Harrison's Reports (1951)

20 HARRISON’S REPORTS February 3, 1951 THE WINDSOR AND MILGRAM CASES ( Editor's T^ote: The following article, based on an analysis by Mr. Abram F. Myers of the recent W indsor and Milgram cases, is from the January 25 bulletin of the Associated Theatre Owners of Indiana. Because of the importance of the questions that Mr. Myers touches upon, Harrison's Reports is reproducing it in full.) Competitive Bidding It has been Allied’s contention that there is nothing in the decree in U. S. v. Paramount et. al. which requires competitive bidding except when it is invoked by an independent exhibitor in order to secure pictures on a run formerly monopolized by an affiliated or circuit theatre. In a recent analysis of two District Court cases, Allied’s General Counsel [Abram F. Myers] points out that the decisions reinforce this view that a distributor may choose its own customer between two competing independent theatres providing the distributor is not in violation of the Sherman Act. The Windsor Case In Baltimore, the Walbrook Theatre, under the same management since 1918, had done business with all the leading film producers (except possibly Columbia) and had been an entirely satisfactory customer. After the New York District Court decision in the Paramount Case some of the distributors called for competitive bidding with the Windsor Theatre which was built in 1941 and in the same zone, but after the Supreme Court reversed that portion of the N. Y. decision relating to competitive bidding the major companies abandoned bidding and returned to their old customer. According to Judge Chestnut's opinion in a suit brought by the Windsor Theatre the distributors — even though they admittedly acted in uniformity — “acted independently and in no way collectively and the only motive actuating each of them separately was their ordinary business interests in exercising their lawful right to select their customers. . . . Each distributor had to do business with one or the other on first availability of pictures in the zone. Some of the eight major distributors preferred to do business with the plaintiff but the majority preferred to continue their long previously satisfactory business with the defendants. In so doing, they exercised what I understand still to be clearly their undoubted and important right to select customers. In so doing they were actuated only by the ordinary business motives of making more money from pictures from an established customer owning a larger and more productive theatre.” Judge Chestnut concluded: “An examination of the case in the Supreme Court will show that it dealt with a factual situation very different indeed from the much simpler and customary business situation involved in the instant case." The Milgram Case In his analysis of this case Mr. Myers points out that the distributors without exception refused to consider any offers for first run pictures from the Boulevard Drive-In Theatre at Allentown, Pa., even though he offered higher prices for film than could be obtained from the indoor theatres. Six of eight distributors offered second run films at a uniform clearance of 28 days. In this case Judge Kirkpatrick ruled that “In practical effect, consciously parallel business practises have taken the place of the concept of meeting of the minds which some of the earlier cases emphasized." (Judge Chestnut felt that there should be some affirmative proof of concert of action.) Mr. Myers states that these two views as to what constitutes inference of conspiracy are somewhat inconsistent but that the inconsistency relates to the general law of conspiracy and has nothing to do with the decree in the Paramount Case. Mr. Myers explains that the Milgram Case could be dismissed as a routine conspiracy case if it were not for the fact that the distributors chose to justify their refusal to deal with the plaintiff on the ground that drive-ins were not entitled to the same consideration as indoor theatres. Said the Court: “Progress under the competitive system comes from the constant development of new forms and their entry into free competition with the old. Unless or until they have demonstrated to be detrimental to the public, they should so far as possible be allowed to find their proper place in the industry, rather than have a place assigned to them by the dominant group with monopolistic power.” This Much Seems Clear 1. Controversies between independent theatres over runs are to be resolved under the anti-trust laws not under the provision in the Paramount decree calling for the licensing of pictures “theatre by theatre." 2. In the absence of any conspiracy a distributor in dealing with competing independent theatres retains his common law right to select his own customers according to his best judgment and in his own interest. 3. Drive-in theatres and conventional theatres stand as equals before the law and a conspiracy to boycott a drive-in is just as illegal as a conspiracy to boycott an indoor theatre. After stating the above, Mr. Myers concludes: “These considerations in the course of time may afford the key to the words ’solely upon the merits and without discrimination’ contained in Sec. II, Par. 8 of the decree in the Paramount Case. Let the provision be confined to cases where an independent is trying to break into the charmed circle of fixed runs and clearances enjoyed by the affiliated and circuit theatres and then let the distributor do a little soul-searching to determine whether, deep down inside, he is doing a right thing or a wrong thing in favoring such affiliated or circuit theatre. “Then real progress will be made toward the reduction of litigation in the motion picture industry." HERBERT J. YATES AND INDUSTRY HONORED The Veterans of Foreign Wars of the United States, at its National Encampment held in Chicago on August 27, 1950, conferred on Herbert J. Yates, president of Republic Pictures, its National Gold Citizenship Medal, the highest honor the 1,200,000 veterans of the organization can bestow. The Gold Medal was presented to Mr. Yates last Saturday by Charles C. Ralls, Commander-in-Chief of the VFW, at a luncheon at the Hotel Biltmore in Los Angeles, attended by more than two hundred and fifty civic dignitaries, military leaders and veterans. In presenting the medal to Mr. Yates “for his inspiring vision, initiative and the many outstanding services he has rendered for the preservation and advancement of American ideals," Mr. Ralls called upon Americans to face the present situation realistically. “Let us not forget for a moment,” said he, “that we are in a shooting war with Russia and that World War III started with the firing of the first shot in Korea after Russia sent North Koreans into South Korea and then sent the Chinese Communists to fight the U.N. forces in Korea. “According to the FBI, we still have 55,000 Communists roaming the streets of the United States. ..." Harrison’s Reports takes pride in recording in these columns the presentation proceedings, for it believes that, in honoring so prominent a member of the motion picture industry, the Veterans of Foreign Wars honored also the entire industry, and that any honor so conferred cannot help creating public good will for the industry.