850 F.2d 477 (9th Cir. 1988), 86-2553, Harkins Amusement Enterprises, Inc. v. General Cinema Corp.

Docket Nº:86-2553, 86-15046 and 87-1740.
Citation:850 F.2d 477
Party Name:HARKINS AMUSEMENT ENTERPRISES, INC.; Daniel E. Harkins, individually and dba Tower Plaza Cinema I and II, Plaintiffs/Appellants, v. GENERAL CINEMA CORPORATION, Defendant, and The Harry Nace Company; United Artists Theatres, Inc.; American Multi-Cinema, Inc.; Paramount Pictures Corporation; Twentieth Century-Fox Film Corporation; Universal Film Exch
Case Date:April 06, 1988
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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850 F.2d 477 (9th Cir. 1988)

HARKINS AMUSEMENT ENTERPRISES, INC.; Daniel E. Harkins,

individually and dba Tower Plaza Cinema I and II,

Plaintiffs/Appellants,

v.

GENERAL CINEMA CORPORATION, Defendant,

and

The Harry Nace Company; United Artists Theatres, Inc.;

American Multi-Cinema, Inc.; Paramount Pictures

Corporation; Twentieth Century-Fox Film Corporation;

Universal Film Exchanges, Inc.; Warner Bros. Distributing

Corp.; Columbia Pictures Industries, Inc.; Avco Embassy

Pictures Corp.; Metro-Goldwyn-Mayer, Inc.; United Artists

Corporation; Buena Vista Distributing Co., Inc.,

Defendants/Appellees.

HARKINS AMUSEMENT ENTERPRISES, INC.; Daniel E. Harkins,

individually and dba Tower Plaza Cinema I and II,

Plaintiffs/Appellants,

v.

GENERAL CINEMA CORPORATION, Defendant,

and

The Harry Nace Company; United Artists Theatres, Inc.;

American Multi-Cinema, Inc.; United Artists

Corporation, Defendants/Appellees.

HARKINS AMUSEMENT ENTERPRISES, INC.; Daniel E. Harkins,

individually and dba Tower Plaza Cinema I and II,

Plaintiffs/Appellants,

v.

GENERAL CINEMA CORPORATION, Defendant,

and

The Harry Nace Company; American Multi-Cinema, Inc.;

United Artists Corporation, Defendants/Appellees.

Nos. 86-2553, 86-15046 and 87-1740.

United States Court of Appeals, Ninth Circuit

April 6, 1988

Argued and Submitted Sept. 16, 1987.

As Amended April 19 and July 19, 1988.

Page 478

[Copyrighted Material Omitted]

Page 479

[Copyrighted Material Omitted]

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Edwin Tobolowsky, N. Henry Simpson, Tobolowsky, Prager & Schlinger, Dallas, Tex., David N. Farren, Shimmel, Hill, Bishop & Gruender, P.C., Phoenix, Ariz., for plaintiffs-appellants.

John P. Frank, Lewis & Roca, Phoenix, Ariz., James L. Seal, Harry B. Swerdlow and Rosenfeld, Meyer & Susman, Beverly Hills, Cal., Joel Linzner, Khourie & Crew, San Francisco, Cal., David W. Dow, Mohr, Hackett, Pederson, Blakely, and Randolph, P.C., Phoenix, Ariz., for defendants-appellees.

Appeal from the United States District Court for the District of Arizona.

Before CANBY and BOOCHEVER, Circuit Judges, and IDEMAN, [*] District Judge.

BOOCHEVER, Circuit Judge:

Harkins Amusement Enterprises, Inc., and Daniel E. Harkins (Harkins) appeal district court judgments in favor of numerous antitrust defendants. This case involves an alleged agreement between certain motion picture exhibitors in the Phoenix, Arizona area regarding film licensing. Seven distributors are accused of cooperating in this conspiracy, resulting in competitive injury to Harkins, an independent exhibitor.

The United States District Court for the District of Arizona denied Harkins' request for a continuance of a partial summary judgment motion filed by the film distributors. The motion was granted on each of Harkins' claims, and a separate judgment was entered for the distributors pursuant to Fed.R.Civ.P. 54(b). The court later entered summary judgment in favor of the exhibitors.

We affirm the district court's grant of partial summary judgment to the film distributors and exhibitors on Harkins' claims of unreasonable clearances, discriminatory moveovers, illusory advances and/or guarantees, blind bidding, and shared monopoly. We reverse and remand for trial, however, Harkins' market splitting, bid rigging, and circuit-wide deals claims. We also hold that the district court did not abuse its discretion by denying Harkins' continuance request.

I. BACKGROUND

Appellant Harkins owned and operated five independent movie theatres in the Phoenix area in the 1970s. In 1977, Harkins sued nine national film distributors and seven regional exhibitors, alleging various theories of conspiracy to restrain trade and monopolization under sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2 (1982).

