Exhibitors Poster Exchange, Inc. v. National Screen Service Corp., 74-1459

Citation517 F.2d 110
Decision Date08 August 1975
Docket NumberNo. 74-1459,74-1459
Parties1975-2 Trade Cases 60,425 EXHIBITORS POSTER EXCHANGE, INC., Plaintiff-Appellant, v. NATIONAL SCREEN SERVICE CORPORATION et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Glenn B. Hester, Augusta, Ga., Francis T. Anderson, C. Ellis Henican, Jr., New Orleans, La., for plaintiff-appellant.

Phillip A. Wittmann, William D. Treeby, Anthony M. DiLeo, New Orleans, La., for Columbia Pictures et al.

James G. Burke, Jr., New Orleans, La., Walter S. Beck, New York City, for Nat. Screen Service.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before TUTTLE, WISDOM and GOLDBERG, Circuit Judges.

GOLDBERG, Circuit Judge:

This antitrust case together with its judicial cousins decided today, Poster Exchange, Inc. v. National Screen Service Corp., 5 Cir. 1975, 517 F.2d 117 and Poster Exchange, Inc. v. National Screen Service Corp., 5 Cir. 1975, 517 F.2d 129 has proceeded toward its culmination with something less than the speed of light. These three cases grow out of the consolidation of the motion picture accessory business, under the dominance of National Screen Service Corp. (National Screen), a development which has generated more than a score of judicial opinions in the Third and Fifth Circuits and the Supreme Court, and covered a span of more than thirty years.

The case at hand concerns the movie poster industry in New Orleans. Plaintiff Exhibitors Poster Exchange, Inc. (Exhibitors) charges in this suit that defendant National Screen and seven movie production firms (Producers) 1 have combined to restrain free trade in movie posters in Exhibitors' market and to sustain a monopoly in the distribution of these posters for National Screen during the 1967-1971 period. We conclude that Exhibitors is collaterally estopped from proving its allegations by the effect of unappealed judgments against it in previous litigation against these defendants. In discussing the nature of the claim here alleged, we necessarily proceed to sketch the basic structure and history of the poster industry as it relates to all three cases resolved today.

I

Nearly all motion picture operators employ posters, or accessories, depicting copyrighted scenes from the films to advertise and promote their current and anticipated features, and such posters have been in use since early in the history of the motion picture industry. These posters were originally sold by the motion picture producers to theater operators; but in the Thirties, localized jobbers went into the business of acquiring an inventory of these posters and then renting them out for use and re-use by theater operators in the vicinity. The poster renting business flourished, and by 1940, independent poster renters were established throughout the United States. Plaintiff Exhibitors joined the industry in 1939 in New Orleans.

Early in the 1940's, three of the motion picture producers, Paramount, R.K.O. and M-G-M, each contracted with defendant National Screen regarding the production and nationwide distribution of their standard posters, thus apparently cutting off independent poster renters from access to new supplies of accessories for films produced by those companies. In response, a band of thirteen independents instituted an antitrust action in the Eastern District of Pennsylvania 2 against National Screen, Paramount, R.K.O., and M-G-M, which ended in a compromise settlement providing that National Screen would grant each plaintiff a license entitling it to purchase all necessary supplies of those producers' accessories (and the accessories of any other producers who might later contract similarly with National Screen) at specified prices. Subsequently National Screen entered into similar exclusive 3 contracts with the remaining five major film producers, Universal, Columbia, United Artists, Warner, and Fox; and a second suit was instituted in the federal district court in Philadelphia, this time against National Screen and all eight major producers. After winning a Supreme Court judgment that their present cause of action was not barred by res judicata because of its continuation after 1943, and because of the enlargement in scope of acts and defendants, Lawlor v. National Screen Service Corp., 1955, 349 U.S. 322, 75 S.Ct. 865, 99 L.Ed. 1122, the independent-plaintiffs were ultimately defeated on the merits. Lawlor v. National Screen Service Corp., 3 Cir. 1959, 270 F.2d 146, cert. denied 1960, 362 U.S. 922, 80 S.Ct. 676, 4 L.Ed.2d 742. Braced by this Third Circuit decision in its favor, National Screen proceeded in February, 1961, to notify Exhibitors and other jobbers throughout the country of its intention to discontinue supplying accessories to Exhibitors and the other jobbers (as it had been supplying them since 1943) as of May 16, 1961.

