The Exhibitor (Nov 1938-May 1939)

notify the exhibitor of the price allocation thereof; provided, however, that this shall not apply to first-runs in the cities which the distributor may designate as "key cities.” IX. NON-THEATRICAL COMPETITION (No change-elimination recommended.) X. FORM OF LICENSE AGREEMENT Each distributor will undertake in consultation with representatives of the organized exhibitor groups to revise its form of license agreement so far as necessary to conform to these fair trade practices and to simplify the same. XI. SELECTIVE CONTRACTS Whenever an exhibitor has the right to select a certain number of pictures out of a larger number, such exhibitor shall exercise that right by notice in writing in respect of each picture within 21 days after the date of mailing of the notice of availability of such picture. Upon the exhibitor’s failure to give such written notice within said period, each picture in respect of which notice is not given shall be deemed to have been selected by the exhibitor. This provision shall be included in every selective contract. XII. PLAYING PICTURES IN THE ORDER OF RELEASE If under any license agreement the exhibitor is obligated to play pictures in the order of release, the distributor will not withhold pictures from the exhibitor for breach of that obligation if the failure of the exhibitor to show the prior pictures was due to the failure of the distributor to make the same available. Any dispute arising out of this provision shall be submitted to arbitration. XIII. COERCING CONTRACTS (As originally proposed by Allied.) No distributor nor the branch manager, salesman or other representative of a distributor shall threaten, coerce or intimidate any exhibitor to enter into a license agreement, or to pay higher film rentals or submit to more onerous terms or conditions, or attempt to do so, by any statement, intimation or overt act evidencing an intention to build or acquire, or to promote the building or opening by any other person, of a motion picture theatre to be operated in competition with such exhibitor. The facts relating to any alleged violation of this provision may, on application of either the exhibitor or distributor, be ascertained and reported by an arbitration board, but this shall not bar any other remedy that the exhibitor may have. XIV. BOX OFFICE STATEMENTS (It is our understanding from articles in the trade press that this provision has been abandoned by the distributors. If those accounts were erroneous and the distributors propose to retain the provision, the writer suggests striking out the last sentence and inserting, in lieu thereof, "The facts relating to any alleged violation of this provision may, on application of either the distributor or the exhibitor, be ascertained and reported by an arbitration board, but this shall not bar any other remedy that the distributor may have.”) XV. PRINCIPLES OF ARBITRATION (1) Declaration of policy. It will be the policy of each distributor, whenever the exhibitors concerned therein are willing to do so, to submit to arbitration boards as hereinafter provided for, for the determination of issues and the making of awards, or for the ascertainment and reporting of facts, as the case may be, all controversies which may arise between it and its exhibitor customers or prospective customers out of the foregoing commitments numbered I. (1) "Cancella SPECIAL FEATURES tion as a matter of right,” I. (2) "Cancellation for cause,” III. "Exhibitor’s limited playing time,” IV. (2) "Unsuitable pictures on preferred playing time,” V. (1) "Runs guaranteed,” V. (2) "Protecting existing customers,” IX. "Non-theatr cal competition,”3 XIII. "Coercing contracts,” and XIV. "Box office statements;”4 also, all controversies concerning the performance by either party of any subsisting contract between a distributor and an exhibitor. In addition, the distributors will encourage, foster and promote the settlement of controversies between exhibitors of the same class, or between exhibitors of different classes, involving (a) complaints of alleged unfair or unreasonable zoning or clearance, and (b) complaints of unfair competition in violation of any code of fair competition which may be formulated and adopted in any film delivery territory and which is legal and responsive to local conditions and needs. The theatre-owning distributors, each for itself, hereby pledges the full co-operation in this movement of its own theatres and will undertake to obtain, so far as possible, the co-operation of its affiliated theatres. Each distributor will also seek the co-operation of its larger customers, whether affiliated or not. All organized exhibitor groups in ratifying this national code of fair trade practices will specifically approve the arbitration system herein provided for and will urge their members and other exhibitors operating theatres in their respective territories to subscribe to the same. (2) Balanced boards. A fundamental principle of the arbitration system herein provided for is that each controversy shall be determined, and each inquiry conducted, by a board that is evenly balanced as between the economic divisions of the industry (as distinguished from trade divisions) to which the respective parties belong, with each party at liberty to choose his representative or representatives from a panel of available arbitrators representing the economic division to which he belongs, and with authority in the arbitrators chosen by the respective parties to appoint a disinterested arbitrator or arbitrators when demanded by either party or when deemed by the