Schad v. Twentieth Century-Fox Film Corporation, 8068.

• Decision Date: 21 June 1943
• Docket Number: No. 8068.,8068.
• Parties: SCHAD et al. v. TWENTIETH CENTURY-FOX FILM CORPORATION et al.
• Court: U.S. Court of Appeals — Third Circuit

136 F.2d 991 (1943)

SCHAD et al. v. TWENTIETH CENTURY-FOX FILM CORPORATION et al.

No. 8068.

Circuit Court of Appeals, Third Circuit.

Argued November 17 and 18, 1942.

Decided June 21, 1943.

Harry Shapiro, of Philadelphia, Pa. (William B. Rudenko, of Philadelphia, Pa., on the brief), for appellants.

Morris Wolf, Philadelphia, Pa. (Charles H. Weidner, of Reading, Pa., C. Brewster Rhoads, Montgomery, McCracken, Walker & Rhoads, Wm. A. Schnader, Bernard G. Segal, and Howard S. McMorris, all of Philadelphia, Pa., John F. Caskey, of New York City, Schnader & Lewis, of Philadelphia, Pa., and Dwight, Harris, Koegel & Caskey, of New York City, on the brief), for appellees.

Before BIGGS, MARIS, and JONES, Circuit Judges.

MARIS, Circuit Judge.

The plaintiffs brought a civil action in the District Court for the Eastern District of Pennsylvania seeking injunctive relief and treble damages for the injuries which they allege they suffered as a result of an unlawful combination and conspiracy by the defendants in violation of the antitrust acts. The action was tried by the court without a jury. After the plaintiffs completed the presentation of their evidence the defendants moved pursuant to Civil Procedure Rule 41(b), 28 U.S.C.A. following section 723c, for a dismissal upon the ground that upon the facts and the law the plaintiffs had shown no right to relief. The court granted the motion for involuntary dismissal and entered judgment dismissing the complaint. This appeal followed.

I. The Procedural Question.

Rule 41(b) provides: "* * * After the plaintiff has completed the presentation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue, operates as an adjudication upon the merits."

In Federal Deposit Ins. Corporation v. Mason, 3 Cir., 1940, 115 F.2d 548, we held that an order of dismissal under this rule is the equivalent in a non-jury case of a directed verdict for the defendant in a jury case as authorized by Rule 50(a). Upon a motion by the defendant for a directed verdict at the close of the plaintiff's evidence it becomes the duty of the trial judge, after viewing the evidence and all inferences reasonably to be drawn therefrom in the light most favorable to the plaintiff, to determine whether, as a matter of law, his evidence makes out a case upon which the law will afford relief.¹ If the trial judge decides this question, which is solely one of law, in favor of the defendant and directs a verdict in his favor, the verdict of the jury obviously involves no appraisal of the weight or credibility of the evidence nor any finding of basic or circumstantial facts. It is merely a formal finding, pursuant to the trial judge's instruction, that upon the facts as the plaintiff's evidence shows them to be and upon the applicable rules of law the plaintiff has shown no right to relief. It presents to an appellate court upon appeal the same question of law which was before the trial judge.²

We think that the same is true in respect of a motion in a non-jury case for involuntary dismissal under Rule 41(b). The sole question presented to the trial judge by such a motion is one of law, namely, whether the plaintiff's evidence and all the inferences fairly to be drawn from it, considered in the most favorable light, make out a prima facie case for relief. This likewise is the question presented upon appeal. Since, if the motion is not granted the defendant may proceed to offer his evidence, it seems clear that when a motion for involuntary dismissal is made under Rule 41(b) the trial has not so far progressed as to be ready for fact findings.

The defendants urge, however, that Civil Procedure Rule 52(a) requires fact findings by the trial judge upon the disposition of such a motion for dismissal and that accordingly the only question before us on this appeal from the order of involuntary dismissal entered under Rule 41(b) is whether the trial judge's fact findings are clearly erroneous. Rule 52(a) provides: "In all actions tried upon the facts without a jury, the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment * * *. Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses. * * *."

