Bordonaro Bros. Theatres v. Paramount Pictures

• Decision Date: 09 August 1949
• Docket Number: Docket 21160.,No. 227,227
• Citation: Bordonaro Bros. Theatres v. Paramount Pictures, 176 F.2d 594 (2nd Cir. 1949)
• Parties: BORDONARO BROS. THEATRES, Inc., v. PARAMOUNT PICTURES, Inc., et al.
• Court: U.S. Court of Appeals — Second Circuit

176 F.2d 594 (1949)

BORDONARO BROS. THEATRES, Inc., v. PARAMOUNT PICTURES, Inc., et al.

No. 227, Docket 21160.

United States Court of Appeals Second Circuit.

Argued May 12, 1949.

Decided August 9, 1949.

Frank G. Raichle, of Buffalo, N. Y. (Raichle, Tucker & Moore and James O. Moore, Jr., all of Buffalo, N. Y., on the brief), for Paramount Pictures, Inc., and Warner Bros. Circuit Management Corporation, defendants-appellants.

F. T. Anderson, of Philadelphia, Pa. (Gray, Anderson, Schaffer & Rome, of Philadelphia, Pa., and Skadden, Arps, Slate & Lyon, of New York City, on the brief), for Bordonaro Bros. Theatres, Inc., plaintiff-appellee.

Sidney B. Pfeifer, of Buffalo, N. Y., for RKO Radio Pictures, Inc., defendant-appellee.

Before CHASE, CLARK, and DOBIE, Circuit Judges.

CLARK, Circuit Judge.

This is a treble-damage action under the antitrust laws, 15 U.S.C.A. §§ 1, 2, 15, by an independent motion picture exhibitor brought originally against thirteen defendants, including major companies engaged, with their subsidiaries and affiliates, in one or more of the various phases of the production, distribution, and exhibition of motion pictures. It comes in the wake of the recent decision of the United States Supreme Court upholding lower court findings of a nationwide conspiracy to restrain competition in and to monopolize the distribution and exhibition of motion pictures by the named defendants. United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260; and see also Schine Chain Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245; United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236. The central issue here, as in our recent case of Fifth and Walnut, Inc. v. Loew's Inc., 2 Cir., 176 F.2d 587, is whether the admitted inability of plaintiffs to obtain first-run¹ films for their theatre sprang from a conspiracy to exclude them from the first-run field or whether it was the natural result of independent business judgments as to the relative value of their exhibition facilities.

Since 1922 the City of Olean, New York, has been offered its motion picture fare in two first-run theatres, the Palace and the Haven. A second-run theatre, known as the Gem, and later as the State, is also available. The Palace theatre has been owned and operated by the Bordonaro family, first as a partnership and later as a corporation, for some thirty years. Until 1930 the Haven theatre was independently owned and operated, and from 1922 to 1930 the two theatres were operated jointly under a local pooling agreement. The agreement was terminated in 1930, and the Haven became a member of the Warner chain. It was leased to Intrastate Theatre Corporation, a wholly-owned subsidiary of Warner Bros. Pictures, Inc., and operated by Warner Bros. Circuit Management Corporation, another wholly-owned subsidiary and one of the appellants here. Immediately after this transfer, the Haven became the exclusive first-run outlet for Warner Bros. Pictures, Inc., Radio-Keith-Orpheum Corporation, United Artists Corporation, Loew's Incorporated, Twentieth Century-Fox Film Corporation, and Universal Corporation films, and since 1931 for Paramount Pictures, Inc., as well. At various times since 1930, Loew's, Fox, and Universal began to divide their product equally between the Haven and the Palace, although plaintiff alleged that its contract contained discriminatory features. During the period complained of, plaintiff obtained none of the product of Warner, Paramount, RKO, or United Artists, and, on allegedly discriminatory terms, half the product of Loew's, Fox, and Universal, and all of the product of Columbia Pictures Corporation (not a defendant).

This action was begun in September, 1946. The complaint was dismissed as to certain of the defendants by stipulation before trial, and as to others by the court at the close of the plaintiff's case. The jury returned verdicts in favor of several of the remaining defendants, leaving in the case only Paramount Pictures, Inc., which itself and through its subsidiaries and affiliates produces, distributes, and exhibits films on a nationwide basis; RKO Radio Pictures, Inc., a distributor subsidiary of Radio-Keith-Orpheum Corporation, which is also a producer, distributor, and exhibitor for the national market; and Warner Bros. Circuit Management Corporation. Against these three defendants the jury returned a verdict of $28,500. The court denied motions by Paramount and Warner to set aside the verdict and entered judgment against them for the damages trebled to the figure of $85,500, for attorneys' fees of $18,000, and for costs of $998.44. It did, however, set aside the verdict against RKO. Defendants Paramount and Warner appeal from the judgment against them, and plaintiff appeals from the judgment in favor of RKO.

To prove its case plaintiff at the trial introduced a considerable mass of evidence on the relative merits, past and present, of the Palace and Haven theatres, and on the negotiations between plaintiff and the major distributors, including defendants Paramount and RKO, with regard to the distribution of first-run features. This appears to us well-designed to support a prima facie case and carry the issues beyond the defendants' motions to the jury. Obviously a conspiracy such as was here charged rarely can be proved by direct evidence from the participating parties themselves; reliance must be had upon the reasonable inferences drawn from their conduct in the light of the surrounding circumstances. Here plaintiff relied primarily upon a showing of the superior facilities afforded by the Palace over the Haven theatre in location, size, and equipment, the denial by these defendants of their products to the plaintiff, and the consequent poor showing in comparison of the Palace with the smaller Haven theatre. There was supplementary evidence of various kinds, including the showing of some leniency to plaintiff's theatre on the part of certain defendants at the very time only of disputes among themselves, the endeavors to draw plaintiff into their operations on various terms, and the statements of certain agents at various times as to the difficulties and disadvantages of independent operation of movie theatres. This evidence did not apply to all the defendants or cover all the period involved, but it was submitted to the jury for the latter's evaluation under a correct charge. True, the defendants sharply controverted this view and presented evidence to show that the Haven was the more desirable theatre. But it is hard to see what function the jury is to serve in these trials if it is not to be permitted to evaluate just this kind of evidence.

Defendants, in urging that the jury should not have been permitted to draw the inferences of combined and concerted action against plaintiff which it obviously...