Boxoffice (Jul-Sep 1948)

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SIMPP FILES AN $8,750,000 SUIT TO BREAK DETROIT FILM SETUP Independent Producers Ask Circuit Dissolution, End of Co-Operative By H. F. REVES DETROIT — The long history of efforts to battle alleged monopoly in the motion picture industry took a new turn with the filing here on Tuesday of a suit in federal district court by the Society of Independent Motion Picture Producers against United Detroit Theatres and Cooperative Theatres of Michigan, seeking dissolution of both organizations and treble damages totaling $8,750,000. The surprisingly unprecedented nature of the present suit lies in the fact that for the first time a group of important producers are suing a group of exhibitors, charging them with operating in violation of both the Sherman and Clayton antitrust laws. In the past, major industry litigation has taken one of two patterns — action by the government against sundry producers and then affiliated distributor and exhibitor organizations, or action by one or more independent exhibitors against such alleged combinations. LINKING OF NEW INTERESTS Significantly, the independent exhibitor has now found a new ally and champion in the independent producer in court action — a step that was indicated in earlier tentative and ultimately rather fruitless efforts to work out a system whereby the independent producer would get his product into the hands of the independent exhibitor at terms favorable to both. The Detroit suit, too, fits into a pattern prepared by 12 to 15 years of litigation locally, in both federal and state courts, in much of which Cooperative has been a key figure. Charges of “conspiracy” and “monopoly” have been hurled in the past, usually by some disgruntled local exhibitor or group, with various film companies commonly involved as codefendants. Most noted example in recent years was perhaps the Carmen Theatre case. Similar testimony has been brought up repeatedly in arbitration cases heard here over the past six years imder the consent decree. The present case differs from these in an important respect — there are no distributor or producer codefendants. The attack is strictly upon two theatre groups — and, in fact, producers, themselves having no distributor organizations of their own, but releasing through various distributor companies, such as United Artists, are the plaintiffs. REVERSAL OF PRECEDENT This significant reversal of all precedent is expected to make this case an historic one in the Industry, ranking at least equally in importance with the government antitrust case brought in the New York federal courts. Eleven independent producer companies, affiliated with SIMPP, are coplaintiffs: Samuel Goldwyn Productions, Inc.; Walt Disney Productions, Inc.; Vanguard Films, Inc., — representing producer David O. Selznick; Walter Wanger Pictures, Inc.; Edward Small Productions, Inc.; Reliance Pictures, Inc., also Allegations in Gist of the independent producers’ position in the $8,750,000 antitrust suit in Detroit is summarized in the following allegations— claimed to be the essential terms of agreement in the alleged conspiracy: 1. That UDT shall operate the principal first run theatres. 2. That first runs be allocated arbitrarily on a noncompetitive basis to UDT. 3. That UDT and Cooperative control 95 per cent of the principal subsequent runs. 4. That after acquisition or control as above, UDT and Cooperative pool their licensing power and consult and collaborate for the negotiations in the licensing of pictures. 5. That Cooperative allocate the product between its member theatres which may be in compettition with each other on an arbitrary and noncompetitive basis. 6. That separately-owned theatres be combined under a contract surrendering their right to negotiate for pictures to Co-op. 7. That separately-owned theatres not joining Cooperative be precluded from enjoying access to picture licenses on an equal basis witth Cooperative members. representing Edward Small; Benedict Bogeaus Productions, Inc.; Empire Productions, Inc., Mars Film Corporation, and Oakmont Pictures, Inc., all representing Hunt Stromberg, and Cagney Pi'oductions, Inc. Codefendants are, besides the two groups named, Earl J. Hudson, president of UDT, and James F. Sharkey, described by the plaintiffs as general manager of Cooperative, though he has hitherto been officially described by that organization as only “film buyer,” and a list of forty “Does” — representing unknown corporations, partnerships, and individuals, who are understood to be the specific firms making up the principal defendant groups, though this is not stated in the complaint. The case has been prepared by Robert J. Rubin, general counsel of SIMPP, and Joseph L. Alioto of San Francisco, with A. Stewart Kerr of the Detroit law firm of Crawford, Sweeny and Dodd. All three were formerly on the antitrust division staff in the Department of Justice. Importance attached to the case was evident in the close coordination of timing of filing with headquarters of the Society in Beverly Hills. A well-known Detroit publicist, Frank Bogart, was named to handle public relations in connection with the law firm here. SIMPP Suit individually deal with any other buying combine nor directly with distributors. 9. That Cooperative has an option to purchase the theatres of its members in the event of sale, to prevent the said theatres from being purchased by nonmember competitors. 10. That UDT and Cooperative eliminate competition between themselves in negotiations with distributors. 11. That defendants agree upon prices for pictures and determine the conditions, and by concert of action compel distributors to accept arbitrary and noncompetitive prices, terms, and conditions. 12. That neither UDT nor Cooperative date a picture licensed to one unless the other has concluded a deal with the distributor for the same picture. 13. That pictures which both UDT and Cooperative license shall be played day and date in the theatres each designates, for the respective runs. 14. That no picture to be played day and date by UDT and Cooperative shall be dated by either until the other is ready to date it for simultaneous showing. 15. That the defendants agree upon the selection of the two features to be played day and date in the theatres controlled by each group. The plaintiffs claim injury from violation of the antitrust laws, and seek an injunction restraining “illegal monopolistic practices.” They ask further that the defendants be restrained from restricting in any way the licensing of pictures in this area, and from agreeing on the prices, terms, or conditions of exhibition. In a direct attack on Cooperative, they ask that its membership contracts be declared illegal, and the organization itself dissolved, and any similar contracts be perpetually enjoined, and that the present members and officers be enjoined from any concerted activity requiring the negotiation of a license with any other person, film, or corporation before a picture will be dated by any defendant or member. Attacking UDT, they ask that this Paramount subsidiary be dissolved, and its entire group of theatres sold to independent exhibitors, who shall have no relation to any of the defendants whatever — a change that would revolutionize the setup of the Detroit industry more completely than any “divorce” proceeding contemplated in any major area. In this connection, it was pointed out that UDT as a Paramount subsidiary, with specific (Continued on page 10) 8. That Cooperative members may not 8 BOXOFFICE :: August 28, 1948