DON GEORGE v. Paramount Pictures

• Decision Date: 18 September 1951
• Docket Number: Civ. No. 3050.
• Citation: 111 F. Supp. 458
• Parties: DON GEORGE, Inc. et al. v. PARAMOUNT PICTURES, Inc. et al.
• Court: U.S. District Court — Western District of Louisiana

111 F. Supp. 458

DON GEORGE, Inc. et al. v. PARAMOUNT PICTURES, Inc. et al.

Civ. No. 3050.

United States District Court W. D. Louisiana, Shreveport Division.

September 18, 1951.

Pyburn & Pyburn, Smallenberger & Eatman, and Jackson, Mayer & Kennedy, all of Shreveport, La., for plaintiffs.

Rosen, Kammer, Hopkins, Burke & Lapeyre, New Orleans, La., and Wilkinson, Lewis & Wilkinson, Shreveport, La., for defendants.

PORTERIE, District Judge.

Ruling on Motion to Quash and the Plea of Want of Jurisdiction.

The facts of the complaint have to be taken as proved for the purpose of passing on the motion to quash and the plea to dismiss for want of jurisdiction.

Complainants' original petition was served on Paramount Pictures, Inc., which excepted on the grounds that it was fully dissolved as a corporation on December 30, 1949.

Complainants' supplemental and amended petition has made parties to this suit both successor corporations of Paramount Pictures, Inc., namely, Paramount Pictures Corporation and United Paramount Theatres, Inc.

Service of the original petition was made on the defendant-producers listed above and also on Twentieth Century Fox, through the Secretary of State in Baton Rouge, Louisiana. Twentieth Century Fox submitted to the jurisdiction, but the other producer-defendants filed motions to quash, contending this to be improper service.

Then the complainants followed the procedure outlined in Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684, and had each of the moving defendant-producers cited by the U. S. Marshal at their principal place of business.

Defendants' contention now is that, although good service has been made, it is ineffectual since these corporations are not subject to suit in Louisiana.

Defendants have filed affidavits to the effect that they are not now doing or have ever done business in the State of Louisiana, and do not now have or ever have had offices, agents, or employees doing business in the State. This does not completely refute the allegations of the following article of the complaint:

Article 8(e):

"(e) That the defendant Radio-Keith-Orpheum Corporation is a corporation duly organized and existing under the laws of the State of Delaware, with its principal office, place of business and residence at 1270 Sixth Avenue, New York City, County of New York, State of New York. It is engaged in the business, among other things, of producing, distributing and exhibiting motion picture film, either directly or through associated or affiliated companies, in various parts of the United States and foreign countries. That this defendant is found and has agents working in Caddo Parish, Louisiana, and further, during the period covered by this suit as shown hereafter, transacted business and is presently transacting business in Caddo Parish, Louisiana." (Emphasis supplied.)

The complaint contains the same allegation for each of the other producer-defendants which have filed motions to quash. Article 8(c), (2), (g), and (1).

We have to accept that the producer-defendants exhibited motion picture films, either directly, or through associated or affiliated companies, in Caddo Parish, Louisiana.

The complaint says:

"9. That the defendants, Paramount Pictures, Incorporated, Radio-Keith-Orpheum Corporation, Warner Brothers Pictures, Incorporated, and Twentieth Century Fox Films, each engage in the exhibition branch of the motion picture industry throughout the United States and foreign countries, through associated or affiliated companies, through various stock ownerships, joint interests, contracts, and agreements so varied in nature, so numerous, and subject to such frequent change that it is impractical to name and describe them herein. In the Shreveport area the exhibition business of Paramount was during the period covered by this suit conducted through Saenger-Ehrlich Enterprises, Incorporated and Paramount-Richards Theatres, Inc.

"10. That the defendant Saenger-Ehrlich Enterprises, Inc. was owned one-half by Paramount Richards Theaters, Incorporated, and until recently one-half by certain partners. That plaintiffs are informed and therefore allege that Paramount Richard Theatres, Inc. presently own all the stock of Saenger-Ehrlich Enterprises, Inc. That Paramount Richards Theaters, Incorporated, owned and operated numerous theaters throughout Mississippi, Louisiana and Texas. That Paramount Pictures, Incorporated, owned a substantial amount of the stock of Paramount Richards Theatres, Incorporated.

"11. That all the defendants were doing business during this period beginning June 1st 1938 as aforesaid, and the transactions herein complained of were in interstate commerce. The motion picture films were transported across state lines, and the contract arrangements therein all being negotiated among the several states and across state lines."

