Independent Exhibitors Film Bulletin (Sep 1935 - Aug 1936)

WEDNESDAY, NOVEMBER 13, 1935 5 DUAL BILL APPEAL HEARD BY CIRCUIT COURT Arguments Presented by Opposing Counsel Last Wednesday Before Three U. S. Circuit Court Judges In Phila. DECISION EXPECTED WITHIN TWO MONTHS Unknown to most of the industry, the final arguments on the major film companies' appeal from the U. S. District Court decision in the Perelman (Philadelphia) double feature case were heard last Wednesday (6th) by the U. S. Circuit Court of Appeals. Attended only by the opposing counsel, Benjamin Golder and Otto Kraus, Jr., for the plaintiffs and Morris Wolf for the defendants, the hearing took only a short time. The Court will now consider the briefs or "paper books" filed by both sides and is expected to have its decision ready within two to three months. Upon the result of this case rests the future of dual bills throughout the country. If the ruling in which Federal Judge George A. Welsh found Warner Bros., Paramount, Fox, Metro, RKO and United Artists guilty of conspiracy to violate the anti-trust laws by inserting in their contracts clauses prohibiting the showing of double features with their pictures is sustained, the dual bill barrier erected by the majors will be down and the few remaining single feature territories, like Philadelphia and Washington are virtually certain to go dual. On the other hand, reversal of the lower court's decision by the Circuit Court will materially strengthen the hand of these producers who desire to eliminate duals and will give them the legal weapon by which they may accomplish their end. The Supreme Court of the United States is the last recourse of appeal, should either litigant decide to appeal further. Upholding of the verdict by the Circuit Court is believed by observers to make almost certain the likelihood that the film companies will carry the case to the nation's highest tribunal. Answering Brief Filed In reply to the appeal brief for the defendants (the highlights of which were printed in last week's FILM BULLETIN), counsel for the Perelmans filed their "paper book" with the Circuit Court of Appeals less than a week before the final arguments were heard. This answering brief is composed largely of quotations of legal precedents in support of the District Court verdict. Many of the principal points made in the appellants' brief are refuted by reference to testimony delivered in this case or rulings in other cases. Arguments of the defendants that double features are a bad thing for the industry are swept aside by the recital of numerous decisions which state that the effect of an anti-trust law violation on the welfare of an industry in no way affects the legal status of the act. "Hence," the plaintiffs' brief declares, "the testimony of Mr. Kuykendall (Ed Kuykendall, MPT OA president) and other witnesses who forecast dire results from double featuring become immaterial." Re-states Questions Involved The brief, prepared by Golder and Krau^, opens with a counter statement of the questions involved. They are: "(1.) If defendants, by combination or conspiracy among themselves, inserted in their contracts a provision forbidding the exhibition of their feature films on a double feature program, was such provision a restraint of interstate commerce in violation of the Sherman Act or of the Clayton Act? "(2.) Was there sufficient proof of the above mentioned combination or conspiracy? "(3.) Does denial of the combination or conspiracy by the conspirators preclude proof of the same by other competent testimony?" After quoting the sections of the Sherman and Clayton Acts claimed to have been violated by the film companies, the brief sets forth the vital points made in the plaintiffs' bill of complaint. "(1) that the defendants control 75% of the feature films, (2) that without the feature films produced by the defendants the independent theatre owners could not conduct their business at a profit, (3) that in Philadelphia District the chain theatres, controlled by Warner Brothers, are given the privilege of first, second and sometimes third runs, (4) that when these feature films reach the plaintiff and other independent owners they have lost their novelty and their drawing power over the public has been so reduced as to exclude by themselves profitable returns, (5) that in consequence the independent owners must offer additional attractions to the public in the form of a double feature on the same program to make a profit, (6) that the defendants have all inserted in their respective contracts a clause forbidding double featuring on one program to be enforced by the penalty of their refusing to furnish any more feature films, (7) that as a result of the enforcement of the above interdiction, plaintiff and other independent owners must refuse to buy feature films from independent producers and also, as a further result, the defendants, among themselves, have restricted their sale of feature films in interstate commerce, (8) that the enforcement of the above restrictive clause will put plaintiff and independent owners out of business." Good Motive' Not Vital In answer to the contention of the defendants that double features are not good for the motion picture industry and that their action in barring them by the clause in their contracts is actuated by a desire to protect the welfare of theatre owners or the industry, is declared in the plaintiffs' brief to be no defense. "The good motive of the combination and the fact that it may be beneficial to the business affected by eliminating cut-throat competition, etc., furnished no defense where the result is to restrain interstate commerce." Numerous cases in support of this principle are quoted, including the suit of Paramount vs. U. S. involving the compulsory arbitration clause, in which it was ruled that "the prohibition of the statute cannot ... be evaded by good motives." "Hence the testimony of Mr. Kuykendall and other witnesses who forecast dire results from double featuring becomes immaterial. We might observe in passing that their own admissions from the witness stand destroyed their fancied apprehensions. They admitted that the theatres controlled by the defendants 'double featured' without any deteriorating effect on the quality of films and without provoking the bugaboo of annihilating competition." On the question of whether or not exhibitors voluntarily accept the anti-dual clause, the brief says this: Charge Coercion "Again the defendant distributors cannot claim that the plaintiff and independent theatre owners voluntarily entered into the agreement now complained of. This was eifectively answered in the following case vhire the same contention was raised: The case of Paramount compulsory arbitration case was again quoted, and in part it states: "In fairness it cannot be said that the restraint imposed upon these exhibitors is voluntary because they accept and agree to be bound by the contracts. They can have none other, because the defendants have agreed that they shall not; and, unless something more than the mere acceptance of all they can get is shown, they must be said to have acted under an involuntary restraint . . . That such coercive restraint upon the commercial freedom of an exhibitor, who was neither represented nor consulted with reference to the agreement to adopt the standard form of contract, is undue and unreasonable both at common law and under the Sherman Act, I cannot doubt. Gains resulting from such restraint to the industry as a whole do not in the eyes ol the statute justify the vicarious s.u rifices ot the individual, even for the sake ot bigger and better business. A state (Continued on Page 6)