IN RE MOTION PICTURE LICENSING ANTITRUST LIT., 366.

• Citation: 468 F. Supp. 837
• Decision Date: 03 April 1979
• Docket Number: No. 366.,366.
• Parties: In re MOTION PICTURE LICENSING ANTITRUST LITIGATION.
• Court: United States Judicial Panel on Multidistrict Litigation

468 F. Supp. 837

In re MOTION PICTURE LICENSING ANTITRUST LITIGATION.

No. 366.

Judicial Panel on Multidistrict Litigation.

April 3, 1979.

Before MURRAY I. GURFEIN, Chairman, and EDWIN A. ROBSON, STANLEY A. WEIGEL, ANDREW A. CAFFREY, ROY W. HARPER, and CHARLES R. WEINER, Judges of the Panel.

OPINION AND ORDER

PER CURIAM.

I. BACKGROUND

This litigation presently consists of nine actions¹ pending in a total of seven federal districts: two each in the District of Arizona and the Southern District of Texas; and one each in the Southern District of California, the Northern District of Georgia, the Western District of Tennessee, the Middle District of Florida and the District of Utah. The complaint in each action involves alleged violations of the federal antitrust laws in connection with the distribution, licensing and exhibition of motion picture films.

Each action was filed by one or more entities that own and operate motion picture theaters (exhibitors). The principal defendants in these actions are a total of eleven motion picture producers and/or distributors (distributors). One of these distributors has been named as a defendant in each action, and five other distributors have been named as defendants in eight of the nine actions before the Panel. Four of the remaining five distributors have been named as defendants in at least two of these actions.² In addition, with only one exception (the Utah action), the complaints include certain exhibitors as defendants; a few of the exhibitor defendants are named as defendants in two or more actions.

The complaints in all nine actions allege that defendants conspired, in violation of Section 1 of the Sherman Act, unreasonably to restrain trade and commerce in the distribution, licensing and exhibition of motion picture films, and that defendants, in violation of Section 2 of the Sherman Act, conspired to, attempted to and did in fact monopolize that trade and commerce. The primary purposes of defendants' conduct, the complaints generally allege, were 1) to establish an artificially high price and/or rental rate for the licensing and exhibition of motion picture films; 2) to establish the terms and conditions for such licensing and exhibition; and 3) to eliminate or reduce competition for motion pictures distributed by the defendant distributors. In particular, the complaint in each action charges that the defendants named in that action engaged in one or more of the following allegedly illegal acts or practices: "blind-bidding" on motion picture films (requiring exhibitors to negotiate or bid for film licenses without an opportunity to see the films in advance); "move overs" (switching a motion picture from the screen to which a bid was awarded to different screens, which were not involved in the bidding process); giving preferential treatment in the awarding of licenses to large theater circuits; bid rigging or sham bidding as to motion picture licenses; fixing prices and terms of film licenses; fixing movie admission prices; "block-booking" of motion pictures (licensing or offering for license one motion picture feature or group of features on condition that an exhibitor will also license another feature or group of features released by a distributor during a given period); "splitting" (a device by which exhibitors agree among themselves that only one, or certain of them, will attempt to license any particular motion picture offered by a given distributor in a specific geographic market); unreasonable "clearances" (the contractual periods between "runs" of a film); and boycotts.

Most of the complaints allege that some of these acts or practices are prohibited under the terms of a series of consent decrees of nationwide scope and application entered as a result of United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260 (1948), and related proceedings such as United States v. Loew's, Inc., et al., 1950 CCH Trade Cases ¶ 62,573 (S.D.N.Y.).³ Most of the distributor defendants in the present litigation are subject to those decrees.