This rule, however, refers only to cases in which the trial has reached the stage where the evidence is all in and fact findings are consequently appropriate. It can have no application to a case where the plaintiff alone has been heard upon the facts, and the defendant has reserved the right to present his version of the facts later if it is determined that the plaintiff has made out a prima facie case. To construe Rule 52(a) as the defendants would have us do is to our minds unthinkable. Thus construed it would plainly deny to a defendant the right to have his evidence heard and considered before the facts are found by the court, in the teeth of the guarantee by Rule 41(b) that a defendant moving for dismissal does not thereby waive "his right to offer evidence in the event the motion is not granted." Such a construction might well violate the due process clause of the Fifth Amendment.

The defendants point out that a dismissal motion under Rule 41(b) is based upon the ground that "upon the facts and the law" the plaintiff has shown no right to relief. They urge that the decision of such a motion accordingly involves an adjudication of the facts. We have already indicated, however, that "the facts" referred to in the rule are the prima facie facts shown by the plaintiff's evidence taken in the light most favorable to him and that no weighing of the evidence is contemplated. As we have already pointed out the facts are to be considered in the same way as upon a motion for a directed verdict.

We find nothing in the rules which contemplates that findings of fact may be made at the close of the plaintiff's case and later revised in the light of the defendant's evidence. Nor is there anything to suggest that when a motion for dismissal is made under Rule 41(b) the trial judge shall make findings if he grants the motion but not if he denies it. We, therefore, conclude, in accord with our ruling in the Mason case, that upon the present appeal we must examine the evidence to determine whether the trial judge was warranted by the plaintiffs' failure to make out a prima facie case in dismissing their complaint pursuant to Rule 41(b).³

II. The Facts.

The parties:

The plaintiffs are exhibitors of motion pictures in Reading, Pennsylvania. They have been the owners of the Astor Theatre since 1935 and exhibited pictures there prior to 1926 and since May, 1941. The defendant Warner⁴ is a producer, distributor and exhibitor. It operates more than 130 theatres in eastern Pennsylvania, southern New Jersey and Delaware, which territory is known to the motion picture industry as the Philadelphia exchange area. In Philadelphia Warner operates the ten center city first run theatres and 16 of the 19 neighborhood first run theatres. Prior to May 2, 1941 Warner operated the Astor and the Ritz in Reading; thereafter it operated the State, now called the Warner. The defendant Fox⁵ is a producer, distributor and exhibitor. It operates theatres throughout the United States but does not operate theatres in the Philadelphia exchange area. The defendant Wilmer & Vincent⁶ is an exhibitor and operates theatres in Pennsylvania and elsewhere. Prior to May 2, 1941 it operated the Embassy and State in Reading. Since that time it has operated the Embassy and the Ritz.

Theatres in Reading:

Before the expiration of the Warner lease of the Astor in May, 1941 there were in Reading four class A theatres which showed the best first run motion pictures, namely, the Astor owned by the plaintiffs and operated by Warner, the Embassy operated by Wilmer & Vincent, the Colonial, operated by Loew's, Incorporated, and the Park, operated by Emanuel, McNamee and Keeney. After the expiration of the lease the State became a first run theatre operated by Warner which renamed it the Warner. The Capitol is outside the theatre district. The Ritz, a B grade theatre, was formerly operated by Warner but since May, 1941 has been operated by Wilmer & Vincent.

The cause of the controversy:

The plaintiffs claim that Warner, acting in combination with Wilmer & Vincent and with Fox, wrongfully deprived the Astor of Fox films with the object of ruining the Astor or of reacquiring it at a sacrifice to the plaintiffs. For many years the Fox product in Reading was equally divided between Warner at the Astor and Wilmer & Vincent at the Embassy. In the 1933-34 and 1934-35 seasons Fox and Warner had a dispute. In those two seasons Fox licensed all its product exhibited in Reading to Wilmer & Vincent. In 1935 the dispute was settled and Fox, over the protest of Wilmer & Vincent, retransferred one-half of its product to Warner. Each year thereafter Wilmer & Vincent requested all the Fox product but was granted only one-half, the other half going to Warner. Warner exhibited its share of the Fox pictures at the Astor. In 1940 the situation changed. The Warner lease on the Astor was to expire May 2, 1941. Warner sought to extend the term of the lease at an annual rental of $87,500. The plaintiffs insisted upon $100,000. Their investment in the Astor was approximately $925,000. The negotiations were unsuccessful. In September, 1940 Warner began negotiations with Wilmer & Vincent for the rental of the State and...