## Facts

- A theatrical producer sued playwrights, their agent, and the Dramatists’ Guild alleging a Sherman Act combination restraining trade through the Guild’s Minimum Basic Agreement (Basic Agreement).
- The Basic Agreement required producers to sign it before Guild-member authors could license plays to them, restricted contracting to parties “in good standing,” set minimum advances and royalties, and required disputes to be resolved by final arbitration.
- The producer became involved in producing *Stovepipe Hat* through an initial producer’s contract that was expressly subject to the Basic Agreement, and later took over the producing rights.
- After investing about $50,000, the producer signed the Basic Agreement to protect his investment and continue the production.
- The producer later sought a direct agreement with the authors while advancing additional funds to open the show; the production proceeded and the producer ultimately claimed much larger total investment.
- Disputes arose after the producer made changes without the authors’ consent; the authors treated this as a breach, terminated the arrangement, and invoked arbitration under the Basic Agreement.
- The producer filed a federal action seeking treble damages and moved for a temporary injunction to stop arbitration/enforcement of the Basic Agreement and to prevent interference with the play’s run.
- The district court vacated an earlier temporary injunction and denied further injunctive relief, reasoning that the producer was in pari delicto because he had signed and participated in the Basic Agreement.

## Issues

1. Whether a producer who signed and operated under the challenged Basic Agreement was barred by in pari delicto (or “unclean hands”) from obtaining preliminary injunctive relief in a Sherman Act case.
2. Whether the allegations concerning the Guild’s Basic Agreement stated a sufficiently substantial Sherman Act restraint-of-trade claim to warrant consideration of preliminary injunctive relief rather than denial on an equitable defense alone.

## Decision

- The Second Circuit reversed the order vacating and denying the temporary injunction and remanded.
- The court held that in pari delicto did not automatically bar the producer from seeking preliminary injunctive relief under the Sherman Act.
- The court rejected denial of injunctive relief based solely on the producer’s signing of the Basic Agreement, given the asserted coercive market conditions and the public purposes served by private antitrust enforcement.

## Legal Principles

- In antitrust actions, equitable defenses such as in pari delicto and unclean hands are applied narrowly when their use would materially impair private enforcement of the Sherman Act.
- A plaintiff is not automatically disqualified from antitrust equitable relief merely because the plaintiff signed or performed under the challenged restraint, especially where participation is plausibly compelled as a condition of market access or to protect an existing investment.
- Courts should not dispose of requests for preliminary antitrust injunctive relief solely on in pari delicto where the complaint alleges a non-frivolous restraint implemented through industry-wide contracting requirements and compulsory arbitration provisions.

## Conclusion

The Second Circuit held that a producer’s participation in a challenged industry-wide play-licensing agreement did not, by itself, bar preliminary injunctive relief under the Sherman Act, and it remanded for further proceedings without treating in pari delicto as dispositive.


Ring v. Spina, 148 F.2d 647 (2d Cir. 1945)