Orson, Inc. v. Miramax Film Corp.

• Decision Date: 05 October 1994
• Docket Number: No. 93-CV-4145.,93-CV-4145.
• Citation: 862 F. Supp. 1378
• Parties: ORSON, INC., Plaintiff, v. MIRAMAX FILM CORP., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

862 F. Supp. 1378

ORSON, INC., Plaintiff, v. MIRAMAX FILM CORP., Defendant.

No. 93-CV-4145.

United States District Court, E.D. Pennsylvania.

October 5, 1994.

COPYRIGHT MATERIAL OMITTED

Niels Korup, Spector, Gadon & Rosen, P.C., Philadelphia, PA, for plaintiff.

Thomas E. Zemaitis, Barbara T. Sicalides, Pepper, Hamilton & Scheetz, Philadelphia, PA, for defendant.

MEMORANDUM AND ORDER

JOYNER, District Judge.

This antitrust matter has been brought before the Court by motion of the plaintiff, Orson, which is seeking an order granting it partial summary judgment. The defendant, Miramax Film Corporation (Miramax), has countered with its own motion seeking an award of summary judgment on all counts of Orson's complaint. For the reasons that follow, Orson's motion for partial summary judgment is denied, while Miramax's motion for summary judgment is granted in part and denied in part.

I. HISTORY OF THE CASE

A. The Principals

Orson is a Pennsylvania corporation that owns and operates the Roxy Screening Rooms, a movie house in Center City Philadelphia. The Roxy operates two screens, each with a seating capacity of 137 persons; and it displays so-called "art films," those films that are viewed as alternatives to mainstream Hollywood fare.¹ The Roxy competes with the Ritz theaters for the patronage of art film-goers in Center City Philadelphia. The Ritz theaters consist of two separate facilities: the "Ritz Five Theaters," which is owned and operated by the Posel Corporation, and the "Ritz at the Bourse," which is owned and operated by the Raysid Corporation. The president of both corporations is Ramon L. Posel, who owns one-half of the outstanding shares of each company. Mr. Posel's brother owns the remaining fifty per cent of each corporation. The Ritz theaters each have five screens and seating capacities ranging from 155 to 375 persons.

Both the Ritz and the Roxy exhibit films distributed by Miramax, a New York corporation that leases feature films, including art films, to movie theaters nationwide. Between January of 1992 and February of 1994, Miramax leased to the Ritz 29 films on a first-run basis and one film on a subsequent-run basis. Over that same period, Miramax leased to the Roxy one film on a first-run basis and 16 films on a subsequent-run basis. Orson alleges in its amended complaint that Miramax and the Ritz enjoy an agreement whereby the Ritz exhibits Miramax films only as long as Miramax grants it an exclusive license for each film. As a result of the agreement, no Miramax film plays contemporaneously at both the Ritz and the Roxy.

B. The Amended Complaint

The amended complaint contains three counts. Counts I and II allege that Miramax's arrangement with the Ritz violates both section one of the Sherman Act² and Pennsylvania common law regarding unreasonable restraints of trade.³ To support its contention, Orson states that it has been unable to secure the right to exhibit Miramax art films on a first-run basis. It claims that Miramax has consistently refused to grant a license to the Roxy, even though the Roxy has offered both to pay a higher percentage of the box office receipts and to exhibit the films on a non-exclusive basis. As for the one film for which Miramax granted a first-run license to the Roxy, "Benefit of the Doubt" starring Donald Sutherland and Amy Irving, Orson claims that Miramax distributed the film, knowing it would be a box office failure, for the purpose of providing it with a post hoc justification for excluding the Roxy from competition with the Ritz. The result of the arrangement between Miramax and the Ritz, alleges Orson, has been to eliminate competition in the art film market, forcing the art film-goer to pay monopoly prices at the Ritz.

Count III alleges that Miramax has violated Pennsylvania's Feature Motion Picture Fair Business Practices Law, 73 Pa.Stat.Ann. §§ 203-1 — 203-11 (1993) (the Pennsylvania Act). Three specific provisions are at issue. First, Orson contends that Miramax has violated section 203-7, the length of run provision, which prohibits a distributor from granting an exclusive first run to an exhibitor for more than 42 days. The amended complaint specifically details instances in which Miramax films played at the Ritz on a first run basis for more than 42 days.

