Lamb's Patio Theatre, Inc. v. Universal Film Exchanges, Inc., 77-1971
| Citation | 582 F.2d 1068 |
| Decision Date | 15 August 1978 |
| Docket Number | No. 77-1971,77-1971 |
| Parties | , 1978-2 Trade Cases 62,193 LAMB'S PATIO THEATRE, INC., Plaintiff-Appellant, v. UNIVERSAL FILM EXCHANGES, INC., Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
H. Reed Harris, Chicago, Ill., for plaintiff-appellant.
Robert W. Bergstrom, Chicago, Ill., for defendant-appellee.
Before SWYGERT, SPRECHER and WOOD, Circuit Judges.
Lamb's Patio Theatre brought this private antitrust action for treble damages against Universal Film Exchanges on September 3, 1974. The complaint alleged that Universal violated the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2, by rejecting Lamb's bid for the movie, "The Sting," as part of a conspiracy with Plitt Theatres, the operator of the Gateway Theatre, to monopolize showing of the film on the northwest side of Chicago. On February 15, 1977 Universal moved for a summary judgment denying by affidavit the existence of a conspiracy. The district court awarded summary judgment to Universal on June 21, 1977 determining that there was a "complete absence of facts from which an inference of conspiracy (could) be drawn . . . (and) that (Universal's) refusal to license (Lamb's) was the result of legitimate business considerations." Lamb's Patio Theatre v. Universal Film Exchanges, Inc., 1977-1 Trade Cases P 61,517 (N.D.Ill.1977).
On appeal Lamb's asserts that the district court erred in granting summary judgment because the evidence was susceptible to the factual inference that a conspiracy existed. Alternatively, Lamb's asserts that the court considered the summary judgment motion prematurely, thereby precluding Lamb's from completing discovery through which it could have marshalled additional evidence which cumulatively would have required a trial.
We affirm the district court's judgment on the basis of reasons stated hereinafter.
Universal, a motion picture distributor, has for many years followed the practice of licensing films to a limited number of theatres on a first run basis and then gradually increasing the number of theatres exhibiting the films on successive sub runs. Pursuant to this procedure Universal solicited bids for a second sub run, I. e., the third showing of the movie, "The Sting," in the Chicago area. Lamb's received this bid request but elected not to respond. The Gateway Theatre, located in the same geographical area as Lamb's, submitted a bid stating that it would not book any movie after "The Sting" so that it could continue the run for the entire summer if terms for additional sub run holdovers could be mutually agreed upon. Universal accepted Gateway's bid and licensed it for a six-week engagement beginning June 28, 1974.
On July 10 Universal solicited bids for a third sub run of "The Sting" to begin August 16. The solicitation included Universal's standard clause whereby it "reserve(d) the right to reject all bids and to license the picture by negotiation." Lamb's submitted a bid for this sub run which Universal rejected. Universal instead chose to allow the Gateway to continue running "The Sting" even though the Gateway had not submitted a bid. Lamb's asserts that once Universal solicited competitive bids it was obligated to conduct the bidding in good faith, and that when it rejected Lamb's bid and licensed the Gateway under allegedly less favorable holdover terms, it did so in bad faith. Lamb's argues that this allegation of bad faith combined with its allegation that Universal's other business reasons for rejecting Lamb's bid were both inaccurate and inconsistent with its prior course of dealings with other exhibitors could lead to the reasonable inference that a conspiracy existed between Universal and the operator of the Gateway.
We cannot agree with Lamb's reasoning. It is well established that a person operating a private business has the right to select his own customers and when exercising unilateral business discretion, may refuse to sell to a particular customer. United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 63 L.Ed. 992 (1919); Bell v. Speed Queen, 407 F.2d 1022, 1027 (7th Cir. 1969). This principle has been applied specifically to the motion picture industry.
(A) distributor has the right to license or refuse to license his film to any exhibitor, pursuant to his own reasoning, so long as he acts independently. . . . (A)ny illegality consists not in the refusal of any one distributor to license an exhibitor, but in his conspiring with one or more other persons to refuse such license.
Paramount Film Distributing Corp. v. Applebaum, 217 F.2d 101, 124 (5th Cir. 1954), Cert. denied, 349 U.S. 961, 75 S.Ct. 892, 99 L.Ed. 1284 (1955). See also Dahl, Inc. v. Roy Cooper Co., 448 F.2d 17, 19 (9th Cir. 1971).
It is not enough, therefore, that Lamb's allege an inconsistency in Universal's course of dealings or that its business reasons for rejecting Lamb's bid were inaccurate. Absent a showing of conspiracy by Lamb's, Universal had no obligation to produce any reasons for refusing to deal with Lamb's. Thus even if Lamb's could show that Universal's announced business reasons were not legitimate, such showing would not satisfy Lamb's burden of establishing the existence of the conspiracy element essential to its prima facie antitrust case. 2
Lamb's is left therefore with its bald allegation of conspiracy to refute the sworn affidavit denying a conspiracy. Lamb's argues, that even so, summary judgment is an inappropriate vehicle to determine the issues of motive and intent upon which conspiracy is founded, as these issues hinge exclusively on credibility judgments. The lack of any credible evidence, however, that a monopolistic conspiracy or agreement existed created a "fatal hiatus" in light of which "the intent, motive, or state of mind of the (defendant is) irrelevant." Solomon v. Houston Corrugated Box Co., Inc., 526 F.2d...
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