Harrison's Reports (1946)

184 HARRISON'S REPORTS November 16, 1946 have learned something from the decision; and not inconceivably, when confronted with a strong protest, they will grant some relief. As a last resort he may appeal to the Department of Justice, and ultimately elect whether or not to take advantage of the remedies now to be considered. Arbitration or Litigation Many of the practices of the defendants that have been declared illegal by the Statutory Court have been in force for many years over substantially the entire nation, with the result that few, if any, independent operators are unaffected by them. In some situations the effect may be slight; in other cases the injuries sustained may be of such consequence as to warrant affirmative action of some nature. At the time of this writing, the scope of the proposed arbitration tribunals, and the nature of the controversies that may be arbitrated, have not been finally determined. Nor is it definitely known that redress will be granted a complainant who prevails in an arbitration proceeding. Until these questions are settled it is impossible to form an opinion in regard to the desirability of arbitrating any particular controversy. If, however, the decisions under the existing arbitration system may be taken as a guide— and the chances are that the new system will be more effective — then in most cases an exhibitor having a just grievance will be awarded some relief. It may not be complete relief, because, after all, arbitration frequently results in a compromise between conflicting contentions, but it is not unlikely to be of substantial benefit. The proceeding before the arbitration tribunal may be comparatively brief, the decision prompt. The cost may be small, even nominal, in comparison with the expense of an action at law; and it is not improbable that some provision will be made to reimburse a successful complainant for his costs and expenses, and even to award him some compensation for the wrong he has sustained. The alternative to arbitration is litigation, possibly an action under the anti-trust laws. Such an action may be protracted and expensive, and should not be lightly undertaken by a person of limited resources. In a disputed case a lawyer frequently advises his client to accept a fair com' promise, rather than to engage in costly and uncertain litigation. If, therefore, the controversy is arbitrable, and if the remedy provided by the decree is unreasonably adequate, it may be good judgment to have it decided by an arbitration tribunal. Instances may occur, however, where the controversy is not arbitrable, or where, under the rules of arbitration, no adequate compensation can be secured for the injury sustained, or where litigation is the only alternative to financial destruction. In that event the independent may be forced to seek relief under the laws of his country. Actions under the anti-trust laws of the United States are not of rare occurrence in the motion picture industry. Independent exhibitors and distributors, as well as other persons engaged in it, are generally familiar with the sections of the Sherman Act which prohibit every contract, combination and conspiracy in restraint of interstate trade or commerce, and declare that no person shall monopolize, or attempt to monopolize, or combine or conspire with any other person to monopolize, any part of such commerce.101 By other provisions of those laws other specified acts and practices are condemned,102 but these are the sections relied upon by the Government, and are, for all practical purposes, the sections upon which independents must also depend. Generally speaking, the anti-trust laws condemn restraints of trade and monopoly. Their purpose is to prohibit interferences with competition and the unnatural obstruction of the channels of interstate trade.103 "The interest of the public in the preservation of competition is the primary consideration."104 For that reason the Statutory Court weighed with considerable care the effect upon competition, and consequently upon the public, of the challenged practices. In the anti-trust laws there are comprehensive provisions to discourage violation. Not only are penalties of fine and imprisonment prescribed, but the laws also impose upon the Attorney General the duty of instituting proceedings in equity to prevent and restrain such violations.105 They give a civil remedy to "Any person who shall be injured in his business or property by reason of anything forbidden in the anti-trust laws" in "three-fold the damages by him sustained, and the cost of suit, including a reasonable attorneys' fee." They also provide that any person "shall be entitled to 6ue for and have injunctive relief . . . against threatened loss or damage by a violation of the anti-trust laws. . . ."u>* Apparently with the intention of placing upon the Government, rather than upon individuals, the primary burden of preventing violations of the anti-trust laws, the Congress provided that when any proceeding has been instituted by the Government "to restrain or punish violations of any of the anti-trust laws, the running of the statute of limitations in respect of each and every private right of action arising under said laws and based in whole or in part on any matter complained of in said suit or proceeding shall be suspended during the pendency thereof." m In popular language, the statute prevents any private right of action from being "outlawed" whde a Government suit involving the same issues is pending. The same section of the Clayton Act provides :m "A final judgment or decree rendered in any criminal prosecution or in any suit or proceeding in equity brought by or on behalf of the United States under the anti-trust laws to the effect that a defendant has violated 6aid laws shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto. . . ." Merely to give an example of the effect of a final decree by the Statutory Court, and at the same time to interpret the language of the statute, it may be suggested that if an independent exhibitor operating in direct competition with affiliated theatres should bring suit claiming not only that he was compelled to charge admission prices prescribed by the defendants but also that he was subjected to unreasonable clearance as a result of their conspiracy, he would not be required in the first instance to prove that the admission price stipulations were illegal or that the clearance was the result of conspiracy. The Government has already established those facts; and, because of this section of the statute, it would only be necessary for the plaintiff to prove the final decree by presentation of a certified copy. The decree, however, would not be conclusive; and thereafter both the defendants and the plaintiff might introduce other evidence on the issue of conspiracy for the ultimate decision of the Court or jury. In at least two respects, therefore, the final decree of the Expediting Court will be of inestimable benefit to independents asserting claims under the anti-trust laws: (1) it will prevent the running of the statute of limitations; and (2) it will provide prima facie evidence of the defendants' violations of law. Of even greater consequence, the principles of law to be enunciated by the Supreme Court upon appeal will be binding on all Federal courts in anti-trust actions. "See the previous discussion in Harrison's Reports, September 7, 1946, p. 143. A theatre operating combination comes within the category of pooling agreements and is generally governed by the same legal principles. mMid-West Theatres Co. v. Co-Operative Theatres of Michigan (D.C. E.D. Mich., S.D.) 43 F. Supp. 216. This decision, it has been noted, was not cited in the opinion of the Statutory Court. "See Harrison's Reports, September 7, 1946. 98Harrison's Reports, September 28, 1946. ■^Hakrison's Reports, August 24, 31, 1946, "(2) Run and Clearance." 100 See the next sub-section of this article, entitled "Arbitration or Litigation." 101 15 U.S.C.A., 1,2. 102Id., sec. 18, which originated in 1914 with the Clayton Act, for example, prohibits the acquisition of the capital stock of competing corporations engaged in interstate commerce, where the effect may be to lessen competition between the corporations, "or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce." 103 See the discussion of this subject by the writer in Harrison's Reporis, April 18, 1936. 104 Paramount Famous Lasky Corf. v. United States, 29,2 U.S. 30, 44. 105This section is quoted more fully in Harrison's Reports, September 28, 1946, footnote 59. 10815 U.S.C.A., sees. 15, 26. 107U.S.C.A. 16. This section of the statute was first applied in an action affecting the motion picture industry in Momand V. Universal Film Exchanges, Inc., et al, (D.C. Mass.) 43 F. Supp. 996. 108 15 U.S.C.A. 16.