Homewood Theatre v. Loew's, Inc.

• Decision Date: 02 September 1952
• Docket Number: Civ. 2698.
• Citation: 110 F. Supp. 398
• Parties: HOMEWOOD THEATRE, Inc. et al. v. LOEW'S, Inc. et al.
• Court: U.S. District Court — District of Minnesota

110 F. Supp. 398

HOMEWOOD THEATRE, Inc. et al. v. LOEW'S, Inc. et al.

Civ. 2698.

United States District Court D. Minnesota, Fourth Division.

September 2, 1952.

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Lee Loevinger, Louise A. Herou and Larson, Loevinger, Lindquist, Freeman & Fraser, of Minneapolis, Minn., for plaintiff.

Joseph W. Finley, Mandt Torrison and Ronald S. Hazel, of St. Paul, Minn. (Bundlie, Kelley, Finley & Maun, of St. Paul, Minn., of counsel), for defendants Minnesota Amusement Co. and Paramount Pictures, Inc.

David Shearer, of Minneapolis, Minn. (Shearer, Byard, Trogner & Peters, of Minneapolis, Minn., of counsel), for the remaining defendants.

NORDBYE, Chief Judge.

This cause came before the court for trial without a jury.

Plaintiffs bring this action to recover damages under the Sherman and Clayton Acts, 15 U.S.C.A. §§ 1-7, 15 note, 12 et seq. They allege that these defendants have been engaged in a conspiracy on a national and local level to fix and control runs, clearances, and other terms upon which motion pictures are licensed to the exhibitors. Plaintiffs, during the period involved herein, operated the Homewood Theatre in North Minneapolis, and they contend that the impact of the conspiracy has caused them damages in the sum of $165,000.

The defendant Loew's, Inc., is commonly referred to as MGM. The Minnesota Amusement Company, sometimes referred to as M. A. C., from September 19, 1932, until the beginning of 1950, was a wholly owned subsidiary of Paramount. The Minnesota Amusement Company was the largest theatre exhibitor in Minnesota and operated both downtown and suburban theatres in Minneapolis. Its predecessor was the Publix Northwest Theatre Corporation, sometimes called Publix Northwest, also a wholly owned subsidiary of Paramount. The terms "Publix" and "Paramount Theatre" in the various exhibits refer to the theatres of the Minnesota Amusement Company or its predecessor. Paramount Pictures, Inc., is generally referred to as Paramount; RKO Radio Pictures, Inc., is known as RKO; Twentieth Century-Fox Film Corporation as Fox; Universal Film Exchanges, Inc., as Universal; Warner Bros. Pictures Distributing Corporation as Warner Bros., First National, Vitaphone, and Vitagraph. Each distributor has a branch exchange in Minneapolis with a resident manager. All motion picture licenses are submitted to the New York offices of the distributors for approval.

The Homewood Theatre is one of several suburban theatres in North Minneapolis. It has approximately 940 seats. During the times herein mentioned, it was, according to the evidence, superior to any theatre on the north side in appearance, appointments, facilities, and furnishings. It was operated by S. L. Lebedoff prior to 1928. From 1928 to 1930, it was operated by the American Amusement Company. In 1930, S. L. Lebedoff took over the operation of the theatre and since that time it has been operated by S. L. Lebedoff, Martin Lebedoff, his son, and the Homewood Theatre, Inc., a corporation, the latter being a corporation owned by the Lebedoffs. Immediately after 1930, the Homewood, when being operated by the Lebedoffs, ran on a 42, 49, and 56 day availability, with admission prices ranging from 20 to 30 cents. Generally, it may be stated that at that time Homewood was accorded by the distributors either the first run on the north side or equal availability with the other north side theatres charging the same admission price. The Paradise Theatre was Homewood's nearest competitor and was within walking distance.

At or about 1930, there was apparently no uniformity among the distributors of motion pictures in the granting of clearance to first run theatres over subsequent run theatres in Minneapolis. As one of the branch managers of one of the defendant distributors expressed it, "Well, conditions were more or less chaotic. There wasn't any order in the playing position of any theatre. * * * Well, one theatre would buy product for a certain place — a certain price and perhaps play 14 days after downtown. Some other important theatre would buy product and pay a much higher price and maybe play it six weeks after downtown. Then some other theatre would buy and pay a good price and play four weeks after downtown." (Record, p. 2924).

