Motion Picture Herald (Nov-Dec 1948)

INDUSTRY FINDS ITS WAY ALONG CONCILIATION TRAIL Lawyers Draft Arbitration "With Teeth"; Exhibition Sets Up Committees by FRED HIFT After more than 25 years experience with arbitration and conciliation, the film industry still is looking for a workable method of procedure. With both exhibitors and distributors sharply aware of the need to curtail litigation, activities along the following lines were under way this week : 1. Lawyers were hard at work, hammering out a draft of an arbitration system "with teeth in it" and covering a much broader scope than the arbitration system set under the 1940 consent decree. With the exception of Columbia, the distributors, including the "Little Three," reportedly have agreed on a new arbitration formula. 2. Conciliation talk was in the air. Both Theatre Owners of America and Allied units were busy discussing and setting up grievance committees in the field. TOA expects to have four boards working by December 15. 3. The American Arbitration Association, with only four active cases, was standing by. Few details of the new arbitration agreement, which would be embodied in any forthcoming decree, are known, but there are indications that it will increase the power of the arbitrators and that it will cover a much broader ground than its predecessor, which lasted from November, 1940, to June, 1948. To be presented to the U.S. District Court at an early date, this new arbitration formula stands to overlap in wide areas the conciliation systems evolved and publicized by the exhibitor organizations. It has been learned that the current arbitration proposal, now in final draft, would cover runs, clearances and "certain questions of discrimination brought up by the court." The AAA, with its 31 offices all over the country, would continue to be the mediation agent. The arbitrators, however, would be given broader powers and would be authorized to determine runs. Arbitrators to Be Given Much Broader Powers When, under the old system, they had to abide by historical developments when these had set a pattern, they now would be able to set new patterns themselves. Also it would be in their power to upset the dis ARBITRATION INDUSTRY FACTOR MANY YEARS Arbitration has been with the industry for many years. Prior to 1923, when the Film Boards of Trade, which included arbitration clauses in the uniform exhibition contract, began to operate under the guiding eye or the Hays Office, arbitration units were functioning in connection with activities by credit agencies. In 1929, when the first U. S. vs. Paramount suit went to trial, Judge Thomas D. Thacher threw out both the uniform exhibition contract and compulsory arbitration as a violation of the anti-trust laws. In 1933, the NRA code authority tried an arbitration system, and then, in 1940, arbitration was made part of the consent decree. Prior to the decree, arbitration had constituted an important part in several efforts of both exhibitors and distributors to arrive at a workable Fair Trade Practices Code. tributors' clearance to their own theatres. Further, the burden of proof on the reasonableness of clearances would be with the distributors where, under the old system, the exhibitors had to bear the brunt of proof for the reasonableness of their complaint. It had been suggested in court that the new system might substitute for competitive bidding. The plan also may provide arbitration of some subjects for which injunctive relief is sought by the Government. The more sweeping provisions of this new arbitration effort may, it is felt, forestall earlier complaints on the part of exhibitors that the arbitration system as it emerged from the 1940 consent decree was not powerful enough. A spokesman for the AAA this week attributed the failure of the arbitration system as constituted under the consent decree partly to exhibitors who, he said, "just didn't use it enough" and felt they could get more out of the branch manager. To support this contention he cited the fact that between 1940 and 1948 only 520 cases were filed with the AAA. Of these, 148, or 25 per cent, were in the first year of operation. Addressing the U.S. District Court recently, Judge Joseph Proskauer, representing Warner Brothers, urged the final decree embody an arbitration system "which will relieve this industry of many of its tensions." He was seconded by Whitney North Seymour, Paramount representative, and other defense counsel. John Caskey of 20thFox filed a memo with the court, proposing a nationwide system of arbitration. While the smaller companies have indi cated their willingness to go along with a new system of arbitration "providing it doesn't cost too much," Louis Frohlich, counsel for Columbia, remains adamant in his opposition to arbitration which, he says, "inevitably means compromise." Declaring himself "in love with our judicial system and the safeguard provided by litigation and the rules of evidence," Mr. Frohlich stressed that Columbia "wouldn't be forced into it." He also pointed out that exhibitors, using arbitration awards in their favor, at times turned to the courts regardless, using the arbitrator's decision as support. Only Four New Complaints Now on File with AAA The AAA, operating under a stay of the statutory court decree pertaining to the tribunal's uecision to abolish arbitration, now has 21 cases pending under the old decree. Four new cases, filed on a completely voluntary basis, have been entered since June and are active. This reluctance to avail themselves of the AAA services is thought to be the result of a "wait-and-see" attitude on the part of exhibitors. The New York District Court thought it did not have the power to continue an arbitration system which would be binding on both parties. The Supreme Court, citing the lower court's evident satisfaction with arbitration results, left the establishment of a new system to the discretion of the District Court, specifying, however, that the system ' "could not, of course, be mandatory." Arbitration of any kind, when part of a new decree, would be "voluntary" as far as exhibitors are concerned. It would become binding only once the theatre owner signs a complaint. The companies, however, would have to arbitrate any complaint. Exhibition Is Busy With Conciliation Programs While the lawyers in New York this week were busy conferring on arbitration, exhibition, mindful and vocal on the need to "keep the industry out of the courts," was going ahead with its own remedy. Conciliation was the talk of the day at exhibitor organization headquarters and at exhibitor conventions. Both the conciliation plan of TOA and that of 20th-Fox's A. W. Smith Jr., as worked out with Benjamin Berger, president of North Central Allied, attempt to reconcile differences on a local level with recourse to "headquarters" in case no satisfactory solution of a problem can be found. Both plans cover the wide scope of exhibitor grievances, but neither group's conciliation units will concern itself with the negotiation of film rentals. It will be conciliation by exhibitors for exhibitors. The conciliation plan of TOA is based on (Continued on page 22, column 1) MOTION PICTURE HERALD, NOVEMBER 27, 1948 19