Motion Picture Herald (Nov-Dec 1944)

EXPECTING 12,000 CASES ARBITRATION HAS 392 Its Continuance, However, Seen Sole Alternative to Court Battles by BILL FORMBY Despite the fact that arbitration has been an inconspicuous factor in the motion picture industry for the past year, its friends are predictinga bright future for it. They base the forecast on the considerable contention that it constitutes the only effective alternative to expensive and disturbing litigation. The comatose condition of arbitration is indicated in the fact that only 45 complaints were filed in the twelve months from December 1, 1943, to December 1, 1944. A total of 392 cases were lodged with local tribunals in the four years of operation. The set-up, arranged under the terms of the Consent Decree by the distributors and the American Arbitration Association with the approval of the Federal court, anticipated, and was geared to care for, a total of 3,000 complaints a year — which would be 12,000 by now. Activity Ranges from One To Sixty-Three Cases The margin between prediction and performance, therefore, has produced a lot of spare time for tribunal clerks and their secretaries. The activity ranges from the one lone complaint in the Seattle tribunal, which was settled and withdrawn, to the 63 cases brought before the New York board. In most of the tribunals the personnel have pursued normal business hours, hopefully making their services available for any exhibitor sufficiently aggrieved to appeal for relief. In some of the boards, the Association has maintained only part-time staffs. In others, especially Boston, Detroit, Los Angeles, Philadelphia and Washington, they have been partially occupied by complaints from other industries. With the permission of the distributors, the facilities of these offices have been made available for labor arbitration at hours not conflicting with their original motion picture function. Proponents of the continuance of the system point out that both sides of the. Government's anti-trust suit suggest a more vital role. The Department of Justice in its petition for modification of the Decree urged extension of arbitration in scope and function. The distributors in their final draft of concessions for the same purpose asked that arbitration be expanded in scope and simplified in procedure. ' Awards Have Been Fewer But More Important Although there have been fewer awards than were originally expected, they have been important. They have established new clearance provisions, caused modification of product contracts, designated theatre runs and settled other forms of disputes in widely scattered situations. It would be a difficult problem, the reasoning goes, to reach early adjustments in these cases. Failure to do this might produce court action more costly in the long run than continued support of the tribunals. Theatre showmen who have won such awards would be reluctant to give up their advantages. LESS THAN 100 CASES YEARLY AVERAGE The number of arbitration cases filed with the American Arbitration Association tribunals during 1944 was less than one-third the total filed in 1941, the initial year for the system in the industry. Cases filed In 1941 numbered 148. For 1942 the figure was I 16, with 83 in 1943 and 45 in 1944. The record for each tribunal over the fouryear period follows: Aibany 70 Mi/waufcee 6 Atlanta 3 Minneapolis 9 Boston 41 New Haven 9 Buffalo 28 New Orleans 9 Charlotte 3 New York 63 Chicago 33 Oklahoma City ... . 10 Cincinnati 73 Omaha 3 Cleveland 9 Philadelphia 24 Dallas 72 Pittsburgh 3 Denver 3 Portland lOre.l .. . 3 Oes Moines 4 San Francisco 6 Detroit 17 Salt Lake City 2 Indianapolis 6 Seattle 7 Kansas City 5 St. Louis 79 Los i4nge/es 77 Washington 77 Memphis 4 TOTAL 392 Losers, for the most part affiliated theatres and distributors, would be disinclined to continue the enforced concessions. This could spawn scores of controversies at a time distributor legal and executive talent is concentrating on the anti-trust suit or organizing operating detail under a new decree. This is the sort of situation the industry obviously would wish to avoid. Viewpoints Divided on Success of Arbitration There is a division of opinion on whether arbitration has been successful. One side holds that the delay and cost have been out of all proportion to the benefits ; that it has been too narrow in scope and complicated in procedure to afford any substantial relief to independent theatre showmen generally; that the small number of cases testifies to its ineffectiveness. The other side contends that any exhibitor with a good case has been provided with an avenue for prompt and low-cost relief; that the very existence of arbitration has caused voluntary adjustments that otherwise might have reached the courts. It argues that the small number of cases is testimony that the system is functioning satisfactorily. Whether arbitration has been a successful experiment or not, it has been an expensive one for the distributors. The system has cost the five Decree-bound companies — Loew's, Paramount, RKO Radio, 20th Century-Fox and Warner Bros. — approximately $1,100,000 for the four years of its operation. For the first three years, the annual appropriation was $285,000 for operation, plus a contingency fund of $25,000. The distributors have received a total of $3,920, representing the filing fee of $10 per case, the only revenue credited to the people who pay the bill. At the expiration of the Decree's formal three-year test period last November, the distributors did not make a formal appropriation for the item of arbil tion because negotiations were proceeding modification of the Decree. Since that t. they have been paying $25,000 each month support the system. Legal opinion, even after more than a y of study, is divided on the question of whetf the arbitration tribunals must be maintaii while negotiations are continuing for a mc fication of the decree. The Government c^ tended last autumn that the main provisi( of the document continued in effect after * expiration of the three-year test period until court had approved a new decree or the aii trust trial was reinstated. Rather than taki' chance, the distributors decided to support i, system on a month-to-month basis. [ Association Proceeding on Belief Structure Is Permanent I Meanwhile, the American Arbitration / sociation is proceeding on the assumption permanency. It is renewing leases as lai lords demand action in any of the 31 tribun serving the exchange area. It is, therefo prepared to stay in the business if it is asked do so. If it is not, some of the offices c be utilized for arbitration in other industri Many of the offices are housed in municij or public buildings and are not a proble Others can be sub-leased without difficulty. The approach to out-of-court adjustments differences is not a new experiment in the i dustry. At least two major attempts have bej made in the past. Clause 18 of the Standal Exhibition Contract which, after a four-mod trial period, was ratified October 5, 1928, pr vided for arbitration. That one had teeth in | Based on the Rules of Arbitration filed wi; the American Arbitration Association on M; 1, 1928, it was authorized by the signatures j the contract committee appointed at the 19J Motion Picture Trade Practice Conferenc and was a part of the contract. Exhibito' could refuse to arbitrate, or they could refu to abide by the award of an arbitration boar In the former instance, distributors could d mand up to $500 on each contract as a securi deposit. If the exhibitor failed to satisfy -tl deposit demands, all distributors could di continue service and cancel his contracts, an exhibitor refused to abide by the decision < the board, the distributors could demand tl deposit and satisfaction of the judgment c pain of loss of service and contract. Boards Were Outlawed \ By Thacher in 1929 Ruling that the demand for deposits and tl refusal to serve exhibitors who balked at arb tration awards or declined to employ arbitr; tion constituted compulsion, Federal Jud^ Thomas J. Thacher on October 15, 1929, ou lawed the boards. He declared that "the sy: tem of compulsory arbitration has been ( great advantage to distributors and exhibitoi alike." He declared, however, that "the ac mitted gain to the industry as a whole, cann( compensate in the eyes of the Sherman ant trust law a sacrifice of the rights of the ir dividual." Arbitration was a feature of the Code < Fair Competition for the Motion Picture Ii dustry approved November 27, 1933, by Pres dent Roosevelt under authority of the Natioi (Continued on page 19, column 3) 14 MOTION PICTURE HERALD, DECEMBER 23, 19-*