Chicago Ridge Theatre v. M & R AMUSEMENT CORP.
| Decision Date | 16 March 1990 |
| Docket Number | No. 82 C 3141.,82 C 3141. |
| Citation | 732 F. Supp. 1503 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | CHICAGO RIDGE THEATRE LIMITED PARTNERSHIP, et al., Plaintiffs, v. M & R AMUSEMENT CORPORATION, et al., Defendants. |
Sheldon O. Collen, Epton, Mullin & Druth, Ltd., and Therese M. Obringer and Paul E. Slater, Sperling, Slater & Spitz, Chicago, Ill., for plaintiffs.
Robert W. Bergstrom, Ronald W. Teeple and John L. Leonard, Bergstrom, Davis & Teeple, Chicago, Ill., Philip R. Toomin, Winnetka, Ill., James G. Hunter, Jr., Latham & Watkins, Hedlund, Hunter & Lynch, Chicago, Ill., and Altheimer & Gray, Chicago, Ill., for defendants.
This case comes to this court following a remand from the Court of Appeals in Chicago Ridge Theater Ltd. v. M & R Amusement, 855 F.2d 465 (7th Cir.1988). In the wake of that decision, the defendants have renewed their motions for judgment under Rule 41(b), Fed.R.Civ.Pro.1 In opposing these motions, Chicago Ridge Theater Limited Partnership and F & F Management Company have asked for a new trial on the claims presented in their amended complaint.
The Court of Appeals reviewed much of the procedural history of this case in Chicago Ridge. This court will assume that the reader is familiar with that decision. Further, the court understands that decision as allowing the court to decide the present motions. See Chicago Ridge, 855 F.2d at 471 ().
Id. at 467-68. The plaintiffs argue that the Seventh Circuit wants this court to consider only the testimony of their expert, Dr. Norman Bradburn, in deciding this motion. The plaintiffs rest their argument on the Seventh Circuit's reliance on the plaintiffs' representation to the appellate court that they would not object to this court's review of Bradburn's "cold" testimony. Before relying on this representation, however, the Seventh Circuit stated that "the district court may ... on remand reweigh the properly admitted evidence, ignoring the evidence improperly considered in its prior review." Id. at 469 n. 4. Further, the issue before the court in Chicago Ridge was whether the previous trial judge considered unadmitted testimony in deciding the defendants' earlier Rule 41(b) motion. The Seventh Circuit decided that he had. A simple solution to the problem, one chosen by the Seventh Circuit, was to remand for consideration of only properly admitted evidence. This suggests to this court that it may consider all of the properly admitted evidence in deciding the defendants' motions.
Pursuant to Rule 41(b), the court finds these facts:2
1. The plaintiffs allege violations of § 1 of the Sherman Act, 15 U.S.C. § 1 (1982). They invoke the jurisdiction of the court pursuant to §§ 4 and 16 of the Clayton Act, codified at id., §§ 15 and 26, and 28 U.S.C. § 1337 (1982). See CR at 466.
2. The plaintiffs are:
a. Chicago Ridge Theater Limited Partnership, the lessee and operator of a movie theater known as the Chicago Ridge Theater.3 The theater is located at 95th Street and Ridgeland Avenue, Chicago Ridge, Illinois. See id.
b. F & F, an affiliate of the Partnership. F & F performed certain management functions for the Partnership, including obtaining licenses for exhibition of films at the Chicago Ridge Theater. See id.; Stip. ¶ 2.
3. Morton and Robert Fink were partners in the Partnership and president and vice-president, respectively, of F & F. They were managing agents of both plaintiffs. See id. at ¶ 3.
4. The defendants are:
a. Evergreen Theater Corporation, which owned and operated the Evergreen Theater, located at 95th Street and Western Avenue in Evergreen Park, Illinois. See CR at 466.
b. M & R Amusement Corporation, which has its principal place of business in Skokie, Illinois. See Stip. at ¶ 8.
c. Columbia Pictures Industries, Inc. Columbia was in the business of producing copyrighted feature motion pictures and distributing feature motion pictures (its own and those of other producers) to theaters in the United States. See id. at ¶ 9.
d. Embassy Pictures, formerly Avco Embassy Pictures Corporation. Embassy was in the same business as Columbia.4 See id. at ¶ 10.
e. Orion Pictures Distribution Corporation, formerly Filmways Pictures, Inc. Orion was in the business of distributing independently produced feature motion pictures to theaters in the United States. See id. at ¶ 11.
f. Paramount Pictures Corporation. Paramount was in the same business as Columbia. See id. at ¶ 12.
g. United Artists Corporation. United Artists was in the same business as Orion, although United Artists financed some of the features which it distributed. See id. at ¶ 13.
h. Universal Film Exchanges, Inc. Universal was in the same business as Columbia. See id. at ¶ 14.
