Cobb Theatres Iii, LLC v. Amc Entm't Holdings, Inc.

• Decision Date: 20 March 2015
• Docket Number: No. 1:14–CV–00182–ELR.,1:14–CV–00182–ELR.
• Citation: 101 F.Supp.3d 1319
• Parties: COBB THEATRES III, LLC and Cobb Theatres IV, LLC, Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS, INC.; AMC Entertainment, Inc.; and American Multi–Cinema, Inc., Defendants.
• Court: U.S. District Court — Northern District of Georgia

101 F.Supp.3d 1319

COBB THEATRES III, LLC and Cobb Theatres IV, LLC, Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS, INC.; AMC Entertainment, Inc.; and American Multi–Cinema, Inc., Defendants.

No. 1:14–CV–00182–ELR.

United States District Court,N.D. Georgia,Atlanta Division.

Signed March 20, 2015.

Catherine S. Simonsen & Thomas Lee Boeder, Perkins Coie, Seattle, WA, Henry D. Fellows, Jr., Julia Ann Palmer, Megan Claire Haley, Fellows La Briola, LLP, Atlanta, GA, for Plaintiffs.

Barton Wayne Cox, Darryl Wade Anderson, Jason K. Fagelman, Michael A. Swartzendruber, Nicholas K. Taunton, and Rachel L. Williams, Fullbright & Jaworski, Dallas, TX, Adam Jeremy Biegel, Jonathon David Parente, and Mary C. Gill, Alston & Bird, Atlanta, GA, for Defendant.

ORDER

ELEANOR L. ROSS, District Judge.

Plaintiffs Cobb Theatres III, LLC and Cobb Theatres IV, LLC (hereinafter “Plaintiffs” or “Cobb”) brought this action against AMC Entertainment Holdings, Inc., AMC Entertainment, Inc., and American Multi–Cinema, Inc., (collectively “Defendants” or “AMC”) for alleged violations of the Sherman Antitrust Act and various state laws. The case is presently before the Court on Defendants' Motion to Dismiss for Failure to State a Claim (Doc. No. 19), Plaintiffs' Notice of Objection and Motion to Strike (Doc. No. 24), and Plaintiffs' Motion for Leave to File Response to Defendants' Second Notice of Supplemental Authority (Doc. No. 42). For the reasons that follow, the Court grants Plaintiffs' Motion for Leave to File Response, denies Plaintiffs' Motion to Strike, and denies Defendants' Motion to Dismiss.

I. BACKGROUND

A. Factual Background

As it must, the Court accepts as true the factual allegations set forth in the Complaint and draws all reasonable inferences in the light most favorable to Plaintiffs.

Cobb operates seven upscale movie theatres throughout the country—known as “CinéBistros”—that combine the experience of fine dining with film exhibition. (Compl. ¶ 37, Doc. No. 1.) One such venue, the CinéBistro at Town Brookhaven (the “Brookhaven CinéBistro”), is located in Brookhaven, Georgia. (Id. ¶ 6.) The Brookhaven CinéBistro features seven screens and has the capacity to seat 758 patrons. (Id. at 37.) AMC, on the other hand, is one of the largest theatre companies in the United States. (Id. ¶¶ 10, 11.) Relevant to this case, AMC operates two theatres in Buckhead, a neighborhood in Atlanta, Georgia adjacent to the City of Brookhaven. (Id. ¶¶ 35, 36.) The first theatre, the AMC Phipps Plaza 14, boasts fourteen screens and 1,046 seats. (Id. ¶ 35.) The second, a smaller venue known as the AMC Fork & Screen Buckhead, has just six screens and 650 seats. (Id. ¶ 36.) Together, the Brookhaven CinéBistro and AMC's two Buckhead theatres comprise “the Buckhead–Brookhaven zone.” (Id. ¶ 39.) In the film industry, a “zone” is a geographic area identified by a distributor for purposes of licensing films.¹ (Id. ¶ 27.) Theatres within each zone compete with one another to exhibit films to the public. (Id.)

As a general matter, the Complaint alleges considerable distinctions between the respective movie viewing experiences offered by Cobb and AMC. (Id. ¶¶ 38, 47.) On the one hand, Plaintiffs highlight the amenities offered at their theatres, including “valet parking on weekends and holidays, reserved seating, elegant and sophisticated auditoriums and lounges, high-back leather rocking chairs, in-theatre, full-service dining prior to the start of the film, a freshly prepared and seasonal American bistro menu and full bar (in addition to traditional movie theatre snacks), 100% digital cinema and theatre technology, 3–D capabilities, and no on-screen advertisements.” (Id. ¶ 38.) Plaintiffs also point out that CinéBistros offer an adults-only environment after 6:00 P.M. (Id.) In contrast, the Complaint alleges Defendants deter theatre patrons “with on-screen advertising, harsh neon lighting, limited food and beverage offerings (and distracting food and beverage service throughout the entire film-play period at the AMC Fork & Screen Buckhead), accommodation of loud children and young people who can destroy the movie-going experience for others, and generally less pleasant atmosphere.” (Id. at 47.)

