by an employee within the scope of his or her employment. " That's just a very strange way to say that.
Robert Alan Garrett: Well, I--
Antonin Scalia: They could have said right-to-control... they could have said.
Robert Alan Garrett: --They could have said formal salaried employee. They could--
Antonin Scalia: I agree.
Robert Alan Garrett: --have said continuous salaried--
Antonin Scalia: I agree with you that too. I'm with you on that one.
Robert Alan Garrett: --But they didn't. Our view is, your Honor, that having said 1976, and that is the right-to-control test.
Antonin Scalia: That's not what it meant in the law. I mean, what it meant in the law was... was master/servant.
Robert Alan Garrett: You're correct, as a general matter, your Honor. But I'm talking about what it meant in the copyright law. We're dealing here with a special... a term that has had its own meaning developed in the copyright law, which is a variant of the meaning that it has developed over the years and the agency law. And I say they both derive from the notion of right... right-to-control here.
Anthony M. Kennedy: Of course, to the extent that one who pays for the work really is concerned about protecting his or her artistic contribution, I suppose that under the statutory scheme that person who hires can simply contract. I know hindsight is always difficult to deal with, but in this... in this situation you had the perfect right to contract with the sculptor to say that the copyright would be exclusively yours.
Robert Alan Garrett: You're absolutely correct.
Anthony M. Kennedy: And that's a very simple statutory scheme.
Robert Alan Garrett: You're absolutely correct, your Honor. This problem can be dealt with by contract by the parties. As I said at the outset of my argument, what you're dealing with here, the situation is in which the parties have not dealt with it by contract. We are establishing, and the Court is establishing... and the Court is disserting, more precisely, the guidelines that Congress established in the 1976 Act. And, given the number of amici who participated in this case, this is obviously not a problem that is... that is where there is no contracts. It's no obviously a problem that's simply limited to our particular factual situation where we have a voluntary society dealing with an artist who presumably knew what contract or copyright law means and who never took the time to either tell us that he was reserving for himself the copyright or what he intended to do with the work afterwards. But you are right. It can be dealt with by a contract here. One of the problems that is noted by Mr. Reid and the Copyright Office is that this is a right-to-control test. It is a test that is going to result in artists, freelance, artists always giving up their rights. It is an easy test to satisfy. And that is not our case. I think one has to distinguish, as the courts have distinguished, between the right-to-control and supervision and direction, and the right to simply approve or reject a work. The right-to-control test is not a difficult... or, is a difficult test to meet in the facts of the case. They were met here, as the district court found, at the--
William H. Rehnquist: Are you saying the right-to-control test as traditionally applied in master/servant law, workmen's compensation, that sort of thing, to define a distinction between an employee and an independent contractor?
Robert Alan Garrett: --No, your Honor. I am saying that it's the right-to-control test, the right-to-control the artistic production, as Justice Scalia noted at the outset, which as Professor Nimmer notes, is a variation of the--
William H. Rehnquist: Well, then you have a very difficult time with the word 1, it seems to me.
Robert Alan Garrett: --Well, our position, your Honor, is that the term 1909 Copyright Act to encompass this right-to-control test, a right to artistic control, a right to supervise the manner in which the work is performed. That is the test that the district court applied in this case, and found that it was satisfied.
Antonin Scalia: Mr. Garrett, I do think that... for me, at least... it's important to your case that the word pre-76 old law, as you call it in that sense. And I'm not sure that's true. One of your major authorities for what the old law was, is Varmer, his 1958 study. And the part of that study that you choose to italicize because you think it's so crucial is the following sentence. 21 of your brief.
Robert Alan Garrett: Yes, sir.
Antonin Scalia: "Underlying this distinction between", that is, between employer/employee and commissioned products, "is the premise that an employer generally gives more direction and exercises more control over the work of his employee than does a commissioner with respect to the work of an independent contractor. " I read that to say that the reason the copyright law has drawn the line at the old master/servant line is that generally speaking the master exercises more control. But the criterion is master/servant. The reason we've selected that criterion is because he generally exercises more control over the artistic product. But that's not the test. That's how I would read Varmer anyway.
Robert Alan Garrett: I think Varmer recognizes that there are situations in which that control is not going to be exercised, and that's why he uses the term "generally". It is, as we said earlier, a right-to-control test. What has been done here is simply to adopt the standard under the old law that had some meaning for copyright law. What we're talking about in a copyright law is encouraging creative activity... encouraging creativity, the type of creativity that we think CCNV has supplied in this particular case. The test that the courts had applied was one of right-to-control that artistic production.
Byron R. White: I think the court of appeals, though, agreed with you that prior to 1976 the right-to-control test had predominated?
Robert Alan Garrett: Yes, your Honor. The view of the court of appeals, however, was that that test had been changed in the 1976 Act.
Byron R. White: By the Act?
Robert Alan Garrett: By the Act. By the fact that Congress in Section 101 subdivision (2) dealt with commissioned works. Our view is that that's all Congress dealt with in Section 101(2), is with commissioned works. It was not intending to abrogate a standard that had already existed in the law here.
Byron R. White: And that standard, under the prior Act, was an interpretation of employee or employer? Which?
Robert Alan Garrett: The only word used in the 1909 Copyright Act was "employer", your Honor.
Byron R. White: Employer.
Robert Alan Garrett: The courts, however, had taught generally in terms of right... in terms of the employment relationship, as Professor Nimmer notes in his 1963-1976 versions of the Treatise on Copyright Law. The... Much of what has been discussed by the Copyright Office and Mr. Reid goes to the concern of predictability and really policy arguments that have been raised here. The notion that the control test is one that is unpredictable and, therefore, should not be adopted. Our view, of course, is that the test is no more or less predictable than it was prior to the 1976 Act. It is no more or less predictable than the agency law control standards. And, indeed, when one looks at the Ninth Circuit case, the Dumas case which lists a whole series of factors that one looks at in order to determine even formal salaried employment relationship, our test, the historic test, is no more or less predictable than that either. Questions of predictability are questions that ought to be addressed, if at all, to Congress. Congress, of course, has been presented with the formal salaried employee argument by various amici participating in this case ever since the year 1982. Our position is that's the first year in which that particular test has ever been surfaced before Congress. If they feel that this is a better test, it's Congress that should be the one to adopt it. Now, they didn't do so in the 1976 Act. With your Honor's permission, I would like to reserve the remainder of my time for rebuttal, please.
William H. Rehnquist: Very well, Mr. Garrett. I neglected to say at the opening of this session that Justice Brennan is unavoidably absent due to a death in the family. He will participate in today's cases on the basis of the transcripts and the tapes. Mr. Kaufman.
Joshua Kaufman: Mr. Chief Justice, and may it please the Court: In the fall of 1985 Mitch Snyder called James Reid. They had two conversations on the phone. Mr. Reid then agreed to create a work of art for CCNV. At the inception of their relationship James Earl Reid was an independent contractor and he was going to create a commission. And that is true under any standard or any test. Section 2 of the work-for-hire definition deals with commissions. It lists nine very specific categories of works which can be deemed works for hire when created by independent contractors. Sculpture is not one of those nine works or categories listed. It also requires a writing. There was no writing in this case. No work-for-hire situation, relationship, was created under the language of the Act. As the Ninth Circuit just found in Dumas, it one holds himself out as an independent contractor, the commissioner is on notice, and that they must take certain actions to insure that the Section 2 requirements are fulfilled. James Earl Reid--
Sandra Day O'Connor: Mr. Kaufman, how do you distinguish the test used by the Ninth Circuit in Dumas from that used by the CACC in the opinion we're reviewing?
