Showmen's Trade Review (Apr-Jun 1939)

Page 44 SHOWMEN'S TRADE REVIEW June 3, 1939 Code of Fair Trade Practises (Continued from page 22) (a) a finding as to whether or not the licensing of such features was so conditioned; and, if the finding be in the affirmative, then, (b) an award cancelling the license agreement or agreements for (or to the extent that they relate to) such "Shorts." VIII. Score Charges Score charges, if any, for flat rental features for the 1938-1939 exhibition season shall be added to and consolidated with the license fees therefor. Commencing with the 1939-1940 exhibition season there shall be no separate score charge for features licensed on either a fiat rental or a percentage basis. IX. Allocation of Features Under license agreements authorizing a distributor to allocate features to particular price brackets, distributor, on giving notice of the availabihty of each feature, shall notify exhibitor of the price allocation thereof! except that such notice of price allocation shall be given not later than fourteen days after the national release date thereof to first-run exhibitors in those cities which the distributor may designate as "Key Cities." X. Form of License Agreement Each distributor will use its best efforts to simplify its form of license agreement. XI. Selective License Agreements Whenever an exhibitor shall have the right under a license agreement to select a number of features out of a larger number, he shall exercise such right by written notice of selection or rejection of each feature to which he may be entitled under such agreement within twenty-one days after the mailing of the notice of availability thereof. Failure of exhibitor to give such written notice with respect to any feature within such period shall constitute a selection thereof by exhibitor. XII. Playing Features in the Order of Release If under any license agreement an exhibitor is obHgated to play features in the order of their release, the distributor will not withhold features from exhibitor because features previously released have not been exhibited by him if his failure to exhibit them was due to the failure of distributor to make them available. Any dispute hereunder shall be subject to arbitration. XIII. Coercing Contracts No distributor shall coerce or intimidate an exhibitor to enter into any license agreement by threatening to build or otherwise acquire, or by falsely representing that any other person will build or acquire, a motion picture theatre for operation in competition with such exhibitor. An exhibitor shall have no right to assert any claim that he has been so coerced or intimidated unless he shall have mailed to the distributor at its Home Office notice in writing of such claim and the grounds therefor within forty-eight hours after delivery by exhibitor of his signed application for such license agreement. Any dispute as to whether exhibitor was so coerced or intimidated shall be subject to arbitration. The powers of arbitrators in any such dispute shall be limited to: (a) a finding as to whether or not the exhibitor was so coerced or intimidated; and, if the finding be in the affirmative, then, (b) an award cancelling such license agreement. XIV. Other Subjects of Arbitration (1) Performance of License Agreements. Any claim by either party to a license agreement that the other party has breached any provision thereof shall be subject to arbitration. The arbitrators shall have power to make the following awards only: (a) To find that the provision involved has been breached ; (b) to direct specific performance of the provision involved ; (c) to award actual damages with respect to each feature involved, which award shall not exceed the liquidated damages provided therefor in the license agreement. (2) Clearance. The parties hereto recognize: that clearance, reasonable as to time and area, is essential In the distribution and exhibition of motion pictures; that an exhibitor has the right without restriction to license for any theatre any run for which he is able to negotiate with any distributor; and that, subject to Article VI hereof, a distributor has the right without restriction to Hcense for any theatre any run for which it is able to negotiate with any exhibitor. Any dispute as to whether or not the existing clearance, under the conditions involved in the particular instance, is unreasonable shall be subject to arbitration. The powers of arbitrators in any dispute relating "The rights of exclusion, if any, under Article I. Section (1) hereof, of a responding exhibitor found by the arbitrators to have over-bought, shall be determined and computed on the basis of his license agreement{s) as modified in consequence of such finding. to clearance shall be limited to: (a) a finding as to whether or not the theatre or theatres whose clearance is complained of, or any of them, is entitled to clearance; and, if so, then, (b) an award of the reasonable maximum clearance to which such theatre or theatres is entitled. (3) Over-buying. Any complaint by an exhibitor that another exhibitor has contracted for the license for exhibition of a greater number of features than the latter reasonably