United States v. Griffith Amusement Co., Civ. No. 172.

• Decision Date: 27 December 1950
• Docket Number: Civ. No. 172.
• Citation: 94 F. Supp. 747
• Parties: UNITED STATES v. GRIFFITH AMUSEMENT CO. et al.
• Court: U.S. District Court — Western District of Oklahoma

94 F. Supp. 747

UNITED STATES v. GRIFFITH AMUSEMENT CO. et al.

Civ. No. 172.

United States District Court W. D. Oklahoma.

December 27, 1950.

George W. Wise and Milton A. Kallis, Assts. to Atty. Gen. (Herbert A. Bergson, Asst. Atty. Gen., and Robert E. Shelton, U.S. Atty., Oklahoma City, Okl. on brief), for plaintiff.

C. B. Cochran and J. B. Dudley, Oklahoma City, Okl., for defendants.

VAUGHT, Chief Judge.

The complaint was filed April 28, 1939 and named as defendants: Griffith Amusement Company, Consolidated Theatres, Inc., R. E. Griffith Theatres Inc., Westex Theatres Inc., L. C. Griffith, H. J. Griffith and R. E. Griffith, together with eight major distributors as follows: Paramount Pictures, Inc., Metro-Goldwyn-Mayer Distributing Corporation (Loew's Inc.), RKO Radio Pictures, Inc., Vitagraph, Inc., Universal Film Exchanges, Inc., Twentieth Century-Fox United Artists Corporation and Columbia Pictures Corporation. The complaint alleged:

That Griffith Amusement Company, hereinafter referred to as Amusement, operated one or more picture theatres in each of the towns of Ada, Ardmore, Bartlesville, Blackwell, Bristow, Chandler, Duncan, Elk City, Enid, Fairfax, Guthrie, Henryetta, Hobart, Hugo, Maud, Norman, Okmulgee, Seminole, Shawnee, Stillwater, and Tonkawa in the state of Oklahoma, and in each of the towns of Borger, Gainesville, Kermit, Pampa, Wellington and Wink in the state of Texas;

That Consolidated Theatres, Inc., hereinafter referred to as Consolidated, operated one or more theatres in each of the towns of Altus, Chickasha, Claremore, Clinton, Cushing, Drumright, Holdenville, Hominy, Kingfisher, Mangum, Pauls Valley, Sapulpa, Sayre, and Vinita in the state of Oklahoma, and in each of the towns of Cleburne, Goldsmith, Lubbock, Midland and Sunray in the state of Texas;

That R. E. Griffith Theatres, Inc., hereinafter referred to as Griffith, operated one or more theatres in each of the towns of Alamogordo, Carlsbad, Clovis, Deming, Eunice, Gallup, Hobbs, Jal and Roswell, in the state of New Mexico, and in each of the towns of Olney and Post in the state of Texas;

That Westex Theatres, Inc., hereinafter referred to as Westex, operated one or more theatres in each of the towns of Ballinger, Belton, Burkburnett, Brady, Clarksville, Decatur, Georgetown, Gonzales, Hereford, Lampasas, Lockhart, Luling, Merkel, Odessa, Plainview, San Saba, Spur, Stamford and Winters in the state of Texas and two theatres in the town of Portales in the state of New Mexico;

That L. C. Griffith was president and director of Amusement and president and director of Consolidated, both of whose offices were in Oklahoma City, Oklahoma;

That H. J. Griffith was secretary and director of Amusement, assistant secretary-treasurer and director of Consolidated, and resided in Oklahoma City, Oklahoma;

That R. E. Griffith was assistant secretary and director of Amusement, assistant secretary of Consolidated, president and director of Griffith, president and director of Westex, and resided in Dallas, Texas;

That for the five-year period immediately preceding April 28, 1939, the defendant exhibitors above-named continuously combined with each other and with the defendant distributors to unreasonably restrain interstate trade and commerce in motion picture films and to monopolize and attempt to monopolize the first and second run exhibition of feature pictures and the operation of first and second run theatres in the Griffith towns in violation of sections 1 and 2 of the Sherman Act, 15 U.S. C.A. §§ 1, 2.

