Fox West Coast Theatres Corp. v. Paradise T. Bldg. Corp.

• Decision Date: 10 September 1958
• Docket Number: No. 15424.,15424.
• Parties: FOX WEST COAST THEATRES CORPORATION, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, Appellants, v. PARADISE THEATRE BUILDING CORPORATION, Appellee. PARADISE THEATRE BUILDING CORPORATION, Appellant, v. FOX WEST COAST THEATRES CORPORATION, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

264 F.2d 602 (1958)

FOX WEST COAST THEATRES CORPORATION, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, Appellants, v. PARADISE THEATRE BUILDING CORPORATION, Appellee.

PARADISE THEATRE BUILDING CORPORATION, Appellant, v. FOX WEST COAST THEATRES CORPORATION, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, Appellees.

No. 15424.

United States Court of Appeals Ninth Circuit.

September 10, 1958.

O'Melveny & Myers, Homer I. Mitchell, William B. Carman, Philip F. Westbrook, Jr., Newlin, Tackabury & Johnston, Frank R. Johnston, David H. Massey, Los Angeles, Cal., for appellant.

Weller & Corinblit, Jack Corinblit, Los Angeles, Cal., Joseph Alioto, San Francisco, Cal., Elwood S. Kendrick, Los Angeles, Cal., for appellee.

Before POPE, FEE and CHAMBERS, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

After a jury found that certain producer-distributor-exhibitors had conspired together to monopolize and unreasonably restrain interstate commerce in the licensing of motion pictures to a theatre for exhibition in a specific area on a seven-day run during a limited period and assessed damages therefor, the verdict and judgment are assailed by the producers on the ground that there was no substantial evidence to support liability or the award of damages. The producers also question certain instructions given by the trial court to the jury.

Paradise Theatre Building Corporation, hereinafter referred to as "Paradise," brought action against Fox West Coast Theatres Corporation, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, all of which are appellants, and also against Paramount, Warner's and Universal, against none of which the jury returned a verdict. The complaint was based upon an alleged conspiracy resulting in the uniform refusal of all defendants to license motion pictures to Paradise on Los Angeles first run. The conspiracy among all defendants was alleged to have resulted also in a coordinated refusal to license a seven-day run in Inglewood and Westchester, and that Paradise was injured thereby. A trial was held where there was a voluminous record. The jury found, in response to a special interrogatory, that there was no conspiracy on the part of any of defendants as to Los Angeles first run. This phase of the case is not here for review. In answer to another special interrogatory, the jury found a conspiracy on the part of Fox West Coast Theatres Corporation, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, as to the licensing of the seven-day runs. By implication, no conspiracy was found on the part of Paramount, Warner's or Universal. A judgment was returned in favor of the last named defendants. The jury returned a verdict against defendants Fox West Coast Theatres Corporation, Twentieth Century-Fox Film Corporation and Loew's, Incorporated, in the sum of $20,000.00. This appeal is from a final judgment against defendants last named for the treble damages in the amount of $60,000.00 and $10,000.00, attorney fees, and $1,657.69 costs.

The Paradise Theatre constructed by appellee was located in the Westchester district. The Loyola Theatre, of Fox, was located less than a half mile away. Loyola exhibited Fox pictures on the Los Angeles first run day and date with Grauman's Chinese, in Hollywood, Los Angeles, in the downtown area, and Wilshire and Uptown theatres, in the Wilshire district, all of which were Fox theatres. Before Paradise and La Tijera, a theatre which was also located in the Westchester district of Los Angeles, were built, Loew's did not license a seven-day run to any theatre in the City of Los Angeles except in the faraway sections of San Pedro and Wilmington. Its practice was to offer a twenty-one-day run in the urban area. In Inglewood, a section merging into Westwood, it licensed a single seven-day run. After La Tijera and Paradise were built, Loew's offered Paradise a twenty-one-day run without bidding. All defendants uniformly refused to license motion pictures to Paradise Los Angeles first run. Paradise demanded the right to license a nonexclusive seven-day run without bidding against other theatres in the general area. All defendants refused this demand.

