Americana Industries, Inc. v. Wometco De Puerto Rico, Inc., 76-1149

• Decision Date: 15 June 1977
• Docket Number: No. 76-1149,76-1149
• Citation: 556 F.2d 625
• Parties: 1977-1 Trade Cases 61,477 AMERICANA INDUSTRIES, INC., Plaintiff, Appellant, v. WOMETCO de PUERTO RICO, INC., et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 625

556 F.2d 625

1977-1 Trade Cases 61,477

AMERICANA INDUSTRIES, INC., Plaintiff, Appellant, v. WOMETCO de PUERTO RICO, INC., et al., Defendants, Appellees.

No. 76-1149.

United States Court of Appeals, First Circuit.

Argued Feb. 8, 1977.

Decided June 15, 1977.

Philip E. Roberts, San Juan, P. R., with whom Harry E. Woods and Baker & Woods, Hato Rey, P. R., were on brief, for plaintiff, appellant.

Jay A. Garcia Gregory, with whom Fiddler, Gonzalez & Rodriguez, San Juan, P. R., was on brief, for defendants, appellees.

Before COFFIN, Chief Judge, VAN OOSTERHOUT, Circuit Judge, ^* CAMPBELL, Circuit Judge.

LEVIN H. CAMPBELL, Circuit Judge.

We hold in this appeal that a complaint filed by a movie exhibitor against a rival exhibitor fails to set forth facts sufficient to state a claim under the antitrust laws.

Appellant Americana Industries, a Puerto Rican corporation, filed its complaint in February of 1975 against Wometco de Puerto Rico, Inc., also a Puerto Rican company, and Wometco Enterprises, Inc., a Delaware corporation with its principal place of business in Miami, Florida. The defendants were alleged to have violated sections 1, 2 and 3 of the Sherman Act, 15 U.S.C. §§ 1, 2 and 3, as well as the antitrust laws of Puerto Rico, P.R.Laws Ann. tit. 10, §§ 258, 259 and 260, and plaintiff sought treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15. Defendants filed an answer admitting some of the complained-of conduct and setting out eight affirmative defenses, including that the complaint failed to state a claim and, in any event, that the alleged illegal behavior was intrastate in nature and the federal antitrust laws could not apply.

Time passed and some pretrial discovery took place, including, on November 11, 1975, the deposition of Walter E. Senior, president of Wometco de Puerto Rico. The deposition appears not to have been filed with the district court, although it was reproduced in the appendix on appeal. Finally, in January, 1976, the defendants moved to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction, and Rule 12(b)(6) for failure to state a claim. Giving its reasons in a memorandum and order, the district court thereupon dismissed, both for lack of subject matter jurisdiction and for plaintiff's failure to state a claim. Costs were taxed against plaintiff Americana which was further ordered to pay Wometco's attorney fees in the amount of $500, the court agreeing with Wometco that the case was frivolous and amounted to impermissible harassment. Americana then took this appeal.

Read most favorably to plaintiff, the complaint alleges the following:

In August 1974, Americana entered into an agreement with Paramount Pictures for the exhibition of the film Godfather Part II at its Ponce I theater in Ponce, Puerto Rico. On and after December 31, 1974, while Americana was showing the movie at an admission price of $4 for adults and $2 for children, Wometco de Puerto Rico, Inc. (Wometco P.R.) advertised in four of its own Ponce movie theaters that Godfather II would be exhibited at its Mall-Twin theater in Mayaguez some 50 miles from Ponce, beginning on March 29, 1975, and that the admission would be $3 for adults and $1.50 for children. Upon information and belief, this advertising was done willfully and with malice aforethought, pursuant to a conspiracy between Wometco P.R. and Wometco Enterprises, with intent and design of injuring and putting Americana out of business, thus lessening competition in the exhibition of films in Ponce, Puerto Rico. Americana claims that the advertising substantially curtailed public attendance at its showings of Godfather II, to the point where the revenue was effectively destroyed, and this forced Americana to lower prices to match those advertised by Wometco P.R. Americana asserts damages in the amount of $1,000,000.

The court held that the action involved was wholly local in character and thus that the federal antitrust laws could not apply. Although the court also discussed the merits of plaintiff's claim and expressed the opinion that the activities complained of encouraged and increased competition rather than lessened it, it laid greatest stress upon its assumed "lack of jurisdiction".

We do not agree that if the alleged conduct were illegal it would not have sufficient impact upon interstate commerce to constitute a federal cause of action for violation of the Sherman Act. The business of procuring and exhibiting in Puerto Rico stateside films like Godfather II is plainly interstate commerce, as the court recognized. Were Wometco P.R.'s conduct illegally to put exhibitors like Americana out of business, thus interfering with the leasing and exhibiting of such films, there would be an appreciable adverse effect upon commerce. See Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 743, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976); Goldfarb v. Virginia State Bar, 421 U.S. 773, 785, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975); United States...