Goldlawr, Incorporated v. Shubert

• Decision Date: 08 June 1967
• Docket Number: Civ. A. No. 21506,22092.
• Citation: 268 F. Supp. 965
• Parties: GOLDLAWR, INCORPORATED v. Jacob J. SHUBERT et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

268 F. Supp. 965

GOLDLAWR, INCORPORATED v. Jacob J. SHUBERT et al.

Civ. A. Nos. 21506, 22092.

United States District Court E. D. Pennsylvania.

June 8, 1967.

Edwin P. Rome, Morris L. Weisberg, Philadelphia, Pa., of counsel, Ruth B. Rosenberg, Edward E. Cohen, Blank, Rudenko, Klaus & Rome, Philadelphia, Pa., of counsel, for plaintiff.

Charles A. Wolfe, Philadelphia, Pa., Hugh G. Moulton, Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., Gerald Schoenfeld, Bernard B. Jacobs, New York City, of counsel, for Select Theatres Corp., and others.

OPINION

KRAFT, District Judge.

After a decade¹ of collateral proceedings, and virtually on the eve of trial, the defendants have moved for summary judgment in these antitrust actions, in which plaintiff charges the defendants with violations of §§ 1 and 2 of the Sherman Act² for the period 1933-1960 and claims damages allegedly suffered from 1950 to 1960.

For the sole and limited purpose of deciding these motions, the defendants admit that they have engaged in a combination in restraint of trade in the booking and presentation of legitimate theatre attractions throughout the United States and in the presentation of legitimate attractions in Philadelphia, Baltimore, Boston, Chicago, Cincinnati, Detroit, Los Angeles, New York, Pittsburgh and Washington, D. C.

For the same restricted purpose defendants admit, further, that they owned and operated the United Booking Office, Inc. (U.B.O.), the only theatrical booking office in the United States, which enabled them to monopolize the booking and presentation of theatrical attractions throughout the country, and particularly, in Philadelphia; that such monopoly power was employed by them and specifically incorporated into their standard booking contract which read as follows:

"WHEREAS the party of the first part controls the booking and playing of first-class theatrical attractions throughout the United States and Canada, and

WHEREAS the party of the second part is desirous of securing the presentation of the attractions thus controlled by the party of the first part and is desirous of arranging with the party of the first part for the production of such and other plays at the said name of theatre in the city of name of city.

* * * the party of the second part hereby retains and engages the services of the party of the first part for a period commencing on the day of , for the exclusive booking of legitimate attractions during the term of this agreement at the said theatre in the city aforementioned, and the said party hereby irrevocably appoints the party of the first part the sole and exclusive booking agent of the theatre in the city of ." (emphasis ours; Vol. I p. 163 of Plaintiff's Pre-Trial Memorandum)

By reason of such agreements the defendants stultified all competition by non-affiliated theatre operators, who were unable to secure legitimate attractions from the defendants. It gave the defendants as well a coercive power over the affiliated theatres, since the contract did not restrict U.B.O. from booking other theatres in the geographical area where the affiliated theatre was located.

The defendants' coercion was not limited to operators of theatres alone. It was extended to producers, who were compelled to book their shows through U. B.O. In occasional instances in which an independent producer of a recognized "smash hit" undertook to compete with the defendants' monopoly, his challenge was defeated. When the producers of Life With Father and the Merry Widow attempted to arrange independent tours for their productions, their efforts failed because of the pressure exerted by the defendants on theatre operators with whom the producers negotiated. Eventually, the producer of Life With Father capitulated to the Shuberts' position of strength and agreed to book his show through U.B.O. on September 1, 1942. (Vol. I Plaintiff's Pre-Trial Memorandum p. 143).

The Merry Widow, in 1944, arranged a booking in Detroit, Michigan only to find itself in competition with a Shubert-produced Merry Widow which had been deliberately booked there one week before the run of the established hit. Confusion reigned. Theatregoers frequently presented tickets at the wrong theatre, unaware that the Merry Widow was playing, competitively and concurrently, at two theatres. Thereafter, the producers of the "hit show" were unable, on a 12 week road tour, to book their attraction into a single Shubert affiliated theatre. (Vol. I Plaintiff's Pre-Trial Memorandum p. 147).

The defendants urge that, assuming the truth of the plaintiff's allegations for the purposes of the present motion—the plaintiff is not entitled to damages, because it was in pari delicto with the defendants and participated in the violations of §§ 1 and 2 of the Sherman Act. Crest Auto Supplies, Inc. v. Ero Manufacturing Company, 360 F.2d 896 (7 Cir. 1966).

