Flip Side Productions, Inc. v. Jam Productions, Ltd.
| Decision Date | 08 April 1988 |
| Docket Number | Nos. 87-1531,87-1547,s. 87-1531 |
| Parties | , 56 USLW 2630, 1988-1 Trade Cases 67,964, 10 Fed.R.Serv.3d 1070, RICO Bus.Disp.Guide 6921 FLIP SIDE PRODUCTIONS, INC., Plaintiff-Appellant, v. JAM PRODUCTIONS, LTD., et al., Defendants-Appellees. FLIP SIDE PRODUCTIONS, INC., Plaintiff-Appellant, v. TEMPO, INC., Defendant-Appellee. FLIP SIDE PRODUCTIONS, INC., Plaintiff-Appellee, v. JAM PRODUCTIONS, LTD., Chicago Jam, Inc., Jerry Mickelson, and Arny Granat, Defendants-Appellants. & 87-1496. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Steven M. Kramer, Philadelphia, Pa., for plaintiff-appellant.
William D. Heinz, Jenner & Block, Reuben A. Bernick, Rudnick & Wolfe, Chicago, Ill., for defendants-appellees.
Before COFFEY and EASTERBROOK, Circuit Judges, and GRANT, Senior District Judge. *
Flip Side Productions, Inc. (Flip Side) alleged that the defendants, Jam Productions, Ltd., Chicago Jam, Inc., Jerry Mickelson, Arny Granat (collectively, JAM) and Tempo International, Inc., MFG International, Inc., Ralph Mickelson, Robert Martwick, Norman Finkel, Lee Stern, Al Granat (collectively, Tempo), exclusively controlled the Rosemont Horizon, an "essential facility" for the booking and promotion of pop, rock, and rhythm and blues (R & B) concerts in the Chicago metropolitan area in violation of Secs. 1 and 2 of the Sherman Act. 15 U.S.C. Secs. 1, 2. Flip Side further contended that the defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C. Sec. 1961 et seq. Flip Side appeals from the order of the district court granting JAM and Tempo's motions for summary judgment and imposing sanctions against Flip Side in favor of Tempo pursuant to Rule 11 of the Federal Rules of Civil Procedure. JAM cross-appeals from the order of the district court denying JAM's petition for attorneys' fees and costs. We affirm in part and reverse in part.
This appeal concerns the booking and promotion of pop, rock, and R & B concerts (collectively, concerts) in the Chicago metropolitan area during the past decade by various promoters and their relationships to the owners or managers of several facilities in which concerts are performed. Promoters contract with performing artists, purchasing their services. In return, the promoter is responsible for advertising the concert, selling tickets, and obtaining a suitable concert hall. Promoters present concerts for Chicago consumers in facilities in three size categories: the arena-level facility, seating 10,000 or more; the middle-level facility seating 3,000-4,500; and the lower-level facility which seats approximately 1,000. At least 35 lower-level facilities and 16 middle-level facilities are located in the Chicago metropolitan area.
Prior to 1980, at least two arena-level facilities competed with each other in the Chicago metropolitan area: the Chicago Stadium which seats approximately 19,000, and the International Amphitheatre, which seats approximately 10,500. The Amphitheatre was constructed during the late 1930s and closed its doors in December of 1982. In its heyday, the Amphitheatre hosted many concerts as well as other events (including the Chicago National Basketball Association team "The Chicago Bulls"). The larger, privately owned Chicago Stadium is the current home arena of two Chicago-area professional sports teams: the Chicago Bulls and the Chicago Blackhawks of the National Hockey League. Throughout the year, the Stadium hosts other events, such as boxing, ice shows, circuses, and music concerts. Specifically, during fiscal years August 1, 1979, to July 31, 1983, at least 21 concerts were performed at the Stadium. Attendance at these concerts ranged from approximately 7,500 to 20,000, and only three of these concerts were attended by less than 10,000 persons. Presently, the Chicago Stadium is available for staging concerts subject only to the promoter's ability to provide the owner a satisfactory profit.
Since 1980, at least three additional arena-level facilities have been constructed in the Chicago metropolitan area: namely, the Rosemont Horizon, the Pavilion, and Poplar Creek.
