Eagle Lion Studios v. Loew's, Inc.

• Decision Date: 09 September 1957
• Docket Number: No. 96,Docket 24224.,96
• Citation: 248 F.2d 438
• Parties: EAGLE LION STUDIOS, Inc., Eagle Lion Films, Inc., PRC Productions, Inc., Chesapeake Industries, Inc., Appellants, v. LOEW'S, Inc., RKO Theatres, Inc., and RKO Film Booking Corp., Appellees.
• Court: U.S. Court of Appeals — Second Circuit

248 F.2d 438 (1957)

EAGLE LION STUDIOS, Inc., Eagle Lion Films, Inc., PRC Productions, Inc., Chesapeake Industries, Inc., Appellants, v. LOEW'S, Inc., RKO Theatres, Inc., and RKO Film Booking Corp., Appellees.

No. 96, Docket 24224.

United States Court of Appeals Second Circuit.

Argued November 15, 1956.

Decided September 9, 1957.

COPYRIGHT MATERIAL OMITTED

James L. O'Connor, New York City (William L. McGovern, Robert L. Wright, Seymour Krieger, Arnold, Fortas & Porter, Washington, D. C., of counsel), for appellants.

Davis, Polk, Wardwell, Sunderland & Kiendl, New York City (S. Hazard Gillespie, Jr., Francis W. Phillips, Robert B. Fiske, Jr., New York City, of counsel), for appellee Loew's, Inc.

O'Brien, Driscoll & Raftery, New York City (Edward C. Raftery, George A. Raftery, William F. Whitman, New York City, of counsel), for appellees RKO Theatres, Inc., and RKO Film Booking Corp.

Before CLARK, Chief Judge, and HINCKS and WATERMAN,¹ Circuit Judges.

WATERMAN, Circuit Judge.

The appellants, four affiliated corporations formerly engaged in the production and distribution of motion pictures, appeal from a judgment dismissing their complaint after a trial before the Court without a jury. D.C.S.D.N.Y.1956, 141 F.Supp. 658. The appellants had brought suit against Loew's, Inc., RKO Theatres, Inc., and RKO Film Booking Corp., the appellees, to recover treble damages under the anti-trust laws, 15 U.S.C.A. §§ 1, 2, 15. These defendants, during the period in issue, were engaged in the exhibition of motion pictures. The complaint, insofar as it concerned the appellees, set forth a claim for damages for losses allegedly resulting from a conspiracy to exclude the plaintiffs during the period 1946-1950 from licensing their films on a competitive basis to the "first subsequent run" theatres of Loew's and RKO in the metropolitan area of New York City.²

Since the facts pertinent to this litigation were set forth in detail by Judge Dawson in his comprehensive opinion below, see 141 F.Supp. 658, we will mention only those facts necessary to the disposition of this appeal.

The plaintiffs and their predecessor organizations produced and distributed motion pictures from 1943 to 1951. During this period they also distributed the films of certain other domestic and foreign producers made either in this country or abroad. The defendants, at the times material to this action, operated motion picture theatres in metropolitan New York, which were known, respectively, as the Loew's and RKO circuits. During the years 1946 to 1950, the years involved in this suit, the Loew's circuit in the metropolitan area comprised approximately 60 "subsequent run" theatres, and the RKO circuit between 30 and 40 such theatres. The term "subsequent run" applies to all theatres in the New York area except the 40 or more "first run" theatres concentrated in the Broadway midtown area of New York City. During this period in suit there were at least 600 subsequent run theatres in metropolitan New York, as that area was defined by the pleadings. However, these theatres fell into an elaborate hierarchy of "first subsequent run," "second subsequent run," and so forth. Approximately 45 of the Loew's theatres were in the "first subsequent run" category, whereas from 31 to 36 of the RKO theatres (depending on the year in question) were so designated.

Although no findings were made below as to the total number of "first subsequent run" theatres in the New York metropolitan area, it is apparently undisputed that the defendants occupied a dominant position in the "first subsequent run" exhibition market. The evidence at trial also tended to show that this market was the crucial one in the entire New York metropolitan subsequent run exhibition field, because the rental rates, billings, and playing positions of individual films throughout their subsequent run history were substantially influenced, if not determined, by the treatment they received from the "first subsequent run" theatres.

Each of the two defendant circuits exhibited about 208 pictures a year — or approximately 4 a week. Generally the same program, comprised of a double feature, would be played simultaneously throughout the first subsequent run theatres of an entire circuit. The playing engagements were typically for the "long half" of the week (Thursday through Sunday) or for the "short half" of the week (Monday through Wednesday). An individual film could receive "top" or "equal" billing, or could be played as the "second" feature, during either the long or short half of the week.

