Grand Opera Co. v. Twentieth Century-Fox Film Corp., 11663

Decision Date16 July 1956
Docket NumberNo. 11663,11664.,11663
Citation235 F.2d 303
PartiesGRAND OPERA CO. v. TWENTIETH CENTURY-FOX FILM CORP.
CourtU.S. Court of Appeals — Seventh Circuit

Thomas C. McConnell, Chicago, Ill., Everett Prosser, Carbondale, Ill., William M. Wolff, Chicago, Ill., for plaintiffs-appellants.

Harold G. Baker, John M. Ferguson, Saul E. Cohn, East St. Louis, Ill., Walter R. Mayne, St. Louis, Mo., R. E. Costello, Leigh M. Kagy, East St. Louis, Ill., for Fox Midwest Amusement Corp. Baker, Kagy & Wagner, East St. Louis, Ill., of counsel.

Fred W. Schwarz, St. Louis, Mo., for Twentieth Century-Fox Film Corp., and others. Fordyce, Mayne, Hartman, Renard & Stribling, St. Louis, Mo., Kramer, Campbell, Costello & Wiechert, East St. Louis, Ill., of counsel.

Before MAJOR, LINDLEY and SCHNACKENBERG, Circuit Judges.

SCHNACKENBERG, Circuit Judge.

On November 18, 1955 plaintiffs filed a notice of appeal from an order entered by the district court on October 24, 1955, which dismissed plaintiffs' amended complaint on the ground that it did not state a claim upon which relief could be granted.

The amended complaint was filed February 25, 1955 and consists of four counts.

In count I, Grand Opera Company, a corporation, plaintiff, complains of Twentieth Century-Fox Film Corporation; Warner Bros. Pictures Distributing Corporation; Universal Film Exchange, Inc.; Paramount Film Distributing Corporation; Allied Artists Pictures, Inc.; Republic Pictures Corporation; RKO Radio Pictures, Inc.; Loew's Incorporated; United Artists Corporation; Columbia Pictures Corporation,1 and Fox Midwest Amusement Corporation, and alleges that Grand Opera Company has since 1917 owned and operated Marlow's Theater in Herrin, Williamson County, Illinois; that Marlow's is a large modern building with 1,400 seats, equipped to exhibit feature first-run motion pictures, is located in Herrin's business district, and has a drawing potential from among persons residing within a radius of 25 miles.

It is further alleged that Fox Midwest Amusement Corporation2 operates theaters in various parts of the United States and owns and operates the Strand Theater and the Roxy Theater in the city of West Frankfort, Illinois, and the Orpheum Theater in the city of Marion, Illinois; that West Frankfort is 11 miles from Herrin and Marion is 10 miles from Herrin; that the Fox Midwest theaters in West Frankfort and Marion are in direct competition with plaintiff's theater; that said cities are connected by concrete public highways, and there is an inter-flow of people between said cities for business purposes of all kinds, including patronage at first-run motion picture houses; that located between said cities there are smaller towns and villages with numerous residents all of whom are patrons in the trade area comprised by West Frankfort, Herrin and Marion; and the theaters of Fox Midwest are in the competitive trade area of plaintiff's theater.

It is also alleged that, beginning in the year 1951 and continuing to the present time, the plaintiff has been forced by the producing and distributing corporations to bid competitively for first-run feature pictures with the Egyptian Drive-In Theater, located about 5 miles from the city of Herrin; that all first-run feature pictures offered to plaintiff were subject to said limited competitive bidding, with the result that the plaintiff was required to bid against one of its competitors but was not allowed to bid against its other competitors in the established competitive trade area, said other competitors being the theaters owned and operated by Fox Midwest, and that upon the institution of this limited bidding practice, and continuing to the present time, the plaintiff has made request of each and every one of the producing and distributing corporations, for the right to bid competitively for first-run pictures, not only against the Egyptian Drive-In Theater, but against all other first-run feature theaters in its trade area, which includes the theaters owned and operated by Fox Midwest. It is also alleged that such requests were either ignored or denied. The count sets forth that this system of unlawfully imposed limited bidding unreasonably favors said plaintiff's competitor, granting such competitor dominance in obtaining first-run pictures, with the intent to deprive the plaintiff of business, and to injure plaintiff, and is a violation of the antitrust laws cited; that the illegal system created by the restricted and limited bidding practices, which leaves free from "competitive bidding" other competing theaters in the trade area, was a discrimination against the plaintiff and was and is an unlawful restraint of trade in interstate commerce, creates and continues to be an economic burden on said plaintiff, and has given an economic advantage to Fox Midwest, and that said system was set up by virtue of a conspiracy which existed between the defendants named in the amended complaint.3

Said plaintiff charges that, as a result, it has suffered losses to the extent of $300,000, and it therefore seeks treble damages and attorneys' fees and costs.

Count II asserts that Marlow's Amusement Corporation, another plaintiff, owns and operates Marlow's Drive-In Theater, near Herrin, and has so owned and operated it since May 7, 1949; that it is a modern drive-in theater accommodating 1,000 cars, being one of the finest in southern Illinois.

This count realleges the conspiracy and discrimination allegations of count I and charges that as a result thereof said plaintiff has suffered substantial losses in business, etc. to the extent of $100,000. This count also seeks treble damages, attorneys' fees and costs.

Counts III and IV repeat the conspiracy and discrimination allegations in count I and ask for injunctive relief on behalf of both plaintiffs and against all the defendants.

Fox Midwest filed a motion to dismiss on the ground that the complaint fails to state a claim upon which relief can be granted, etc. Allied Artists Pictures filed a similar motion to dismiss and the other producing and distributing corporations filed a separate motion to dismiss or in the alternative for summary judgment.4

On October 24, 1955, the district judge filed an opinion in which he concluded that "the amended complaint is dismissed as not stating a claim upon which relief can be granted". In the course of his opinion he said that motions to dismiss filed by all the defendants rest on various grounds, chief of which is that the amended complaint fails to state a claim upon which relief can be granted. The judge referred to the allegations in the amended complaint as to the location of Herrin, West Frankfort and Marion and the connecting paved highways, said to constitute the same trade area, and the allegation of direct competition of the Fox Midwest theaters in the first named cities with plaintiffs. He stated that he did not decide on defendants' argument that the discrimination through competitive bidding as alleged "is but a continuance of the discriminatory practices forever settled between the parties in the 1947 cases." He stated that "This defense will better be presented as an affirmative defense if and when this case is brought to actual trial."

After referring to the charges in the amended complaint, he stated that "For the purpose of the motions before the court I have considered the amended complaint as charging a conspiracy to discriminate against plaintiffs begun in 1951 through the imposition of the alleged requirement that plaintiffs bid for first-run pictures with or against Egyptian Drive-In Theater without permitting plaintiffs to bid competitively for...

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