We should assume that the defendants carried on business in this manner, not only here but in all other parts of the United States.

This type of activity is "transacting business" in Louisiana, although the defendants may not be "found" or may not be "doing business" in the usual sense of the word. The Louisiana corporations were agents of the defendant-producer corporations the same as if they had employed agents to work continuously here.

In Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 403, 71 L.Ed. 684, the United States Supreme Court said the following, regarding Sec. 12 of the Clayton Act, 15 U. S.C.A. § 22:

"And we think it clear that, as applied to suits against corporations for injuries sustained by violations of the Anti-Trust Act, its necessary effect was to enlarge the local jurisdiction of the district courts so as to establish the venue of such a suit not only, as theretofore, in a district in which the corporation resides or is `found,' but also in any district in which it `transacts business'—although neither residing nor `found' therein—in which case the process may be issued to and served in a district in which the corporation either resides or is `found'; and, further, that a corporation is engaged in transacting business in a district, within the meaning of this section, in such sense as to establish the venue of a suit—although not present by agents carrying on business of such character and in such manner that it is `found' therein and is amenable to local process— if in fact, in the ordinary and usual sense, it `transacts business' therein of any substantial character. This construction is in accordance, not only with that given this section by the two lower courts in the present case, but also with the decisions in Frey & Son v. Cudahy Packing Co., D.C., 228 F. 209, 213, and Haskell v. Aluminum Co. of America, D.C., 14 F.2d 864, 869. And see Green v. Chicago, B. & Q. Ry., 205 U.S. 530, 533, 27 S.Ct. 595, 51 L. Ed. 916, in which it was recognized that a corporation engaged in the solicitation of orders in a district was in fact `doing business' therein, although not in such sense that process could be there served upon it."

We believe that in Jeffrey-Nichols Motor Co. v. Hupp Motor Car Corporation, 1 Cir., 46 F.2d 623, the court in reaffirming this principle held that a foreign corporation to be "transacting business" within a local judicial district under the anti-trust venue statute need not maintain an office or place of business or the presence of agents soliciting or taking orders—if it has a well-defined plan of promoting the sale of its products—if it has contracted with so-called distributors and it retains a general oversight and control under its contract it is clearly transacting business within the meaning of Section 12 of the Clayton Act, 15 U.S.C. § 22, 15 U.S.C.A. § 22, sufficient to establish a venue in a district where such acts are done.

See, also, Northern Kentucky Tel. Co. v. Southern Bell Tel. & T. Co., D.C., 54 F. 2d 107.

Under Articles 17 and 18 of the complaint, it is alleged that complainants were forced to sign contracts controlled and approved by defendant-producers, which contracts contained minimum prices to be charged for each picture, discriminating clearance clauses, and other allegedly illegal features.

The impact of these contracts falls on Shreveport and vicinity. These foreign corporations were controlling Louisiana business. Since we know, from the cases cited above, that it is not necessary to have outlets and agents here in Louisiana to "transact business", these allegations, taken as true, show defendants to have performed these acts and are, therefore, amenable to suit here in Louisiana.

Moreover, these quoted factual allegations are corroborated as prima facie evidence, as found in the consent decree entered into by Paramount Pictures, Inc., dated March 3, 1949; paragraph 62377 of CCH Trade Regulations; consent decree entered into by RKO Radio Pictures, Inc., dated November 8, 1948; paragraph 62335 CCH Trade Regulations; final decree against Warner Bros. Pictures Corp., dated February 8, 1950; paragraph 62573 CCH Trade Regulations; final decree against Columbia Pictures Corp., dated February 8, 1950, paragraph 62573 CCH Trade Regulations.

We should remember just here the language of Section 5 of the Clayton Act, 15 U.S.C.A. § 16, without quoting it.

In keeping with DeLuxe Theatre Corp. v. Balaban & Katz, D.C.1951, 95 F. Supp. 983, paragraph 62790 of CCH Trade Regulations, we must consider the above consent decrees in the same category as final judgments as far as using them as prima facie proof of the acts charged.

A reading of the Paramount Consent Decree on March 8, 1949, shows that every allegation of the complaint has its counterpart in a section of the decree. This Paramount decree affects and controls the actions of the monopolists down to the local Shreveport area level, since it requires that Paramount divest itself of four of its local "circuit" theatres.

The defendants have...