Independent Exhibitors Film Bulletin (Sep 1934 - Aug 1935)

TUESDAY, FEBRUARY 5, 1935 3 PRODUCERS ARE GUILTY OF CONSPIRACY JUDGE WELSH RULES DOUBLE FEATURE CLAUSE IS ILLEGAL; APPEAL CERTAIN Circuit Court May Hear Appeal Second Week in March; Supersedeas Virtually Sure of Halting Execution of Decree Temporarily DUAL BILL BAN VIOLATES ANTI-TRUST LAWS The long and eagerly awaited decision in the case of Harry Perelman vs. the major producers, which has held the local branches of the industry in a state of suspended animation for many weeks, was finally handed down last Thur:day morning by Federal Judge George A. Welsh. The result was regarded as a smashing triumph for for the independent exhibitors. In a thorough and comprehensive determination, Judge Welsh ruled that the defendants "have entered into a combination and a conspiracy in restraint of trade." Tracing the growth and reasons for the spread of dual bills, the opinion pointed out the use of elaborate stage attractions by large theatres and the priority of run given to affiliated theatres as being among the primary causes for double features being employed by the independent exhibitors. Ban Restricts Production The judge declared that the clause prohibiting the playing of double features with any pictures belonging to the defendants restricts and "tends to reduce the business of the independent producer and to create a monopoly in production." Specifically, the ruling charges the major producers with having violated the Sherman and Clayton Anti-Trust Acts, and the provision in the film contracts prohibiting the use of their features on double feature programs is declared illegal and void. Goes to Higher Court Morris Wolf, counsel for the producers, advised this correspondent that he would file an appeal as soon as Benjamin M. Golder, attorney for Perelman, entered the decree. The decree will be filed either today or tomorrow, according to Otto Krause, Jr., of Golder's office. The Circuit Court of Appeals, which will hear the appeal, may reach the case during the second week in March, in the regular order of the calendar. If something unforeseen delays the matter, it will be set for the first or second week in April. ill J: I Supersedeas Stays Execution It is held likely that the court will grant the defendants a supersedeas, thereby staying execution of the decree and estopping anyone from taking advantage of the District Court's decision. The supersedeas will make it necessary that any plans to double feature be held in abeyance pending the Circuit Court's determination of the appeal. While there is a possibility that the supersedeas might be refused the producers by Judge Welsh, it is unlikely because the plaintiff's counsel will probably not oppose the request, since they prefer to leave the status quo undisturbed until the higher court has definitely passed on Welsh's ruling. Decision Is Significant Aside from the consideration of double features, the decision is highly significant. It calls a halt to the producers' practice of inserting unfair and restrictive clauses in their film contracts. It will encourage other exhibitors, who believe that their rights have been abrogated, to force issue in the courts of the land. The producers may be expected to exercise a certain degree of caution in their future dealings with exhibitors. The victory stands as somewhat of a personal triumph for Ben Golder, whose brilliant conduct of the plaintiff's case prompted the bench to commend him highly. Within a comparatively brief period, Golder has established an important niche for himself in the industry's affairs. Credit is also due I. E. Chadwick, independent producer, for the valuable aid he rendered the plaintiff's case during his appearance on the stand and throughout the hearing, during which he materially assisted Golder. Among the witnesses during the hearing were Ed Golden, of Monogram; J. Robert Rubin, of Metro; Ned E. Depinet, president of RKO Pictures; George J. Schaefer, of Paramount; Sam Waldman, Charles Steifel, Columbus Stamper, Harry Fried and Harry Perelman, all Philadelphia exhibitors. | COLDER WIRES STATEMENT Ben Golder, attorney for Harry Perelman in the double feature case, is taking a short vacation in Florida. Upon request, he wired the following brief statement to FILM BULLETIN: Credit for this important victory belongs to the lEI'A. I hope all independent exhibitors and the entire industry may profit thereby. The fight of the independent exhibitors has just begun and must be carried on. BEN GOLDER. IMPORTANT CLAUSES FROM THE DECISION Plaintiffs claim that without the ability to present a "double feature" program they are unable to meet the serious competition that the defendants themselves have set up in the business, brought about by the introduction of the vaudeville and theatrical features used by the defendants in large central areas in what are called de luxe houses. The evidence shows that the double feature program has grown enormously throughout the United States and that in many areas the defendants themselves resort to it. The evidence also shows that for some years the defendants, who have been described as the major producers, have been trying in every possible way to restrict this practice. In practically every contract put out by the defendants in certain areas (including the area in this jurisdiction) the exhibitor is obliged to agree under certain reserved penalties that no double feature will be shown. Plaintiffs by evidence produced showed that by the control that the defendants have over the major production of pictures they, the plaintiffs, could not carry on their business as exhibitors without the pictures controlled by the defendants. This situation places the defendants in a peculiarly strategic position to dominate the whole situation. The Chancellor was deeply impressed with the fact that by reason of the tremendous concentration of resources that are in the power and control of these defendants they are able to absolutely dictate their own terms and conditions upon which an exhibitor may do business with them. It is this serious situation that causes the Chancellor to weigh fully every fact bearing on the important questions at issue. Stresses Public Interest During the progress of the hearings objection was made by the defendants to the Chancellor considering the public aspect of the question. Yet this subject could not be fairly and properly considered if the public viewpoint and the public interest were eliminated. The public is vitally interested in a free and uninterrupted flow of commerce and a free and uninterrupted right of contract. Monopoly Danger Cited The Chancellor was irresistably forced to the conclusion that if the restraints of trade and commerce practiced by the defendants in the r contracts now complained of were permitted to continue the independent producer and the independent exhibitor would be greatly injured and interfered with, and the public welfare impaired. This is particularly true just at this time when the economic conditions are such that if the independent producer and the independent exhibitor are permitted to be handicapped in the manner complained of they will not be able to survive, and if destroyed it might be a long time before the monopolistic control and domination could be challenged or broken. A Definite Conspiracy Defendants further contend that there was no conspiracy on the part of the defendants to do the thing complained of. However, from all of the evidence produced showing the discussion of this matter, the purposes desired to be obtained by the defendants, the means of combatting the (Continued on Page Fo-ur)