arbitrators chosen to be necessary or desirable. For the purposes of this provision a distributor and an "affiliated theatre” (i.e., a theatre owned, operated or booked by a distributor or any subsidiary thereof, or in which the distributor has any interest through stock ownership or otherwise), shall be considered to belong to the same economic division and shall not be entitled to duplicate representation in a controversy involving an independent exhib;tor. Thus, if a controversy involves an application by an independent exhibitor for a run under No. V. (1) and it is opposed by an affiliated theatre, or if it involves a complaint by an independent theatre of alleged selling away to an affiliated theatre in violation of V. (2), and the board consists of four, the distributor may choose one arbitrator, the affiliated theatre may choose one arbitrator, and the independent exhibitor may choose two arbitrators. In a case where more than two parties demand representation on the board on the ground that while two or more may belong to the same economic division their interests in the controversy are nevertheless antagonistic, each party may choose one arbitrator and, on the demand of any party, a sufficient number of disinterested arbitrators shall be added so that the vote of any representative arbitrator plus the combined votes of the disinterested arbitrators shall constitute the balance of power. Thus, if in the examples cited in the preceding paragraph the theatre opposing the granting of a run or to which product has been sold away from the complainant, belonged to an independent circuit instead of an affiliated circuit and the independent circuit demanded representation on the board, the distribu * If retained. * If retained. 37 tor, the independent circuit and the complaining exhibitor would each be entitled to name one arbitrator, and upon demand of any party, the board would be augmented by two disinterested arbitrators. Obviously, this mathematical progression can not be pursued to a point where the boards become too unwieldy. It is believed that all controversies except cases involving clearance and zoning can be accommodated by boards containing not more than five representative members and a total membership of nine. This, therefore, is established as the point beyond which individual representation can not go. In controversies affecting a large number of individuals, such as those involving zoning and clearance, effort should be made to obtain the participation of all through group representation rather than by individual representation. The distributors prefer not to participate in controversies involving clearance and zoning beyond being heard in regard to any proposal which might affect their revenues as distributors.5 6 The economic divisions in cases of this kind, therefore, will not be as between distributor and exhibitor, or affiliated theatre and independent exhibitor, but between runs. The principle of balanced representation, whether by groups or individuals, will be observed with the balance of power resting with the disinterested members of the board. (3) Binding awards. The forms of consent or agreement to arbitrate shall conform to the practice and law in the jurisdiction in which they are to operate. In jurisdictions where arbitration agreements are effective only as to existing controversies, the general agreements shall provide that the subscribers will execute a separate agreement as to each controversy when and if it arises. All agreements, whether general or special, shall bind the parties not only to arbitrate all controversies affecting them of the kinds enumerated herein, but also shall bind them to abide by and perform any awards that may be entered against them. In some jurisdictions the awards will be enforceable in the courts, in other jurisdictions they may not be. In all cases the parties by their agreement to arbitrate will pledge their good faith to abide by and perform any award that may be entered against them.0 4. Pre-trial or conciliation. Provision shall be made in the panels for a limited number of men, balanced 3s between the several economic divisions, who, being readily available, shall constitute a standing committee whose good offices may be invoked, at the option of the complainant, for the adjustment of controversies (particularly those calling for speedy determination)’ by means of conciliation. This procedure shall not, however, be a substitute for the formal arbitration proceeding whenever the latter is demanded by either party; nor shall resort to the informal conciliation method preclude any party from thereafter demanding arbitration. XVI. ARBITRATION MACHINERY AND PROCEDURE (1) Location of Boards. An Arbitration Board shall be established in each film delivery territory. (2) Organization of Boards and creation of panels. Promptly after the ratification of this code of fair competition by the exhibitor association or associations in any film delivery territory, a committee to be known as the Joint Committee on Arbitration, consisting of representative distributors and exhibitors (each trade division naming its own representatves) , shall be formed. It shall be the duty of this Joint Committee to provide for the establishment of an Arbitration Board for the territory, and, in this connection — 5 So stated in the conferences. 0 It should he explained that generally speaking arbitration awards may be vacated (a) where procured by corruption, fraud or undue means; (b) where the arbitrators did not allow a fair hearing, and (c) where the arbitrators exceeded their powers. February 22, 19)9