United States v. CENTRAL STATES THEATRE CORPORATION

• Decision Date: 29 August 1960
• Docket Number: Civ. No. 0117.
• Citation: 187 F. Supp. 114
• Parties: UNITED STATES of America, Plaintiff, v. CENTRAL STATES THEATRE CORPORATION, Center Drive-In Theatre Company, and Midwest Drive-In Theatre Company, Defendants, and Frank D. Rubel, Additional Defendant.
• Court: U.S. District Court — District of Nebraska

187 F. Supp. 114

UNITED STATES of America, Plaintiff, v. CENTRAL STATES THEATRE CORPORATION, Center Drive-In Theatre Company, and Midwest Drive-In Theatre Company, Defendants, and Frank D. Rubel, Additional Defendant.

Civ. No. 0117.

United States District Court D. Nebraska.

August 29, 1960.

COPYRIGHT MATERIAL OMITTED

Earl A. Jinkinson, Francis C. Hoyt, and Joseph E. Paige, Attys., Dept. of Justice, Chicago, Ill., and William C. Spire, U. S. Atty., Omaha, Neb., for plaintiff.

Yale C. Holland, Clarence E. Heaney, Kennedy, Holland, DeLacy & Svoboda, Omaha, Neb., for all defendants.¹

Yale Richards, Omaha, Neb., for defendant, Midwest Drive-In Theatre Co.

DELEHANT, District Judge.

Relying upon the jurisdictional grant of Title 15 U.S.C.A. ? 4, plaintiff instituted this proceeding to obtain injunctive relief against the defendants, and each of them forbidding their violation of Title 15 U.S.C.A. ? 1, upon whose alleged earlier violation, infra, the prayer was premised. The action was brought in the first instance only against the three corporate defendants. The individual defendant was later brought into it upon motion. The complaint will first be summarized at some length. Thereafter, the general nature of the answers of the defendants will be noted briefly.

The complaint, as amended, first identifies the parties defendant, whose correct identification, varying in some measure from the original averments of the complaint, will be reflected in the findings of fact, infra, and alleges (a) that defendant, Central States Theatre Corporation, manages 76th and West Dodge Drive-In Theatre, Omaha, Nebraska, and Council Bluffs Drive-In Theatre, Council Bluffs, Iowa; (b) that defendant, Frank D. Rubel, of Des Moines, Iowa, is District Manager of Central States Theatre Corporation, and is film buyer for and in charge of operations of the two drive-in theatres mentioned in the last preceding clause hereof; (c) that defendant, Center Drive-In Theatre Company owns and operates 84th and Center Drive-In Theatre, Omaha, Nebraska; and that defendant, Midwest Drive-In Theatre Company, owns and operates Airport Drive-In Theatre, Carter Lake, Iowa. It then defines a "Drive-In Theatre" as "an open air motion picture theatre so provided with roadways, parking areas, sound amplifiers, and motion picture screens as to permit its patrons to drive into the theatre area in automobiles, and to park in such a manner that they may view the performance from their automobiles." And it utilizes the characterization, "Omaha area," which it defines as "the area included in the Counties of Washington, Douglas and Sarpy, in Nebraska, and the Counties of Pottawattamie and Mills, in Iowa." It next, in a sequence of four paragraphs copied verbatim in a footnote² hereto, alleges that the "Drive-In Theatre" operation in the "Omaha area" substantially involves and affects interstate commerce, and that The Omaha World Herald, a daily newspaper published in Omaha, is regularly utilized by operators of such theatres as an advertising medium.

The complaint, thereupon, avers that, beginning on or about February 4, 1955, and continuing thereafter up to and including its filing, the defendants, and others unknown to plaintiff, had been engaged in a combination and conspiracy in unreasonable restraint of the trade and commerce defined in footnote 2 hereof, in violation of Title 15 U.S.C.A. ? 1, and were continuing, and unless enjoined therefrom, would continue such offense. That combination and conspiracy are asserted to consist of a continuing agreement, understanding, and concert of action among the defendants, the substantial terms of which had been, and were, that they agreed:

"(a) To fix, establish, and maintain uniform and non-competitive prices to be charged for admission to defendants' theatres;

"(b) To fix, establish and maintain maximum dollar amounts for newspaper advertising to be expended by or on behalf of defendants' theatres;

"(c) To fix, establish and maintain uniform and non-competitive prices to be charged for food and beverages sold at defendants' theatres;

"(d) To threaten to refrain from dealing with distributors who provide pictures to drive-in theatres for exhibition at admission prices below those agreed upon by defendants."