Joshua Kaufman: --I think that the Dumas test provides a greater degree of predictability. The salaried formal employee and the agency test are slightly different. There are certainly areas of overlap but we look to--
Sandra Day O'Connor: The Ninth Circuit would say unless you're a salaried employee... that's it?
Joshua Kaufman: --It looks at Section 1, an employee within the scope of his or her employment. And that's an employee. It looks at the ordinary meaning of the word, the one that is understood by most people, and that's where they stop. In Section 2 it deals with independent contractors and commissions. And those are very understood words. A commission--
Sandra Day O'Connor: You think the Ninth Circuit would not look to the old common law of master/servant?
Joshua Kaufman: --No, I do not. I think only where that would apply to a salaried employee. But I think it's a different criteria and I think they look at the most common ordinary use, the most predictable use.
Sandra Day O'Connor: And what standard do you suggest is proper?
Joshua Kaufman: We believe that the Dumas test is the best standard. We believe it provides the greatest predictability.
Sandra Day O'Connor: So you don't support the standard adopted by the CADC?
Joshua Kaufman: We believe they came to the correct conclusion and we think that it is the second-best test. Compared to the Aldon test it is by far superior. But we think that the Dumas test, as recently enunciated just a month ago, does provide the best test of the three that are before the courts by the various circuits.
William H. Rehnquist: Well, can you give an example of a case which would come out differently as between the D.C. and the Ninth Circuits?
Joshua Kaufman: The situation where you would have someone who would be an agent but nut a salaried employee.
Byron R. White: What about a piece worker?
Joshua Kaufman: You would have a... a piece worker... under the agency which we look at respondeat superior perhaps a piece worker where they don't have FICA withholdings and you don't get some of the other benefits... but they are under the control, the ten categories of control that are set out in the restatement, you might have a situation... and probably not regularly but not infrequently... where you would not have some indicia of formal salaried employees, workmen's comp, like I said, withholding, FICA, and some of those others, but would satisfy the various control tests.
Antonin Scalia: Mr. Kaufman, I don't really agree with you that the common meaning of employee is salaried employee. I think when you mention employee to the person in the street the first they think of is a salaried employee. Just as if you mention a dog, the first thing they think of is an animal with four legs and a tail. But I have a dog that doesn't have a tail and nobody thinks it isn't a dog. [Laughter] And I think if you describe... if you describe to somebody on the street a pieceworker, as Justice White just suggested, let's say somebody that works for the International Ladies' Garment workers Union but gets paid instead of per... you know, by the hour, by the number of dresses that he or she completes. I don't think the person would think that that person suddenly is no longer an employee. I think you've snatched this concept of hourly wages just out of the air. Most employees are like that but I don't... I don't know that that's a common meaning of employee.
Joshua Kaufman: Well, I don't think that a formal salaried employee is... the method of payment in the sense of a salary is merely a weekly... it could be based on a long-term job. It could be based on piece. It could be on commissions, commission and salary. There are many ways that a formal salaried employee--
Antonin Scalia: What about the people that your client hired to help him in... in doing this statue? Suppose he told them, "I just want you to help me on this one job and don't you to help me on any others. " "And I'm going to pay you $500 for the whole job. " "I want you to follow my instructions. " "Where I tell you to curve, you curve. " "Where I tell you to make a sharp corner, you do that. " "You report to work when I tell you. " "You leave when I tell you. " They are not employees within the meaning that you would urge upon us, right?
Joshua Kaufman: --No, they would not be employees. They would--
Antonin Scalia: Well, that's very strange.
Joshua Kaufman: --Under agency law they probably would, but not under the formal salaried--
Antonin Scalia: I think even the man in the street would consider them employees, plus the traditional legal connotation of employee.
Joshua Kaufman: --We think they would fall outside this definition.
Sandra Day O'Connor: But the statute says employee within the scope of his or her employment. So, you have to read something else into that language--
Joshua Kaufman: Correct.
Sandra Day O'Connor: --for your view.
Joshua Kaufman: You have a full-time salaried employee... let's assume they work 9:00 to 5:00 or whatever the hours are.
Anthony M. Kennedy: Well, I suppose that just includes wages too, doesn't it?
Joshua Kaufman: Pardon me?
Anthony M. Kennedy: That just includes what would be called wages, I suppose.
Joshua Kaufman: Salary would be wages, yes. Well, whatever they would be.
Anthony M. Kennedy: Okay.
Joshua Kaufman: They could be commissions. It could be... but--
Antonin Scalia: Excuse me. Who doesn't work for wages? I mean, if that's all you mean by salaried. You mean it just excludes those who are working for free?
Joshua Kaufman: --No. You can have many different forms of wages. You look at the entire picture to see... when they are an employee, you look at the various criteria that Dumas has set out. You look for the various aspects of benefits, taxes--
Antonin Scalia: Well, you've given me a whole new theory. I thought salaried meant what salaried normally means, you get paid on a regular basis. Weekly, monthly, annually. Not by the piece.
Joshua Kaufman: --But if your long-term relationship with your employer is based on a piece salary, on a commissioned salary, you can be on salary and commission both. I'm not looking at it in the sense of... I don't believe the Dumas court looked at it that it has to be that you're paid biweekly for a salary. A salary can take many different forms. And as long as it is there on a regular--
Antonin Scalia: Including commission?
Joshua Kaufman: --Of course. You can have people on--
Antonin Scalia: Oh, boy.
Joshua Kaufman: --a commission as well as a... you know, you get paid "x" dollars an hour plus a commission and be a regular salaried employee. Yes.
Antonin Scalia: I thought they were opposites. You know, do you work on salary or you want commission? I work on commission. You're telling me it's at the same. Salary is anything.
Joshua Kaufman: As long as it maintains a regular type of pattern, it could be a salary. Yes.
William H. Rehnquist: I don't think you had an opportunity to finish answering justice O'Connor's question.
Joshua Kaufman: That's correct, your Honor. Under the salaried employee test or under the definition... excuse me... of the copyright law, you nave the opportunity to work for your employer within the scope of the employment from the 9:00 to 5:00 position, and if you create something outside of that scope, it is the creator's. It is not the employer's. That's one of the interesting problems with the test presented by Petitioner. It's that everything created under their test, by definition, becomes part of the scope of the employment. There is nothing that you can create as part of the relationship that outside the scope of employment, thus, rendering the second half of the definition meaningless. One of the interesting points when we were discussing... Petitioner was bringing up the issue of this historic definition. It was historic... it was in existence for nine years, from 1966 to 1975. Prior to 1966 independent contractors were never considered employees under the work-for-hire doctrine. And if the Court looks at the legislative history of this case, which is very similar to the legislative history in Mills Music which you ruled on, it was the same legislative history, and it took place in 1965. In 1965 independent contractors were not employees within the scope of employment. There were other problems with them. And it was the law in 1965 which is what was enacted in 1976. The legislative history for this law was very unique. What happened was that we had a 1909 Act that was becoming rapidly obsolete because of the technological advances. Many special interest groups were before the Congress and they could not pass legislation. There was a legislative gridlock, so to speak. So Congress, through its agent, the Copyright Office, went out on a different trail to break this impasse. What they did was they commissioned studies and reports. And then they brought all the players together. The Copyright Office picked representatives who they felt represented the various interests, sat them down, and forced them to negotiate together until they came up with a consensus. And this consensus... and this type of process happened in cable, fair use, termination, manufacturing clauses. It is replete throughout the whole process. And those compromises is what was enacted into law in 1976. In 1965 the termination and the work-for-hire hearings all took place and ended. And in 1976 when the law was enacted, it was almost identical language that came out of these negotiations and hearings in 1965. That is the language in the statute. And the law at the time did not have independent contractors, employees for hire. That came afterwards. That was not what was before the Congress. It was not the compromise, as part of the compromise which they adopted. And that is clear from the case law and from all the different participants at the hearings. We cite extensive quotes. And it didn't matter which side of the table they were on, be in industry or the artists, they all used the term "employee" as a formal salaried employee. We think that is what was meant at the time.
