Folly Amusement Holding Corp. v. RANDFORCE A. CORP.

• Decision Date: 05 August 1939
• Citation: 32 F. Supp. 361
• Parties: FOLLY AMUSEMENT HOLDING CORPORATION v. RANDFORCE AMUSEMENT CORPORATION et al.
• Court: U.S. District Court — Southern District of New York

32 F. Supp. 361

FOLLY AMUSEMENT HOLDING CORPORATION v. RANDFORCE AMUSEMENT CORPORATION et al.

District Court, S. D. New York.

August 5, 1939.

Louis Halle, of New York City, for plaintiff.

Telsey & Young, of New York City, for defendants Randforce Amusement Corp., Samuel Rinzler and Louis Frisch.

J. Robert Rubin, of New York City, for Loew's, Inc.

R. W. Perkins, of New York City, for Warner Bros. Pictures, Inc., and Vitagraph, Inc. Dwight, Harris, Koegel & Caskey, of New York City, for 20th Century-Fox Film Co.

William Mallard, of New York City, for R.K.O. Pictures, Inc.

Austin C. Keough, of New York City, for Paramount Pictures, Inc.

Charles D. Prutzman, of New York City, for Universal Film Exchanges, Inc., and Big U Film Exchange, Inc.

O'Brien, Driscoll & Raftery, of New York City, for United Artists Corp.

Julian B. Rosenthal, of New York City, for Monogram Distributing Corp.

Meyer H. Lavenstein, of New York City, for Republic Pictures Corp.

HULBERT, District Judge.

There are eleven motions addressed to the complaint.

Plaintiff sues to recover treble damages for alleged violation of the Sherman Anti-Trust Law, Title 15 U.S.C.A. §§ 1, 2, 7, and the Clayton Anti-Trust Act, 15 U.S. C.A. §§ 12, 13, 14, 15, 16, 18, 22 and 23.

Summarizing the rather voluminous complaint, without effort to embellish the substance of the allegations, plaintiff is a New York corporation and leased a theatre at 15 Debevoise St., Brooklyn (Eastern District), known as the "Folley" from the Hyde & Behman Corporation for a period of ten years to commence on December 23, 1933, to be operated by plaintiff as an independent exhibitor of motion pictures. Prior thereto this theatre was managed by Shea Chain, Inc., as agents for the lessor and plaintiff contracted with Shea for the duration of said lease to continue to purchase the same type of motion picture product, classified as "third" or "subsequent run" film as had been shown during the management of Shea, for exhibition in conjunction with a vaudeville show.

Defendants Rinzler and Frisch are residents of the State of New York and engaged in the operation of motion picture theatres "either directly or indirectly, and are the principal officers of Randforce Amusement Corp.," which it will be assumed is a corporation although not so averred. These three defendants are designated as "defendant exhibitors". The remaining defendants, designated as "defendant distributors," are alleged to be corporations (place of incorporation not stated) each maintaining a place of business in the State of New York within the jurisdiction of this court, and all of said defendants are engaged in Interstate Commerce and are producers and distributors of motion picture films throughout the United States (except R.K.O. Radio Pictures, Inc).

The defendant exhibitors have been in the business of operating a chain of motion picture theatres, and some of them are in the same "zone" in which the plaintiff's theatre was located, to-wit — the Alba and the Rainbow, one and six blocks respectively from the plaintiff's theatre the "Folley"; also the Commodore and the Republic, since acquired by R.K.O.

The defendant producers (sic) and the producing companies affiliated with the defendant distributors, who are "major producers," manufactured practically the only films having any commercial value which are generally of a much better grade than the films manufactured by the other producers referred to as the "independent producers" which, being of an inferior quality, have not been generally exhibited at motion picture theatres, and the number of suitable films manufactured by the independent producers is wholly inadequate to supply seasonal needs of any motion picture theatre and a regular supply of the films of the major producers, which are classified as "A" "B" and "C" pictures is essential for every theatre operator, particularly in the highly competitive "zone" in which the plaintiff's theatre was located.

Approximately 350 pictures of the major producers and 100 pictures of the independent producers are distributed in the several states of the United States each year.

Under the booking contracts in effect during the season September 1, 1933 to August 31, 1934, approximately 100 pictures from the Metro Corporation (which merged into the defendant Loew's, Inc.) and the Warner Bros. Picture, Inc., were displayed at plaintiff's theatre after playing first run at Loew's theatres and second run at other houses in the "zone".

