Fifth and Walnut v. Loew's Incorporated

• Decision Date: 19 July 1949
• Docket Number: Docket 21206.,No. 192,192
• Citation: 176 F.2d 587
• Parties: FIFTH AND WALNUT, Inc. et al. v. LOEW'S INCORPORATED et al.
• Court: U.S. Court of Appeals — Second Circuit

176 F.2d 587 (1949)

FIFTH AND WALNUT, Inc. et al. v. LOEW'S INCORPORATED et al.

No. 192, Docket 21206.

United States Court of Appeals Second Circuit.

Argued March 14, 1949.

Decided July 19, 1949.

Monroe E. Stein, of New York City (Rogge, Fabricant, Gordon & Goldman, Herbert J. Fabricant, Murray A. Gordon, and Maurice A. Gellis, all of New York City, on the brief), for plaintiffs-appellants.

Edward C. Raftery, of New York City (O'Brien, Driscoll, Raftery & Lawler, J. Robert Rubin, George A. Raftery, Edward J. Toner, Jr., Benjamin Melniker, and Earle L. Beatty, all of New York City, on the brief), for defendants-appellees Loew's Incorporated and others.

John F. Caskey, of New York City (Dwight, Harris, Koegel & Caskey, Austin C. Keough, Gordon E. Youngman, Charles F. Young, Sam Boverman, and T. Latta McCray, all of New York City, on the

brief), for defendants-appellees Twentieth Century-Fox Film Corporation, Paramount Pictures, Inc., and RKO Radio Pictures, Inc.

Abraham L. Freedman, of Philadelphia, Pa. (Robert W. Perkins and Howard Levinson, both of New York City, on the brief), for defendant-appellee Warner Bros. Pictures Distributing Corporation.

Louis D. Frohlich, of New York City (Schwartz & Frohlich, Everett A. Frohlich, and Max H. Rose, all of New York City, on the brief), for defendant-appellee Columbia Pictures Corporation.

Before AUGUSTUS N. HAND, CHASE, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

This appeal by plaintiffs from a defendants' verdict and judgment in a private action for damages and injunctive relief under the antitrust acts, 15 U.S.C.A. §§ 1, 2, 15, 26, comes to us on quite narrow issues of law. Plaintiffs claim two grounds for reversal: (1) the court's refusal of certain requests to charge, and certain language in the charge itself; and (2) the exclusion of certain of the adjudications in United States v. Paramount Pictures, Inc., D.C.S.D.N.Y., 70 F.Supp. 53, affirmed in part and reversed in part, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, which are alleged to be admissible under § 5 of the Clayton Act, 15 U.S.C.A. § 16. The basis of the action is the loss sustained by plaintiffs in the operation of the National Theatre in Louisville, Kentucky, by reason of the claimed conspiracy among defendants to refuse to this theatre the licensing of desirable moving picture films for show there. Jurisdiction was obtained in the Southern District of New York over the nine defendants now parties, and thereafter they moved for dismissal on the ground that Louisville was the more convenient place for trial. This motion was denied, D.C.S.D.N.Y., 76 F.Supp. 64, largely because of the delay in seeking the relief. There followed the lengthy jury trial whose unsuccessful outcome brings the plaintiffs here on appeal.

The individual plaintiff, Albert J. Hoffman, and the corporate plaintiff, Fifth and Walnut, Incorporated, successively operated the National Theatre, in Louisville, from September 3, 1943, to December 9, 1943, and from December 10, 1943, to July 11, 1946, respectively. There were four regular first-run theatres¹ operating in that city during the period in suit: the Rialto, the Strand, the Loew's-United Artists, and the Mary Anderson. The Fourth Avenue Amusement Co. operated the Rialto and the Strand, which were the only first-run outlets in Louisville for feature films distributed by defendants RKO Radio Pictures, Inc., Twentieth Century-Fox Film Corporation, and Paramount Pictures, Inc. The Loew's-United Artists Theatre was operated by the Louisville Operating Co., a corporation indirectly controlled, in equal shares, by defendant Loew's Incorporated and defendant United Artists Theatre Circuit, Inc. This theatre exhibited practically all the first-run features released by Loew's Incorporated and by defendant Columbia Pictures Corporation, and the majority of the first-run features distributed by defendant United Artists Corporation. (There is no connection between the two defendants United Artists Theatre Circuit, Inc., and United Artists Corporation other than the similarity of name.) The People's Theatre Company operated the Mary Anderson Theatre. It was the exclusive first-run outlet for pictures distributed by defendant Warner Bros. Pictures Distributing Corporation. A fifth theatre, the Brown Theatre, served as a move-over first-run theatre² under a joint agreement of the Fourth Avenue Amusement Co., the Louisville Operating Co., Inc., and the Broadway and Fourth Avenue Realty Co., which last organization owned the theatre. The profits from its operation were divided equally among the parties to the agreement, which also provided that "the same admission price shall be charged for such films as the price charged * * * in the first run theatres of such parties at the times when such films shall be exhibited at the Brown Theatre."

