Webster Rosewood Corp. v. Schine Chain Theatres

• Decision Date: 10 December 1957
• Docket Number: Civ. A. No. 3679.
• Citation: 157 F. Supp. 251
• Parties: WEBSTER ROSEWOOD CORPORATION, Plaintiff, v. SCHINE CHAIN THEATRES, Inc., et al., Defendants.
• Court: U.S. District Court — Northern District of New York

157 F. Supp. 251

WEBSTER ROSEWOOD CORPORATION, Plaintiff, v. SCHINE CHAIN THEATRES, Inc., et al., Defendants.

Civ. A. No. 3679.

United States District Court N. D. New York.

December 10, 1957.

Gray, Anderson & Schaeffer, Philadelphia, Pa., for plaintiff, Francis T. Anderson, Cormac J. Malloy, Philadelphia, Pa., of counsel.

Raichle, Tucker & Moore, Buffalo, New York and Antevil & Antevil, Gloversville, New York, for defendants, James O. Moore, Jr., David C. Diefendorf, Buffalo, N. Y., Howard M. Antevil, Gloversville, N. Y., of counsel.

FOLEY, District Judge.

This action is one under the antitrust laws involving the usual provisions of the Sherman and Clayton Acts (15 U.S.C.A. §§ 1, 2, 15, 16). It involves the motion picture business and by the complaint brings back on the screen the Schine interests, named as defendants, and the eight major distributors named as co-conspirators. Apparently, this type action will rise eternal against these same defense and conspirator players who featured in the court struggles of the 1940's in relation to conspiracy and monopoly government charges in the distribution and exhibition of motion pictures. Of course, the Schine decision is the important one in this controversy. Schine Chain Theatres, Inc., v. United States, 1948, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245; D.C.W.D.N.Y.1945, 63 F.Supp. 229; U. S. v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed 1260; D.C., 85 F.Supp. 881. The voluminous complaint generally is patterned after the writings in these decisions, but there is not too great resemblance between the complaint and the evidence produced at the trial in behalf of the plaintiff. Although this variance is not at all fatal under our liberal procedures, these catch-all allegations taken from law books without too much regard for the actual circumstances and filed in 1950 in this district court, did not stand too well against actual trial combat in 1957, and the wide range of issues indicated by the complaint narrowed very much. In fairness it should be noted that the draftsmen of the complaint were not the same lawyers who undertook the preparation for trial and tried the case before me for the plaintiff. Complexity is inherent in these cases because of the broad sweep of the antitrust statutes in their terms and established interpretations. The conspiracy element is usually a nebulous thing to tie down because the evidence always tends to range far and wide; at times, in my judgment, with an inclination to outer space unless restricted. However, this situation should be simple in contrast because the plaintiff, except for the impact it urges of the findings and decrees in the Schine decisions on the questions of conspiracy and monopoly, limits the dispute we have to the deprivation of a first neighborhood run by reason of such conspiracy and monopoly and wants the comparative theatres limited to two alone, the Webster of the plaintiff and the State of the defendants, both located in the northeastern part of the City of Rochester, New York, three quarters of a mile or six blocks apart. Despite this simplicity of approach taken by the plaintiff, the evidence in its behalf followed again the roving design, and we were taken back to 1927 in an attempt to establish a perpetuity of business villainy on the part of Schine into the damage period claimed here from 1942 to 1950. The chief witness for the plaintiff corporation at the trial, and in fact the leading actor throughout the many years, because of his relationship with the erection and operation of the Webster Theatre, and now the real principal in this lawsuit, because all the stock of the plaintiff is now owned by him and his wife, was Max Fogel. The import of his testimony, particularly when examined by his own lawyers, was to paint an agonizing picture of a victim crushed in the beginning and never allowed to rise again with his neighborhood theatre, the Webster, throughout the many years, except at the whim of the Schine interests and always bludgeoned by their monopoly and buying power, discussed by the United States Supreme Court in 334 U.S. 110, 115, 118, 68 S.Ct. 947, 92 L.Ed 1245. This portrayal, and it was quite interesting, provoked a robust, slam-bang defense at the trial and resulted in lengthy defense briefing and much of the simplicity from the plaintiff's viewpoint began to vanish.

