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Arbitration in the Motion Picture Industry
Arbitration — Compulsory Arbitration Clause in Contract Subject of Government Investigation. In 1928, representatives of the Motion Picture Producers and Distributors of America, Incorporated, and of the various exhibitor associations, agreed upon a New Standard Exhibition Contract, which contained a clause that waived the right of trial by jury in favor of compulsory arbitration for the settlement of trade disputes. In the same year the Federal Department of Justice investigated the arbitration agreement, contending that compulsory arbitration was forced upon the exhibitors without their consent ; that certain provisions of the contract were unfair to independent exhibitors; and that the system was in contravention to the law.
(1928)
In 1928, representatives of the Motion Picture Producers and Distributors of America, Incorporated, and of the various exhibitor associations agreed upon a new Standard Exhibition Contract, a part of which was a clause that waived the right of trial by jury in favor of compulsory arbitration for the settlement of trade disputes. This contract had been preceded by two other contracts, one adopted in 1922 and one in 1926, both of which had contained provisions for compulsory arbitration. In 1928, the whole arbitration structure erected in this industry was attacked by the Federal Department of Justice,1 which contended that the 10 distributors2 who controlled 98% of the domestic film supply had effected a restraint of trade through the enforced use of the New Standard Exhibition Contract and the arbitration clause attached thereto. The suit was filed in the spring of 1929, against 32 Film Boards of Trade, against the Motion Picture Producers
1 Senator Smith W. Brookhart of Iowa had introduced into Congress a revision of a former bill that sought to regulate certain aspects of motion picture distribution. The revised bill included a provision restricting arbitration as then practiced. See United States of America, Petitioner v. Paramount Famous Lasky Corporation, et at., Defendants, in District Court of United States for Southern District of New York, in Equity No. 45-100.
2 Paramount Famous Lasky Corporation, Metro-Goldwyn-Mayer Pictures Corporation, First National Pictures, Incorporated, Universal Pictures Corporation, Fox Film Corporation, Pathe Exchange, Incorporated, FBO Productions, Incorporated, Warner Bros. Pictures, Inc., United Artists Corporation, and Educational Film Exchanges, Incorporated.
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