Byron R. White: You have a statement in your brief that says, "when interpreting the meaning of the statute, one looks to the ordinary meaning of the words used. "
Joshua Kaufman: And we believe that the Dumas court was correct in looking at it as the salaried employee. I know Judge--
Byron R. White: Is that the... you can't really believe that that's the ordinary meaning of employee. Just salaried employees?
Joshua Kaufman: --I think when people are... the ordinary meaning of the word "salaried employee"--
Byron R. White: But you're willing to go by that then, to take the ordinary meaning of the word rather than what's revealed in the hearings or something like that?
Joshua Kaufman: --No. I think the hearings are in sync with that. When they... if you look at the language of the participants in the hearings and the cases prior to 1965, you'll see they used the term "employee" in the formal sense of the word. And they had... again, we have quotes in there where they talk about how... oh, we don't have to put these people on the payroll and make them salaried people, that would be such a problem, and so on. And it is... the record is replete with references to salaried employees, and that's what the case law also was in 1965. I do believe that the man on the street, if you say to them the ordinary meaning of who is an employee, they think of the very traditional relationship of somebody who goes to work 9:00 to 5:00, gets benefits, taxes withheld. I think that's what people think of as an employee. I think agency... the definition of agency is very widely used but it's a lawyer's definition of the word. It is not the ordinary common... I think when you take a step back--
John Paul Stevens: Mr. Kaufman, do you take the position that the employee must nave been an employee before the arrangement for the particular work of art was made?
Joshua Kaufman: --Either before or that was part of the negotiations at the outset of it. You can go to somebody, hire them as a formal employee so that the work that is created afterwards can be--
John Paul Stevens: Can you provide in the agreement that he'll be discharged when the work is completed?
Joshua Kaufman: --If it's for a sufficient amount of time.
John Paul Stevens: Supposing in this case, say, it takes five months to build this work of art. Supposing at the start when they talked about $15,000, they said, "We'll pay you $3,000 on the first of each month. " and by then you've already indicated you'll be through with the job. And we'll pay you that amount no matter what time you finish but presumably within the time. Would the artist have been an employee then?
Joshua Kaufman: It depends on the rest of the contract. Will they be getting other benefits?
John Paul Stevens: Well, the rest of the contract is we want you... you know, we want to get this work of art done and--
Joshua Kaufman: No. Then they would be--
John Paul Stevens: --and we want you to prepare it the way we designed it. It's our idea and we want you to build this work of art.
Joshua Kaufman: --No, I don't believe if it was "go create it and we'll give you $3,000 at the beginning of every month. " --I think he's an--
John Paul Stevens: No, not "go create". Prepare it in accordance with our conception of the plan.
Joshua Kaufman: --I still think that's an independent contractor. If they said, come into our shop where you can accrue benefits, we'll do workmen's comp, we'll do withholdings and the other indicia of salaried employee--
John Paul Stevens: Do you think you need workmen's comp and withholding?
Joshua Kaufman: --They vary... withholdings, workmen's comp, and how they treat their other employees. Do they give them vacations?
John Paul Stevens: Well, their other employees don't get anything in this particular organization. Under that test it seems to me you might well not be so successful--
Joshua Kaufman: The--
John Paul Stevens: --Because they don't treat other employees by paying... by taking withholding and all the rest of it.
Joshua Kaufman: --They may not have any employees, is what I believe. They have volunteers and people who are independent contractors who do their work. But I don't think any of the people who volunteer for CCNV are employees. No. I think there has to be an employment relationship, not a volunteer relationship.
Antonin Scalia: Mr. Kaufman, can I ask you about your assertion earlier that we should adopt your interpretation because only that gives meaning to the phrase "within the scope of his or her employment. " in the statute. I don't know... let's go back to the example earlier. You acknowledged that if your... if the workers that your client hired were just paid by the job. Say, "Work for me and I'll give you $500 and I want you to follow my directions. " You acknowledged that they would not be employees under your interpretation.
Joshua Kaufman: Correct.
Antonin Scalia: Don't you think the meaning of "within the scope of his or her employment. " would be clear under an ordinary... if you adopted the court of appeals' interpretation here and used agency, ordinary agency principles, wouldn't it be clear what "within the scope of their employment. " means? Anything they did in connection with the statue would be covered. If they created some new statute on their own at home, it would be outside the scope of their employment. I don't see the problem.
Joshua Kaufman: Under the agency law test, scope of employment has meaning. Under the Aldon test, it has none, is what we're saying.
Antonin Scalia: Under the Aldon test.
Joshua Kaufman: The Aldon test, the test proposed by the Petitioners--
Antonin Scalia: I see.
Joshua Kaufman: --supervision. Then it has no meaning. Under agency it absolutely has... meaning.
Antonin Scalia: Okay. How about under your test?
Joshua Kaufman: Under our test it certainly has a meaning. At 5:00 it's... the scope of employment is--
Byron R. White: Well, I take it that... should we be very upset about this case? After all, the statute allows you to contract any way you want to. Just word of mouth... is that so frequent and pervasive that--
Joshua Kaufman: --What is important here... word of mouth in this area is very, very pervasive. And what we are doing is requiring people under our test, or even under the agency law test... requiring people to negotiate up front their contract so a commissioning party cannot come in through the back end after the fact and say, "Oh, I supervised him directly. " The artist says, "No, you didn't". "Yes, I did". And it's this hijack the copyright at the end. They have negotiate. The commission party, the businesses have to go to the creators and say up front this is what we want and this is what we will pay. And you do not allow this back door hijacking.
Byron R. White: --But, of course, if Mr. Snyder had a homeless lawyer with him, he might have contracted for--
Joshua Kaufman: And so he should have if that was his intent. The burden is on the people, the commissioning parties under the Copyright Law... and the '76 Act is replete where the leveling of the playing field is recognized, where the artist and the creators have been at a disadvantage.
William H. Rehnquist: --You're talking about Section 2 now?
Joshua Kaufman: Yes. And if you want to obtain a copyright, if you want to obtain the rights... the rights that you want to obtain from a creator must be negotiated up front, not after the fact. It cannot be... you cannot make an independent contractor, unknown to himself, inadvertently an employee, which is what they're test will allow. And that, I propose--
Byron R. White: --suppose an employer and an employee could agree that the copyright would be owned by the employee?
Joshua Kaufman: --There are provisions for that. However, under this direction and supervision test, you could even have a situation where a salaried employee, if he was not directed and supervised by his employer might be able to claim, "Well, I wasn't directed and supervised. " "That's the standard. " "It's mine. " even though it was created in the scope of employment. And we think that's an absurd result, but it is a result that can occur under the Aldon test, not under the other tests. The Aldon test doesn't work. The other two tests do work and we think the Dumas test is the most predictable of all of the tests and is the most in sync with the legislative history and is the one that we hope that the court adopts. Thank you very much.
William H. Rehnquist: Thank you, Mr. Kaufman. Mr. Robbins.
