West Boylston Cinema Corp. v. Paramount Pictures Corp., 9800252
| Decision Date | 18 September 2000 |
| Docket Number | 9800252 |
| Citation | 2000 MBAR 385 |
| Parties | West Boylston Cinema Corporation v. Paramount Pictures Corporation et al. |
| Court | Massachusetts Superior Court |
Mass L. Rptr. Cite: 12 Mass. L. Rptr. 530
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): TOOMEY
Plaintiff West Boylston Cinema Corporation ("West Boylston"), an exhibitor of "sub-run" movies,1 brings this action against National Amusements, Inc. ("National"), a competing exhibitor, and Paramount Pictures Corporation ("Paramount"), a movie distributor, alleging that Paramount's grant of a "clearance" to National (i.e. licensing that enabled National to run allegedly more profitable "first-run" movies to West Boylston's exclusion), was unreasonable and constituted an unlawful vertical non-price restraint of trade.2 West Boylston's amended complaint alleges violations of the Massachusetts Antitrust Act, G.L.c. 93, 4 and 5 (Count I), the Massachusetts Consumer Protection Act, G.L.c. 93A, 11 (Count II), the Blind Bidding Act, G.L.c. 93F, and actual and prospective business relationships (Count IV).3
Each of the defendants now move, pursuant to Mass.R.Civ.P. 56(c), for summary judgment on all counts. For the reasons that follow, their motions are ALLOWED in part and DENIED in part.4
The evidence offered in connection with the present motion is voluminous. After careful and methodical review of the nearly eight inches of summary judgment materials, including hundreds of pages of deposition transcripts and affidavits this court finds the following facts, when taken in a light most flattering to the plaintiff, to be material and undisputed.
In the motion picture industry, after a film is made, but before it is released for exhibition, distributors, such as Paramount, prepare "national marketing plans" to project the optimal number of markets in which they will run their films and the number of exhibitors they will simultaneously license within each market.6 Once the markets have been determined, distributors then generally invite exhibitors in an area to submit written "bids" or to negotiate directly for licenses to run films that interest them.7
"Bidding" for films or "product" is a process by which "two or more exhibitors in a specific zone... offer written or oral bids to license, and thus exhibit, first-run films. Successful "bidders" are then given the opportunity to play first-run films. See Deposition of Thomas F. Molen ("Molen Depo.") at 39-43 attached to Affidavit of Jennier Grace Miller ("Miller Aff.") as Exhibit 5 (emphasis added). In evaluating bids and determining which exhibitors to license, a particular movie distributors will examine, inter alia, each exhibitor's box office grossing potential.8 The successful bidding exhibitor will customarily pay the distributor a film rental amount plus a percentage of its weekly gross profits from ticket receipts in return for a license to exhibit the bid-for film. A film distributor's revenues (and an exhibitor's corresponding ability to license first-run films) depend in large part, therefore, on the exhibitor's ability to attract the public the higher the box office gross of the film exhibitor, the higher the return for the distributor.
To maximize their own revenues, and "to assure... that its expected income will not be significantly diminished by the distributor's simultaneously granting a license for the same film to a nearby competitor," exhibitors sometimes seek what is referred to in the movie business as "clearance" over a competitor. Affidavit of James Mack Folsom in support of defendants' motion for summary judgment at 4-5 ("Folsom Aff."). Clearances are exclusive licenses that preclude distributors from simultaneously licensing other theaters, either specifically named or encompassed in a geographic area, from showing a movie while it is being exhibited by a theater whose bid is accepted.
In the instant case, as set forth in more detail below, National, on behalf of its Showcase North theater, requested and was granted clearance from Paramount over West Boylston on all films from the day West Boylston opened for business. It is that request, and subsequent grant of clearance, that form the basis of the underlying action.