The evidence dealing with the move-over arrangement is the basis for plaintiffs' exception to the charge and to the denial of certain requests to charge. This arrangement was alleged to be one of the constituent conspiracies involved in the general conspiracy between and among the named defendants, and the exhibitors, who were not so named, since they were not amenable to the process of the district court.

It is of the essence of plaintiffs' argument that "but for the fact that a Jury had to pass upon the question of damages," a directed verdict would have been required. This contention, which we must reject, is the basis for their objections to the charge and the refusals to charge. Obviously what the plaintiffs are doing is to confuse evidence of conspiracy, to be evaluated by the jury, with demonstrated proof, to be accepted as final by the court. It was not the move-over arrangement itself that was condemned in United States v. Paramount Pictures, Inc., 334 U.S. 131, 159, 160, 68 S.Ct. 915, 92 L.Ed. 1260, but rather the discriminatory fashion in which move-over privileges were accorded by distributors to "large affiliated and unaffiliated circuits" and not to "small independent exhibitors." Plaintiffs make no claim here that they were denied the opportunity to move what first-run pictures they did receive over to the Brown.

Likewise, the joint operation of the Brown Theatre by one independent exhibitor and a subsidiary of one of the defendants (Loew's) was a type of activity which would not be unlawful unless a conspiracy to monopolize or restrain commerce by means of that activity was found by the jury to exist as to some of the defendants in the present action. The condemnation of joint interests in the decision in United States v. Paramount Pictures, Inc., D.C.S.D.N.Y., 70 F.Supp. 53, is not to be regarded as a declaration that joint ownership as such is illegal. It was made in a suit between the United States and various distributors and exhibitors on the basis of the particular facts of that case, and the presence of some of the defendants in the two actions did not relieve the plaintiffs in the present action from the necessity of satisfying the jury that a conspiracy existed. Of course, no one could reasonably contend that every joint ownership of a theatre, irrespective of all surrounding circumstances, is a violation of the Sherman Antitrust Act; and no such decision has ever been made. Nor did the price-fixing clause in the agreement require any special attention from the judge in his charge or afford any basis for a recovery of damages in the present action. Not only was the testimony of the plaintiffs' manager Janecky that he fixed his own prices, but the only complaint was that plaintiffs were deprived of first-run pictures by a conspiracy against them among the defendants. We cannot see how price-fixing in this case between some of the defendants and the owner of the Brown Theatre if it involved any illegality — which may be doubted — affected the plaintiffs' claim to damages for failure to obtain pictures.

Lastly, there was no inherent wrong in the uniform practice at the Brown Theatre of taking the picture that had earned the highest gross on its first run in Louisville and arranging standard terms (20 per cent of box-office receipts up to $3,250, and 50 per cent of receipts above that figure) with all distributors. Although the operating agreement required that no better terms be given any other distributor than were accorded to Loew's, it cannot be assumed that such an agreement would restrain competition among the distributors for the move-over facilities of the Brown. All of the pictures simultaneously on first-run exhibition in Louisville competed for the move-over privilege on the basis of their comparative box-office records.

Plaintiffs stress the fact that use of the Brown Theatre, which had been standing vacant for some time before it was reopened under the move-over arrangement, decreased, pro tanto, the demand for first-run exhibition space, since by taking the more popular pictures from first-run theatres before their first-run potentialities had been exhausted, the move-over made possible more frequent changes in the first-run bills. But so to hold is not to condemn the arrangement as in restraint of competition. The district court correctly assessed the significance of the evidence with regard to the move-over when it said in the charge:

"There has been considerable testimony in this case regarding: (a) The move-over pictures to the Brown Theatre from Loew's and the Rialto theatres; (b) The alleged uniform terms paid by the operator of the Brown move-over theatre to the various distributors; (c) The licensing of a second run in Louisville to the Kentucky Theatre by most of these defendants; and (d) The licensing of a third run to the Uptown Theatre by most of these defendants.

"This evidence was admitted solely to show the uniform conduct of the defendant distributors in licensing their pictures in Louisville, which the plaintiffs contend was another phase or part of the alleged combination and...