The Alba Theatre, operated by the defendant Randforce, was not in an advantageous position to show profitably as second or subsequent pictures, product which had been exhibited at Loew's as first run, so that Alba was not interested in booking Metro (Loew's) and Warner product for Alba so long as it was being shown first run at Loew's.

During the early part of 1934, R.K.O. and Loew (as exhibitors) "made a deal" which resulted in shifting the Warner product exhibited as first run in Loew's Theatres, to R.K.O. (1 mile from Alba) as first run. Thus, because of this distance it became profitable to show the Warner product as second run in the Alba. Randforce continued to operate approximately 40 theatres and defendant producers and distributors, in order to obtain bookings for their product from Randforce, were terrorized to do its bidding.

On or about, or prior to July 1934, the defendants entered into a combination and conspiracy to restrain and monopolize Interstate Trade and Commerce in the distribution and exhibition of motion pictures, particularly the right to contract for and to exhibit the same and deprive plaintiff of an opportunity to do so; it was a part of this conspiracy to minimize, suppress and destroy competition and prevent plaintiff from competing with Alba and other theatres owned by Randforce with a view toward the total destruction of plaintiff's business.

In furtherance thereof, plaintiff proceeds to set forth at length numerous overt acts, i.e., "In furtherance of the aforesaid unlawful combination and conspiracy, the defendant exhibitor, Randforce Amusement Corporation, illegally contracted with the defendant distributors herein for:

"(a) exclusive right to exhibit the films distributed by the latter in the theatres of the Randforce Amusement Corporation;

"(b) special privileges and preferences to the said Randforce theatres, including concessions in prices, long terms of credit, priority, and exclusiveness in playing dates:

"(c) the right of selection, cancellation, and rejection of films by the said Randforce Circuit;

"(d) the refusal on the part of the defendant distributors to enter into contracts with the plaintiff for licenses to exhibit their films in its theatre, and that no such licenses should be issued to the plaintiff, or any films delivered to it, except when the Randforce Amusement Corp., who would have the right to exhibit the said films prior to the right of the plaintiff to exhibit the same, was unwilling to contract for the said films and then, only upon the condition that said films could not be exhibited by the plaintiff until after lapses of long and unreasonable periods of `protection' and finally;

"(e) furtherance of the intent and purpose of said combination and conspiracy by hindering and harassing the plaintiff in other ways and by other methods expedient to the defendant, Randforce Amusement Corp., and the other defendants herein to interfere with and disturb and injure the business of the plaintiff in order to facilitate the elimination of the plaintiff as a competitor of the Randforce Amusement Corporation's Alba Theatre, and such other theatres of the Randforce Amusement Corp., as would operate in competition with the plaintiff."

As a consequence and in furtherance of the conspiracy, Loew's, Warner and Vitagraph refused to renew their contracts with plaintiff for the season of 1934-1935 because Randforce demanded a half split of pictures produced for exhibition at its Alba theatre.

To replace the shortage which resulted when Loew's, Warner and Vitagraph diverted half of their produce to Alba theatre, plaintiff was compelled to seek out and sign contracts with the defendants Columbia Pictures Corp. and Universal Film Exchanges, Inc.

The diversion of one half of the product of Metro (Loew's) Warner and Vitagraph to Alba, made it necessary for the plaintiff to increase the cost of vaudeville stage production which wiped out plaintiff's profits for that season.

Sometime in April or May of 1935, the defendants Frisch and Rinzler demanded of the plaintiff a one half interest in plaintiff's theatre without being required to give any consideration therefor and accompanied said demand by a threat that non-compliance therewith would result in the destruction of the plaintiff's business. Plaintiff refused the demand.

Thereafter, in 1935, when the buying season for the picture product for the season of 1935-1936 arrived, Metro (Loew's) Warner and Vitagraph refused to renew their contracts with plaintiff, explaining that Randforce had secured the same.

Plaintiff thereupon ascertained that Warner had entered into an agreement with Randforce providing that Warner's entire product for that season would be exhibited, first run, at R.K.O. Bushwick theatre, Brooklyn, and second run in the Alba theatre, thereby depriving plaintiff of the opportunity to exhibit any of the Warner product.

Thereafter when plaintiff attempted to...