That said violations consisted of the following acts: (1) that said exhibitors refrained from competing with each other in the acquisition and operation of motion picture theatres in said towns pursuant to express or implied agreements to allocate said territory between them; (2) that during said five-year period, said exhibitors contracted with each of the defendant distributors tributors for all of the feature pictures annually required for exhibition at all of the theatres operated by them in said towns, in advance of the production and distribution of such feature pictures and before such feature pictures or any of them had been offered to any other exhibitor in said towns, with the purpose and effect of controlling and monopolizing the supply of feature pictures available for exhibition in said towns; (3) that by said contracts said exhibitors combined with each other to compel each of the defendant distributors to grant to all of them in all of said towns exclusive privileges during the entire time they operated theatres in said towns; (4) that the exclusive privileges above named enabled the defendant exhibitors to unreasonably restrain, suppress and entirely eliminate the competition offered by other theatre operators in the licensing and exhibiting of feature pictures; (5) that during the past five years said distributors uniformly granted to each of the defendant exhibitors, in each town where they operate theatres, the same clearance on all feature pictures released by any of said distributors, by means of uniform action; (6) that each defendant exhibitor had what is commonly referred to in the motion picture industry as a circuit of theatres, and as a result of the acquisition and operation of numerous theatres as hereinbefore alleged, said exhibitors and each of them obtained what is commonly referred to in the motion picture industry as circuit buying power.

The complaint then prayed for specific relief in that the defendant exhibitors be perpetually enjoined and restrained from jointly or collectively negotiating any contracts for the licensing of feature pictures with any of the defendant distributors or their successors in interest, and for further relief.

The defendants filed their answers in July and August, 1940 and the issues were joined. These answers were filed only after numerous motions had been made for bills of particulars, more definite statements, et cetera, and certain portions of the complaint were either withdrawn or stricken. The cause was not tried until the summer of 1945. All of the continuances, however, were at the request of the government based upon the fact that many of the government attorneys in the Department of Justice were engaged in war activities, and it may be said that the continuances were due to war conditions which made it impractical to try the case at an earlier date. The case was tried from May 7 to May 24, 1945 and from September 10 to October 2, 1945, covering thirty actual trial days, or six weeks. Evidence was introduced relating to 243 theatres in 93 towns. In that trial there were 3668 pages of typewritten record and 761 exhibits were introduced, numbering 2873 pages. This court rendered its opinion on October 9, 1946, reported at 68 F.Supp. 180, to which reference is made for a more full and complete statement of the actual issues in this case. The case was appealed to the Supreme Court of the United States, and on May 3, 1948 that court rendered its opinion. United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 942, 92 L.Ed. 1236.

An examination of the opinion of the Supreme Court becomes necessary at this point. Quoting in part:

"This is a suit brought by the United States in the District Court to prevent and restrain appellees from violating §§ 1 and 2 of the Sherman Act.

* * * * * *

"* * * In April, 1939, when the complaint was filed, the corporate appellees had interests in theatres in 85 towns. In 32 of those towns there were competing theatres. Fifty-three of the towns (62 per cent) were closed towns, i.e. towns in which there were no competing theatres. Five years earlier the corporate appellees had theatres in approximately 37 towns, 18 of which were competitive and 19 of which (51 per cent) were closed. It was during that five-year period that the acts and practices occurred which, according to the allegations of the complaint, constitute violations of §§ 1 and 2 of the Sherman Act." (Emphasis supplied.)

The opinion further states that there were certain exclusive privileges alleged to have been granted to the exhibitors over their competitors and that "The exclusive privileges charged as violations were preemption in the selection of films and the receipt of clearances over competing theatres. It (the complaint) also charged that the use of the buying power of the entire circuit in acquiring those exclusive privileges violated the Act." Quoting further from the opinion:

"* * * And so, even if we accept the District Court's findings that appellees had no intent or purpose unreasonably to restrain trade or to monopolize, we are left with the question whether a necessary and direct result of the master agreements was the restraining or monopolizing of trade within the meaning of the Sherman Act.

"Anyone who owns and operates the single theatre in a town, or who acquires the exclusive right to exhibit a film, has a monopoly in the popular sense. But he usually does not violate § 2 of the Sherman Act unless he has acquired or maintained his strategic position, or sought to expand his monopoly, or expanded it by means of those restraints of trade which are cognizable under § 1. For those things which are condemned by § 2 are in large measure merely the end products of conduct which violates § 1. * * * So it is that monopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil and stand condemned under § 2 even though it remains unexercised. * * * It follows a fortiori that the use of monopoly power, however lawfully acquired, to foreclose competition, to gain a competitive advantage, or to destroy a competitor, is unlawful.

"* * * When the buying power of the entire circuit is used to negotiate films for his competitive as well as his closed towns, he is using monopoly power to expand his empire. * * *

* * * * * *

"Appellees were concededly using their circuit buying power to obtain films. Their closed towns were linked...