A general review of the history of the Webster Theatre, the relations of Schine and Fogel with it in its topsy-turvy existence through the years amidst numerous corporate name changes seems important to this decision.¹ Max Fogel, who had experience in the theatre business from 1921, built the Webster Theatre in 1927 with other investors about six blocks away from the State Theatre, which had been newly built by Schine approximately a year before in 1926. There is little difference in the construction of the State and Webster, but important difference in location. There is an episode at this time of the construction of the Webster Theatre which varies through the years in its description and changes with the retelling, depending on the person who recalls it. It concerns a threat by J. Myer Schine at this time to the persons building the Webster that the location of the Webster was too near the State and he would build a theatre near another theatre, the Murray, owned by them in Rochester, if they persisted. This episode was made a specific finding by Judge Knight. Finding of Fact 11(h) of the Amended Findings of the District Court, W.D.N.Y., dated March 29, 1946; Schine Chain Theatres, Inc., v. United States, supra. The finding is not a very determinative one because it merely states both versions as to the presence or absence of threat and seems to be one of the ambiguous findings allowed to stand by the Supreme Court because of the record as a whole and the support received from other findings to conclude unlawful purpose. Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, at page 119, 68 S.Ct. 947, at page 952. This episode became further enmeshed and confused in the affidavit given by Fogel to the government in 1939 (Exhibit 5) and the recanting affidavit given to Schine in 1940 (Exhibit 4), both in evidence at this trial, concerning which Fogel freely admits now and marks in red on Exhibit 4, much he says was false. On the trial in 1957 Fogel elaborated further on this episode in 1927 testifying that J. Myer Schine said, in effect: "You have no right to build the Webster" and that Schine would not only build the other theatre but said he would see that Fogel and his associates would not get pictures for either of their theatres, and that Schine concluded it all by demanding 50% interest in the Webster. (R. 36-40). Whether Fogel and his associates succumbed to the blackjack as he wants believed, or whether he followed the old and practical adage: "If you can't beat them, join them", and thought a little monopoly his way would not be too bad, the arrangement was made and Schine took over a 50% interest in the new operating company of the Webster Theatre which continued from 1927 until 1933. In 1933 the Schine interest, as Fogel puts it, "just dropped his part of the theatre, dropped out". (R. 42). Then, to hasten the review of this background, Fogel stayed with the Webster Theatre through varied operating companies, always as manager, with a substantial interest in ownership until 1940. In the Fall of 1940, Schine picked up the mortgage on the Webster and another theatre and came into full control and operation of the Webster until the Spring of 1942. During this period Fogel became an employee of Schine, managing a Rochester theatre of Schine and booking pictures for Schine for theatres in the Rochester area. The picture painted by Fogel is again that this was done under the crushing heel of the Schine monopoly, and he became the poorly paid employee who lost his theatre as a result of continued greed. Such pathos is not too well supported and is seriously contradicted by important evidence in the record of this trial. In any event, in 1942 by reason of a consent order entered in the District Court for the Western District of New York (Exhibit 7), Fogel with others reacquired the Webster from Schine and conducted it with varying degrees of ownership, finally to full ownership by him and his wife at a time during the period of claimed damage, June 20, 1942 to May 10, 1950. Many elements in this sketchy background are not important at all in the disposition of this suit because the narrow question at hand is knowing conspiracy and monopoly between Schine and its alleged co-conspirators in the distribution of motion pictures to deprive the Webster Theatre from first neighborhood run during the years 1942 to 1950, to the financial detriment of the Webster Theatre. There are many specifics in the evidence which apply directly to this limited question and allow reasonable conclusions, and I am old-fashioned enough to attempt to decide the problem on the record made before me, keeping the all-encompassing conspiracy principle within the bounds of the proof submitted.

The most turbulent issue in the lawsuit is the offer in evidence, upon which I reserved decision, of the consent decree dated June 24, 1949, signed by Judge Knight and consented to as a judgment by the government representatives and the Schine representatives (Exhibit 12 for Id.). I am sure that few exhibits in the history of litigation have drawn so much discussion and briefing as to its admissibility. The defense is one of depth with much substance at the various barricades as to competence and relevance. Of course, this decree was consented to at a time when a stillness in the Western District of New York existed in the Schine litigation and to give it effect and sense under Section 5 of the Clayton Act (15 U.S.C.A. § 16) it must be related back to the judicial dispositions in the original government litigation against...