Sometime in 1995, David Fedeli ("Fedeli"), considered building a movie theater in Central Massachusetts, and, to that end, personally investigated the Worcester metropolitan area demographics. Based on, inter alia, his belief that "the Worcester market was an under-utilized marketplace for theaters," his impression that "people [would] travel anywhere from 15-20 minutes to go see a movie," a demographic study he received in 1995 estimating the population within ten miles of the proposed West Boylston site to be roughly 300,000, his lifetime "movie-going" experiences, and his previous thirty years review of, and experience in, the Worcester area, Fedeli determined that the Worcester marketplace could support an additional theater.9 He then built the West Boylston Cinema ("West Boylston").10
West Boylston, initially intended to be a sub-run and not a first-run theater, opened for business on July 25, 1997 with five screens. It was converted from a former grocery store and shares space and parking with other businesses in the Scarlet Brook strip mall in West Boylston, Massachusetts. Three of West Boylston's five auditoria are equipped with Dolby Digital sound systems and two with regular Dolby SR sound each with Irwin Rocker seats. Its total seating capacity is approximately 845.11 The cost of its construction was $1.15 million. At some point prior to opening, West Boylston altered course. Martin Zides ("Zides"), West Boylston's film booker the person in charge of obtaining the right to play films from movie distributors contacted Paramount and requested the opportunity to play first-run movies. As will be discussed infra, his request was denied.
National, as aforesaid, is a competitor of West Boylston; National owns and operates two theaters in the Worcester metropolitan area the White City theater in Shrewsbury and the eighteen-screen multiplex Showcase North theater in Worcester.12 Both White City and Showcase North exhibit first-run movies. At the time West Boylston opened for business, National maintained approximately 1,000 screens nationwide, or roughly 3.1% of all screens operated by exhibitors in the United States. See Affidavit of James Mack Folsom at pp. 8-9. It should be noted that National is also a controlling shareholder of Viacom, Inc. ("Viacom"), Paramount's parent corporation.
Of particular relevance to the instant dispute are the physical properties of National's Showcase North theater. In contrast to West Boylston, Showcase North is located in its own free-standing building, just off a major highway, and offers parking on its own premises. Each Showcase North auditorium is handicap accessible and equipped with Dolby Digital sound equipment and plush rocking chair seats with cup holders. Showcase North also maintains assistive listening devices for the hearing impaired. Its total seating capacity is approximately 4,35313 roughly five times the capacity of West Boylston. The cost of construction was more than $25 million.
West Boylston and Showcase North are located approximately three and one-half miles apart. West Boylston is on Route 12, a single lane highway, running roughly parallel to Interstate I-190. Showcase North is accessed at one exit further south on Interstate I-190. It takes approximately five to seven minutes to drive between West Boylston and Showcase North. Moreover, both West Boylston and Showcase North advertise in the same local Worcester newspaper, the Telegram & Gazette.14
West Boylston and Showcase North are not, however, the only exhibitors in the greater Worcester metropolitan area (West Boylston's self-described relevant geographic market).15 In particular, there are also the Westborough Hoyts and the Solomon Pond Mall Hoyts in Berlin (collectively the "Hoyts"). Unlike West Boylston (and like Showcase North) the Hoyts theaters play first-run films the relevant product market16 day-and-date with Showcase North. See newspaper clippings attached to Affidavit of Kimberly A. Stone, Esq. ("Stone Aff.") as Exhibit 36.
Paramount, as aforesaid, is a wholly-owned subsidiary of Viacom. It produces, licenses and distributes films to exhibitors, such as West Boylston, National and the Hoyts. As will be discussed shortly, it also authorizes or grants "clearances" to exhibitors.
On or about July 10, 1997, Stephen Cooper ("Cooper"), film booker for National, learned through a newspaper article of the construction and anticipated opening of West Boylston. Believing that West Boylston would directly compete with Showcase North (and thus siphon a portion of Showcase North's revenue stream), Cooper set off to document his concerns: he drove to West Boylston's site and traveled between it and Showcase North. Cooper noted that the driving distance was only 3.3 miles. Further, he observed a "general commercial activity," "traffic flow" and "[what the] population appeared to be." See Deposition of Stephen Cooper ("Cooper Depo.") at pp. 16-17 attached to Stone Aff. as Exhibit K.
Following up on his observations, Cooper met with George Leavitt17 of Paramount and suggested that National request clearance over West Boylston.18 Id. at 17. His trepidations confirmed, Cooper then telephoned Thomas F. Molen ("Molen"), Paramount's Sales Manager of New England19 and specifically requested clearance "for any films...
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