future performance

Rich and Enza Hill ordered a computer from Gateway 2000 by telephone, providing a credit card number for payment. A box containing the computer along with a list of terms arrived at their residence. The Hills kept the computer more than thirty days before complaining about its components and performance. The Hills filed suit in federal court. They argued that the product's shortcomings make Gateway a racketeer, with mail and wire fraud as the predicate offenses, and sought treble damages under RICO for themselves and a class of all other purchasers. Gateway asked the district court to enforce an arbitration clause contained in the list of terms. The district court refused enforcement, writing that the present record is insufficient to support a finding of a valid arbitration agreement between the parties or that the plaintiffs were given adequate notice of the arbitration clause. Gateway took an immediate appeal. The Hills concede that they noticed the statement of terms but deny reading it closely enough to discover the agreement to arbitrate. The box from Gateway was crammed with software, including an operating system without which the computer was useful only as a boat anchor, as well as many application programs. Gateway's advertisements state that their products come with limited warranties and lifetime support.

In April 1988, Margaret McIntyre distributed leaflets at a public meeting at Blendon Middle School in Westerville, Ohio, where the school superintendent planned to discuss a proposed tax levy. The leaflets, which she composed on her home computer and had printed professionally, expressed opposition to the levy and were signed in some versions by "CONCERNED PARENTS AND TAX PAYERS" rather than her name. She handed out additional leaflets at another meeting the following evening, with assistance from her son and a friend in placing some on car windshields. The proposed levy was defeated in the initial two elections but passed in November 1988. Five months later, a school district official who supported the tax filed a complaint with the Ohio Elections Commission alleging that McIntyre's distribution of unsigned leaflets violated Ohio Rev. Code Ann. § 3599.09(A). The Commission imposed a $100 fine on McIntyre. The Franklin County Court of Common Pleas reversed the fine, finding that McIntyre did not mislead the public. The Ohio Court of Appeals reinstated the fine. The Ohio Supreme Court affirmed by a divided vote, upholding the statute. McIntyre passed away during the pendency of the litigation. Her executor pursued the claim to the United States Supreme Court, which granted certiorari.

Columbia Broadcasting System, Inc. (CBS) operates one of three national commercial television networks, supplying programs to approximately 200 affiliated stations and telecasting approximately 7,500 network programs per year, many of which use copyrighted music recorded on the soundtrack. CBS also owns television and radio stations in various cities and is the giant of the world in the use of music rights. In 1914, Victor Herbert and a handful of other composers organized the American Society of Composers, Authors and Publishers (ASCAP) as a clearinghouse because those who performed copyrighted music for profit were numerous and widespread and most performances were fleeting, making individual negotiation and detection of unauthorized uses impractical. As ASCAP operates today, its 22,000 members grant it nonexclusive rights to license nondramatic performances of their works, and ASCAP issues licenses and distributes royalties to copyright owners in accordance with a schedule reflecting the nature and amount of use of their music and other factors. Broadcast Music, Inc. (BMI), a nonprofit corporation owned by members of the broadcasting industry, was organized in 1939, is affiliated with or represents some 10,000 publishing companies and 20,000 authors and composers, and operates in much the same manner as ASCAP. Almost every domestic copyrighted composition is in the repertory either of ASCAP, with a total of three million compositions, or of BMI, with one million. Both organizations operate primarily through blanket licenses that give licensees the right to perform any and all compositions owned by members or affiliates as often as desired for a stated term. Fees for blanket licenses are ordinarily a percentage of total revenues or a flat dollar amount that does not directly depend on the amount or type of music used. Radio and television broadcasters are the largest users of music, and almost all of them hold blanket licenses from both ASCAP and BMI. CBS held blanket licenses from both organizations for its television network on a continuous basis since the late 1940's and had never attempted to secure any other form of license until this litigation. In December 1969 the president of the CBS television network wrote to ASCAP and BMI requesting new performance rights licenses providing for payments measured by actual use of the music. CBS filed suit charging violations of the Sherman Act and copyright laws, arguing that ASCAP and BMI are unlawful monopolies and that the blanket license is illegal price fixing, an unlawful tying arrangement, a concerted refusal to deal, and a misuse of copyrights. The District Court for the Southern District of New York denied summary judgment on the per se issue in 1972, and after an eight-week trial limited to liability dismissed the complaint in 1975, rejecting the claim that the blanket license was price fixing and a per se violation. The Court of Appeals for the Second Circuit in 1977 held that the blanket license issued to television networks was a form of price fixing illegal per se under the Sherman Act, reversed the District Court on that ground, and remanded to consider the appropriate remedy while affirming rejection of CBS's other antitrust claims. The Supreme Court granted certiorari in 1978.

In 1968, Chicago police officer Richard Nuccio shot and killed a youth named Nelson. State authorities prosecuted Nuccio and obtained a conviction for second-degree murder. The Nelson family retained petitioner Elmer Gertz, a Chicago attorney, to represent them in civil litigation against Nuccio. Respondent Robert Welch, Inc., publishes American Opinion, a monthly magazine expressing the views of the John Birch Society. In March 1969, the magazine published an article titled "FRAME-UP: Richard Nuccio And The War On Police." The article accused Gertz of participating in a Communist conspiracy to discredit local law enforcement, described him as a "Leninist" and "Communist-fronter," and claimed he had been an officer of the National Lawyers Guild, which it portrayed as a Communist organization involved in planning attacks on Chicago police during the 1968 Democratic Convention. The article contained numerous inaccuracies, including the false implication that Gertz had a criminal record. Gertz had served as an officer of the National Lawyers Guild approximately fifteen years earlier but had no involvement in planning the 1968 demonstrations. He had never been a member of the Marxist League for Industrial Democracy or the Intercollegiate Socialist Society. The managing editor of American Opinion made no effort to verify the charges against Gertz before publication and appended an editorial introduction stating that the author had conducted extensive research. Gertz filed a diversity action for libel in the United States District Court for the Northern District of Illinois. The district court ruled that the statements constituted libel per se under Illinois law. After a trial, the jury awarded Gertz $50,000 in compensatory damages. The district court later entered judgment for the defendant notwithstanding the verdict, applying the New York Times standard. The Court of Appeals for the Seventh Circuit affirmed. The Supreme Court granted certiorari to review the application of constitutional standards to defamation of a private individual.