Independent Exhibitors Film Bulletin (1954)

Full Text of Supreme Louri Ruling The Cvest Decisian Theatre Enterprises, Inc.. Petitioner, v. Paramount Film Distributing Corp.. et al. I January 1. 1954.] Mr. JrSTiCK Clark delivered the opinion of the Court. Petitioner hrought this suit for treble dainanges and an injunction under 1 and 16 of the Clayton Act.' alleging that resi)ondenl motion picture producers and distributors" had violated the antitrust laws " by conspiring to restrict "firstrun" ' pictures to downtown Baltimore theatres, thus confining its suburban theatre to subsequent runs and unreasonaf)!e "clearances." ' After hearing the evidence a jury returned a general verdict for respondents. The Court of Appeals for the Fourth Circuit affirmed the judgment based on the verdirl. 201 F. 2d 306. We granted certiorari. 315 V. S. 963. Petitioner now urges, as it did in the Court of Appeals, that the trial judge should have directed a verdict in its favor and submitted to the jury only the question of the amount of damages. Alternatively. |)elitioner claims that the trial judge erred by inadequately instructing the jury as to the scope and ( fleet of the decrees in l'n<ted Stales v. Paramount Pictures. Inc. et al.. the (Government's prior equity suit against respondents." We think both contentions are untenable. The opinion of the Court of Appeals contains a complete summary of the evidence presented to the jury. W e need not lecite that evidence again. It is sufficient to note that |)elilioner owns and operates the Crest Theatre, located in a neighborhood shoj)ping district .some six miles from the downtown .chopping center in Baltimore. Maryland. The Crest, possessHill the most modern improvements and appointments, opened on February 26. 1919. Before and after the opening. j)elitioner. through its president, repeatedly sought to obtain first-run features for the theatre. Petitioner approached each respondent separately, initially requesting exclusive first-runs, later asking for first-runs on a "day and date" basis.' But re^•[)ondents uniformly rebuffed petitioner's efforts and ahered to an established policy of restricting first-runs in Baltimore to the eight downtown theatres. Admittedly there is no direct evidence of illegal agreement between the respondents and no conspiracy is charged as to the indei)endenl exhibitors in Baltimore, who account for 63^^ of first-run exhibitions. The \arious respondents advanced much the .<ame reasons for denying ■ 38 Stat. 731, 737, 15 U. S. C. §§15, 24. -Respondents are: Paramount Film Distributing Corp., Loew's Inc., RKO Radio Pictures. Inc.. Twentieth Centurv-Fox Film Corp., Universal Film Eichanqes, Inc., United Artists Corp., Warner Bros. Pictures Distributing Core.. Warner Bros. Circuit Management Corp.. Columbia Pictures Corp. • Sections I and 2 of the Sherman Act, 26 Stat. 209, as amended 15 U. S. C. 5§ I, 2. and 5 2 of the Clayton Act, 38 Stat. 730. as amended. 15 U. S. C. § 13. Petitioner has dropped the allegation of a Clayton Act violation. ' '"Runs are successive exhibitions of a feature in a given area, firstrun being the first exhibition in that area, second-run being the next subsequent, and so on . . . United States v. Paramount Pictures Inc et al., 334 U. S. 131, M4-I45, n. & II948I. "A clearance is the period of time, usually stipulated In license contracts, which must elaose between runs of the same feature within a oarticular area or in soecified theatres." United States v. Paramount Pictures, Inc., et al., 334 U. S. 131,144, n. t, II948I. "64 F. Supp. 323 II944I, 70 F. Supp. 53 11944), reversed and remanded In part, 334 U. S. 131 II948I. 85 F. Supp. 881 II949I affirmed 339 U. S. 974 119501. ■ A first-run "day and date" means that two theatres exhibit a firstrun at the same time. Had petitioner's request for a day and date firstrun been granted, the Crest and a downtown theatre would have exhibited the same features simultaneously. Rhal. Conspiracy and the Anti-Trust Laws, 44 III. L. Rev. 743 11950) petitioner's offers. Among other reasons they asserted that day and date first-runs are normally granted only to noncompeting theatres. Since the Crest is in "substantial competition" with the downtown theatres, a day and date arrangement would be economically unfeasible. And even if respondents wished to grant petitioner such a license, no downtown exhibitor would waive his clearance rights over the Crest and agree to a simultaneous showing. As a result, if petitioner were to receive first-runs, the license would have to be an exclusive one. However, an exclusive license would be economically unsound because the Crest is a suburban theatre, located in a small shopping center, and served by limited public trans|>ortation facilities: and. with a drawing area of less than one-tenth that of a downtown theatre, it cannot compare with those easily accessible theatres in the power to draw patrons. Hence the downtown theatres offer far greater opportunities lor the widespread advertisement and exploitation of newly released features, which is thought necessary to maximize the o\erall return from subsequent runs as well as first-runs. The respondents, in the light of these conditions, attacked the guaranteed offers of petitioner, one of which occurred during the trial, as not being made in good faith. Respondents Loew's and W arner refused petitioner an exclusive license because they owned the three downtown theatres receiving their first-run jjroducl. The crucial question is whether respondents' conduct toward petitioner stemmed from inde])endent decision or from an agreement, tacit or express. To be sure, business behavior is admissable circumstantial evidence from which the fact finder may infer agreement. Interstate Circuit. Inc. v. United Slates, 306 1:. S. 208 ( 1939 ) ; L nited States v. Masonite Corp., 316 U. S. 265 (1942) ; United States v. Bausch & Lomb Optical Co., 321 H. S. 707 (1944); .American Tobacco Co. v. United States, 328 U. S. 781 (1946) ; United States v. Paramount Pictures, Inc., et al.. 334 U. S. 131 (1948). But this (^ourt has never held that proof of parallel business behavior conclusively establishes agreement or. phrased differently, that ■■such behavior itself constitutes a Sherman Act offen.se. Cir( iimstantial evidence of consciously parallel behavior may have made heavy inroads into the traditional judicial attitude toward conspiracy;" but "conscious jiarallelism"" has not yet read conspiracy out of the Sherman Act entirely. Realizing this, petitioner attemjits to bolster its argument for a directed \erdict by urging that the conscious unanimil)' of action by respondents should be "measured against the background and findings of the Paramount case." In other words, since the same n'sjjondents had conspired in the Paramount case to imI'.o.M' a uniform system of runs and clearances without ade'luate explanation to sustain them as reasonable restraints of trade, use of the same device in the present case should be legally equated to conspiracy. But the Paramount decrees. c\en if admissable. were only prima facii' ev idence of a con>piracy covering the area and existing during the j)eriod there involved. Alone or in conjunction with the other proof of ihe |»elitioner. they would form no basis for a directed verdict. Here each of the respondents had denied the existence of any (Continued on Page 7 J Page « FILM BULLETIN January II, 1954