Before 1949, there were four motion picture theatres in Inglewood and Westchester, including the Loyola. Within twenty months, there were constructed six additional theatres, including Paradise and La Tijera and the Fox in downtown Inglewood.

The jury found a conspiracy between Fox West Coast, Twentieth Century-Fox and Loew's to refuse to Paradise a right to license a nonexclusive seven-day run without competitive bidding between September 18, 1950, and September 17, 1951. The first question is whether there was substantial evidence to sustain the verdict on this point.

Admittedly, there was parallel action by all these parties in the refusal. There was likewise evidence that in 1944 or 1945 the Fox interests had indicated an intention to prevent the construction of any outside theatre in Westchester. In 1946, Fox West Coast constructed the Loyola Theatre. The custom of exhibiting motion pictures simultaneously in various groups of theatres is well established. The licensing of motion pictures on successive runs is also well established in practice and recognized by law. The Los Angeles first run launches a picture. The seven-day run is the next important step. Generally this licensing is confined to communities outside the downtown Los Angeles area. Much later there occurs the more general exhibition of a picture on twenty-one-day and later runs.

Each distributor determines in what areas it will license a given run of its pictures and the number of pictures it will license in a given area.

The distributor is also able to select a theatre in an area in which to exhibit its pictures on a seven-day run to the exclusion of any other. Another practice of the distributor is to use competitive bidding to rent pictures desired by competing exhibitors for the same day and date showing. Loew's used this method of determining which theatre in Inglewood or Westchester would be licensed the seven-day run on each picture. Paradise bid on a few pictures and only obtained one seven-day run of Loew's pictures by this method. Fox obtained several of Loew's pictures by the bidding method. It was not shown that in the bidding Fox was accorded any special privileges by Loew's.

There was evidence that, before Paradise opened, there had been an agreement by certain distributors, including Fox, to divide up the pictures in this area and not to bid for Loew's product in the Academy, Fifth Avenue or Fox Theatres in Inglewood. This arrangement ceased before Paradise opened. However, there was some evidence from which it might have been concluded by the jury that certain exhibitors, including Fox, had agreed not to bid against each other in certain areas which may have included the one in dispute.

Appellants contend that the divergent reason for the conduct of Fox and Loew's in licensing their seven-day runs shows conclusively that there was no conscious parallelism of action. But it was possible for the jury to conclude from the evidence that the simultaneous refusal of Fox and Loew's amounted to the forbidden parallelism worked out by different methods. Even parallelism does not raise the inference of conspiracy necessarily where the conduct is reasonably responsive to business considerations as to the respective defendants. Fox had a right to license its pictures on any particular run to its own theatres. Loew's had a perfect right to select a particular theatre for exclusive showing on particular runs or could have required competitive bidding. However, the charge is that these distributors conspired to do these acts and not to interfere with each other to their detriment. As Judge Yankwich said, the question presented is whether "the actions of the defendants * * * exceed the limits of choice of, or preference in, dealing allowed by law to one engaged in a private enterprise for profit." United States v. Twentieth Century-Fox Film Corporation, D.C., 137 F. Supp. 78, 115. But it must be kept in mind that this is a question of fact which the jury has decided against appellants. It makes no difference that the jury found the facts and the intentions of the parties proved a conspiracy here, whereas a trial judge, sitting without a jury, found to the contrary on somewhat similar facts and his findings and judgment were affirmed by this Court. See Fanchon & Marco, Inc. v. Paramount Pictures, Inc., 9 Cir., 215 F.2d 167. There is no power in this Court to reverse a verdict on such grounds. The only problem is whether there was sufficient evidence to submit to the jury. This is a problem of law.

There was substantial evidence upon which the jury might have found a conspiracy by Fox West Coast, Loew's and Twentieth Century-Fox. There was evidence from which the jury might have found that...