requires for exhibition in his theatre or theatres, with the intent and effect of depriving the complaining exhibitor of sufficient features to operate his theatre or theatres, shall be subject to arbitration. In considering such complaint, the arbitrators shall, among other things, make due allowance for a sufficient number of features reasonably to protect the responding exhibitor against non-delivery of features and failure to make features available and give due regard to the type and operating policy of the theatre or theatres onerated by the responding exhibitor. In no event shall an exhibitor be deemed to be "overbought" if his minimum commitments do not exceed by more than fifteen (15%) per cent, his maximum requirements. If the arbitrators shall find that over-buying exists as herein provided, they shall specifically find by what number, if any, the responding exhibitor shall have over-bought and the responding exhibitor shall then be permitted a period of fourteen days from the date of the arbitrators' decision to obtain the release of such excess number, if any, from his license agreement(s) ; if the exhibitor does not obtain such release, in whole or in part, then the arbitrators shall make an award apportioning among the distributors, with which responding exhibitor has entered into license agreements, the number of features to be released by them, respectively (being in the aggregate the number of features "over-bought" less such number, if any, the release of which the responding exhibitor shall have obtained) to the complaining exhibitor'", provided that no such award shall be made unless adequate assurance shall be given to each distributor that it will receive from the complaining exhibitor, in respect of its features to be so released, no less in license fees and no less favorable other terms than were provided for in its license agreement with the responding exhiljitor. (4) License Fees, Other Terms and Conditions. Neither license fees, nor (except in the respects and to the extent specifically provided in this code) other terms or conditions upon which motion pictures may be licensed by a distributor to an exhibitor, shall be the subject of arbitration for any purpose under any Article hereof, each of the parties hereto recognizing that such matters are to be determined only by mutual agreement between distributor and exhibitor. XV. Effective Date The provisions of this code shall apply to all contracts made after January 1, 1939, for 1939-1940 product and the product of subsequent years so long as this agreement shall be in effect. XVI. Term The term of this code shall be for two exhibition seasons", commencing with the season 1939-1940, and thereafter indefinitely. Any signatory hereto may withdraw herefrom at the end of the second exhibition season or at the end of any subsequent exhibition season by giving written notice of such withdrawal to the other signatories at least six months prior to the end of such exhibition season. [Provision should be made giving the signatories the right of withdrawal in the event of substantial withdrawals by other signatories and in the event of legislation or judicial decisions declaring any part of the code invalid or illegal, requiring a material change in the method under which distributors or exhibitors do business or making the code impracticable bcause of added burdens. While this has been discussed with representatives of exhibitors no definitive language has yet been worked out but will be sunnlied shortly.] [Provision should also be made enabling other distributors and exhibitors to become parties to the code.] Arbitration Machinery 1. Location of Board. An Arbitration Board shall be established in each exchange territory. 2. Method of selection of arbitraf^rs. There shall be created in each exchange territorv a general panel and a neutral panel. The general panel shall consist of about 20 members of wh^rn the distributors will appoint 10 and the exhibitor association functioning in that particular exchange territorv the other 10. Where there are 2 or more exhibitor associations each association may appoint a panel of 10 of their own. The members of the general nanel may be affiliated with exhibitor or distributor interests. Each party to a dispute may designate as his arbitrator any member of this general nanel or any one else he desires outside of the panel. The neutral ranel shall consist of 10 m.embers to be mutually agreed upon by the exhibitor and distributor interests in each exchange territory. These members shall not be members of the general panel and shall net be associated with exhibitor or distributor interests but shall have an understanding and knowledge of the motion picture industry. The two arbitrators chosen by the above method shall designate the third arbitrator from the neutral panel and if thev are unable to agree the third arbitrator shall be drawn from the neutral panel by lot. No compensation shall be paid to any arbitrator from the general panel, but compenastion wherever necessary may be paid to the neutral arbitrator. 