Despite the alleged superior quality of their theatres, Plaintiffs contend several major film distributors have given Defendants preferential treatment thus depriving the Brookhaven CinéBistro of a fair opportunity to compete with AMC's Buckhead theatres. (Id. ¶ 48.) According to Plaintiffs, Defendants have ensured such treatment by engaging in the type of anti-competitive conduct prohibited by the Sherman Antitrust Act and various Georgia laws. (Id. ¶¶ 100–53.)

The events underlying this suit began shortly after Cobb and AMC competed to lease the space where the Brookhaven CinéBistro is currently located. (Id. ¶ 54.) Unhappy after losing that battle to Plaintiffs, AMC began requesting “clearances” for its nearby Buckhead theatres. (Id. ¶¶ 54–79.) The term “clearance” refers to a practice in the film industry whereby a distributor agrees to license a particular film to only one theatre in a given geographic area rather than engaging in a “day-and-date” release, i.e. allowing multiple theatres within a region to exhibit the same film on the same day. (Id. ¶ 29.) Prior to 2009, AMC did not request clearances over its nearby competitors. (Id. ¶ 55.) However, after a significant restructuring of management, the theatre chain purportedly changed its policy and began a nationwide campaign to demand clearances over film exhibitors to “[insulate] itself from competition on the merits.” (Id. ¶¶ 1, 54–79.)

More specifically, Plaintiffs contend the Senior Vice President and Head Film Buyer for AMC's Buckhead theatres sent a letter to “the major film distributors” in 2010 stating:

[The Brookhaven CinéBistro] is 1.9 miles northeast of our AMC PHIPPS 14 and 2.5 miles northeast of our AMC FORK & SCREEN BUCKHEAD 6, and thus we will not play day-and-date with a venue at this location.... We have played 100% of your wide commercial releases and look forward to continuing that arrangement going forward.

(Id. ¶ 58.) The Complaint alleges this letter operated as a demand by AMC that distributors refuse to license certain films to the Brookhaven CinéBistro or, alternatively, risk damaging their relationships with one of the nation's largest film exhibitors. (Id. ¶ 59.) Plaintiffs further contend that, as a direct result of the letter, several major distributors began to honor AMC's demand for preferential treatment and allocated the Brookhaven CinéBistro fewer high-grossing, popular films.² (Id. ¶ 62.)

Plaintiffs also assert Defendants have interfered with their attempts to lease new space near existing AMC theatres. (Id. ¶ 87.) Specifically, Plaintiffs allege that AMC threatens landlords it will request clearances for its nearby theatres if the landlord decides to lease space to one of AMC's competitors, including Cobb. (Id.) Landlords are thus deterred from leasing to those competitors out of fear that the threatened clearances would make it difficult for the new theatre to license films thereby reducing customer traffic to the landlord's property. (Id.)

Despite their purported ability to offer moviegoers an overall better film viewing experience, Plaintiffs argue they have been deprived of a fair opportunity to compete with AMC's Buckhead theatres. Interestingly, Plaintiffs allege Defendants' conduct is not unique to the specific theatres at issue in this case but is instead a part of nationwide strategy to employ anticompetitive tactics to gain an unfair advantage in the marketplace.³ As necessary, the Court will discuss additional facts in its analysis below.

B. Procedural Background

On January 22, 2014, Cobb filed suit in this Court seeking relief for AMC's alleged violations of the Sherman Antitrust Act and various Georgia laws. The Complaint alleges: 1) Defendants violated sections 1 and/or 2 of the Sherman Act by engaging in “circuit dealing” (Count I); 2) Defendants violated section 2 of the Sherman Act by engaging in monopolization and/or unlawful exercise of monopoly power (Count II); 3) Defendants violated section 2 of the Sherman Act by attempting to engage in monopolization; 4) Defendants violated section 1 of the Sherman Act by engaging in “exclusive dealing” (Count IV); and 5) Defendants violated various Georgia laws (Counts V and VI). Defendants subsequently filed the present Motion to Dismiss for Failure to State a Claim (Doc. No. 19) on April 1, 2014.

In addition to filing a response, Plaintiffs filed a Notice of Objection and Motion to Strike (Doc. No. 24) Exhibit A to Defendants' Motion to Dismiss and all arguments relying thereon. The exhibit at issue is a Google map printout showing the location of various theatres in the Atlanta area. Citing the map, Defendants ask the Court to take judicial notice of the fact that “[t]he Regal Hollywood 24, Regal Perimeter Point Stadium 10, Regal Atlantic Station Stadium 16, and United Tara Cinemas 4 are all approximately 15 minutes away [from the Brookhaven CinéBistro], according to the ‘Directions' feature on Google Maps.” (Mem. of Law in Supp. of Defs.’ Mot. to Dismiss 2–3, Doc. No. 19–1.)

On January 15, 2015, the parties appeared for oral argument regarding the motions before the Court. Three weeks later, Defendants filed a Notice of Supplemental Authority (Doc. No. 41) to which Plaintiffs seek leave to file a response (Doc. No. 42). For good cause shown, the Court GRANTS Plaintiffs' Motion for Leave to File Response to Defendants' Second Notice of Supplemental Authority (Doc. No. 42). The Court notes that Plaintiffs have already submitted their response, and the Court has considered the arguments therein.

II. STANDARDS OF REVIEW

A. Judicial Notice

Pursuant to Federal Rule of Evidence 201(b), “[t]he court may judicially notice a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court's...