Harrison's Reports (1958)

152 HARRISON'S REPORTS September 20, 1958 ANOTHER BLAST AT PHILLIPS It appears as if Louis Phillips, Paramount's general counsel, certainly set himself up as a vulnerable target when he wrote recently to Senator Hubert H. Humphrey, chairman of the Senate Small Business Subcommittee on Retailing, Distribution and Fair Trade Practices, criticizing National Allied's "white paper" and recommending that the antitrust laws be amended to combat alleged abuses by exhibitor plaintiffs and their attorneys. The latest to make a withering attack on Phillips' statements is Rube Shor, the Cincinnati exhibitor leader and former president of National Allied, who had this to say in a letter sent to the Senator under date of September 15: "Dear Senator Humphrey: "From the trade papers I have been advised of the contents of a letter to you dated August 22, 1958, from Louis Phillips, counsel for Paramount Pictures, which is at best an abusive diatribe against exhibitors and their lawyers. As is usual for him, Mr. Phillips distorts facts, perverts truth and attempts to avoid embarrassing issues. "The fact of the matter is that Mr. Phillips does not like the Antitrust Laws and never did. He has always felt that his client and the other motion picture distributors were above the Antitrust Laws, that those laws were passed only to govern lesser persons than his client and their associates. "Thus it is well known in the motion picture industry that when the famous Paramount case was instituted by the Department of Justice, Mr. Phillips took the view that the Government had no case whatever and that Paramount was as pure as the driven snow. He advised his client it had nothing to fear and that the Government case would collapse. Even after the District Court found Paramount and its co-conspirators guilty, Phillips still insisted that there was nothing to the case and is the one lawyer principally responsible for the film industry's taking an appeal. Of course, history now records that the United States Supreme Court on appeal was much more severe with the culprits than the District Court had been. Indeed had Phillips' arrogance and fool-hardy insistence upon the immunity of his client from the application of the Antitrust Laws not prevailed, divesiture would probably not have been ordered. As it turned out it was a great boon to the exhibitors that Phillips' type of egotism prevailed in the counsels of the film companies, since the result was better relief to the struggling independent exhibitors. "Furthermore, Phillips' attacks on lawyers who represent exhibitors in Antitrust suits against the film companies is laughable and reminds one of the pick-pocket who shouts 'Stop Thief in order to draw attention away from himself. The reason Mr. Phillips does not like treble damage suits is that his client has been guilty of the abuses as charged. "There is no doubt that occasionally there have been damage suits filed without justification. That, of course, is no reason for not strengthening the Antitrust Laws so as to make it easier, not more difficult for bona fide victims to be compensated for their damages. If Mr. Phillips' philosophy were to be followed just because occasionally there is an unjustified damage suit filed arising out of an alleged automobile accident, laws should be passed to make it more difficult to obtain redress for genuine claims arising out of such accidents, or because occasionally a man suing on a contract does not prove his case, nobody should be permitted to sue for breach of contract. The truth of the matter is that Mr. Phillips would like to get some kind of immunity for his client and the other film companies to protect them from having to pay the damages they have inflicted upon innocent victimized exhibitors through monopolistic and conspiratorial practices in restraint of trade, in violation of the Antitrust Laws. "The treble damage feature of the Antitrust Laws was wisely put in such laws to deter violators or those who contemplated any violation from continuing such violations or starting upon them. Unfortunately history has shown that the treble damage threat is alone not sufficient to prevent Antitrust Law violations by the film companies. The filing and prosecution of a private civil action for violation of the Antitrust Laws by a small independent exhibitor who has been victimized by a combination of the film companies and their favored circuits, is usually beyond the means of the average independent exhibitor. Such suits are very expensive and the film companies with their almost unlimited resources do their best to make it as expensive as possible for the independent. They drag out the cases through every delay known — and even some unknown — to the law. They subject the independent to all manner of harrassment and expense by way of examination, depositions, interrogatories, etc. "A good example of what I mean is the suit which my company brought against the film companies for discriminating against the Twin Drive-In Theatre in Cincinnati in favor of the RKO Circuit. Suit was filed in the Spring of 1952. By all the dilatory tactics which they could devise, this case was stalled by the film companies for over five years to the Summer of 1957, when it was finally settled. It was only then settled because the Judge had ordered it tried in the Fall of 19 57 with the warning that positively no further delays would be granted. Also before the settlement by which the film companies in effect admitted they were in the wrong, my company had been put to expense, exclusive of attorney's fees, in the neighborhood of $10,000 for traveling expense, court reporters' fees, depositions, accountants' fees, etc., not to speak of the countless hours I was taken away from my business. "If Mr. Phillips were truthful, he would admit it is not the independent exhibitors who misuse the processes of the courts in Antitrust suits against the film companies, but it is the defendants who cause delays and impose harrassment and unnecessary expenses on the plaintiffs to wear them out, and make them drop their cases or settle them to their disadvantage. "The most hypocritical aspect of all in Mr. Phillips' letter was his ranting about the ethics of some plaintiffs' counsev. Mr. Phillips is the last man in the world that should complain about any other lawyer's legal ethics, in view of his own conduct. For example, in the same suit of the Twin Drive-In Theatre against the film companies, Mr. Phillips' local counsel was Charles Sawyer, the former Secretary of Commerce. As part of the defendants' harrassing tactics, they asked for a sweeping examination by their accountants, Sargo and Stein, of the Twin Drive-In records and all affiliated company records, and even my personal records. To show that I had nothing to hide I permitted them, without a court order, to make microfilm copies of all the company's records and even my own personal income tax records, which, of course, were none of their business. This was done on the express agreement on the part of Mr. Sawyer that any information obtained from my records would be kept strictly confidential and be used only in the lawsuit, and not elsewhere. This agreement was confirmed in writing. Even without such an agreement, it of course would be highly unethical for a lawyer in a particular lawsuit to obtain such confidential information by deposition or any of the discovery processes and then use the information outside of the lawsuit. Mr. Phillips as usual, however considered himself above ethics or possibly below ethics, and too important a person to be bound by a solemn agreement, confirmed in writing. After I had permitted the microfilming of all these records, they were not used in the lawsuit at all but Mr. Phillips instead used the information thus obtained in confidence and which were required not to be revealed by rules of legal ethics and the agreement made with Mr. Sawyer, solely in an effort to embarrass me by putting a distorted version of the information in the trade papers and in one of his wild tirades at a hearing before your committee, and even distributed printed copies of his statement widely throughout the industry. "When he was called to task for such dispicable conduct, Mr. Phillips had the gall to claim that he did not know of his co-counsel, Mr. Sawyer's agreement. I wonder who he thinks would believe him but irrespective of his cocounsel's agreement, as an ethical lawyer, he would have appreciated the obligations of confidence. With his record, any talk about ethics from Mr. Phillips is ludicrous. "Mr. Phillips claims that private civil Antitrust suits against the film industries are solicited by unscrupulous lawyers. While such a thing possibly may have happened, in a very few instances, almost all such cases arise not from solicitation but from the agony of exhibitors who are being victimized by the Antitrust conspiracies of the film companies and who employ counsel unsolicited to obtain redress. I myself found it necessary on several occasions to file private Antitrust suits against the film companies to get some measure of relief, and in no instance was I ever solicited by any lawyer. "Mr. Phillips disputes the proof of the ineffectiveness of private civil Antitrust cases based on the number of cases which are not successful, claiming that their lack of success simply proves their lack of merit. This is not true. Most (Continued on inside page)