3. The cost of arbitration machinery. Upon the fil "An exhibition season for the purpose of this Article shall be deemed to commence September first and end August thirty-first next following. ing of a claim the complaining party shall pay a filing fee of $5. These fees are to cover the cost of: (a) compensation to the neutral, wherever necessary, (b) expenses incurred upon the initiative of the arbitration board, (c) administration. In disputes involving principles, affecting the entire industry the arbitration board may assess the cost incurred upon the initiative of the arbitration board upon all distributors and exhibitors associations. The arbitration board shall have no power to award counsel fees. Except as here provided each party shall stand its own costs and expenses. The board shall be empowered in its discretion to engage a secretary for its own sessions. 4. Qualification of arbitrators. No person shall be nominated or elected to act as an arbitrator in any dispute in which he has a personal or financial interest, directly or indirectly. The parties may, however, waive their right in any objections which may exist on the above grounds. 5. Vacancies. Vacancies occuring by reason of illness, resignation, disqualifications, disability or death shall be filled in the same manner as the original appointment. 6. Hearings. Hearings shall take place in the exchange territory in the city in which is located the exchange out of which the complaining exhibitor is served. Parties may represent themselves or be represented by another. Each party shall have the right to question the witnesses of the other party or parties. Witnesses shall testify under oath. The arbitrator may require any party to produce whatever records and documents they may deem necessary. Stenographic records of testimony will not be taken unless either or both parties so request and provide funds for the same in which case the stenographer shall be selected by the board, or if designated by either or both parties, approved by the board. 7. Waiving oral hearings. If the parties to a controversy agree in writing to waive oral hearings they shall submit to the arbitrators a statement of claim under oath including statements from books of account or other evidence together wih written argument. Immediately upon receipt of the statement of facts and written arguments a cony thereof shall be submitted to the respective parties and each shall have the right to reply thereto. But if either party should fail to make such reply in days from receipt thereof he shall be deemed to have waived the right to reply. The files shall then be submitted to the arbitrators. 8. Preferential cases. Certain disputes require prompt and immediate decisions while others do not. There shall therefore be established a list of disputes to which the arbitrators must give preference in time of hearing. 9. Miscellaneous. All questions affecting procedure such as the time when the submissions are to be made; the time within which the arbitrators must make their awards: the forms to be used; the notices to be sent and similar problems should be referred to counsel for the distributors and exhibitor groups. [Disputes where more than 2 parties are involved, or involving third parties who refuse to submit to arbitration, or where a greater number of exhibitors are involved than distributors or vice versa, or where a distributor and its affiliated theatre company are parties, present problems which have been discussed but have not yet been resolved.] Arbitration Code I. Exchange Territories Arbitration of disputes which are subject to arbitration under the Trade Practice Code or hereunder in the territories (hereinafter referred to as exchange territories) served by the film exchanges in the cities below named : Albany, N. Y. Milwaukee, Wis. 'Atlanta, Ca. Minneapolis, Minn. Boston, Mass. New Haven, Conn. Buffalo, N. Y. New Orleans, La. Charlotte, N. C. New York, N. Y. Chicago, 111. Oklahoma City, Okla. Cincinnati, Ohio Omaha, Nebr. Cleveland, Ohio Philadelphia, Pa. Dallas, Texas Pittsburgh, Pa. Denver, Colo. Portland. Ore. Des Moines, Iowa St. Louis, Mo. Detroit, Mich. Salt Lake City, Utah Indianapolis, Ind. San Francisco, Cal. Kansas City, Mo. Seattle, Wash. Los Angeles, Cal. Washington, D. C. Memphis, Tenn. shall, in each exchange territorv, be governed by these Rules of Arbitration from and after the date of the appointment of the panel of neutral arbitrators for such exchange territory, as provided in Article II hereof. II. Panel of Neutral Arbitrators All distributors and affiliated exhibitors and orfranized exhibitor groups which have signed the Trade Practice Code to which these Rules of Arbitration are annexed, and which at the time carry on their business (or, in the case of organized exhibitor grouos, have members who have signed the Trade Practice Code and who at the time operate theatres) in an exchange territory shall by unanimous action appoint a panel of not less than five nor more than ten neutral arbitrators for such exchange territory. Neutral arbitrators shall be compensated for their services, shall preferably have an understanding and knowledge of the motion picture industry but shall not be associated with either distributor or exhibitor interests.