Second, Orson argues that Miramax has violated section 203-4, the blind bidding provision, which provides that before a distributor and an exhibitor either engage in negotiations or conclude an agreement, the distributor must conduct a trade screening. The facts supporting this allegation are not specifically set forth in the amended complaint, but instead are enumerated in Orson's motion for partial summary judgment. There, Orson contends that Miramax had, on numerous occasions, concluded licensing agreements with the Ritz prior to the trade screenings. Finally, Orson contends that Miramax has violated section 203-8, which sets forth the bidding procedures that exhibitors and distributors must follow if a distributor solicits bids for the licensing of the distributor's films. Again, the facts underlying this charge are largely set forth in Orson's motion for partial summary judgment rather than in the amended complaint.

C. The Motions

Orson has filed a motion for summary judgment as to its allegations under the Pennsylvania Act. Miramax has countered with its own motion for summary judgment on all counts of the plaintiff's amended complaint. In its brief in opposition to Miramax's summary judgment motion, Orson argues that the Miramax-Ritz agreement should be declared illegal per se under our antitrust laws. The courts are authorized to make such a declaration if the challenged restraint "facially appears to be one that would always or almost always tend to restrict competition and decrease output." Broadcast Music, Inc. v. Columbia Broadcasting, 441 U.S. 1, 19-20, 99 S.Ct. 1551, 1562, 60 L.Ed.2d 1 (1979).

Since the determination of whether a certain business practice is illegal per se is made at the summary judgment stage, see id. at 6, 99 S.Ct. at 1555; Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 4, 78 S.Ct. 514, 517, 2 L.Ed.2d 545 (1958), the Court will treat Orson's contention as to the per se illegality of the Miramax-Ritz agreement as a request for summary judgment on its antitrust claim. Thus, the Court will approach this matter as though it had before it crossmotions for summary judgment as to Orson's entire amended complaint.

II. DISCUSSION

A. The Summary Judgment Standard

This Court is authorized to award summary judgment "if the pleadings, depositions ... on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, the Court's responsibility is not to resolve disputed issues of fact, but to determine whether there exist any factual issues to be tried. Anderson v. Liberty Lobby, 477 U.S. 242, 247-49, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). The non-moving party must raise "more than a mere scintilla of evidence in its favor" in order to overcome a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir.1989) (citing Liberty Lobby, 477 U.S. at 249, 106 S.Ct. at 2510). Further, the non-moving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)). Boiled to its essence, the summary judgment standard requires the non-moving party to create a "sufficient disagreement to require submission of the evidence to a jury." Liberty Lobby, 477 U.S. at 251-52, 106 S.Ct. at 2512.

In cases where the parties have filed cross motions for summary judgment, as the parties have in the present action, each side contends that no issues of material fact exist. Yet the standard under which the Court weighs the merits of the motions does not change simply because cross-motions have been filed. United States v. Hall, 730 F.Supp. 646, 648 (M.D.Pa.1990). Each party must establish that no issues of fact exist and that it is entitled to judgment as a matter of law. As a result, a case will not necessarily be decided at the summary judgment stage merely because cross-motions have been filed. Id. (citing Rains v. Cascade Indus., 402 F.2d 241, 245 (3d Cir.1968)). If an issue of fact exists, both summary judgment motions will fail. With these principles in mind, the Court turns to the substance of the motions.

B. The Antitrust Claim

Orson's amended complaint alleges that Miramax and the Ritz theaters continue to engage in a concerted refusal to deal with the Roxy. This alleged refusal to deal has resulted not only in the Roxy's exclusion from the art film market, but also in the Ritz's realization of monopoly power. The United States Court of Appeals for the Third Circuit has identified the four elements a plaintiff must demonstrate to prove a Sherman Act violation: (1) an agreement or combination, (2) that produced anti-competitive effects within the relevant product and market, (3) that the conspiracy was illegal, and (4) that the conspiracy was the proximate cause of the plaintiff's harm. J.F. Feeser, Inc. v. Serv-a-Portion, Inc., 909 F.2d 1524, 1541 (1990), cert. denied, 499 U.S. 921, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991) (citations omitted).

For purposes of its motion for summary judgment on the antitrust claim, Miramax concedes that there exists an agreement pursuant to which Miramax refuses to deal with the Roxy, but it maintains that Orson cannot, as a matter of law, demonstrate the second and third elements of the Feeser test. Accordingly, Miramax contends that it is entitled to summary judgment on two grounds: (1) because the antitrust laws do not prohibit the Miramax-Ritz agreement; and (2) because Orson has...