State v. Sterling Theatres Co.

• Decision Date: 16 July 1964
• Docket Number: No. 37606,37606
• Citation: 64 Wn.2d 761,394 P.2d 226
• Parties: The STATE of Washington, Appellant, v. STERLING THEATRES CO., a corporation, et al., Respondents.
• Court: Washington Supreme Court

Page 761

64 Wn.2d 761

394 P.2d 226

The STATE of Washington, Appellant, v. STERLING THEATRES CO., a corporation, et al., Respondents.

No. 37606.

Supreme Court of Washington, En Banc.

July 16, 1964.

John J. O'Connell Atty. Gen., Frederic C. Tausend, C. David Sheppard, Asst. Attys. Gen., Olympia, for appellant.

Ferguson & Burdell, Charles Burdell, Lycette, Diamond & Sylvester, John N. Sylvester, Bogle, Bogle & Gates, Ronald E. McKinstry, Jordan & Adair, Chester Adair, Seattle, for respondents.

William H. Orrick, Jr., Lionel Kestenbaum, Donald L. Hardison, Department of Justice, Washington, D. C., amici curiae.

FINLEY, Judge.

This lawsuit challenges the efforts of the state of Washington to enforce recently enacted state antitrust legisaltion (The Consumer Protection Act of 1961, RCW 19.86) against a segment of an industry which unquestionably carries on part of its activities in interstate commerce. The appellant state is seeking injunctive and other relief against four groups of motion picture exhibitors owning or operating motion picture theatres in the greater Seattle area ¹ and certain film distributors who own or control copyrights to the films which they license to the exhibitors for display. ² The complaint alleged violations of sections 3 and 4 of the Consumer Protection Act, which reads as follows:

'Every contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is hereby declared unlawful.' (RCW 19.86.030)

'It shall be unlawful for any person to monopolize, or attempt to monopolize or combine or conspire with any other person or persons to monopolize any part of trade or commerce.' (RCW 19.86.040)

The focal point of the complaint and the state's enforcement activity was the Sterling Theatre group, which was alleged to have monopolized second-run exhibition of feature films in Seattle, and to be attempting to monopolize subsequent runs of commercial feature films in like manner. Specific acts of monopolization on the part of Sterling are set out, along with further allegations that all four of the respondent exhibitor groups have combined and conspired to restrain trade by dividing the market of feature films among themselves on a pre-arranged basis, and that they have been aided in the unlawful arrangements by the respondent distributors.

After hearing argument, the trial court granted the respondents' motion to dismiss for lack of jurisdiction over the subject matter. The three contentions of the respondents accepted by the trial court as the basis for dismissal may be summarized as follows:

(1) The applicability of sections 3 and 4 of the Consumer Protection Act to interstate commerce has been pre-empted by the Congress in enacting the Sherman Act.

(2) The application of the state Act to the motion picture industry would constitute a direct interference with and a burden upon interstate commerce.

(3) The state Act, § 17, by its own terms exempts respondents' transactions here in question, because, as provided in § 17, the transactions are otherwise regulated by an officer acting under a federal statute.

The first two contentions--(1) the asserted pre-emption, and (2) the asserted burden on interstate commerce--may conveniently be considered together. The Sherman Act is coextensive in scope with the federal commerce power, and is devoid of any express provision of Congress preempting the power of the states to regulate concurrently respecting the antitrust field. This being so, the factors which must be considered in reference to an implication of Congressional intent to pre-empt the field of antitrust regulation are essentially the same as those involved in the balancing test used to determine whether the commerce clause would exclude state action of its own force, irrespective of a federal statute.

It is well established that state action incidentally affecting commerce is valid when there exists sufficient local significance and impact to justify the exercise of the police power. Standard Oil Co. of Kentucky v. Tennessee (1910), 217 U.S. 413, 30 S.Ct. 543, 54 L.Ed. 817. The exhibition of motion pictures is a prime example of an industry which has a primarily local impact, regardless of the interstate activities of film distributors in making the films available. Leader Theatre Corp. v. Randforce Amusement Corp. (1945), 186 Misc. 280, 58 N.Y.S.2d 304. The existence of the predominantly local interest dispels the contentions of the respondents that the federal interest in antitrust enforcement should be considered so dominant as to render concurrent state jurisdiction an impermissible interference.

Factors which might generate an implication that Congress intended to fully occupy the field and pre-empt concurrent state activity are wholly absent in this area. Uniformity of regulation was expressly foregone when antitrust enforcement was permitted by not only the United States Attorney General and the Federal Trade Commission, but also by private litigants. The nearly identical wording of the disputed provisions of the Consumer Protection Act and sections 1 and 2 of the Sherman Act indicates that the motive or goal of federal and state regulation is the same, and leads to the conclusion that state enforcement, far from frustrating or interfering with federal purpose or national policy, will actually further it. For like conclusion, see State v. Southeast Texas Chapter of Nat'l Elec. Contractors Ass'n, 358 S.W.2d 711 (Tex.Civ.App.1962); State v. Allied Chemical & Dye Corp. (1960), 9 Wis.2d 290, 101 N.W.2d 133; Peoples Savings Bank v. Stoddard (1960), 359 Mich. 297, 102 N.W.2d 777, 83 A.L.R.2d 344; Commonwealth v. McHugh (1950), 326 Mass. 249, 93 N.E.2d 751; Leader Theatre Corp. v. Randforce Amusement Corp. (1945), 186 Misc. 280, 58 N.Y.S.2d 304. In this connection we also note the submission in the present cause of an Amicus Curiae brief by the United States, urging upon this Court the principle of concurrent state regulation of antitrust matters. The conclusion is inescapable that the Consumer Protection Act is neither an impermissible burden on interstate commerce nor pre-empted by the federal antitrust acts, including the Sherman Act.

The third and final contention upon which the dismissal was based is that the state ...