Motion Picture Herald (Mar-Apr 1940)

14 MOTION P-ICTURE HERALD April 6, 1940 U.S. CHARGES COERCION IN NEW BILL (Continued from preceding page, column 1) might be brought by exhibitors seeking to be bought off, by the provision that arbitration costs can be assessed against either party. Government Must Open Files If Demanded A delay in the scheduled start of trial of the Government's "key" New York anti-trust suit on May 1st appeared inevitable this week as the Government experienced its second consecutive setback in pre-trial skirmishes on Monday before Henry W. Goddard, federal judge, who will try the case. Judge Goddard, in the federal district court. New York, directed the Government to provide the defendant film companies with detailed information and to "open its files" in Washington, if necessary, to defense counsel. Paul Williams, trial lawyer for the Government, in response to the court ruling, said that he would comply with these instructions by Friday. His statement was made after Judge Goddard had said that the Government had not complied with a stipulation in which it had promised to provide details of acts called discriminatory, in addition to the names of witnesses. The court session afforded a preview of the industry's "million dollar" legal battery. Joseph Proskauer of the law firm of Proskauer, Rose and Paskus, and one of New York's outstanding corporation lawyers, made his first appearance in the case as counsel for Warners, having been retained only the day before. With him was Robert W. Perkins, Warner general counsel. Also on hand were Thomas D. Thacher, former U. S. solicitor general, of counsel for Paramount. Appearing with him were A. C. Bickford of the Simpson, Thacher & Bartlett law firm; Austin C. Keough, Paramount general counsel, and Louis Phillips of the home office legal staff. Colonel William J. Donovan of Donovan, Newton, Leisure & Lumbard, appeared for RKO with John Howley of the same firm. Monroe Goldwater of Goldwater & Flynn represented Keith-Albee-Orpheum. John W. Davis, chief defense counsel for Loew's-M-G-M ; Louis Frohlich of Schwartz & Frohlich, Columbia counsel ; John Caskey of Dwight, Harris, Koegle & Caskey, 20th Century-Fox counsel, and Benjamin Pepper of O'Brien, Driscoll & Raftery, United Artists and Universal counsel, were among the other legal luminaries on hand. In the course of the Friday court argument Mr. Williams admitted that the Government lacked detailed information as to monopoly claims in the production field. No investigation had been made of the situation in production since 1936, Mr. Williams said, and reports from Government agents dating from that year did not supply the Department of Justice with more than a general statement of conditions. The Government was charged with prosecuting the suit without sufficient evidence to back its complaint after Mr. Williams had conceded that his information was limited. Unless the Department of Justice comes forward with detailed evidence of anti-trust violations in the production field, the majors will apply for an order dismissing charges of discrimination in production set forth by the complaint, attorneys told Judge Goddard. Questioned by Judge Mr. Williams was questioned by the judge for reasons^ for agreeing to furnish detailed information if it did not have the information available. Mr. Williams explained that the Government always had maintained that it was BAIL DENIED BIOFF PENDING RULING The Illinois supreme court on Tuesday denied the petition of Willie Bioff, studio union leader, for a writ of supersedeas and bail to allow him freedom pending decision to renew an appeal court ruling in 1922, which affirmed a Chicago jail sentence. Bioff had been free on bond to the lower court, after extradiction from California. In St. Louis John P. "Big" Nick, deposed head of the city's projectionists' Local 143, and Clyde Weston, its deposed business agent, have been denied a review by the state supreme court, of a recent decision by Ernest Oakley, circuit judge, permanently enjoining them from interfering with, or controlling, the union. bound to supply only those details of which it had personal knowledge. Mr. Williams expressed willingness to open the Government's files in Washington to defense attorneys "if his superior approved." Mr. Williams made this offer to prove his contention that he was prepared to give the majors all available information. In addition, attorneys took up the question of a pre-trial conference to simplify the issues and effectively to shorten the trial. Majors' counsel criticized the proposed admissions which the Government has asked the defendants to concede. Cites Basic Dispute