From 1946 to 1950, the plaintiffs distributed 195 films, which earned total gross film rentals of $39,107,800 in this country, of which $2,362,200 was received from subsequent run theatres in the New York metropolitan area. The trial court found, 141 F.Supp. at page 663, that "of the 195 pictures distributed by the plaintiffs during the period in question, the defendants exhibited 85 pictures on one or the other of its circuits in the New York metropolitan area * * * Each of the defendants exhibited certain other pictures distributed by the plaintiffs in one or more theatres amounting to less than the full circuit. Loew's played some 39 additional pictures in addition to the 50 which it played on the entire circuit. RKO exhibited in one or more of its theatres during the period in question some 55 additional pictures."

Thus the plaintiffs did not attempt to prove below, nor do they contend on appeal, that the defendants conspired to totally exclude their pictures from exhibition in the defendants' theatres. Rather, the issues in controversy were framed in a pre-trial order as follows:

"1. Did the defendants combine and conspire in violation of the anti-trust laws of the United States to exclude the plaintiffs from the opportunity of licensing on a competitive basis their feature motion pictures to Loew and RKO theatres which exhibit feature motion pictures in the New York metropolitan area on runs subsequent to first run Broadway? (Emphasis added.)

"2. If so, were the plaintiffs directly damaged in their business or property as the result of the said illegal combination and conspiracy, and, if so, in what amount?"

The trial court answered both questions in the negative, and, dismissing the complaint, entered judgment for the defendants. On appeal, we affirm that judgment, since we discern no error of law in the proceedings below, and we do not believe that the trial court's findings of fact were "clearly erroneous." Fed. R.Civ.P. 52(a), 28 U.S.C.A.

At trial, in order to sustain their burden of proof on both issues, the plaintiffs relied primarily upon (1) the findings of fact and conclusions of law contained in the final decree of the Paramount case, United States v. Loew's Inc., Equity No. 87-273, S.D.N.Y., filed Feb. 8, 1950, affirmed 1950, 339 U.S. 974, 70 S.Ct. 1032, 94 L.Ed. 1380 (for prior history, see United States v. Paramount Pictures, Inc., D.C., 66 F.Supp. 323, Id., D.C.1946, 70 F.Supp. 53, reversed and remanded in part, 1948, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260; D.C.1949, 85 F.Supp. 881); (2) detailed statistics comparing film rentals earned by the plaintiffs during the period in question with those earned by the eight major distributors in the Paramount case; (3) the testimony of the president of one of the plaintiffs; (4) a letter written by the president of another of the plaintiffs to the president of Loew's.

On appeal, the plaintiffs urged two principal grounds for reversal: (1) that the trial court erred in its construction of the Paramount judgment; and (2) that the trial court did not properly evaluate the comparative film rental statistics.³ We find both of these contentions without merit.

1. The Paramount Judgment

"A government anti-trust suit, while primarily in the public interest, if successful, also accrues to the immediate benefit of those injured by the wrongful conduct." T. C. Theatre Corp. v. Warner Bros. Pictures, Inc., D.C.S.D.N.Y.1953, 113 F.Supp. 265, 269. Under section 5 of the Clayton Act, 15 U.S.C.A. § 16, "A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties * * *" Relying on section 5, the appellants have strenuously contended throughout this litigation that the judgment in the Paramount case constitutes prima facie evidence of a conspiracy by the appellees to deny the plaintiffs competitive access to the appellees' theatres in metropolitan New York.

The Paramount judgment embodied findings of fact and conclusions of law based on the situation in the motion picture industry as it existed in 1945. The plaintiffs argue, however, that the conditions found to exist at that time continued until 1950, the date of the final order in the Paramount case.

As the trial court pointed out, "the primary issue in that the Paramount case related to the effect under the antitrust laws of a combination between the large producers of motion pictures who also controlled, to a substantial extent, the places of exhibition of those motion pictures." The great bulk of the many findings of fact and conclusions of law contained in the final Paramount decree do not touch upon the narrow issue here at bar. See United States v. Loew's Inc. et al., Equity No. 87-273, S.D.N.Y., filed Feb. 8, 1950, affirmed 1950, 339 U.S. 974, 70 S.Ct. 1032, 94 L.Ed. 1380. The appellants direct our attention, however, to several findings and conclusions, particularly Finding No. 154(d) and Conclusion No. 16, which they contend are evidence of...