691 F.2d 885 (9th Cir. 1982), 80-5337, Stein v. United Artists Corp.

Docket Nº:80-5337.
Citation:691 F.2d 885
Party Name:Fred STEIN, an individual; Miriam Stein, an individual; Fred Stein, as assignee of Century Cinema Circuit, a California corporation, Plaintiffs-Appellants, v. UNITED ARTISTS CORPORATION, a Delaware corporation; Pacific Theaters Corporation, a California corporation, Laemmle Theaters, Inc., a California corporation; Phoenix Theaters, Inc., a Califor
Case Date:November 03, 1982
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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691 F.2d 885 (9th Cir. 1982)

Fred STEIN, an individual; Miriam Stein, an individual; Fred

Stein, as assignee of Century Cinema Circuit, a

California corporation, Plaintiffs-Appellants,

v.

UNITED ARTISTS CORPORATION, a Delaware corporation; Pacific

Theaters Corporation, a California corporation, Laemmle

Theaters, Inc., a California corporation; Phoenix Theaters,

Inc., a California corporation; Westwood Theaters, a

co-partnership; Twentieth Century-Fox Film Corporation, a

New York corporation; United Artists Theater Circuit, a

California corporation; Paramount Pictures Corporation, a

wholly owned subsidiary of Gulf & Western corporation, a

Delaware corporation; Peter Myers, an individual; Norman

Levy, an individual; Columbia Pictures Industries, Inc., a

New York corporation; Bernard Myerson, an individual,

Defendants-Appellees.

No. 80-5337.

United States Court of Appeals, Ninth Circuit

November 3, 1982

Argued and Submitted Oct. 9, 1981.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Frederick A. Lorig, Kendrick, Netter & Bennett, Los Angeles, Cal., for plaintiffs-appellants.

Peter Smoot, Robert Holtzman, Loeb & Loeb, Los Angeles, Cal., argued for defendants-appellees; Robert A. Meyer, Loeb & Loeb, Los Angeles, Cal., Judianne Jaffe, Swerdlow, Glikbarg & Shimer, Beverly Hills, Cal., Rintala, Smoot & Jaenicke, Andrew M. White, Wyman, Bautzer, Rothman, Kuchel & Silbert, Roy L. Shults, Mitchell, Silberberg & Knupp, Los Angeles, Cal., on brief.

Appeal from the United States District Court for the Central District of California.

Before KENNEDY and REINHARDT, Circuit Judges, and CRAIG, [*] District Judge.

KENNEDY, Circuit Judge:

Appellant Fred Stein was the primary shareholder and officer of Century Cinema Circuit, Inc. ("Century"), an operator of motion picture theaters in Southern California. The complaint charges various motion picture exhibitors, distributors, and individual officers with conspiring to violate the antitrust laws by discriminating against Century in the licensing of first-run films. Stein, joined by his wife in certain of his claims, sues both as assignee of Century's antitrust claims and in his individual capacity. He alleges that appellees conspired to force him to sell them half of Century's stock at less than fair market value by boycotting the company. In 1976, following the alleged activity, Century filed for and was granted a rearrangement under Chapter XI of the Bankruptcy Act. Century did not list the antitrust claim among its assets in that proceeding.

The main issues on appeal are whether Century, despite its failure to list the claim, can now enforce its antitrust action through its assignee, Stein, and whether Stein has standing on his own to challenge appellees' behavior under the antitrust laws. The district court resolved these questions against appellants, and granted appellees' motions to dismiss all counts. We find that Century cannot enforce its antitrust action without first having sought to reopen the bankruptcy proceedings or to obtain an order of abandonment from the bankruptcy court, because the claim did not revest in Century at the completion of the Chapter XI proceedings. We further hold that Stein cannot challenge appellees' anticompetitive activity as creditor or shareholder, even if the boycott of Century was intended to drive down share prices. We affirm dismissal of this action.

Stein had been an exhibitor of motion pictures since the early 1950s. In 1973, he formed Century, retaining two-thirds of its stock and transferring the remainder to his son, Robert. From November 1, 1973, to December 31, 1976, Century was engaged in operating theaters throughout Southern California and Arizona. On October 11, 1976, Century petitioned for the rearrangement of its affairs under Chapter XI of the Bankruptcy Act 1. At the end of December 1976, Century closed or disposed of all of its motion picture theaters. A plan of arrangement with Century's creditors was

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confirmed in late June 1977, calling for the liquidation of Century's remaining assets and the distribution of the cash proceeds to the creditors. The plan was completed by June 15, 1978, and the estate was closed.