5. The Distributor Defendants each maintained a branch office in the Chicago metropolitan area. The purpose of these offices was to license and distribute films to local theaters for exhibition. See id.
6. Persons in the movie business refer to operators of motion picture theaters as "exhibitors." The persons, firms, or corporations who create the negative film which contains the completed feature motion picture in a form available for the making of positive prints suitable for exhibition are called "producers." The production cost, called "negative cost," encompasses the cost of writers, actors, directors, producers, photographers, costumes, stages, and scenery, and often runs over $1 million. From the resulting negative, companies make several hundred to a thousand or more positive prints. These prints cost $2000-12,000 each. See id. at ¶ 16; T. 907; D.App. 832.
7. Most films earn the bulk of their revenues during their "first run," their exhibition immediately after release. Distributors license a first run on a percentage of the exhibitor's gross receipts. License fees are known as "film rentals." The terms of a film license agreement between an exhibitor and a distributor for a first run frequently provide for a priority of run, called a "clearance," over one or more theaters in the area. The Evergreen Theater obtained clearances over the Chicago Ridge Theater for many films from each of the Distributor Defendants. See CR at 466 & n. 2; Stip. at ¶¶ 17-19.
8. Motion pictures vary considerably in their ability to attract an audience. Exhibitors and distributors cannot determine how successful a picture will be in advance of exhibition. The number of theaters licensed simultaneously on the same run (known as showing "day and date") was in part a function of the distributor's marketing plan. Additionally, each distributor competed with all other distributors for screens on which to play films. In some instances, because a plethora of different products were on the market, an individual distributor often could not license as many first runs as it hoped. While there were more than 225 screens in the Chicago area, exhibitors controlling 150-175 screens dedicated these screens largely to a myriad first-run films. These theaters comprised the first-run market in the Chicago area for film distributors, including the Distributor Defendants. See Stip. at ¶¶ 20-21; D.App. at 142, 768; T. 563-4, 1040, 1150.
9. For many years, some of the Distributor Defendants licensed first runs of selected films in limited, key areas of the country, then gradually increased the number of theaters showing the film on successive runs. Their aim was to attract the most film-goers, and maximize film rentals. Their practice allowed economies in the use of positive prints of films, permitted favorable word-of-mouth publicity to build, attracted additional exhibitors to the film on the basis of its early showings, and gave film-goers more time to determine whether they wished to see a given picture. It often increased the total business for popular films. For this reason, some distributors did not attempt to maximize the number of simultaneous first runs for a film. For example, one distributor licensed "Sophie's Choice" for an exclusive run at Chicago's Carnegie Theater. Other films subject to this practice were "Amadeus," "A Passage to India," and "A Soldier's Story." Distributors in the Chicago area usually limited first runs to 10-15 theaters. These distributors considered geographical coverage in determining which theaters received licenses. See D.App. at 567-68, 768-70, 832-34, 880-81.
10. At and prior to the time the Chicago Ridge Theater opened for business, each of the Distributor Defendants licensed first runs in the Chicago area by negotiation and competitive bidding. In anticipation of the release of a particular film, the Chicago branch office of the film's distributor would send a written invitation to bid to all area exhibitors. Bid invitations set forth the date on which the picture would be available, and suggested a minimum film rental, opening date, minimum playing time, holdover terms, sharing of advertising expenses, and advances. Sometimes the invitation indicated whether the distributor offered the film for exclusive exhibition, multiple exhibition, or both. The invitation specified the date and time within which the distributor's branch office had to receive bids in order to consider them, and reserved to the distributor the right to reject all bids. See id. at 207-8, 352-54, 586-87, 754, 770, 834-35, 860, 864-69, 874 11. Exhibitors...
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