Fanchon & Marco v. Paramount Pictures

• Decision Date: 17 August 1951
• Docket Number: No. 11572.,11572.
• Citation: 100 F. Supp. 84
• Court: U.S. District Court — Southern District of California
• Parties: FANCHON & MARCO v. PARAMOUNT PICTURES, Inc. et al.

100 F. Supp. 84

FANCHON & MARCO v. PARAMOUNT PICTURES, Inc. et al.

No. 11572.

United States District Court S. D. California, Central Division.

August 17, 1951.

Pacht, Tannenbaum & Ross, Bernard Reich and Robert I. Weil, Beverly Hills, Cal., for plaintiffs.

O'Melveny & Myers, Homer I. Mitchell and Philip F. Westbrook, Jr., Los Angeles, Cal., for defendants Paramount Pictures, Inc. and others.

Newlin, Holley, Tackabury & Johnston, Frank R. Johnston and Hudson B. Cox, Los Angeles, Cal., for defendants Twentieth Century-Fox Film Corp. and others.

Loeb & Loeb and Herman F. Selvin, Los Angeles, Cal., for defendants Loew's, Inc., and others.

YANKWICH, District Judge.

Action for treble damages, instituted by Fanchon & Marco, Inc., a California corporation, with its principal place of business in Los Angeles, California, where it has operated since August 10, 1949, the Baldwin Theatre at 3741 La Brea Boulevard. The Baldwin is a modern building erected prior to August 10, 1949, seats approximately 1,800 persons and has adequate private and other parking facilities.

The complaint alleges that ever since the completion of the Baldwin, the plaintiff has been ready, willing and able to exhibit "the best" motion pictures at the earliest dates, and to operate as a "first-run" motion picture theatre. Upon the ground that the defendants have conspired to deprive the plaintiff of access to such pictures, in violation of Sections 1 and 2 of the Sherman Anti-Trust Act¹, treble damages are sought in the sum of $300,000, attorney's fees and costs.²

I The Conspiracy Charged

Through dismissals, the number of defendants now remaining in the case has been reduced. We identify them briefly.

Paramount Pictures, Inc., a New York corporation, is engaged in producing, distributing and exhibiting motion pictures, either directly or through subsidiary or associated companies, in various parts of the United States, including Los Angeles and San Diego, California, and in foreign countries.

Paramount Film Distributing Corporation, a Delaware corporation, and a wholly-owned subsidiary of Paramount Pictures, Inc., is engaged in distributing motion pictures in various parts of the United States, including Los Angeles and San Diego, California, and in foreign countries.

Loew's Inc., a Delaware corporation, is engaged in producing, distributing, and exhibiting motion pictures, either directly or through subsidiary or associated companies, in various parts of the United States, including Los Angeles and San Diego, California, and in foreign countries.

Universal Pictures Company, Inc., a Delaware corporation, prior to May 25, 1943, was a subsidiary controlled by Universal Corporation, which also was a Delaware corporation engaged in producing and distributing motion pictures in various parts of the United States, including Los Angeles and San Diego, California, and in foreign countries. On May 25, 1943, the two corporations were merged under the name of Universal Pictures, Inc.

Universal Film Exchanges, Inc., a wholly-owned subsidiary of Universal Pictures, Inc., or Universal Corporation, is a New York corporation, engaged in distributing motion pictures in various parts of the United States, including Los Angeles and San Diego, California, and in foreign countries.

United Artists Corporation, a Delaware corporation, is engaged in the distribution of motion pictures as above indicated as to other distributing corporations.

Twentieth Century-Fox Film Corporation, a New York corporation, is engaged in producing, distributing and exhibiting motion pictures in the manner indicated as to other corporations.

National Theatres Corporation, a subsidiary controlled by Twentieth Century-Fox Film Corporation, is a Delaware corporation, with a place of business at 1609 West Washington Boulevard, Los Angeles, California, engaged in exhibiting motion pictures, either directly or through associated corporations, in various parts of the United States, and more particularly in several of the Western States, including California, and the cities of Los Angeles and San Diego.

National Theatres Amusement Company, Inc., a Delaware corporation, is engaged in exhibiting motion pictures in various parts of the United States, and more particularly in several of the Western States, including California and the cities of Los Angeles and San Diego.