The Steins filed this antitrust action in June 1979. Stein sought to proceed both individually and as assignee of Century, and his wife, Miriam, sought to proceed individually and as assignee of Robert and Carol Stein, the remaining shareholders of Century. Appellants alleged that all of the Steins had lent substantial sums to Century. They sought to recover damages as creditors and guarantors of a major portion of its indebtedness.

The appellees are five corporate motion picture exhibitors, four corporate motion picture distributors, two individuals employed by two of the distributors, and one individual alleged to have been an executive of a former owner of Century's theaters.

The complaint in general depicted a conspiracy to drive Century out of business because of its refusal to participate in an existing conspiratorial scheme for the allocation of first-run motion picture licenses among major exhibitors and distributors. Count I of the first amended complaint charged appellees with violating sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1976), and sections 3 and 4 of the Clayton Act, 15 U.S.C. §§ 14, 15 (1976) in these respects: refusing to license first-run motion pictures to Century's theaters; denying its theaters the opportunity to bid, negotiate for, or obtain first-run motion pictures; giving Century's competitors preferential treatment in bidding or negotiating for first-run motion pictures; and refusing to evaluate Century's offers on their merits and in a nondiscriminatory manner. The second count challenged the same conduct under California's antitrust laws, Cal.Bus. & Prof.Code § 16600 et seq. The third count was based on state law unfair competition, and the fourth claimed intentional interference with contractual rights and prospective advantage.

On March 3, 1980, the district court granted appellees' motion to dismiss all counts for failure to state a claim upon which relief could be granted. The court held that Century's failure to list the antitrust claim in the Chapter XI proceedings prevented the asset from vesting in Century at the conclusion of the Chapter XI proceedings. Hence Century could assign no claim. The court also held that plaintiffs lacked standing to pursue antitrust actions individually.

We reject appellants' preliminary contention that the district court erred in not treating the motion to dismiss as a motion for summary judgment. Appellants claim the trial court considered selected material outside the pleadings, but we think it plain from the record that the court did not do so. In January 1980, appellants moved to treat appellees' prior motion to dismiss as a motion for summary judgment because appellees had attached certain deposition testimony to their supplemental papers in support of the motion to dismiss. On January 8, 1980, the district court granted the motion preliminarily and permitted appellants to file an affidavit of Fred Stein, without further pleadings or discovery. At the hearing on the motion, though, the court indicated it would consider supplementary material only if the motion to dismiss under Fed.R.Civ.P. 12 was not dispositive of the case.

In the Memorandum of Decision, the court found it unnecessary to consider the supplemental material submitted by both parties. It granted the motion to dismiss. Appellants concede that the trial court, after considering the supplemental material, could have excluded it. Appellants were not entitled to present supplemental material to defend the dismissal motion. See AMFAC Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 430 & n.3 (9th Cir. 1978); Costen v. Pauline's Sportswear, Inc., 391 F.2d 81, 84 & n.2 (9th Cir. 1968).

I. Century's Unlisted Antitrust Claim

Century did not list the antitrust cause of action against appellees in the arrangement proceeding, and the claim was not brought to the attention of the bankruptcy court.

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Whether Stein can now proceed to enforce Century's antitrust claim depends on whether the cause of action revested in the bankrupt, Century, despite its failure to list the asset. Former section 70(i) of the Bankruptcy Act, 11 U.S.C. § 110(i) (1976), provided that upon the confirmation of an arrangement or plan in bankruptcy, "the title to the property dealt with shall revest in the bankrupt or debtor." The dispute on appeal centers on whether the antitrust claim can be said to have been "dealt with" in bankruptcy.

Appellant asserts that "the property dealt with" refers to all property of the bankrupt, listed or unlisted, because all assets and affairs of the debtor come under the control of the bankruptcy proceedings and bankruptcy court. Appellant attempts to bolster his interpretation by reading section 70(i) in conjunction with Bankruptcy Rule 11-38(f), which applies only to Chapter XI arrangements and which provides that a certified copy of the rearrangement plan and of the order confirming the plan "shall constitute conclusive evidence of the revesting of title to all property in the debtor." 11 U.S.C.App. Rule 11-38(f) (1976).

Stein apparently does not seek to enforce the corporate claim solely for himself, but concedes that Century's creditors may have an interest in the suit. Stein states he would proceed in custodia legis, for the benefit of all creditors. Alternatively, he suggests creditors can intervene if they choose.

Appellees contend that "property dealt with" means all property administered or listed in bankruptcy. They...

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