Lawrence S. Robbins: Thank you. Mr. Chief Justice, and may it please the Court: In October 1985 when Mr. Snyder called Mr. Reid on the phone and proposed that he sculpt the three human figures for the statue Third World America, the two men had never met before. They'd never done any business before. And except for suing each other, they've done no business since the statue was created. [Laughter] In short, their entire relationship was defined by the particular project that Mr. Reid agreed to create. That kind of relationship is what I think most people mean by the word "commission". Indeed, Mr. Snyder used himself no fewer than eight times at trial to describe his relationship with Reid. That is the same word that Mr. Snyder's trial counsel used when he summed up the trial, and it's the precise finding made by the trail court when it explained that "Third World America was commissioned by CCNV and made on commission by the artist. " Now, as it happens, there was a provision in the work made for hire definition that speaks directly to commissioned works. And the Court has not heard very much about that provision this morning. That subsection, which is Subsection 2, states that specially ordered or commissioned works will be treated as works made for hire when they satisfy both of two conditions. That they fall within the nine enumerated categories, and that there is a writing executed by the parties. The position of the Register of Copyrights in this case is simple and straightforward. The word 2 should be taken at its word, should be given its plain and literal meaning. And when that meaning is honored, it's perfectly clear that Third World America is a commissioned work. The court need not struggle with the various historical definitions of the word "employee" because this is a case about the word "commission". And if--
William H. Rehnquist: But we should struggle with the various historical definitions of "commission"? [Laughter]
Lawrence S. Robbins: --Well, I think, Mr. Chief Justice, that in fact that is... if it's a struggle at all... is a rather lesser struggle. And I think that it has a word that embraces more uniformity and a wider acceptance. And the fact of the matter is that this relationship, where an artist is engaged to sculpt a particular project and nothing more, is what I think most people take the word "commission" to mean, and it's perfectly clear that that's what the draftsmen of this statute took the word to mean.
John Paul Stevens: Well, Mr. Robbins-- --Mr. Robbins, these are not mutually exclusive categories. A thing can be both specially... you could specially commission an employee to do a job.
Lawrence S. Robbins: Well, I think, Justice Stevens, that it is... it is theoretically possible to have these categories be overlapping in part.
John Paul Stevens: What I mean, it's reading the language... that it's linguistically possible.
Lawrence S. Robbins: There is no question that it is linguistically possible. I think--
John Paul Stevens: And if it's as clear as you say it is, the thing that I'd just like you to talk about for a minute is how is it that the Register of Copyright and Professor Nimmer got it so wrong for so many years?
Lawrence S. Robbins: --Well, let me address the subject I can address with more authority--
John Paul Stevens: All right.
Lawrence S. Robbins: --how it is that the Register of Copyrights got it wrong. It's our view that the Register of Copyrights did get it wrong. But for so long is something that I might want to quarrel with. It is true that--
John Paul Stevens: Six years.
Lawrence S. Robbins: --It is true that in response to inquiries from Congress in the mid-80s the Register of Copyrights offered a position quoting from Nimmer that is at odds with his present one. I think, however, that if you look back to the position of the Register when these provisions were in fact being adopted, when they were being negotiated, and when the understanding of the parties was fresh, the Register's position was very much like its present one. But, in any event, in light of this litigation the Register has revisited the issue in detail and frankly has disavowed those previous filings.
John Paul Stevens: Oh, I don't question the authority of the Register to change his or her mind. But it just... if it's as perfectly clear as we all seem to think it is on the face of the plain language, it's kind of hard to understand how anybody could have made a mistake.
Lawrence S. Robbins: Well, it wouldn't be the first time that words end up having a plain meaning as to which other people disagree. But I'd like to talk a little bit about Subsection 2 because the thing that is as clear as anything else--
Antonin Scalia: But would you first explain to me your earlier statement, that we can just do this on the basis of Subsection 2 alone. I can't understand... I could understand that if Subsection 2 said it includes... work-for-hire includes special ordered or commissioned works only if they come within these nine categories. But it doesn't... it doesn't say that. It says it happens to include those special-ordered or commissioned works. It doesn't say it does not include any other special-ordered or commissioned work. So you're ultimately driven back to one, aren't you, to see whether it comes within one?
Lawrence S. Robbins: --No.
Antonin Scalia: No?
Lawrence S. Robbins: Justice Scalia, I think that's not correct. And the reason it's not correct is that if there is nothing else clear from the history of Subsection 2, as reflected in the accompanying House report both in the '76 Act and in all the prior revisions, the fact is clear that the nine categories were intended to be the only ways, the only kinds of commissioned works that could ever become works made for hire. And the central fallacy of Petitioner's argument this morning is that even if you fail to come in with one of those nine categories, Subsection 2 will get you to the promised land under their test. Even if you're a sculptor and you're not within the nine categories, why, then, you can still become a work made for hire if you satisfy what they call the historic standard, which, by the way, is as historic as 1966 in the Second Circuit's Brattleboro decision--
Antonin Scalia: Well--
Lawrence S. Robbins: --and goes back no further than that.
Byron R. White: --The... However clear you think a commission is, the claim here in this case, and which the court of appeals certainly ruled on... the claim is that this is a work-for-hire because there was an employment relationship. We have to rule on that claim.
Lawrence S. Robbins: My understanding, Justice White, is in fact that the court of appeals held that it was not a work made for hire because they--
Byron R. White: I understand that.
Lawrence S. Robbins: --the court construing Subsection 1 under the--
Byron R. White: I know. They construed it. And you say we don't even need to. The court below did and I would think we would have to because the claim is here by the Petitioner that... that there was an employment relationship.
Lawrence S. Robbins: --That's--
Byron R. White: We certainly have to dispose of that... rule on that claim.
Lawrence S. Robbins: --Well, Justice White, we have offered what we think the correct interpretation of Subsection 1 is. But I think--
Byron R. White: And so you struggled with what an employee is, eh?
Lawrence S. Robbins: --Well, we've done our best. [Laughter]
Byron R. White: Well, I guess we have to too.
Lawrence S. Robbins: But... but--
Sandra Day O'Connor: Well, may I ask on that point. You urged, apparently, in the brief that we adopt the Dumas view. And yet that is a little more difficult to do under the language than the common law master/servant approach.
Lawrence S. Robbins: --No, I don't think so, Justice O'Connor. I think the reason we agree with the Dumas construction of Subsection 1 is that that is the conception of the employee that the draftsmen of Subsection 1 had in mind. This so-called historic right-to-control test is something that emerged in 1966 when these provisions were set in stone by the people who came up with them. And they were then enacted in whole cloth by Congress 11 years later, much as the derivatives works exception was handled by Congress in the Mills Music situation. But the fact of the matter is that in Subsection 2 those nine categories were intended to be exclusive. If this was a commissioned work, as that word was understood in its common parlance, then you had to satisfy Subsection 2. And if you didn't, it was simply not a work made for hire. The central fallacy of Petitioners' argument is that it gives commissioned works another way to become a work made for hire, and there is nothing clearer than that is precisely what the draftsmen sought to avoid.
Antonin Scalia: Well, they could have been so clear if they had said one... a work made for hire is, one, a work other than a special ordered or commissioned work prepared by an employee within the scope of his employment, or, two, a work specially ordered or commissioned for use, blah, blah, blah. You just want us to read in that language into 1, which just isn't there.
Lawrence S. Robbins: Justice Scalia, I won't quarrel with the fact that Congress and the draftsmen could have done a better job, and maybe someday they will.