In 1978 the Village of Rosemont, Illinois, decided to construct an 18,000-seat indoor arena, the Horizon, which would compete with the International Amphitheatre and the Chicago Stadium. The Horizon was to stage sporting events, circuses, ice shows, and other entertainment events. The Village of Rosemont financed the project, issuing $19 million worth of revenue bonds. To ensure the marketability of these bonds, the Village contracted with Araserv, Inc. (a concessionaire), the Ringling Brothers Barnum & Bailey Circus, and MFG International, Inc. (the corporate entity now known as Tempo International, Inc.). Pursuant to these agreements, Araserv, Ringling Brothers, and Tempo received long-term contracts for the exclusive use of the Horizon. For example, Araserv received a ten-year exclusive right to sell beverages, food, programs, etc., at all Horizon events except circuses; Tempo received a ten-year exclusive right to present no less than 50 concerts annually at the Horizon (subsequently the agreement was renegotiated to reduce the number of concerts Tempo must present to 32), and Ringling Brothers acquired exclusive rights to present a yearly circus. In exchange, the Village was guaranteed substantial license fees which were essential to the sale of the revenue bonds. Araserv guaranteed the Village a minimum annual license fee of $300,000 and further contracted to install and maintain equipment at the Horizon at a potential cost of $365,000. The Ringling Brothers guaranteed the Village 11 1/2 percent of its annual gross receipts or an annual license fee of $150,000, whichever was greater. Under its agreements, Tempo was obligated to pay a minimum license fee of $6,000 per event or $300,000 annually, again, whichever was greater. The exclusive nature of these ten-year contracts protected the guarantors Araserv, Tempo, and Ringling Brothers, allowing them the opportunity to recoup their substantial fee guarantees and expenditures. The Horizon opened its doors in May 1980, and concerts, as well as an assortment of other events, have been staged very successfully.
The Board of Trustees of the University of Illinois embarked on a new enterprise opening the 11,000-seat Pavilion on their Chicago campus in April 1982. During the previous year (1981) the University had inquired of several promoters, including JAM, as to their interest in contracting for the use of the Pavilion for staging concerts. The University eventually entered into an agreement with JAM under which JAM had the exclusive rights to present at least 30 events or commercial performances per year. In exchange, JAM guaranteed the University $250,000 per year. Also note that the Pavilion has well in excess of 100 dates available annually for the presentation of concerts or other attractions.
Lastly, the construction of Poplar Creek, an outdoor, arena-level facility, was completed after 1980, and the facility is currently available for the presentation of concerts. The record neither revealed the exact date construction of Poplar Creek was completed nor the date concerts were initially staged.
In June 1982 Flip Side, a corporation engaged in the business of booking and promoting 1 concerts in the Chicago metropolitan market since the mid-1970s, alleged that JAM, its competitor, entered into exclusive leases with co-defendants Village of Rosemont and the University of Illinois for the right to promote concerts at two "essential facilities," namely the Rosemont Horizon and the Pavilion, owned by the co-defendants, respectively. 2 Flip Side alleged that the conduct of JAM, the Village of Rosemont and the University of Illinois, i.e., entering into exclusive leases for the use of the purported facilities, constituted monopolization of the promotion of concerts in the Chicago metropolitan area, an attempt to monopolize the relevant market, and a conspiracy, combination, and contract to unreasonably restrain trade in violation of Secs. 1 and 2 of the Sherman Act. 15 U.S.C. Secs. 1, 2. In response and during August 1982, JAM filed a counterclaim, a "mirror image" 3 of Flip Side's complaint, and a third-party complaint contending that Flip Side and its principals, Lawrence and Carl Rosenbaum, also had violated Secs. 1 and 2 of the Sherman Act by entering into an exclusive rights agreement to promote concerts at the International Amphitheatre, purported to be an essential facility from mid-1976 to mid-1980 (before the Horizon was constructed).
Subsequently, the University of Illinois filed a motion for summary judgment and on October 29, 1982, Judge Moran granted the University's motion for summary judgment, finding:
(Emphasis supplied).
In April 1983, Flip Side filed its first amended complaint, joining as defendants Tempo International, Inc., a partnership specifically organized to enter into a licensing agreement with the Village of Rosemont for the presentation of concerts at the Rosemont Horizon, and Tempo International, Inc.'s owners, Ralph R. Mickelson, Alan Granat, 4 Lee B. Stern, Robert F. Martwick, and Norman D. Finkel (collectively, Tempo). Flip Side alleged that Tempo, which had an...
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