Mr. Thacher, spokesman for the defendants, said that it was "utterly impossible" for the defendants to agree to a major part of the Government's proposals since there was a basic dispute as to definitions and the history of the industry. Columbia would not concede that it was anything but an independent producer, Mr. Frohlich said. In discussing the pre-trial conference, Mr. Williams said that the Government was attacking the fundamental conditions in the industry. It was the control of production, exhibition and distribution by the majors that the Government claimed was in violation of the Sherman antitrust act, he said. As a result, the industry was not "open and competitive," he added. Mr. Thacher, in reply, said that the defendants for the time being would withhold their hand but that they were prepared to prove on trial that any so-called discrimination was "strictly lawful." Another reason why the trial may be delayed is that Mr. Davis and Ralph Harris, Twentieth Century-Fox attorney, are now engaged in the trial of a suit in the New York supreme court against a number of oil companies. A third reason, and considered probably the strongest, is the settlement discussion now taking place in Washington. U. S. Charges Coercion In More Trust Answers The Government on Monday filed a second supplemental bill of particulars in its "key" New York trust suit, in the U. S. district court in New York in which it listed additional instances of alleged coercive acquisitions of theatres and of discriminatory selling practices. The bill itemized 149 theatres in which the defendants are charged with obtaining an interest in 103 listed instances by refusing to sell product to the independent owner or threatening to open rival houses. Details of dates and methods are set forth. Names of the theatres appear in other columns. A list of 68 instances in which "major distributors, including Columbia, permitted an exhibitor to overbuy motion pictures" also is annexed to the bill. In 28 instances Twentieth Century-Fox theatres were permitted to overbuy, the bill claimed. Paramount followed with 24 listings, then Warner Brothers with eight and RKO and Loew's with one each. The balance were independent houses. Columbia received special attention in the Government statement. The bill detailed five instances in which the company is claimed to have prohibited the exhibition of its pictures as part of double bill and 38 examples where the company is claimed to restricted admission prices in houses to which it sold product. Film Officials To Be Questioned by U. S. William Kupper, western, and William Suss i man, eastern, sales managers of Twentieth Century-Fox, were scheduled for questioning Wednesday, but the hearing was postponed due to another court engagement of John Caskey, attorney. Abe Montague, sales head of Columbia, was to be questioned before the weekend. Government attorneys said this week that efforts were being made to arrange for the appearance of Adolph Zukor, chairman of the , board of Paramount, and Darryl F. Zanuck, production chief for Twentieth Century-Fox. Neil F. Agnew, vice-president of Paramount in charge of sales, last Thursday wound up his i testimony by describing negotiations of his company for first run sales in the Governments list of 36 key cities. Most of Paramount' s first run accounts have remained unchanged for a period of years, Mr. Agnew said. $16,000,000 Loew Indebtedness Listed Loew's, Inc., disclosed a fixed indebtedness of $16,081,000 in answers to the Government's • New York trust suit interrogatories last week. The replies also said the company had no : current outstanding loans. Out of 4,000,000 ; authorized shares of Loew common stock, ! 1,665,713 shares are outstanding, the company t said. In addition, 136,722 shares of $6.50 cumulative preferred stock have been issued, the answers disclosed. Fixed indebtedness is divided into two cate . gories. Listed are $12,331,000 in 3]/2 per cent : sinking fund debentures maturing in 1946 and which will be purchased or redeemed by a sinking fund created by semi-annual deposits of $375,000. Notes totaling $3,750,000 at 2M per cent 1 maturing in 1944, payable at $375,000 annually f from Feb. 1, 1940 constitute the remaining part | of the indebtedness, the answer said. U. S. Will Answer Columbia Questions _ The Government will answer seven of Columbia's ten separate interrogatories in the New York suit, it was announced Monday after a conference between Louis D. Frohlich, Columbia counsel, and William P. Farnsworth, special attorney for the Department of Justice. The seven answers will be in addition to the set of consolidated answers furnished all defendants by the Government.