William H. Rehnquist: A better job of embodying your views.
Lawrence S. Robbins: I'm sorry?
William H. Rehnquist: A better job of embodying your views. [Laughter]
Lawrence S. Robbins: Well, I think they could have done a better job of embodying their own views. I think that we are as faithful as we can to what they had in mind. The accompanying House report, for example, says, Justice Scalia, that Subsection 2 is a compromise intended to divide commissioned works between those that could be and could not be works made for hire. The only... I think... sensible way to read that language is that if you're not in Subsection 2 and you're commissioned, you're not a work made for hire. They're not. They are commissioned. It's not a work made for hire. It's just that simple.
William H. Rehnquist: Thank you, Mr. Robbins. Mr. Garrett, you have four minutes remaining.
Robert Alan Garrett: Both Mr. Reid and the Government here refer to the historic standard as one that was adopted only nine years prior to the 1976 Copyright Act. They're both wrong. If you take a look at the very first edition of Nimmer on Copyright in 1963, you will see that even there he talks about the right-to-control standard as being a standard well ingrained in the copyright laws, and cites cases going back a number of years. We cited cases in our brief going back as far as 1937 dealing with right-to-control standard. Furthermore, if you take a look at the letter that the Register of Copyright sent to Congress back in 1986, you'll see that he refers... and this is on page 2(a) of the Appendix of our Reply Brief... as this being a standard that has been part of our copyright laws for almost a hundred years.
Antonin Scalia: That depends on what all those old cases were referring to when they said right-to-control. I mean, you can describe the master/servant rule as a right-to-control rule also.
Robert Alan Garrett: That is correct, your Honor. But I think--
Antonin Scalia: You have to assume that they're using right-to-control in the very narrow sense that you're using it. Not right-to-control physical activities but just to control the product, the outcome.
Robert Alan Garrett: --I believe that the courts were using it, your Honor, in the various cases that we cite in our brief in the sense of right-to-control the artistic production of the work. Something that has meaning to what copyright law is all about. Not what chisel you use, but rather how you produce the particular statue. The kinds of contributions that we, CCNV, made in this particular case. That is exactly what they were referring to. And there was no question in the district court's mind when it went to trial in this case that that was the kind of standard it was asked to look at. Indeed, that's the standard that Mr. Reid said we should look at, and that's the standard that he found was satisfied in this particular case. And our view, your honors, is that there is going to be a new standard. And we talk about all of the different standards in our briefs that Mr. Reid's amici have adopted. This morning I have heard yet additional criteria and additional factors that one should look at in order to determine whether an employment relationship should be met. But the fact of the matter is that none of these tests... none of these tests... was before the district court when we went to trial. We all went on the basis of the historic right-to-control test. And we believe that's the correct test. But, if this Court is going to adopt different test, as the court of appeals below did, then we ask that, at the very least, that this case be sent back to the district court so the district court can evaluate the relationship of the parties in light of whatever new-found standard is adopted here. That is exactly the approach the court has taken in other cases that we cite in our brief, Kelly v. Southern Railway, for example, a case very much like this one where a different standard was adopted by the court of appeals to determine who was an employee. That was applied at the district court level. This Court held that the court of appeals was right with its standard, but sent it back so that the district court could evaluate the facts of the case under that standard.
William H. Rehnquist: Is it-- --The court of appeals remanded here, didn't it?
Robert Alan Garrett: But not on the work-for-hire issue, your Honor.
William H. Rehnquist: Joint?
Robert Alan Garrett: It remanded on the joint work theory--
William H. Rehnquist: On the joint work--
Robert Alan Garrett: --which is entirely different.
Antonin Scalia: --But is it really at all questionable, Mr. Garrett, whether if you adopt the court of appeals' theory of the common law master/servant rule that your client was not a servant? That... that... I'm sorry... that the artist here was not a servant?
Robert Alan Garrett: Well, I would--
Antonin Scalia: That CCNV could not tell him what chisel to use, couldn't tell him when to come into work, and so forth.
Robert Alan Garrett: --I would respectfully disagree, your Honor.
Antonin Scalia: Really?
Robert Alan Garrett: We spent a good portion of our brief talking about all of the agency law cases and why we feel that there are factors of this case that would in fact satisfy those standards. And, furthermore, your Honor, if we had known that this was going to be an agency law type of an approach, as opposed to the historic approach, it's possible that we would have put our case on differently than we did. The fact of the matter is we did control a great deal of the manner in which the artist in this case worked here. We set guidelines. Thank you very much, Chief Justice.
William H. Rehnquist: Thank you, Mr. Garrett. The case is submitted.


Earl Warren: Number 416 -- Number 363 rather, United States, Petitioner, et al., versus Southwestern Cable Company, et al., and Number 428, Midwest Television, Incorporated, et al., Petitioner, versus Southwestern Cable Company, et. al. Mr. Geller, you may now proceed with your argument.
Henry Geller: Mr. Chief Justice, may it please the Court. This case involves the impact of community antenna television on television allocations throughout the United States and of the FCC's jurisdiction to regulate CATV in order to preserve local television service. The issues in the case, the Commission's jurisdiction over CATV and its jurisdiction to inter relief order involve construction of the Communications Act of 1934 but the background facts are very important and I would like to go over them first. Now, the Commission and the Congress have long had a policy of local television service, of service coming from local sources rather emanating from just a few large metropolitan areas. The Commission, therefore, has devised a nationwide cable of TV assignments, assigning channels to hundreds of communities and specifying the heights and powers of the stations. The purpose of this plan is to get local service. To give an example that would be applicable in this case, the Commission could have given the Los Angeles stations a heightened power that was so great that they will put a very good signal in the San Diego even though it's a 120 miles away. And then the people in San Diego will get a great deal of service from Los Angeles but it would not be local service. It would not be service geared to serving the needs and interests of San Diego, its ministers, its schools, its politicians, its issues. So what the Commission has done is to specify heightened power in Los Angeles that results in the Los Angeles' signals being weak when they arrive in San Diego, so that you can have San Diego station. And this is not just the Commission policy but I say this is a congressional policy embodied in Section 307 (b) of the Act. And now, to achieve this plan, the Commission has made use of 12 VHF channels, the Channels 2 to 13 and 70 UHF channels, Channels 14 through 83. But in the 1958, the UHF channels run into difficulty when they went into operation. A number of them went off the air, the stations, people were not buying UHF sets and entrepreneurs were not entering UHF Broadcasting. The Congress in 1962, to deal with this situation and at the urging of the Commission, passed the All Channel Television Receiver Law, which in effect specifies that all sets ship and interstate commerce shall be capable of receiving UHF. And the reason why Congress said it was doing this is that it had to make UHF viable. It was the only way to get this nationwide system of local television outlets and possibly afford the network. And we are getting the benefits of that law. There has been a great surge in interest in UHF. Stations are coming on the air particularly in the major markets and we are getting the additional outlets and they added competition. Now, what this case is all about really is the impact of community antenna television on this congressional and commission plan of local service. And it's not all one way. CATV can be helpful. It can bring service to areas that do stand badly in the need of it. As it develop originally, the CATV operator would go out to a -- put a tall antenna on a high mountain, get the signals that were available there. Very often local signals and bring them down in the community that was in the valley and therefore, it wasn't getting any service or they will go out pretty far away from the town, put up again a tall antenna and get the signals, amplify them. And bring them back to a town that was just too far away from a major population center and as a result, it was getting maybe only one or two signals. And the Commission believes that's in the public interest and it's facilitated that with microwave brands. When it looked at this problem in 1959, for the first time