The allegations of the complaints in five actions before us (the Southern District of Texas⁴ and Arizona actions, and the California action) specifically focus on the geographic area in which plaintiffs in those actions operate theaters. The complaint in the Georgia action is not limited on its face to the area in which plaintiff in that action is located, but discovery in that action has been restricted geographically to a relatively local area by court order. A somewhat similar geographic limitation on discovery has been accomplished by stipulation in the Florida action, but at least some plaintiffs in this action presently are seeking permission to conduct additional discovery concerning "national issues." Transcript at 24. In the Tennessee action, where the complaint includes allegations of a national conspiracy, plaintiff has not to date contested defendants' confinement of their responses to plaintiff's discovery requests to particular geographic areas. Finally, the Utah action also includes allegations of a national conspiracy, and discovery in that action has proceeded on national issues.

II. PROCEEDINGS BEFORE THE PANEL

Twelve of the fourteen plaintiffs in the Florida action have moved the Panel, pursuant to 28 U.S.C. § 1407, to centralize these nine actions⁵ for coordinated or consolidated pretrial proceedings. Movants have not suggested a transferee district. Plaintiffs in the Southern District of Texas actions subsequently moved the Panel to centralize this litigation in the Southern District of Texas; these plaintiffs oppose Section 1407 transfer to any other forum. All other responding parties—which include all distributor defendants, many exhibitor defendants, the remaining two plaintiffs in the Florida action, and plaintiffs in the Georgia, Tennessee and Utah actions—oppose Section 1407 transfer.

We find that these actions involve common questions of fact and that, with the exception of the Georgia action, centralization of these actions under Section 1407 in the Southern District of Texas will best serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.

III. THE QUESTION OF TRANSFER

Opponents to transfer argue that each action before the Panel raises a multitude of individual factual issues, and that no overriding common questions of fact are involved in this litigation. The core of each complaint except one, opponents contend, is the allegation that certain exhibitors, which are in competition with the plaintiff in the limited geographic area from which plaintiff draws its patronage, conspired with certain distributors to prevent plaintiff from obtaining films by causing plaintiff's bids or offers to license films to be rejected in favor of those of competing exhibitors. Thus, opponents maintain, most of the complaints allege a separate conspiracy involving a variety of different distributor and exhibitor defendants, market areas and time periods. And although some of the complaints include sweeping allegations relating to antitrust violations outside the local area in which a plaintiff operates, as a practical matter discovery in all but one action has been almost totally limited to those local areas, opponents state.

Such disparate factual allegations and localized discovery requests are inevitable in these actions, opponents assert, given the nature of the motion picture licensing process. Arriving at the final terms upon which a film will be licensed to a particular exhibitor is a complex business calculation which depends on a distributor's estimates concerning a number of distinctly "local" factors including, inter alia, the grossing potential of a film in a given market, the age and other characteristics of the potential audience for the film, the grossing potential of specific theaters in that market for that audience, and the licensing terms offered by the operators of those theaters, opponents argue. Opponents further contend that numerous courts that have dealt with alleged antitrust violations concerning the distribution, licensing and exhibition of films (including many of the specific acts and practices enumerated on pages 838 839, supra) have held that these allegations must be resolved on the basis of local issues.

Also, opponents contend that unique questions of fact clearly predominate in the present actions because of defenses raised, or almost surely to be raised, in each action. In response to each plaintiff's contention that plaintiff was not able to license films as a result of illegal conduct, the defendants state that they will attempt to prove that any failure to obtain films was caused by legitimate business circumstances peculiar to that particular plaintiff—for example, that plaintiff was not awarded a film because plaintiff's bids or offers were inferior to bids or offers of competing theaters, or that plaintiff was not awarded films because of its theater's poor location or less desirable facilities.

Opponents deny that Section 1407 transfer would serve the convenience of the parties and witnesses or promote the just and efficient conduct of these actions.⁶ While some opponents admit that a few of the witnesses for the distributor defendants might be called to give depositions in more than one action, these opponents maintain that, in the light of the local nature of the issues, even testimony of the same witness about marketing films in one city will have little or no relevance to marketing practices in another city. If there is any such relevance, these opponents state, duplication can be avoided by filing notices of a particular deposition in all actions. At any rate, all opponents contend, because the licensing of motion pictures is done market by market, the vast majority of discovery concerns witnesses and factual issues that vary widely from market to market. Even where a party is a...