Chorak v. RKO Radio Pictures

• Decision Date: 04 June 1952
• Docket Number: No. 13041.,13041.
• Parties: CHORAK et al. v. RKO RADIO PICTURES, Inc. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

196 F.2d 225 (1952)

CHORAK et al. v. RKO RADIO PICTURES, Inc. et al.

No. 13041.

United States Court of Appeals Ninth Circuit.

April 24, 1952.

Rehearing Denied June 4, 1952.

Alfred C. Ackerson, Los Angeles, Cal., for appellants.

Eugene D. Williams, W. B. Carman, Jr., Los Angeles, Cal. (Freston & Files, Los Angeles, Cal., of counsel), for appellees.

Before MATHEWS, BONE and POPE, Circuit Judges.

BONE, Circuit Judge.

This appeal presents a phase of the persistent controversy over what constitutes a fair and legitimate distribution of motion picture films to exhibitors in any given area. Precedence in the matter of "runs" and "clearances" in the exhibition of any picture in such an area gives it a favored position and thus affords a competitive advantage with the natural result that conflicting claims of exhibitors in the area for such a preferential position in this highly competitive field inevitably produces problems calling for a fair and rational adjustment of such claims between distributor-producers and exhibitors. These conflicts of economic interest have led to much litigation and frequent resort to arbitration in an effort to achieve a maximum of fairness in the light of all local conditions. The facts in this case reveal the presence of just such a problem.

In this action the ten corporate appellee producer-distributors above named (along with two other producer-distributors who were dismissed from the action after close of the evidence) were joined as defendants along with three above named appellee exhibitors owning and/or operating motion picture theatres located in an area of Los Angeles County in Southern California lying to the east of Los Angeles, this area (claimed by appellants to be the "competitive area") embracing urban communities, villages and open countryside. On argument here counsel for the contending parties readily agreed that the substantial and controlling issue in this case narrows down to a controversy over the question of "clearances" of pictures in this local area as between a theatre owned by appellants and those owned and/or operated by the three exhibitor-appellees under distribution arrangements and procedures employed by the various appellee producer-distributors named above.

The action was laid under Title 15 of U.S.C.A. §§ 1, 2 and 7 and the Clayton Act, Secs. 4 and 16, 15 U.S.C.A. §§ 15 and 26, and appellants' complaint charged appellees with the violation of these statutes in the distribution and exhibition of motion pictures in the noted area where appellants' "Puente Theatre" is located. The ten distributor-defendants are engaged in the distribution of motion picture film in interstate commerce throughout the United States and generally engage in business practices necessary to the conduct of such interstate activities.

Practices obtaining in the motion picture business are set forth at length and with great particularity in the complaint. Appellee producer-distributors are charged therein with being members of a conspiracy having for its purpose the exclusion of the Puente Theatre as a first-run picture house in the so-called competitive area. Appellee exhibitors are charged with being participants in this conspiracy.

The complaint charges that commencing in or about the year 1947 and continuing to the day of filing of appellants' complaint, all defendants unlawfully and knowingly engaged in a combination and conspiracy to restrain and monopolize interstate and foreign trade and commerce in the distribution and exhibition of motion picture films within the claimed "competitive area" located in the San Gabriel Valley in Los Angeles County, California, this area including the towns and populated areas known as El Monte, Five-Points, Baldwin Park, Monterey Park, Covena, Rosemede, Montebello and Puente, together with the less heavily populated rural areas surrounding each of said city and towns.