That allegation is followed by another to the effect that in carrying out and effectuating such combination and conspiracy, the defendants had done those things which, it had theretofore been alleged, supra, they had conspired and agreed to do.

Finally, the complaint alleges that the asserted combination and conspiracy had the following effects, among others:

"(a) Members of the public are denied the opportunity of seeing motion pictures at drive-in theatres in the Omaha area, in Nebraska and Iowa at admission prices determined in a free, competitive market;

"(b) Distributors are deprived of the benefits of a free, competitive market for the motion pictures distributed by them in interstate commerce in the Omaha area;

"(c) The volume of theatre advertising purchased by defendants from newspapers circulating in interstate commerce is substantially lessened."

And in its complaint, plaintiff prays:

"1. That the aforesaid combination and conspiracy among the defendants in restraint of interstate trade and commerce be adjudged and decreed to be in violation of Section 1 of the Sherman Act.

"2. That the defendants and their officers, directors, agents, representatives, and all persons acting, or claiming to act on their behalf, be perpetually enjoined from being a party to agreements, contracts, relationships, understandings, or practices having the purpose or effect of continuing, reviving, or renewing any of the violations of the Sherman Act hereinbefore set forth and described.

"3. That the plaintiff may have such other, further, and different relief as the nature of the case may require and to the Court may seem just and proper.

"4. That the plaintiff recover its taxable costs."

By way of answer, defendant, Central States Theatre Corporation, admits that it is a corporation (though it mistakenly admits that, as originally alleged in the complaint, it is incorporated in Iowa), that substantially all films exhibited in theatres in or near Omaha, Nebraska, are made in states other than Nebraska or Iowa, and that plaintiff's definition of a "Drive-In Theatre" is "fairly comprehensive," and, for the rest either categorically denies, or denies its possession of information respecting the truth of, the other allegations of the complaint. Its denial of its own management of 76th and West Dodge Drive-In Theatre, and of Council Bluffs Drive-In Theatre, is supplemented and amplified by allegations (a) that by contract Smith Management Company, of Boston, Massachusetts manages those theatres, but has committed the supervision and control of their actual operation and management, including the procurement of pictures for exhibition in such theatres, to defendant, Frank D. Rubel, as an individual, who receives his compensation for such services directly from the respective corporate owners of such theatres, and (b) that the answering defendant, under arrangement with Smith Management Company, keeps the books and records of those two theatres, rendering accounting therefor to Smith Management Company, and disburses such funds as may be required for the maintenance and operation of such theatres. The denial by that answer of plaintiff's allegations of the inclusion within the reach of interstate commerce of the operation of the drive-in motion picture business in the "Omaha area" is enlarged and amplified by some affirmative allegations touching the transportation of films for use in such operation, and the assertion that the delivery, exhibition and return of such films are entirely intrastate in character. That answering defendant particularly denies that it transacts business, or is found, in the District of Nebraska, and that valid service of summons can be, or has been, made upon it in the District of Nebraska. And it denies both the sufficiency of the averments of the complaint to state a claim upon which the relief prayed for can be granted, and also the jurisdiction of this court either over the person of such defendant, or to grant the relief prayed as against such defendant.

The defendant, Center Drive-In Theatre Company, by answer, admits (a) that it is a corporation formed under the laws of Nebraska, with its principal place of business in Omaha, Nebraska, and transacts business in the District of Nebraska, (b) plaintiff's pleaded definition of "Drive-In Theatre" supra, (c) that motion picture distributors enter into contracts with each of the defendants pursuant to which the distributors lease motion picture films to each of the defendants, and license each of them to exhibit said films in its theatres (which admission the court regards as being operative only in respect of the admitting defendant's own operations and not as attributing a course of action to any other defendant), (d) that motion picture film exhibited in its theatre has been made in a state or states other than Iowa or Nebraska, and, upon being made is transported from outside Nebraska and Iowa to an exchange or distributing center of the respective film company or distributor (but, making such admission with the affirmative assertion that film "is then at rest"), (e) that a substantial number of contracts for film exhibition in the Omaha area provide that the exhibitor shall pay to distributors for the privilege of exhibiting the film, a percentage of the boxoffice receipts obtained from exhibiting the film in distributors' theatres, and (f) that, as a part of their endeavor to secure patronage for defendants' theatres, and to inform the public of the films to be shown in their theatres, the defendants advertise, among other ways, in the Omaha World Herald, a daily newspaper published in the City of Omaha, and circulated from Omaha to...