The defendants claim to be entitled to judgment as a matter of law, asserting that the plaintiff corporation was formed in 1950 by William Goldman (Goldman) and Lawrence Shubert Lawrence, pursuant to an agreement among Goldman and the defendants in violation of the Sherman Act §§ 1 and 2 in which the parties agreed:

"(a) That plaintiff and defendants would allocate and divide among themselves the legitimate attractions to be presented in Philadelphia."

"(b) That the defendants would exercise their alleged monopoly power to compel producers whose attractions had been allocated to plaintiff to present their attractions at plaintiff's theatre."

"(c) That the defendants would not compete with plaintiff in the solicitation of producers whose legitimate attractions had been allocated to plaintiff's theatre."

"(d) That the defendants would refuse to deal with any producer whose attraction had been allocated to plaintiff."

"(e) That plaintiff and defendants would pool and monopolize all five Philadelphia theatres and divide the profits of the Erlanger Theatre between Goldman and defendants."

The defendants contend that no genuine issue of material facts exists because they "adduce no evidentiary matter in their own behalf * * * and * * * rely solely upon the allegations of the Amended Compaint, plaintiff's answers to defendants' interrogatories, Plaintiff's Pre-Trial Memorandum and the deposition of plaintiff by its officers and directors, William Goldman 1763 pages, William A. Loudermilk and H. Norman Weiss including the exhibits thereto."

The plaintiff, in opposing the motion, offers the entire deposition of Goldman, an affidavit by Goldman and the pleadings.

"* * * summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot." Poller v. Columbia Broadcasting System, Inc. et al., 368 U. S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed. 2d 458 (1961). "Both factual inferences and the record as a whole must be viewed in the light most favorable to the party opposing summary judgment." 6 Moore's Fed.Prac. ¶ 56.17 5 p. 2495 (2d ed. 1965).

From 1940 to 1950, William Goldman Theatres, Inc. attempted unsuccessfully to operate the Erlanger theatre, under a ten year lease, as Philadelphia's only independent legitimate theatre and as a first run motion picture house. It was unable to exhibit first run films in the Erlanger as the result of a conspiracy among the major motion picture distributors. William Goldman Theatres v. Loew's, Inc., 150 F.2d 738 (3 Cir. 1945).³

Only fifteen legitimate attractions,⁴ including five Mask & Wig Club productions, were presented throughout this period. During Goldman's tenure the Shubert interests were negotiating with the landlord to take over the operation of the Erlanger. In 1949 Goldman learned of the Shubert negotiations, when he encountered Lawrence Shubert Lawrence on a Philadelphia street.

At this meeting, Lawrence, a nephew of Lee Shubert, approached Goldman with a proposal that he (Lawrence) and Goldman form a new corporation to operate the Erlanger as a legitimate theatre. Goldman, foreseeing an opportunity to obtain legitimate attractions, agreed with Lawrence to form Goldlawr, Inc. Upon incorporation Goldman and Lawrence owned equal shares of the issued stock and shared the responsibilities of corporate operation. Lawrence was to serve as general manager in charge of bookings and Goldman was to have charge of the management of the theatre.

On August 19, 1950, the plaintiff and Lee Shubert entered into a written agreement by the terms of which Lee Shubert agreed to supply Goldlawr with at least thirteen legitimate theatrical attractions to be performed at the Erlanger for a minimum of thirteen weeks during each year of a new ten year lease eventually obtained by Goldlawr from the lessor⁵ of the theatre on September 19, 1950. The 1950 agreement also provided for the payment by Shubert to Goldlawr of $1000 as liquidated damages for each week that such attractions were not so provided.

Under this written agreement, which the defendants concede to be completely proper and lawful, Goldlawr began to operate the Erlanger in 1950. (Defendants' Brief p. 36). However, the defendants contend, that Goldlawr was also to receive "equal treatment" with the Shubert theatres in Philadelphia, pursuant to an independent illegal understanding Goldman had with Lee Shubert (Goldman Dep. 676-678). The defendants interpret that "equal treatment" to mean: (1) Goldlawr was to benefit from the exercise of the defendants coercive power upon the producers; (2) Goldlawr was to obtain productions from U.B.O. without engaging in competition with the defendants; (3) Goldlawr was specifically formed to accomplish an equal division of the product theretofore controlled by the defendants. Defendants urge that Goldlawr's ultimate acceptance of such benefits under the agreement bars any recovery by it under the doctrine of in pari delicto.

We think that several...