Momand v. Universal Film Exchange

• Decision Date: 20 March 1942
• Docket Number: No. 7024.,7024.
• Citation: 43 F. Supp. 996
• Court: U.S. District Court — District of Massachusetts
• Parties: MOMAND v. UNIVERSAL FILM EXCHANGE, Inc., et al.

43 F. Supp. 996

MOMAND v. UNIVERSAL FILM EXCHANGE, Inc., et al.

No. 7024.

District Court, D. Massachusetts.

March 20, 1942.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

George S. Ryan, of Boston, Mass., for plaintiff.

Edward F. McClennen and Jacob J. Kaplan, both of Boston, Mass., for defendant.

WYZANSKI, District Judge.

At an earlier stage of this case Judge McLellan ordered that the issue of the statute of limitations should be tried separately and before a trial on the merits. Momand v. Paramount Pictures Distributing Co., D.C., 36 F.Supp. 568, 571. Pursuant to that order, the parties have filed an agreed statement of facts. My findings and conclusions are directed solely to the issue of the statute of limitations and in no way touch upon the merits.

Findings of Fact.

1. Introductory. In these findings of fact I consider in turn: the date this case began (fdg. 2); a summary description of the causes of action (fdg. 3); the status of the plaintiff (fdg. 4); the names of the defendants (fdg. 5); a detailed description of each of the ten counts in what is called "the declaration" in the case at bar (fdgs. 6-17); a detailed description of what is called "the complaint" filed April 17, 1931, in Law No. 4520 in the United States District Court for the Western District of Oklahoma, (fdgs. 18-30); a partial description of what is called "the petition" filed June 15, 1932, in Law No. 4520 (fdg. 31); a partial description of what is called "the amended petition" filed June 14, 1933, in Law No. 4520 (fdg. 32); a partial description of, and an explanation of the course of proceedings respecting, what is called "the amended and supplemental petition" filed August 27, 1934, in Law No. 4520 (fdgs. 33, 34); and a summary description of miscellaneous criminal and civil proceedings instituted by the United States under the anti-trust laws (fdgs. 35-50).

2. Date suit began. June 7, 1937 the plaintiff entered this case and the writ issued.

3. Summary description of the case. The declaration, filed June 22, 1937, is in ten counts. They involve separate actions for treble damages under Section 4 of the Clayton Act, Act of October 15, 1914, c. 323, 38 Stat. 731, 15 U.S.C.A. § 15. In general, the counts allege contracts, combinations and conspiracies in restraint of the motion picture trade and combinations and conspiracies to monopolize that trade, all in violation of Sections 1 and 2 of the Sherman Anti-Trust Act, 26 Stat. 209, 15 U.S.C.A. §§ 1 and 2, and all continuing until the time of this suit. (Declaration, par. 12).

4. Status of the plaintiff. The plaintiff since prior to 1931 continuously has been and now is a citizen and resident of Oklahoma. He sues as assignee of ten separate corporations, the first eight of which leased motion picture theatres, the ninth being a lessor company, and the tenth being a management company. The declaration recites that on April 13, 1931, and December 31, 1932, the claims here presented were assigned to him by the Home Amusement Company (Count 1, par. 43); Shawnee Theatre Company (Count 2, par. 6); Wewoka Theatre Company, Inc. (Count 3, par. 9); Clinton Theatre Company, Inc. (Count 4, par. 11); Holdenville Theatre Company, Inc. (Count 5, par. 8); Hartshorne Theatre Company, Inc. (Count 6, par. 8); Pawhuska Theatre Company, Inc. (Count 7, par. 8); Alva Theatre Company, Inc. (Count 8, par. 7); Momand Realty Corporation (Count 9, par. 8); and Momand Theatres, Inc. (Count 10, par. 7). The details of the assignments are not given.

5. Names of the defendants. The eight defendants are: Universal Film Exchange, Inc.; Loew's, Inc.; Metro-Goldwyn-Mayer Distributing Corporation; Twentieth Century-Fox Film Corporation; Vitagraph, Inc.; R.K.O. Distributing Corporation; United Artists Corporation; and Columbia Pictures Corporation.

6. Analysis of the declaration. The ten counts of the declaration each incorporate the first 32 paragraphs of Count 1. Then each count proceeds to further details with respect to action alleged to have been taken toward, and damage suffered by, a different one of the ten assignor corporations, referred to in finding 4 above.

