United States v. Starlite Drive-In

• Decision Date: 21 May 1953
• Docket Number: No. 10649.,10649.
• Citation: 204 F.2d 419
• Parties: UNITED STATES v. STARLITE DRIVE-IN, Inc. et al.
• Court: U.S. Court of Appeals — Seventh Circuit

204 F.2d 419 (1953)

UNITED STATES v. STARLITE DRIVE-IN, Inc. et al.

No. 10649.

United States Court of Appeals Seventh Circuit.

May 21, 1953.

Daniel M. Friedman, Washington, D. C., Willis L. Hotchkiss, Chicago, Ill., Charles H. Weston, Sp. Asst. to the Atty. Gen., Newell A. Clapp, Acting Asst. Atty. Gen., Victor H. Kramer, Sp. Asst. to the Atty. Gen., E. Houston Harsha, Ralph M. McCareins, Careins, Charles W. Houchins, Chicago, Ill., for the United States.

Leonard Carriere, Blue Island, Ill., Edward Blackman, Philip R. Toomin, Seymour F. Simon, Thomas C. McConnell, J. H. Schwartz and Jacob Cohen, Chicago, Ill., Sheldon O. Collen, Ode L. Rankin, Chicago, Ill., of counsel, for appellees.

Before MAJOR, Chief Judge, and FINNEGAN and SWAIM, Circuit Judges.

MAJOR, Chief Judge.

This is an appeal by the government from an order entered April 23, 1952, dismissing an indictment which charged the defendants with conspiring to fix admission prices of drive-in theatres in violation of § 1 of the Act of Congress of July 2, 1890, Title 15 U.S.C.A. § 1, commonly known as the Sherman Act. The order was entered after oral argument, during which the District Judge expressed the view that the indictment was faulty for failure to factually allege that interstate commerce was directly affected. The issue here is whether the court erred in the view thus expressed and in its order of dismissal.

The defendants are all operators of drive-in theatres located in Cook County, Illinois. Their business activity is limited to the showing of motion pictures in their respective theatres. No defendant is engaged in or has any connection with the production or distribution of motion pictures. The indictment, stripped of its verbosity and legal conclusions, alleges no more than that the defendants agreed to and did fix uniform admission prices. Specifically, the indictment alleges that the defendants engaged in a combination and conspiracy in unreasonable restraint of trade and commerce among the several states, the substantial terms of which were "(a) to fix and establish uniform and non-competitive prices to be charged for admission to the drive-in theatres of the corporate defendants and the co-conspirator; and (b) to refrain from charging a group admission price to said theatres based on a fixed charge per automobile."

True, the indictment in a paragraph entitled "Effects" alleges:

"The effects of the aforesaid combination and conspiracy, among others, have been as follows:

(a) The flow in interstate commerce of motion picture films into the drive-in theatres operated by the corporate defendants and the co-conspirator has been substantially restrained;

(b) Members of the public have been denied the opportunity to see motion pictures at the drive-in theatres operated by the corporate defendants and the co-conspirator at admission prices determined in a free, competitive market;

(c) Distributors have been deprived of the benefits of a free, competitive market for the motion pictures distributed by them, in interstate commerce, to the corporate defendants and the co-conspirator."

The substance of defendants' argument is that the "effects" thus alleged are mere conclusions of the pleader, without basis in the factual allegations. Such being the case, the allegations entitled "Effects" are not admitted by the motion to dismiss. We agree with this reasoning. Whether the indictment states an offense must be determined from the allegations of fact, that is, whether the agreement or combination fixing uniform prices for admission under the circumstances alleged constitutes an anti-trust violation. As noted, no agreement is asserted between exhibitors and either distributors or producers, no agreement which bears any relation to the price paid by the defendant exhibitors for the films — in fact, no agreement relating in any manner or form to the films but only to the price which exhibitors will charge their theatre patrons for the privilege of witnessing a display of the films. It is evident that the interstate nature of the dealings between the distributors and the exhibitors by which the latter obtain the films is terminated prior to their exhibition. A decision, therefore, simmers down to the narrow question as to whether the price-fixing agreement charged has or could have any appreciable effect upon the flow of films in interstate commerce. It appears that the theory which the government embraces carries it into a field of speculation and conjecture, as is epitomized by the legal effects which the indictment alleges. No facts are alleged and it is not reasonably discernible how or in what manner the condemned agreement affected commerce. Certainly there is no basis for a claim that the movement of films in interstate commerce was either enhanced or diminished or that any discrimination resulted either to exhibitors in the procurement of films or to their patrons in viewing the films. Distributors were as...