346 U.S. 537 (1954), 19, Theatre Enterprises, Inc. v. Paramount Film Distributing Corp.

Docket Nº:No.19
Citation:346 U.S. 537, 74 S.Ct. 257, 98 L.Ed. 273
Party Name:Theatre Enterprises, Inc. v. Paramount Film Distributing Corp.
Case Date:January 04, 1954
Court:United States Supreme Court

Page 537

346 U.S. 537 (1954)

74 S.Ct. 257, 98 L.Ed. 273

Theatre Enterprises, Inc.


Paramount Film Distributing Corp.


United States Supreme Court

Jan. 4, 1954

Argued November 30, December 1, 1953




Petitioner brought suit in a Federal District Court under the Clayton Act for treble damages and an injunction, alleging that respondent motion picture producers and distributors had violated the antitrust laws by conspiring to restrict "first-run" pictures to downtown Baltimore theaters, thus confining petitioner's suburban theater to subsequent runs and unreasonable "clearances." There was no direct evidence of illegal agreement between respondents, and the jury returned a general verdict for respondents.


1. Upon the evidence in the case, the trial judge properly refused to direct a verdict for petitioner and properly submitted the issue of conspiracy to the jury. Pp. 539-542.

(a) Proof of parallel business behavior does not conclusively establish agreement, nor does such behavior itself constitute a Sherman Act offense. Pp. 540-541.

(b) The decrees in United States v. Paramount Pictures Inc., 334 U.S. 131, alone or in conjunction with petitioner's other proof, formed no basis for a directed verdict for petitioner, since those decrees were only prima facie evidence of a conspiracy covering the area and existing during the period there involved, and since petitioner's allegation of conspiracy was factually contested. Pp. 541-542.

2. In his instructions to the jury, the trial judge did not fail to give sufficient weight to the decrees in the Paramount case. Pp. 542-544.

(a) The instructions in this connection were not so superficial and so limited as to deprive petitioner of any of the benefits conferred upon it by § 5 of the Clayton Act. Pp. 542-543.

(b) It was not error for the trial judge to instruct the jury, in effect, that the Paramount decrees alone could not support a recovery by petitioner, and that additional evidence was required to relate the prior Paramount conspiracy to Baltimore and to the claimed damage period. Pp. 543-544.

201 F.2d 306 affirmed.

Page 538

CLARK, J., lead opinion

MR. JUSTICE CLARK delivered the opinion of the Court.

Petitioner brought this suit for treble damages and an injunction under §§ 4 and 16 of the Clayton Act,1 alleging that respondent motion picture producers and distributors2 had violated the antitrust laws3 by conspiring to restrict "first-run"4 pictures to downtown Baltimore theaters, thus confining its suburban theater to subsequent runs and unreasonable "clearances."5 After hearing

Page 539

the evidence a jury returned a general verdict for respondents. The Court of Appeals for the Fourth Circuit affirmed the judgment based on the verdict. 201 F.2d 306. We granted certiorari. 345 U.S. 963.

Petitioner now urges, as it did in the Court of Appeals, that the trial judge should have directed a verdict in its favor and submitted to the jury only the question of the amount of damages. Alternatively, petitioner claims that the trial judge erred by inadequately instructing the jury as to the scope and effect of the decrees in United States v. Paramount Pictures, Inc., the Government's prior equity suit against respondents.6 We think both contentions are untenable.

The opinion of the Court of Appeals [74 S.Ct. 259] contains a complete summary of the evidence presented to the jury. We need not recite that evidence again. It is sufficient to note that petitioner owns and operates the Crest Theater, located in a neighborhood shopping district some six miles from the downtown shopping center in Baltimore, Maryland. The Crest, possessing the most modern improvements and appointments, opened on February 26, 1949. Before and after the opening, petitioner, through its president, repeatedly sought to obtain first-run features for the theater. Petitioner approached each respondent separately, initially requesting exclusive first-runs, later asking for first-runs on a "day and date" basis.7 But respondents uniformly rebuffed petitioner's efforts and adhered to an established policy of restricting first-runs in Baltimore to the eight downtown theaters. Admittedly there is no direct evidence of illegal agreement

Page 540

between the respondents, and no conspiracy is charged as to the independent exhibitors in Baltimore, who account for 63% of first-run exhibitions. The various respondents advanced much the same reasons for denying petitioner's offers. Among other reasons, they asserted that day and date first-runs are normally granted only to noncompeting theaters. Since the Crest is in"substantial competition" with the downtown theaters, a day and date arrangement would be economically unfeasible. And even if respondents wished to grant petitioner such a license, no downtown exhibitor would waive his clearance rights over the Crest and agree to a simultaneous showing. As a result, if petitioner were to receive first-runs, the license would have to be an exclusive one. However, an exclusive license would be economically unsound, because the Crest is a suburban theater, located in a small shopping center, and served by limited public transportation facilities; and, with a drawing area of less than one-tenth that of a downtown theater, it cannot compare with those easily accessible theaters in the power to draw patrons. Hence, the downtown theaters offer far greater opportunities for the widespread advertisement and exploitation of newly released features which is thought necessary to maximize the overall return from subsequent runs, as well as first-runs. The respondents, in the light of these conditions, attacked the guaranteed offers of petitioner, one of which occurred during the trial, as not being made in good faith. Respondents Loew's and Warner refused petitioner an exclusive license because they owned the three downtown theaters receiving their first-run product.

The crucial question is whether respondents' conduct toward petitioner stemmed from independent decision or from an agreement, tacit or express. To be sure, business behavior is admissible circumstantial evidence from which the factfinder may infer agreement. Interstate Circuit,

Page 541

Inc. v. United States, 306 U.S. 208 (1939); United States v. Masonite Corp., 316 U.S. 265 (1942); United States v. Bausch & Lomb Optical Co., 321 U.S. 707 (1944); American Tobacco Co. v. United States, 328 U.S. 781 (1946); United States v. Paramount Pictures Inc., 334 U.S. 131 (1948). But this Court has never held that proof of parallel business behavior conclusively establishes agreement or, phrased differently, that such behavior itself constitutes a Sherman Act offense. Circumstantial evidence of consciously parallel behavior may have made heavy inroads into the traditional judicial attitude toward [74 S.Ct....

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