it found that CATV had little and no adverse impact in the public interest. But when it looked again in the 1960, CATV began undergoing a phenomenal growth pattern. And that growth pattern began to threaten the entire allocations plan of local service and raised a serious, a particularly serious threat in two instances. One is the TV station serving a sparse population and the other is the instance of the new UHF stations that I mentioned that are going on the air in these major markets. Now, I think I can illustrate the problem in the first instance by a specific case, a case called Carter Mountain that was decided in the D.C. Circuit. In Carter Mountain, you had a station in Riverton, Wyoming serving a very sparse population and CATV assistance begins springing up throughout its service area and these systems did not carry the local station. All they brought in was a service from Denver, Colorado hundreds of miles away. The subscriber set to get his service of his cable going into the back of the set and when the local station wasn't on that cable, it was cut off from access to this audience, its own local audience and that's patently destructive, the Commission found, of local broadcasting. There was a second factor here and that is even if this local station had been carried, the CATV system was duplicating its programs. As the Court notes from the case to follow, CATV presently stands outside the competitive TV programming distribution market. The local station bids for its programming and getting exclusive. Under the antitrust laws or under Communications Act Policy, reasonable exclusives are permissible. The CATV stands outside that structure. As a result, if the local station is presenting Bonanza, let's say at 9:00, the CATV can be bringing Bonanza in from Denver at 9:00 and you're cutting the audience for this program in hafting. An audience is what the local stations sells, to get revenues from advertisers in order to support this local operation. The Commission found that if CATV continues to grow this way without any conditions, it would mean the demise of this local station and the Court of Appeals found that that holding was amply justified by the record. The Commission further found that if that happened, it would not be in the public interest for three reasons. CATV service is just not a substitute for local service for these three important reasons. First, the CATV does not serve the people in the local area. It cost $3,000 to $4,000 in mile to string cable and as a result, it doesn't go out to the rural areas. It's confined just to the built up areas in the city. In Carter Mountain, this meant that of 74,000 people, 40,000 of them would be left without any service and that clearly is not in the public interest, for some people to get service at the expense of those in the rural areas getting none. Second, CATV is a form of pay TV and there are some people who cannot afford to pay so once again they wouldn't be getting service. And third and very important, it is not local service. It's always been brought in is Denver signals and they do not service in outlet for local expression for Riverton and so you would have a complete frustration of this congressional plan of local service. Now, to deal with this in view of the trends as phenomenal growth factor, the Commission devised two reasonable rules: the first is that the local station be carried so it has access to its own local audience. And the second rule --
Abe Fortas: The local station. What? I'm sorry.
Henry Geller: That the local station be carried, Mr. Justice Fortas, that it get on the cable so that it has access to its own local audiences, I said. The second is the same-day non-duplication rule and this was that the CATV system affords same-day non-duplication protection to the programs of the local station. As the Court probably knows, network programming is distributed on a fairly simultaneous nationwide basis. In this same-day non-duplication requirement therefore affords a great deal of protection to the network programming and that's a very important basis of the local operation. Now, these -- I should point out that this allows the CATV to continue its valuable supplementary service, they continue to bring in the Denver signals that are not -- the programming is not there already. Now, these rules as carried in non-duplication rule were adopted by the Commission after a lengthy rule-making proceeding in 1965 in a report called the First Report and they are made applicable at that time to Microwave Service Systems. Our jurisdiction to regulate the Microwave Service CATV system is not challenged here. In another rule-making proceeding, culminated in 1966 in the Second Report, we made the same carriage in non-duplication rules applicable and now to the non-Microwave Service System, the so called “off-the-air service system” and of course, our jurisdiction to do that is being challenged. Now, the Second prop --
Speaker: What was the year of that Second Report?
Henry Geller: 1966. March 17th, 1966. And now, the second problem that arose is I say concerned the new UHF Stations that were coming on the air in these major markets. CATV in a revolutionary new development began going into areas that were unlike Riverton these areas had plenty of service: Baltimore, Philadelphia, Cleveland, Sacramento, San Diego, they had all the network service. And what CATV proposed to bring in to these areas were the New York independence. An “Independent” is a station that is not affiliated with any network. They would propose to bring in the three New York independents into Philadelphia or the three Los Angeles independents into Sacramento or into San Diego. And it proposed to do so with very large scale operations: 12 channel systems, 20 channel systems proposed for the future, $37 million with the operation proposed in Philadelphia. Now, coming on the air, in the same major markets are the UHF stations and they are going to be independent in nature also. For example, there are three UHF stations that are going to be independent on the air now in Philadelphia. The audience for this non-network, this independent programming is limited. Most of the people in the evening hours watch network programming and only the time the Second Report to figure was only 10% of the people turned away from the popular network programming to watch the non-network shows. Now, without CATV bringing in these outside signals, the local UHF stations going on the air would have that audience to themselves. With CATV, the audience is being fractionated. It's limited and it's being split between the signals coming from New York and Los Angeles or in the local UHF one. And the question --
Potter Stewart: That is the non-network audience?
Henry Geller: That's correct.
Potter Stewart: The 10%, it's non-network in that?
Henry Geller: Exactly. They would be fractionated. It gets even more serious than that because even when you bring in the network programming station, that is a network affiliated station, 45% of its programming is non-network and you again get a fractionalization from that. And the question before the Commission was what would be the effect to fractionating this limited audience on these UHF stations. Now, the Commission in the Second Report said it did not know the answer because the answer depended upon how large the CATV systems would grow in these major markets. But it did hope that if their growth was of a higher order or substantial 50% or more that they would cripple UHF and that the Commission went on to hold that that would not be in the public interest.
Abe Fortas: And maybe that crippled the networks.
Henry Geller: The network programming, the same-day non-duplication requirement works. They're had afford substantial protection and so there is not a problem as much of a problem in that area. It's with the independent, Mr. Justice Fortas, that the problem really becomes a queue.
Abe Fortas: Well, maybe.
Henry Geller: The Commission have thought this was a most serious problem for -- because again what you have here, if they should drive UHF stations off the air, this independents, would be that Philadelphia would be getting service from New York and it wouldn't again be local service. You would have the television structure dominated by stations --
Abe Fortas: What do -- what do you require in this local service business? How much time you require of a local station? Does that devote of -- how much of its time does the network affiliate have to devote to what you call and I trust not whimsically local matters.
Henry Geller: There is no specific requirement and no rigid rule. On the average, Your Honor, the figure is 16% per network affiliate station.
Abe Fortas: But this is just part of their programming that they submit in order to get a license?
Henry Geller: And to get renewed.
Abe Fortas: And how's that 16% broken down?
Henry Geller: You can see the breakdown of it, Your Honor, in the magazine, Television Magazine in August of 1967 breaks into the various categories. I think 40% of it was news. I think 14% would --
Abe Fortas: 40 % local news.
Henry Geller: Of the local.
Abe Fortas: Of the 16%?
Henry Geller: Of the 16% was news; I think about 12% was entertainment. I think about 5% was discussion. I'm relying on my memory and I would refer you to Television Magazine which took a sample and broke it down.
Abe Fortas: So that includes the local advertising?
Henry Geller: I beg your pardon?
Abe Fortas: Is that include the local commercial --
Henry Geller: Oh! No, sir. No, we're not talking about the programming and it is 16% but it's broken to various categories.
Abe Fortas: So, it's a 16% segment that all this is about in protecting that?
