Steiner v. 20th Century-Fox Film Corporation

• Decision Date: 15 March 1956
• Docket Number: No. 13989.,13989.
• Parties: Selma STEINER, Appellant, v. 20TH CENTURY-FOX FILM CORPORATION, Fox West Coast Theatres Corporation, Avenue Fifty-Eight and Pasadena Corporation and National Theatres Corporation, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

232 F.2d 190 (1956)

Selma STEINER, Appellant, v. 20TH CENTURY-FOX FILM CORPORATION, Fox West Coast Theatres Corporation, Avenue Fifty-Eight and Pasadena Corporation and National Theatres Corporation, Appellees.

No. 13989.

United States Court of Appeals Ninth Circuit.

March 15, 1956.

Schwartz & Alschuler, Bernard Reich, Beverly Hills, Cal., for appellant.

Newlin, Holley, Tackabury & Johnston, Hudson B. Cox, Frank R. Johnston, Los Angeles, Cal., for appellees.

Before STEPHENS and CHAMBERS, Circuit Judges, and McLAUGHLIN, District Judge.

McLAUGHLIN, District Judge.

Appellant is the owner of the Larchmont Theatre, which shows motion pictures in Los Angeles, California. Appellant alleges the following facts about the appellees. Appellee 20th Century-Fox Film Corporation, hereinafter called Fox, is a New York corporation engaged in the business of producing, distributing and exhibiting motion pictures. Fox maintains an office and transacts business in Los Angeles. Appellee National Theatre Corporation, hereinafter referred to as National, is a Delaware corporation. It is a subsidiary of Fox. National is engaged in the business of exhibiting motion pictures throughout the United States, either directly or through associated companies. Appellee Fox West Coast Theatres Corporation is also a Delaware corporation. It is a subsidiary of National. It operates motion picture theatres, directly or through subsidiary or affiliated corporations, in Los Angeles. Avenue Fifty-Eight and Pasadena Corporation, hereinafter referred to as Pasadena, is a California corporation also engaged in the business of exhibiting motion pictures in California. Mark M. Hansen and Ida R. Hansen are husband and wife. They were defendants in this case; however, the appellant has dismissed as to them. They were appellant's lessees of the Larchmont Theatre.

The Larchmont Theatre was opened for business in 1922. It was leased to the Hansens for ten years. In 1932 the Hansens executed a new lease for a term of ten years at a rental of $850 per month. This was reduced by agreement to $150 per week commencing January 1, 1933. In February 1935 the lease was modified to provide a rental of $650 per month for the ensuing year. In August 1935 Pasadena subleased the theatre from the Hansens. In February 1936 the modified rental was continued for an additional year. In February 1937 the rent was increased to $700 per month for the remainder of the lease. The term of the lease was also extended for a further period of 10 years, to December 31, 1952. The Hansens and Pasadena each were given a five-year option to renew the lease at the expiration of the term in 1952. On November 17, 1952, Pasadena closed the theatre and reassigned its interest to the prime lessees, the Hansens. Possession of the theatre was surrendered to the appellant upon the termination of the lease on December 31, 1952.

This action, filed March 14, 1951, is based upon §§ 1 and 2 of the Sherman Act, 26 Stat. 209 (1890) as amended, 50 Stat. 693 (1937), 15 U.S.C.A. §§ 1 and 2¹ and § 4 of the Clayton Act, 38 Stat. 731 (1914), 15 U.S.C.A. § 15.²

The amended complaint alleges two conspiracies: one, that the appellees and the Hansens combined and conspired to monopolize the exhibition of motion pictures, and two, that the defendants and certain unnamed distributors of motion pictures combined and conspired to acquire a monopoly of first-run motion pictures. This latter monopoly is stated to have been accomplished by various means including the leasing of theatres below a fair rental. Appellant claims that these low rentals were secured by threats that if a theatre was not leased at a low rental, said theatre would not be supplied with first-run pictures, or a competing theatre would be built which would receive first-run pictures. Appellant does not allege these threats to be overt acts done in furtherance of the conspiracy.

The two alleged conspiracies are closely interrelated. In reality they can be considered as one: that the appellees conspired to monopolize the exhibition of motion pictures by combining and conspiring to acquire a monopoly of first-run pictures. The complaint alleges that pursuant to these conspiracies the appellees forced appellant to receive less than the reasonable rental value of the Larchmont Theatre, alleged to be $1250 per month; to accept less favorable lease terms and conditions than could have been obtained in a competitive market; to grant options to renew the lease without adequate considerations; and finally the appellees closed the theatre in favor of other theatres operated by them. Damages of $1,356,300 are asserted, together with a prayer for redress.