7. The first 32 paragraphs of Count 1 open with a description of the motion picture industry (par. 3-8). The declaration describes the free competition alleged to have existed in 1921 (par. 9) and then makes general allegations which are here summarized. In December, 1921, and April, 1922, the defendants Universal, Loew's, Metro, Fox and Vitagraph, and others not defendants, entered into a conspiracy (par. 10a) which R.K.O., United Artists and Columbia, the other defendants, later joined (par. 11). The conspiracy included limitation of production; regulation of prices for film licenses and for admission to theatres; allocation of territories and zones; boycott of the films of independent producers; special privileges to producer-controlled theatres; and pooling of resources (par. 10). In pursuance of the conspiracy (par. 12), the defendants, except Columbia, divided territory, acquired the stock of competing corporations, closed their businesses and secured from their former employees covenants not to compete (par. 13). All the defendants combined to eliminate Associated First National Exhibitors and First National Productions Corporation (par. 14). They refused to contract with independent producers (par. 15). The effect was to put the independent producers and distributors out of business (par. 16). The conspirators gave to producer-controlled theatres special licenses and privileges, including franchises, annual deals and master contracts (par. 17). In 1926 the defendants collectively adopted a practice known as "protection" which was directed at competition from independent exhibitors; and about May 1, 1930, they formed a scheme to induce independent exhibitors to assent to the practices of protection (par. 18). The protection agreements, together with franchises, contracts and reservations of product, created a monopoly (par. 19). The defendants, except United Artists, jointly adopted and enforced block booking, blind buying and full line selling, and threatened to acquire competing theatres (par. 20). The defendants, in order to exact excessive prices, checked exhibitors' receipts and followed a system of discriminatory percentage contracts (par. 21). About June 14, 1922, they collectively agreed on uniform contracts with mandatory arbitration clauses (par. 22). They adopted uniform rules for the operation of oppressive credit systems (par. 23). They conspired to enhance minimum admission prices (par. 24); engaged in oppressive practices including promises which they were not bound to observe or which they broke (par. 25) and carried on practices of price-cutting, excessive bids for leases, interferences with contracts, and acquisition of leases (par. 26). When sound films became a commercial success, the conspirators agreed that independent producers would not be licensed but that those producers who were in the conspiracy should engage in cross-licensing under patents (par. 27). They resorted to various practices impeding independent exhibitors from showing sound pictures (par. 27). Through these practices the defendants and Paramount had attained by January 1, 1927, a monopoly (par. 28). The conspiracy and monopoly eliminated competition (par. 29 through par. 32).

8. After these introductory allegations, Count 1 of the declaration then presents claims assigned by Home Amusement Company. That company operated the Savoy Theatre in Shawnee until it closed in September, 1931. The count alleges that up to that time the company was continuously suffering damages as a result of various acts of the defendants in pursuance of the general conspiracy. The count refers particularly to the acts of the defendants in 1926 in connection with their uniform arbitration contract, but also alleges that continuously the defendants, except United Artists, engaged in full line selling and that continuously all the defendants followed the practices of percentage contracts, checking exhibitors' receipts, prescribing minimum admission prices and block booking. The count also alleges that in pursuance of the conspiracy, Griffith Amusement Company, an affiliate of Universal, beginning in 1926 and 1927 and continuously thereafter, operated two competitors, the Bison and Ritz Theatres, so that they received benefits from, and the Home Amusement Company suffered damage from, the conspiracy.

9. Count 2 is based upon causes of action assigned to the plaintiff by Shawnee Theatre Company. That company operated the Odeon Theatre in Shawnee until July, 1931. Count 2 incorporates the broad allegations of Count 1 and then alleges that Griffith, an affiliate of Universal, beginning in 1926 and 1927 and continuously thereafter, operated in Shawnee two competing theatres, the Ritz and the Bison, which were used in pursuance of the conspiracy to the injury of Shawnee Theatre Company at least until the close of the 1928-1929 season. In 1929 Griffith leased the Criterion Theatre and used it in pursuance of the conspiracy to the injury of the Shawnee Theatre Company.

10. Count 3 is based upon causes of action assigned to the plaintiff by Wewoka Theatre Company, Inc. That company operated the Rex and Key Theatres in Wewoka until December, 1932. This count, after referring to the general conspiracy and particularly to the protection practices of the conspirators, places special reliance on the acts of Paramount (which is not a defendant) and Universal (which is a defendant) in and subsequent to September, 1930. These acts are alleged to include the opening of a competing theatre for the purpose of injuring the Wewoka Theatre Company, the preference of that theatre and the use of that theatre to book pictures which it could not exhibit.

11. Count 4 is based upon the causes of action assigned to the plaintiff by Clinton Theatre Company, Inc. That company operated...