The day after the cut-off, May 17, 1961, Exhibitors initiated suit (Suit 1) against National Screen and six of the seven producers 4 here charged, alleging violations of Sherman Act, §§ 1 5 and 2, 6 15 U.S.C. §§ 1 and 2, through a conspiracy to restrain trade and to give National Screen a monopoly, and through National Screen's alleged monopolization and attempt to monopolize the accessory industry. Exhibitors sought treble damages and injunctive relief. 7 Exhibitors initially garnered a preliminary injunction against all defendants, but the injunction was dissolved following discovery, and summary judgment was entered in favor of the Producers. Plaintiff took no appeal.

National Screen remained as a party defendant in Suit 1. As trial approached, Exhibitors filed a second suit in 1964 (Suit 2) against National Screen and all Producers 8 to recover damages suffered since the entry of summary judgment in Suit 1 in 1961. Trial on the remaining aspects of Suit 1 was postponed, and the two suits were merged. Subsequently, in 1965, the district court entered summary judgment for each of the defendants. Again, Exhibitors took no appeal.

Undeterred, Exhibitors filed Suit 3 in 1967 against National Screen and the seven producers, asking for damages from the time of filing Suit 2. The district court entered summary judgment for each defendant on the basis of res judicata and collateral estoppel, and Exhibitors appealed. Exhibitors Poster Exchange, Inc. v. National Screen Service Corp., 5 Cir. 1970, 421 F.2d 1313, cert. denied, 400 U.S. 991, 91 S.Ct. 454, 27 L.Ed.2d 439. Lending an indulgent reading to Exhibitors' pleadings in Suit 3 9 we concluded that they could be read to allege new claims based on significant post-1961 actions, and that res judicata did not entitle the defendants to summary judgment on that record. We observed further, however,

(a)lthough No. 3 would be a new cause of action and res judicata inapplicable thereto, Exhibitors might still be barred from further action on certain issues by collateral estoppel. The doctrine is classically stated by Mr. Justice Field in Cromwell v. County of Sac, 1877, 94 U.S. 351, 24 L.Ed. 195 when he says that in 'a second action between the same parties * * * upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.' at 94 U.S. 353, 24 L.Ed. 198. It forecloses inquiry only as to those issues which were necessarily determined. United States v. Burch, 5 Cir. 1961, 294 F.2d 1, 5.

Thus it is necessary to determine what were the 'matters in issue or points controverted' in Suits No. 1 and No. 2. This determination is to be made on the basis of the prior records. The process was generally described by Mr. Justice Day: 'To answer these questions, we must look to the pleadings making the issues, and examine the record to determine the questions essential to the decision of the former controversy.' United Shoe Machinery Corp. v. United States, 1922, 258 U.S. 451, 459, 42 S.Ct. 363, 366, 66 L.Ed. 708, 718.

421 F.2d at 1319.

We then proceeded to identify the issues determined in Suits 1 and 2, and thereby precluded from re-litigation in Suit 3, as including the lawfulness under §§ 1 and 2 of the Sherman Act of the defendants' 1961 activities. Concluding, however, that Exhibitor's pleadings might be interpreted to encompass new actions beyond those charged in the earlier suits, we remanded the case to allow Exhibitors an opportunity to prove such subsequent substantive antitrust violations.

On remand Exhibitors offered to prove only that the alleged antitrust behavior of which it has complained since 1961 National Screen's consolidation of the industry, refusal to deal with Exhibitors, and exclusive dealing with Producers has continued throughout the period sued upon. 10 Exhibitors has not alleged any new and different activities or agreements by or between the defendants, or any new and different disruption of plaintiff's business. On the contrary, its position, as stated to the district court, was that the defendants "are not doing anything different from what they've done before. There is nothing different after 1961 . . . ." On this record, the district court denied Exhibitors a preliminary injunction in 1970, which denial we affirmed, Exhibitors Poster Exchange v. National Screen Service Corp., 5 Cir. 1971, 441 F.2d 560, and ultimately again entered summary judgment in favor of the defendants on the basis of res judicata, collateral estoppel, and the statute of limitations. We conclude that summary judgment was properly granted on the basis of collateral estoppel, and do not reach the alternative grounds.

II

The judgment entered by the district courts in Suits 1 and 2 established that the activities of Producers and National Screen did not amount to a § 1 conspiracy and that National Screen had not monopolized or attempted to monopolize the industry in derogation of § 2. In this lawsuit Exhibitors complains of conduct...

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