Harrison's Reports (1946)

40 HARRISON'S REPORTS March 9, 1946 that the verdict could not be supported on some other theory." "Read in the light of the whole opinion this passage seems a polite way of saying, 'But don't think the whole darn system isn't illegal.' "2. Discrimination is illegal. The gist of the Bigelow's complaint was that by reason of the conspiracy they were prevented from securing pictures until after Balaban 6*1 Katz had shown them on the earlier and more desirable runs. 'The jury returned a general verdict hence it was necessary for the Court, in order to ascertain the nature and extent of the unlawful conspiracy, to examine the entire record. In doing this the Court was moved to expressions not strictly relevant to the question of damages which unmistakably reveal the Court's attitude toward the system whereby the major companies consistently discriminate in favor of affiliated theatres and against independents in the licensing of films. "For example, although under the District Court's instructions the Supreme Court had to conclude that 'the verdict did not establish that the fixed minimum admission prices were the result of the unlawful conspiracy,' the Chief Justice at another point took occasion to say: 'There was thus evidence tending to show that the release system and the price-fixing system were each an integral part of an unlawful conspiracy to give the Loop theatres the advantage of a first-run protected from low-price competition.' "From the record the Court concluded that the jury's verdict (which the Court sustained) was 'based on the damages suffered by petitioners (plaintiffs) in consequence of the deprivation, by the discriminatory operation of the release system, of their demonstrated freedom to rent and exhibit some films which had not had prior showing." "The 'system' mentioned is the Chicago system of release, which is described in the opinion. While that system differs in form, it is not much different in substance from the systems employed by the major companies in other situations where there are affiliated theatres competing with independent theatres. "3. Proof of Damages. One of the greatest deterrents to the filing of triple damage suits by independent exhibitors under Sec. 7 of the Sherman Act has been the difficulty of proving losses resulting from the discrimination. In the Jackson Park Case the District Court told the jury, in effect, that there were two theories of determining the amount of plaintiffs' damages: (1) A comparison of the receipts of the Jackson Park Theatre for four years preceding 1937 (when it obtained some films which had not been shown in defendants' theatres) with the receipts during the five years succeeding that year (when it obtained no such films due to the introduction of double features); and (2) a comparison of the earnings of the Jackson Park Theatre, which was held to the first week of general release, with those of the nearby Maryland Theatre (B&K) which was allowed to exhibit on 'C pre-release run, one week ahead of the Jackson Park. The Court told the jury they must choose one or the other of these theories. The Circuit Court of Appeals and the Supreme Court both concluded that the jury had based its verdict on theory No. 1. "The Court of Appeals in setting aside the verdict held that both theories were untenable. The Supreme Court, in reversing the C.C.A., said: 'Each of the two classes of evidence . . . tended to show damage . . . since each, independently of the other, tended to show that (plaintiffs') inability to obtain films before they had been shown elsewhere adversely affected their receipts. . . 'The constant tendency of the courts is to find some way in which damages can be awarded where a wrong has been done. Difficulty of ascertainment is no longer confused with the right of recovery for a proven invasion of the plaintiffs' rights.' "As regards defendants' contention that their monopoly was so complete the plaintiffs could not prove actual damages, the Court said :'The most elementary conceptions of justice and public policy require that the worng-dotr shall bear the risk of the uncertainty which his own wrong has created." Again: 'The evidence here was ample to support a just and reasonable inference that (plaintiffs) were damaged by (defendants') action whose unlawfulness the jury has found and (defendants) do not challenge. The comparison of (plaintiffs) receipts before and after the defendants' unlawful action impinged on (plaintiffs') business afforded a sufficient basis for the jury's computation of the damage.' "4. General effects. Industry lawyers will interpret the decision according to the interest of their clients. Counsel for the majors will attempt to dismiss it as a mere ruling on damages. Representatives of the independents will stress the general tenor of the opinion. Certainly the majors can derive no comfort from the decision; it strikes at the heart of their discriminatory practices. And as pointed out in the annual report, the case has served to further enlighten the Court concerning conditions in the industry. The Court must have been impressed by the long line of anti-trust cases coming before it involving the major companies. "An immediate effect undoubtedly will be to stimulate the filing of triple damage suits, now that the way has been opened for proving damages based on a comparison of earnings with competing affiliated theatres which have been the beneficiaries of preferential treatment. "Another effect may be to upset the Chicago system of release since it is reported that the Bigelows intend to supplement their victory by applying for injunctive relief. Moreover, the distributors and B & K may hesitate to continue a system which has been pronounced illegal and threatens to expose them to a multiplicity of private actions. "Eventually the decision will have repercussions in all situations where discrimination has been systematically practiced. "The distributors would be in a happier situation today if they had heeded Allied's old plea for 'The right to buy'." As Mr Myers points out, the decision is one of damages only, on which the Court sustained the verdict solely on the basis that there was sufficient proof of injury to the Jackson Park. But there can be no doubt that the highest court in the land now has a pretty comprehensive picture of the predatory practices that beset the industry, and that it looks upon them with disfavor. Read again the concluding paragraph of the opinion delivered by Chief Justice Stone to be convinced of the Court's general attitude: "We do not mean to indicate by what we have said that the jury could not, on this record, have found a conspiracy for fixing minimum prices or that the Chicago system of release was not an unreasonable restraint of trade in other respects. We conclude that there was evidence to support a verdict for damages on at least one theory on which the case was submitted to the jury. We do not imply that the verdict could not be supported on some other theory." The distributors should read this concluding paragraph carefully and digest it, for therein lies the handwriting on the wall. If they will comprehend fully the purport of this admonition, they will realize that the time has come for them to sit down with the exhibitors in a sincere effort to work out for the entire industry a fair and equitable program. Unless they discard their former ideas and start doing things in a more human way, unless they endeavor to gain the good will of their customers, they cannot hope to avoid judicial censure of the means they are employing to hold on to unfair control of the industry.