This system apparently caused dissatisfaction among the distributors as well as the exhibitors, and steps were taken to remedy the situation. There was in existence at this time in Minneapolis, and had been for some years, the Minneapolis Film Board of Trade. This organization was composed of the branch managers of each of the distributors located in Minneapolis. Their membership was obligatory, and the organization, with a paid secretary, was maintained by the national organization of motion picture producers in New York.

At or about this time, Publix Northwest Theatres, a Paramount subsidiary, made a proposal to the Minneapolis Film Board of Trade for the consideration of a zoning plan in order to work out some feasible system of runs and clearances. At the instance of Mr. Workman, branch manager of Loew's, and president of the Film Board of Trade, a meeting was called which was attended by the representatives of Paramount Publix theatres, the members of the Film Board of Trade, and the representatives of certain independent exhibitors. It appears that, as an outgrowth of this meeting, a zoning plan for the City of Minneapolis was agreed upon "in principle" (Record, p. 2975) as between the several distributors and the so-called circuit theatres operated by the Publix Northwest Theatres Corporation. The independent theatres' representatives, however, did not agree to the proposed plan, and while it does not appear from the evidence that any formal arrangement or agreement as to zoning, runs and clearances was adopted by the Film Board of Trade and Publix Northwest Theatres, the evidence is very persuasive, if not conclusive, that the agreement "in principle" among the distributors and Publix Northwest shortly thereafter evolved into a uniform plan or system for clearances with Publix Northwest, and later its successor, Minnesota Amusement Company, with the city being divided into seven zones. In September, 1932, the Minnesota Amusement Company was incorporated and apparently carried on from that date the motion picture exhibition of Paramount in the Minnesota territory.

That after 1930 there was substantial uniformity among all the defendant distributors in following a patterned plan and system of runs and clearances and availabilities in Minneapolis seems uncontradicted. Primarily, it was bottomed upon the admission price charged by the particular theatre, with the theatres affiliated with the major distributors usually being accorded the first run and certain Minnesota Amusement Company suburban theatres being granted an availability of 7 days earlier than independent houses charging the same price.

At or about the time the distributors began to follow their schedule of runs and clearances in Minneapolis, and in September, 1932, the Peoples Theatre Company filed its bill in equity against the Minneapolis Film Board of Trade and certain major distributors, including the defendant distributors herein, or their predecessors. In that suit, plaintiff charged that the defendants were engaged in a conspiracy in undue and unreasonable restraint of trade in violation of the Sherman Anti-Trust Act, and, among other things, charged that the defendants conspired to grant Publix Northwest Theatre Corporation a monopoly of the business in exhibiting pictures to the public in the so-called Film Board territory by

"(a) Granting to said Northwest Company special preferences and privileges in the selection, leasing and exhibition of motion pictures not accorded to other theatre owners and operators;

"(b) Denying to theatre owners and operators other than said Northwest Company the right to select, lease and exhibit motion pictures upon terms and conditions which will enable them to compete with the theatres of said Northwest Company or to retain the patronage to which they are accustomed and which they must have to remain in business;

"(c) Refusing to furnish to such other theatre owners and operators motion pictures until such time has elapsed after the showing of such pictures in the houses controlled by said Northwest Company that the pictures have largely lost their novelty and freshness and consequently their attractiveness to the public;

"(d) Regulating the playing time of such other theatres after the pictures have been shown in the theatres of said Northwest Company according to the admission prices charged by said other theatres, thus protecting the theatres of the Northwest Company against all price competition and effecting a general increase in admission prices in said Minneapolis Film Board Territory."

The Peoples Theatre Company operated the Paradise Theatre in North Minneapolis, and the gravamen of its complaint was:

"As a result of said combination and conspiracy, and of the acts and things done in pursuance thereof, petitioner has been put so far behind the theatres of the Northwest Company in playing time, and has been so interfered with and harrassed in the conduct of its business, and has been subjected to such unreasonable and oppressive discriminations and disadvantages in obtaining an adequate supply of suitable motion pictures, that it has suffered losses and injury in its business; * * *."

Issue was joined in that proceeding and notice of trial was served on February 27, 1933. It appears that one W. A. Steffes was a leading figure in the independent theatres' organization at that time. He was the operator of the Paradise Theatre and president of the Peoples Theatre Company. Early in 1933, while the Peoples Theatre suit was pending, Paradise was playing on a 15 cent admission and had one of the later runs in North Minneapolis.

During this period when the Peoples Theatre...