An overt act must accompany or follow the agreement, and must be done in furtherance of the object of it. Blumenthal v. United States, 9 Cir., 1946, 158 F.2d 883, affirmed 1947, 332 U.S. 539, 68 S.Ct. 248, 92 L.Ed. 154; Marino v. United States, 9 Cir., 1937, 91 F.2d 691. We have serious doubt whether the reduction of rent can be considered a logical means to achieve the objectives of the conspiracies alleged herein. For the purposes of the complaint, we will assume it is. However, if this case goes to trial, it must be affirmatively proven.

The trial court, on motion by appellees, dismissed the complaint upon the ground that the applicable statute of limitations barred the action. The Hansens had not joined the motion to dismiss and remained as defendants before the trial court. The appellant appealed, pursuant to Rule 54(b), Federal Rules of Civil Procedure, 28 U.S.C.; 28 U.S.C. § 2072. In Steiner v. 20th Century-Fox Film Corporation, 9 Cir., 1955, 220 F.2d 105, the appeal was dismissed without a consideration of the merits. Rule 54(b) was held to be inapplicable in the absence of multiple claims.³ After remand appellant dismissed her complaint against the Hansens, and reappealed.

The first issue is whether the appellant is a proper party to bring an antitrust action alleging a conspiracy to monopolize the exhibition of motion pictures. She is.

The appellees assert that as a matter of law the appellant's interest as a landlord is too remote to permit recovery. The cases cited by the appellees are not factually similar to the case at bar. In Harrison v. Paramount Pictures, D.C.E.D.Pa., 115 F.Supp. 312, affirmed 3 Cir., 1954, 211 F.2d 405, there were no direct dealings between the plaintiff and defendant. Here the appellant asserts the appellees conspired with the prime lessee to force the appellant to receive less than a reasonable rent. Appellant is not seeking damages caused to the lessee as was attempted in Folly Amusement Holding Corp. v. Randforce Amusement Corp., D.C.S.D.N.Y.1939, 32 F.Supp. 361; Westmoreland Asbestos Co. v. Johns-Manville Corp., D.C.S.D.N. Y.1939, 30 F.Supp. 389, affirmed, 2 Cir., 1940, 113 F.2d 114, held the wrongful acts directly affected the lessee, not the owner. Here the complaint affirmatively alleges direct injury to the appellant, not the lessee. It is said the appellees' wrongful acts operated directly upon the appellant. This is sufficient for the appellant to become a proper party to complain of the conspiracy alleged. Westmoreland Asbestos Co. v. Johns-Manville Corp., supra.

The next issue is whether the appellant has stated a recoverable claim under the alleged conspiracy.

Recovery in a private civil antitrust action is based upon actual damage. Suckow Borax Mines Consol. v. Borax Consolidated, 9 Cir., 1950, 185 F.2d 196, 208, certiorari denied 1951, 340 U.S. 943, 71 S.Ct. 506, 95 L.Ed. 680; Foster & Kleiser v. Special Site Sign Co., 9 Cir., 1936, 85 F.2d 742, 750, certiorari denied 1937, 299 U.S. 613, 57 S.Ct. 315, 81 L.Ed. 452. As stated in Harrison v. Paramount Pictures, supra, 115 F.Supp. at page 316.

"`Injury * * * implies violation of a legal right.\' * * * this plaintiff `owns\' the building, but her `property\' in it consists entirely of the right to the reversion after the expiration of the lease, plus the rights which she has retained by the leases in respect of it. There is no such thing as a conspiracy against a building, and the plaintiff\'s injury, if any, can only arise from a violation or impairment of such rights in the property as she has."

Appellees contend that the appellant does not state a recoverable claim because the alleged coercion and threats could have operated only upon the Hansens as appellant's lessees rather than upon the appellant. Appellant is a landlord engaged in the business of leasing a theatre. Her prime lessees were always the Hansens. If the appellees had refused to allow first-run pictures to be exhibited at the Larchmont Theatre, or had built competing theatres to receive first-run movies, the appellant could still have collected the full rental from the Hansens who were never relieved of this responsibility. However, the complaint asserts the appellees in concert with the Hansens forced the appellant to do acts detrimental to her reversionary interest, such as granting to the Hansens in 1938 more favorable lease terms than could have been obtained in a free competitive market, and giving options to renew without adequate consideration. This is sufficient to state an antitrust claim by a landlord.

The appellees have submitted affidavits to the effect that the lease terms obtained by the Hansens in 1938 did not involve the appellees in any way. However, affidavits, filed in support of the alternative motion for summary judgment, contradicting the verified complaint give rise to jury questions.

Appellees next assert that because the unreasonable rent was in fact in excess of that freely negotiated with the Hansens more than three years before the impact of the alleged Fox monopoly upon the appellant, a recoverable claim is not stated. This also presents a question of fact, and so is a jury problem.

The pivotal issue is whether appellant's claim is barred by the statute of limitations.

As the antitrust laws do...