Henry Geller: Yes, but it's extremely important segment. We do want the politician to be able to have access to these independent stations to the -- for another outlet to reach the people. To whatever extent, we want the people to hear discussion of controversial issues. The sum total of all these stations for example in Philadelphia before the three VHFs and the three UHFs, adds up to informing Philadelphia better each of one them, and we don't want --
Abe Fortas: Do we have before us -- we don't have before us a substance of these regulations anyway, do we?
Henry Geller: No, you do not but --
Abe Fortas: This is your power to do them?
Henry Geller: And that is correct. But to understand -- we believe to understand both issue in this case, I believe that it is important to understand the basis of them. Now, the second reason --
Potter Stewart: So one of the impact, not only upon this 16% devoted by network stations to local programming that we also have, do we not, the impact upon the non-network stations that are 100% applied (Voice Overlap)?
Henry Geller: You're quite right on that. For example, in this community WTTG's local programming is 30%. It's a non-network station that devotes 30% of its time and you're quite right, Mr. Justice Stewart that that is a very, very important one since the local -- since the non-network station is bound to devote more time to local programming. The second, the Commission found that again, it would not be in the public interest because CATV was a former pay TV and there are people who are too poor in these ghettos and other places to afford it so that some people would not be getting the independent service at all. And finally, the people who were living in the outlying areas, in the rural areas, surround these towns like Sacramento and San Diego, Philadelphia, they also would not be getting service, the independent service, because the CATV would not go out. Now, to deal with this problem in the Second Report, the Commission developed its major market policy and that policy states that in the top 100 markets where independent UHF Television was most likely to develop, the CATV system which propose to commence operation with distant signals, that signals carried beyond their Grade B contour which is normally the furthest point of acceptable service. That any CATV proposing to begin operation with such signals should not do so before the Commission in an evidentiary hearing had established that that would be consistent with the public interest with UHF Broadcasting. The Commission felt this was a reasonable way to proceed because it was trying to get the facts in depth as the CATV penetration and other factors and it was trying to get them before it was too late before the CATV would become entrenched. This main rule is in 1107 of the Commission's rules. Another rule, 1109 is the one that's involved in this case. The Commission found that you could get exactly the same public interest question raised even though a signal was not being carried beyond its Grade B contour and this is the so-called “area of overlapping B contours”. And I think I can illustrate it best by Baltimore, Washington. The Washington stations place a Grade B signal over Baltimore. But they are not watched to any great extent in Baltimore. People in Baltimore tend to watch the much stronger Baltimore signals. But if you have a CATV operating in Baltimore and it is carrying these Washington signals, it makes the signals exactly the same. It strengthens them and now there's no difference at all technically between Washington and Baltimore. So, you have the three Washington independents being brought into Baltimore and you have the exactly the same public interest question. What's the effect of that under the development of the Baltimore UHF station? Now, the Commission said it would treat this problem when it arose under petition, bringing it to its attention under 1109 and would hold the same evidentiary hearing before the commencement of the service. Now, there is one other facet of 1109 that's applicable here. The Commission grant brought it in all the existing stations, all existing systems, excuse me. But if a system had just gotten under way and had just a few 100 subscribers, it clearly shouldn't grow from these few hundred to hundreds of thousands throughout the entire community until there had been a resolution of the same public interest question. And so, it set again that when this was brought to its attention under 1109, it would hold the hearing. And since that hearing is a complex economic one that would take considerable time, the Commission also said that it would consider on the pleadings awarding interim relief, holding the status quo because if the systems continue to grow while the hearing was going on, the Commission could be met by entrenchment and the Commission stressed throughout all these rules that once a CATV becomes entrenched, it cannot roll back the service. It cannot let the service get dug in. The people get to rely upon it and then try to yank it out wires and all, it's just not practical. Now, those are the policies that are involved here and they are specifically applicable to San Diego. In San Diego, what is happening is that from a 120 miles away, the Los Angeles signals are being brought in. There is plenty of service here in San Diego. There are all of the networks on VHF, one from T1. There is a UHF station that's independent that's gone on the air. There's a UHF permittee that has been granted and it has not yet on the air. There's also a UHF educational station. The CATV's have just gotten underway. A number of them, some of them begun in '63 but the penetration is very small. It is only 4.6% of the homes is the Grade A area, that is an area going out about 35 miles. But the potential for CATV was very large. It was 78% to 90% of the homes in that area and there was a fairly rapid rate to growth. So that the Commission said here is a classic case for the application of our major market policy. They're bringing in the Los Angeles signals that aren't viewed any great extent without CATV. They, therefore, designated the matter for evidentiary hearing and then they turned. And on the pleadings, the Commission turned to see how since they are holding an evidentiary hearing, how could they limit the growths. And looking at it, the Commission found that there are eight discreet islands of CATV activity.
Earl Warren: There were, what's that?
Henry Geller: Eight discreet areas or islands of CATV activity. The CATVs in San Diego were limited to specific areas, very concrete areas and the Commission said: “Fine, you can continue to grow in those areas. You can continue to access subscribers” but --
Abe Fortas: You mean those are subscriber areas.
Henry Geller: Yes, “but you cannot go beyond those areas with Los Angeles signals. You can continue your operation with Los Angeles signals only within these eight areas.” And this in effect allowed the Commission to be able to still make any decision they wanted to at the end of the hearing because it prevented the kind of all-out entrenchment, all-out growths that would have made the -- frustrated the very purpose of the hearing. At the same time, the Commission stressed, “It left the CATV systems fully viable.” The Commission here is the largest in the United States but the Commission also said if a wrong in the viability come back and tell us and we'll modify the Order. But it was a reasonable effort to hold the evidentiary hearing, at the same time, reasonably accommodate the CATV systems.
William J. Brennan, Jr.: This is your argument to the complaint, this was no hearing?
Henry Geller: Yes. We -- rather there was no evidentiary hearing, there was a full pleadings. There were no facts in dispute here and we say that we -- our action here was full and it was proper on the pleadings. And at page 147, you will see the very full opportunity. Page 147 of the appendix.
Potter Stewart: And the thinking was that if you hadn't done it this way at that time, by the time you've completed the full evidentiary hearing, the thing would have been out hand?
Henry Geller: That's right, that's exactly right.
Byron R. White: That might be ground for -- this was in effect an ex parte injunction, wasn't it?
Henry Geller: No, it was not ex parte. It was served upon them the request on the CATV systems. They responded fully. As I say at page 147, you see all the pleadings. It was not done with an evidentiary hearing. It was done on very voluminous written pleadings back and forth which did not put any issues that we say in dispute. All the crucial elements were there. The service coming in from Los Angeles which wasn't viewed very much, the fact of UHF activity, the fact of CATV had just gotten underway and only had 4.6 penetration --
Byron R. White: But you would -- would you contend that you could go through this kind of procedure prior to issuing a cease-and-desist order?
Henry Geller: No, we believe that in the cease-and-desist field, we would find very extraordinary circum --
Byron R. White: Yes, with all that requires the hearing?
Henry Geller: The cease-and-desist?
Byron R. White: Yes.
Henry Geller: There is a hearing when there is --
Byron R. White: So you -- you concede there was not a hearing here.
Henry Geller: Absolutely. We -- which the second issue in the case contend that it was not necessary. We were not engaged in enforcement proceeding.
Earl Warren: We'll recess now, sir.


Earl Warren: Number 35, United States of America versus Abraham Minker. Mr. Frankel.