The acts of defendants by which the plaintiffs claim to have been injured in their business may be summarized as follows: (1) During the period here involved the exhibition of motion pictures in the said competitive area has been based upon a clearance schedule of 14 days after the Pasadena closing date and this clearance applied to and governed the exhibition of feature pictures in all theatres in the competitive area until the opening of plaintiffs' Puente Theatre at Puente, and as a part of the conspiracy and by virtue of the same, the Puente Theatre was given a minimum clearance of not less than approximately 14 days after the El Monte closing date, or 28 days after the Pasadena closing date. (2) That in effect and practice this schedule withheld feature pictures from the Puente Theatre until a minimum of 14 days had elapsed after their showing in each and every other motion picture theatre in the competitive area. (3) That since the opening of plaintiffs' Puente Theatre on February 20, 1948 this arbitrary, collusive and discriminatory withholding of feature pictures to the Puente Theatre has been increased and extended to in excess of 30 days in most instances after their showing in the city of El Monte and elsewhere in the competitive area. (4) That by reason of the conspiracy and as a part thereof the three exhibitor defendants have operated under a "split showing" arrangement¹ with the distributor defendants whereby Edwards Theatre Circuit, Inc. and James Edwards, Jr. have been and were given the exclusive right to exhibit feature pictures on first run in the city of El Monte produced or distributed by defendants, Columbia, RKO, Monogram and Republic; that defendant Arthur L. Sanborn has been given and now enjoys the exclusive right to exhibit on first run in the city of El Monte all feature pictures distributed by or through Warners, Loew's, Fox, Paramount and Universal; that in addition to the foregoing split showing arrangement, defendants Edwards Theatre Circuit, Inc. and James Edwards, Jr. are permitted, as a part of the said conspiracy, to exercise and enjoy a "move over"² privilege on most feature pictures which it derives as a result of its split showing arrangement and agreement between said defendants' El Valley Theatre in the city of El Monte and its Tumbleweed Theatre situated on the outskirts of the city of El Monte, in a locality commonly known as Five Points, California. That under this conspiracy the defendants have prolonged the arbitrary and collusive clearance of approximately 14 days after the El Monte closing date by moving over feature pictures produced and distributed by Columbia, RKO, Monogram and Republic to the Tumbleweed Theatre at Five Points after their showing in the El Valley Theatre in El Monte thereby extending the Puente clearance an additional 7 days with the result that this move over delayed the availability for exhibition at the Puente Theatre. (5) That the exhibitor defendants, by reason of their ownership of multiple theatres within the competitive area and elsewhere and their association and affiliation with other large theatre chain organizations have enjoyed a mass purchasing power in the purchase and rental of feature films exhibited within the competitive area. (6) That from the opening of plaintiffs' Puente Theatre and for months prior thereto, plaintiffs have repeatedly sought from distributor defendants the privilege of licensing pictures distributed by them on a comparable basis with their competitors in the area mentioned and have been ready, willing and able to pay film rentals for such runs comparable to rentals paid to defendant distributors by all other theatres in the competitive area, but solely by reason of the collusive conspiracy and agreement alleged the distributor defendants have failed and refused to so license plaintiffs' Puente Theatre except on a long-delayed subsequent run after their exhibition by all other theatres in the competitive area; that by virtue of this conspiracy among the defendants, plaintiffs have been compelled to pay for such subsequent runs, the same or a higher film rental price for feature pictures than their competitors have paid for the same pictures on a first run showing, and have been compelled, by said conspiracy among the defendants, to charge the same admission prices for said subsequent runs as are charged by plaintiffs' competitors for first run showing of the same feature pictures in the competitive area; that this arbitrary scheme of runs, clearances and admission prices has for its purpose and effect the protection from competition of theatres in the competitive area and more particularly the theatres owned by the exhibitor defendants herein named, thereby creating monopoly of first and early run exhibition of motion pictures for the benefit of the exhibitor defendants in this action, resulting in the complete exclusion of plaintiffs and their Puente Theatre.

Appellants sought treble damages in the sum of $436,187.43 along with costs and for an attorney's fee in the amount of $40,000, also an injunction pendente lite and permanent injunctive relief against the alleged unlawful practices set forth in the complaint. After a trial without a jury the lower court entered a judgment and decree denying relief to plaintiffs and requiring each party to bear its own costs. The appeal is from that judgment.

As indicated above, this case is primarily concerned with the problem of clearances and runs which has to do with the method of distributing motion pictures to exhibitors. The terms "clearances" and "runs" are a familiar part of trade terminology.³ See United States v. Paramount Pictures, Inc., D.C., 66 F.Supp. 323, 341, 345; Fanchon & Marco v. Paramount Pictures, Inc., D.C., 100 F.Supp. 84, 89; United States v. Paramount Pictures, Inc., 334 U.S. 131, 144, 68 S.Ct. 915, 92 L.Ed. 1260.

Preliminary to further comment on the specific problems presented on this appeal it should be noted that certain principles are well settled by the cases and are applicable to the...