Columbia Pictures Corporation v. Rogers

• Citation: 81 F. Supp. 580
• Decision Date: 04 January 1949
• Docket Number: No. 201-215.,201-215.
• Parties: COLUMBIA PICTURES CORPORATION v. ROGERS et al. and fourteen other cases.
• Court: U.S. District Court — Southern District of West Virginia

81 F. Supp. 580

COLUMBIA PICTURES CORPORATION v. ROGERS et al. and fourteen other cases.

Nos. 201-215.

United States District Court S. D. West Virginia.

January 4, 1949.

Paxton & Seasongood and Evans L. DeCamp, all of Cincinnati Ohio, Sargoy & Stein, of New York City, and Luther G. Scott, of Bluefield, W. Va., for plaintiffs.

Joseph M. Sanders, of Bluefield, W. Va., and B. F. Howard, of Welch, W. Va., for defendants.

BEN MOORE, Chief Judge.

As will be seen from the caption, eight of these fifteen cases are brought against one set of defendants, and seven against another and individual defendant. The plaintiffs are various moving picture distributing corporations, which are mainly the same in each group of cases. I am of opinion that all the cases involve a common question of law, and that, generally speaking, they involve also common questions of fact. At the outset, therefore, an appropriate order should be entered consolidating them.

In each of the cases several motions are now pending. Plaintiffs have filed a motion for an order permitting them to make a complete audit of defendants' books; defendants have filed a motion to dismiss the actions on the ground that the matter in controversy in each case does not exceed the sum or value of $3,000; motions for a more definite statement of the plaintiffs' claims; and motions for an order requiring the plaintiffs to produce the licensing agreements in effect between plaintiffs and defendants during the period in controversy, which defendants say are the bases of plaintiffs' claims. Defendants have since announced that they do not insist on the motions for a more definite statement, and have filed answers in all the cases. Plaintiffs' motion for an order permitting an audit, and defendants' motions for an order requiring the production of the licensing agreements will be referred to at the conclusion of this opinion. I will now consider only the motion to dismiss for alleged lack of jurisdiction.

The claims for relief are stated in the complaints substantially in effect as follows: That plaintiffs over a period of years licensed to defendants as operators of moving picture theatres a series of films, numbering for the entire period and for all theatres, as shown by affidavits filed in opposition to the motion to dismiss for lack of jurisdiction, approximately ten thousand (some of these films were licensed on a percentage basis, and others on a flat rental basis); that the defendants during the period in controversy have continuously and systematically under-reported to plaintiffs the number of admission tickets sold by them for admission to the showings of various films; that such under reporting was accomplished by means of fraud and trickery, and, in those cases involving multiple defendants, as the result of a conspiracy among these defendants; that thereby defendants have withheld from plaintiffs large sums of money which should have been paid on the percentage pictures, and have also induced the plaintiffs to license both flat rate and percentage films at a lower rate of rental or percentage than would have been done had the number of admissions been truthfully reported. Plaintiffs say that they are not able to allege the amounts which they say have been withheld, or from which plaintiffs; and they do not allege to what extent admissions to the showings of the various films were under-reported, nor what reductions in flat rentals or percentages were the result of such alleged under-reporting. They allege that the amount in controversy in each case is more than $3,000, and claim both actual and punitive damages. Defendants' answers, filed, as I have indicated, while the various motions were pending, deny all the substantial averments of the complaints.

The motion to dismiss on jurisdictional grounds has been submitted to the Court on affidavits and briefs. Plaintiffs have filed two affidavits of Edward A. Sargoy, an attorney, whose firm is special counsel for each of the plaintiffs, not only in these actions, but in others of similar character throughout the nation. The purport of those affidavits, insofar as it is necessary to be digested here, is that as a result of a series of investigations by agents of affiant's firm of attorneys, reports have been made to affiant that on occasions when percentage pictures were being shown, checkers on the ground had observed that more paying patrons entered the theatre than were afterwards reported by defendants in their reports to plaintiffs of the number of admissions to the respective percentage films; that the same tickets were often resold, and the proceeds of only one sale accounted for; that patrons were sometimes admitted on payment of the admission price in money without being given a ticket, which admissions were not accounted for; that defendants often changed the opening and closing numbers on the ticket rolls with reference to percentage films so as to show a smaller number sold than were actually sold; that an employee of the defendants in the Rogers cases admitted that it was the custom of the defendants in those cases to report only fifty percent of the receipts, although books showing the correct receipts were kept; that receipts for two or more theatres were deposited at the same time for the purpose of confusing any one attempting to make an audit; that it was the custom of defendants to omit the first two digits of the serial numbers of the tickets on reports to plaintiffs so that gross receipts during periods between percentage pictures could not be calculated; that defendants sometimes reported only the serial numbers shown by the ticket vending machine instead of the serial numbers of the tickets being sold in order to confuse the checker and conceal the unreported receipts; and that the under-reporting was accomplished under direct instructions from one or another of the defendants. As to the defendant Mannie Shore, Sargoy says in his affidavit that reports from the agents of his firm were to the effect that one method regularly used by this defendant to conceal unreported receipts on percentage pictures was to use a separate roll of adult tickets; and that tickets would be sold from both adult rolls during the course of the percentage pictures, but the proceeds of only one of these rolls would be included in the report to the distributor, while the second roll would not be mentioned at all. Sargoy further states that reports as to two of the percentage films shown in the Rogers theatres and observed by checkers were to the effect that on one occasion the under-reporting of admissions amounted to more than $350, and on the other more than $500; that a similar report of a percentage picture shown in one of Shore's theatres during the use there of a double roll of adult tickets was to the effect that the total admissions to that particular film were under-reported by an amount in excess of $500; and that the usual percentage charged for exhibiting the percentage films was from twenty-five percent to fifty percent of gross receipts.

It is from these Sargoy affidavits that it appears, as I have already said, that approximately ten thousand different films licensed by the various plaintiffs were shown in all the theatres involved during the period in controversy. Of these, approximately eighty percent were said to have been flat rental films, and twenty percent percentage films.

Defendants have filed the affidavits of L. E. Rogers and Mannie Shore. These affidavits consist almost entirely of flat denials by affiants that any of the fraudulent practices reported to Sargoy occurred, or if they did occur, that defendants had any...