Fox West Coast Theatres Corporation, a wholly-owned subsidiary of National Theatres Corporation, is a California corporation, with its principal place of business at 1609 West Washington Boulevard, Los Angeles, California, engaged in exhibiting motion pictures in various parts of the United States, and more particularly in several of the Western States, including California, and the cities of Los Angeles and San Diego.

All the defendants before the court and those against whom the action was dismissed, are engaged in the production and/or distribution of motion pictures.

During the trial, the defendants Fox West Coast Theatres, National Theatres Corporation and National Theatres Amusement Company, Inc., were referred to as Fox West Coast. Directly or through subsidiary corporations, they own control and are affiliated with some 250 theatres in Los Angeles and vicinity.

The complaint charges that the defendants for many years past combined and conspired with each other to restrain and monopolize trade and commerce, and have, in effect, unreasonably restrained and monopolized trade and commerce in the production, distribution and exhibition of motion pictures in the United States, including California and the cities of Los Aogeles and San Diego and vicinity.

The acts of the defendants by which the plaintiff claims to have been injured in its business are stated in this manner:

(a) Refused to license, sell or furnish motion pictures to the plaintiff for exhibition on a first-run basis, and to permit the plaintiff to compete for such run in open and fair competition with other theatres.

(b) Arbitrarily fixed the run, protection or clearance (the time which elapses between runs of the same picture in different theatres) of motion pictures in favor of other theatres, including Fox West Coast, and in discrimination against the plaintiff and refusing to permit the plaintiff to compete for play dates in open and fair competition with other theatres or the exhibitor defendants.

(c) Refused to license, sell and furnish motion pictures to the plaintiff on any other basis than for exhibition 21 or more days after they had first been exhibited first-run in Los Angeles.

(d) Refused to permit the plaintiff to compete for such pictures as to all terms of licensing on a picture-by-picture, theatre-by-theatre basis in open and fair competition with other theatres.

(e) Favored Fox West Coast and other exhibitor-defendants and discriminated against the plaintiff with respect to the terms of license of motion pictures, including selection, run and clearance, designation of play dates, rentals, charges, allowances, price, road show engagements, classification of films and other conditions and privileges in connection with exhibition of motion pictures.

It is the plaintiff's claim that these practices have resulted in illegal restraints which have impaired, injured and damaged them, and that the injury and damage would continue as long as the practices continue. For this reason, the plaintiff seeks injunctive relief against the continuance of these illegal acts, in addition to the damages already referred to.

II The Treble-Damage Action

Having had occasion very recently to discuss in comprehensive opinions the scope and object of the anti-trust statutes³, it will not be necessary to discuss in detail the philosophy behind them, the aim of which is to maintain our economy competitive. There has been much speculation among economists and writers as to whether the type of competition envisaged by the authors of the Sherman Act conforms to the pattern which our industrial development has taken.⁴

The treble-damage action was intended not merely to redress injury to an individual through the prohibited practices, but to aid in achieving the broad social object of the statute.⁵ In order to establish a right to recover, the plaintiff in such action must show (a) a conspiracy to monopolize or restrain interstate commerce, and (b) injury to his business by such acts.⁶ If the prohibited acts which have damaged him have been established in a judgment or decree obtained by the Government in a criminal prosecution or an equity proceeding under the anti-trust statutes, the plaintiff may, in aid of his cause, rely upon such judgment or decree, in proving the existence of the prohibited acts. The law specifically provides that such judgment or decree "shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against such defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto".⁷

The Supreme Court has very recently given us an authoritative interpretation of the meaning of this clause.⁸ Speaking of the effect to be given to a judgment obtained by the Government in a criminal prosecution, the Court said: "To establish their prima facie case it therefore was necessary for petitioners only to introduce, in addition to the criminal judgment, evidence of the impact of the conspiracy on them, such as the cancellation of their franchises and the purpose of General Motors in cancelling them, and evidence of any resulting damages."⁹

The plaintiff in the case before us does not rely solely upon the decree entered in the Paramount case.¹⁰ It offered, in addition, evidence relating to the practices obtaining in motion picture distribution for a long period of time dating back of 1920. In the main, however, so far as the "impact" of these practices on the plaintiff are concerned, they amount to the refusal to license the...