Phoenix and its suburbs, including Chandler, Glendale, Mesa, Paradise Valley, and Tempe constitute the relevant geographic market in this case. The relevant product markets are the distribution and indoor exhibition of high-quality, first-run motion pictures. The damage period is between 1973 and 1977.

The appellees in No. 86-2553 are film distributors Columbia Pictures Industries, De Laurentis Entertainment Group (formerly Avco Embassy), Paramount Pictures Corp., Twentieth Century Fox Film Corp., Universal City Studios, Warner Bros. Distributing Corp., and United Artists Corp. (the distributors). The appellees in Nos. 86-15046 and 87-1740 are film exhibitors American Multi-Cinema, Inc., The Harry Nace Co., and United Artists Communications, Inc. (the exhibitors). 1 The appeals were consolidated.

Harkins' suit centers on the alleged anticompetitive effects of a motion picture "split." Splits are exhibitor agreements that divide a normally competitive market by allocating pictures to particular members

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and prohibiting bidding for licensing rights to the films assigned. Exhibitors' Serv., Inc. v. American Multi-Cinema, Inc., 788 F.2d 574, 576 (9th Cir.1986); Dahl, Inc. v. Roy Cooper Co., 448 F.2d 17, 20 (9th Cir.1971). Phoenix exhibitors met regularly in the mid-1970s and divided rights to films on a picture-by-picture basis. Harkins was not a split member.

The distributors have repeatedly acknowledged the existence of the Phoenix exhibitor split. Harkins' amended complaint alleged that rather than being mere observers, the distributors "agreed to, acquiesced in, aided and abetted the Exhibitor Defendants in implementing and effectuating this 'split' arrangement." The distributors deny any participation, and argue that they--not an exhibitor such as Harkins--were victimized by the market division scheme.

Harkins alleges seven types of conspiracies in restraint of trade under section 1 of the Sherman Act. They center on a common premise: that unlawful preferential treatment granted by the distributors prevented Harkins from having a fair opportunity to compete with the split member exhibitors. In addition to an unreasonable restraint on competition resulting from licensing films according to the split, Harkins asserts that these concerted preferences included unreasonable clearances, discriminatory moveovers, bid rigging, circuit-wide deals, illusory advances and/or guarantees, and blind bidding.

This conduct also served as the basis of Harkins' endeavor to extend the monopolization prohibition of section 2 to claims of shared monopoly by the exhibitors and distributors.

In April 1979, this action was transferred by the Judicial Panel on Multidistrict Litigation to the Southern District of Texas as part of a nationwide movie antitrust case. In re Motion Picture Licensing Antitrust Litigation, 468 F.Supp. 837 (J.P.M.L.1979). Harkins' suit was one of eight consolidated by the Panel.

During the next four years, discovery on issues of a national conspiracy in the motion picture industry was conducted. In July 1983, District Judge John V. Singleton, Jr., on a motion to consolidate the cases for trial, instead remanded them to their original districts.

The clerk's record indicates that this case was not formally remanded to Arizona District Judge Walter E. Craig until late December 1983. Harkins, which admits "[t]he parties had accomplished very little discovery" of a local nature in the eighteen months between the original filing of the suit and the transfer, served document production requests in May 1984. During the next nineteen months, the parties argued by telephone and by mail regarding discovery.

The distributors filed a motion for partial summary judgment on each of Harkins' claims in October 1985. Harkins responded in late November by filing a motion to compel document production. Following a hearing before a magistrate, the parties entered into a discovery stipulation in January 1986. In March 1986, Harkins filed its opposition to the distributors' partial summary judgment motion, consisting largely of discovery from the multidistrict litigation proceedings. In the alternative, Harkins sought a continuance of the motion under Fed.R.Civ.P. 56(f) pending completion of additional local discovery.

The motions were argued before Judge Craig on April 4, 1986. Ruling from the bench, he first denied the continuance and then granted partial summary judgment to the distributors on each of Harkins' claims. Judge Craig died in June 1986, without issuing written findings of undisputed fact and conclusions of law. The case was transferred to Judge Charles L. Hardy, who entered a formal judgment pursuant to Fed.R.Civ.P. 54(b) in July based on Judge Craig's oral ruling.

Exhibitors American Multi-Cinema and United Artists filed motions for summary judgment in June 1986, shortly before the case was transferred to Judge Hardy. The Harry Nace Co. filed a similar motion in August. Judge Hardy granted the exhibitors' motions by minute order in November 1986 and entered a formal judgment in January 1987.

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II. STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo. Hernandez v. Johnston, 833 F.2d 1316, 1317 (9th Cir.1987). "Therefore ... this court sits in the same position as the district court and applies the same summary judgment test that governs the district court's decision." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987).

Under Fed.R.Civ.P. 56(c), summary judgment is proper if "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." The "materiality" of a fact is determined by the substantive law governing the claim or defense. Hernandez, 833 F.2d at 1317-18.

This court reviews a denial of a Fed.R.Civ.P...

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