Marvin E. Frankel: May it please the Court. This case, on certiorari for the Third Circuit in the Falcone case, which follows, presents the same problem. The question in both cases is whether under Section 235 (a) of the Immigration and Nationality Act of 1952, the Attorney General and immigration officers have power to subpoena a person in an administrative investigation to determine whether judicial proceedings should be brought to seek revocation of that persons' naturalization on a ground that it was unlawfully procured. Section 235 (a), which gives rise to the problem, appears in the Government's brief, beginning at page 51. The particular sentence, on which the controversy turns, begins at the bottom of page 52. Some six lines from the bottom of the page reads as follows, “Thus, the Attorney General and any immigration officer, including special inquiry officers, shall have power to require by subpoena the attendants and testimony of witnesses before immigration officers and special inquiry officers, and the production of books, papers and documents relating to the privilege of any person to enter, reenter, reside in, or pass through the United States, or concerning any matter which is material and relevant to the enforcement of this Act and the administration of this service.” On page 11 of our brief, focusing on the particular words that are in dispute, we have used asterisks and set out the pertinent coercion of the statute as we read it. The facts are not disputed and may be simply stated. In September 1953, the respondent, Minker, was subpoenaed under Section 235 (a), and directed to appear before an immigration officer. Before the date directed for his appearance, he moved in the Eastern District of Pennsylvania to quash the subpoena. The motion to quash was denied in an opinion by Judge Welch that begins at page 13 of the record, and the primary issue there as it was below and as it is here, and as it is in the Falcone case which follows was whether Section 235 (a) authorized the subpoena of this kind for this kind of investigation. Following the denial and the motion to quash, a letter was addressed to Minker, directing his appearance in accordance with the subpoena. When he failed to appear, an order was sought in the District Court in accordance with Section 235 (a) to require to compel his obedience. The order was issued and Minker again, failed to appear, disobeying the District Court's order. On motion of the Government, he was held in contempt by the District Court and fined $500. On appeal to the Court of Appeals for the Third Circuit, that judgment of contempt was reversed. The Court of Appeals agreed with the Government that Section 235 (a) authorizes the use of subpoenas in investigations of the type involved here that is in investigations to determine whether a naturalization certificate has been fraudulently procured and whether proceedings in court for its revocation should be instituted. The Court held, however, that the word “witnesses” in Section 235 (a) does not include in an investigation of this type, the persons whose certificate of naturalization is being investigated. And on this ground held that there was no power to subpoena Minker, and as I say, reversed the judgment. As I pointed out in summarizing the Court of Appeals' opinion, the problem here can be broken down into two parts. First, the question whether in investigations of the type in these cases of the subpoena power in Section 235 (a) may be used at all. And if that question is answered affirmatively, there was a further narrower question on which the court below decided the case, whether the person whose naturalization is under inquiry can be subpoenaed under that -- under Section 235 (a).
Felix Frankfurter: Does that -- on the brief, I don't know if the first -- your first question in controversy.
Marvin E. Frankel: Well, the -- there are two cases, Your Honor. The first question is not in controversy in this, the Minker case. The Court of Appeals held that this kind of investigation was certainly -- the word the Court used was certainly a matter as to which Section 235 (a) applied, that is, it was an investigation of a problem, material and relevant in the enforcement of the Act, and therefore, came within that language of Section 235 (a). And what I would like to do since these are two half-hour cases --
Speaker: It agreed with the Second Circuit on that proposition.
Marvin E. Frankel: That's Correct Your Honor. It agreed with the Second Circuit and the Fifth Circuit, a case from which is pending before the Court on petition for certiorari, so that all three Courts of Appeals have unanimously agreed that the subpoena power in Section 235 (a) is available for denaturalization investigations of this type. What I would like to do because this first point is controverted, though, we have won it in the three Courts is --
Felix Frankfurter: Do you mean it's controverted by counsel?
Marvin E. Frankel: By our opponent.
Felix Frankfurter: I see.
Marvin E. Frankel: Yes, Your Honor. I would like first, since it's a broader point in some ways that -- and perhaps illogically a prior point to state just summarily our position on it, and then turn to the second question on which we have our quarrel with the Court of Appeals for the Third Circuit. Briefly, we think the three Courts of Appeals are right for the reasons I've already sketched, I think. We think that the language, any matter, which is material and relevant to the enforcement of this Act, clearly includes the matter of investigating to see whether the powers of the Attorney General and the duties of the Attorney General with respect to revocation of fraudulently obtained naturalization certificates should be exercised and asserted. We think, moreover, that if there could be any doubt as to this, the legislative history of the provision would have emanated. This broad language, any matter, material and relevant to the enforcement of this Act, was deliberately and purposefully added when Section 16 of the 1917 Immigration Act was carried over into Section 235 (a) of the 1952 Act. Therefore, the language that applied pretty plainly only the questions of exclusion and deportation at the instance of the immigration service, this broad additional language was added. And though our opponents attempt now to limit the subpoena power in 235 (a), still to exclusion and deportation of aliens, we think that could only be accomplished by assuming and we think this is an unavailable and improper assumption that Congress didn't know what it was about when it added this broad plain language.
Speaker: As --
Felix Frankfurter: If it --
Speaker: Have any other circuits go on the other way on this proposition?
Marvin E. Frankel: No Your Honor, the three -- the only three Courts of Appeals which have considered it are the Third, Second and Fifth, and they have all, without dissent, agreed with us on this broad question.
Felix Frankfurter: It happened merely as a matter of construction, isn't it?
Marvin E. Frankel: The problem throughout is a matter of statutory construction.
Felix Frankfurter: So, no possession of any constitution of difficulty which might lead one way or the other in construction with --
Marvin E. Frankel: Belatedly and we think insubstantially, there are suggestions of constitutional problems in the brief of the respondent which were never raised below. And we think even as a source of attempting to generate construction doubts, this kind of tardy act for -- to raise constitutional problem should be rejected. Now, turning to the narrow question on which the Third Circuit decided this case against the Government, the Court and its analysis of this problem begins on page 18 of the record and -- and I plan to pitch my argument to some extent on a criticism of -- of this analysis. The Court of Appeals began with a proposition that the word “witnesses” is an ambiguous word. It said that there are many occasions where it is difficult to know whether the word “witnesses” includes a party.
Earl Warren: In this case or the -- or the Third Circuit?
Marvin E. Frankel: The -- this is the Third Circuit case and -- and the opinion -- I refer to page 18 of this slim Minker record where the opinion begins with this statement to the problem. In this connection, the Court refers to three state cases, dealing with state discovery statutes where the problem of what the word “witnesses” includes was considered, and where I think in each instance, the state court held that it's particular discovery statute when it was referred to witnesses did not refer to a party. Now, we think that the error of the Third Circuit begins right here. I think it's significant that although it mentioned these state cases, unlike the Second Circuit and unlike the District Judge in this case, the Court of Appeals made no reference whatsoever to any of the many statutes and cases dealing with the administrative subpoenaed power, which is what concerns us here.
Tom C. Clark: You said administrative subpoena, is the subpoena here? Is the subpoena in the record?
Marvin E. Frankel: Yes, Your Honor.
Tom C. Clark: Was he -- was he summoned to appear before the administrative hearing?
Marvin E. Frankel: He was summoned to appear before an immigration officer. This is an investigative inquiry.
Tom C. Clark: Why, would it to be? Was anybody to be there, with him, and the officer?
Marvin E. Frankel: There, the summons was only to him. He didn't come. In the Falcone case, the two Falcone's did come and they came with their lawyers. The immigration service for its purposes, did not invite guests in the subpoena, but there's no indication that others than the -- than Minker would be excluded. It's simply a subpoena to him as his customary directing his appearance.