2301 M Cinema LLC D/B/A West End Cinema v. Silver Cinemas Acquisition Co.

• Court: District Court, District of Columbia
• Decided: September 28, 2018
• Docket: Civil Action No. 2017-1990
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

) 2301 M CINEMA LLC, et al., ) ) Plaintiffs, ) ) v. ) Civil Action No. 17-1990 (EGS) ) SILVER CINEMAS ACQUISITON CO., ) et al., ) ) Defendants. ) )

MEMORANDUM OPINION

I. Introduction

To show a film, a movie theater must obtain a license from

the film’s distributor. The case before the Court involves the

competitive market between theaters for exclusive licenses to

show specialty films. Plaintiffs—2301 M Cinema d/b/a West End

Cinema (“West End Cinema”), the Avalon Theatre Project, Inc.

(“the Avalon”), the Denver Film Society, and the Cinema Detroit

(collectively, “plaintiffs”)—bring this action against Silver

Cinemas Acquisition Co. d/b/a Landmark Theatres and its parent

corporation 2929 Entertainment, LP (collectively, “Landmark”).

Plaintiffs allege that Landmark violated federal antitrust law

by using its national market power to coerce film distributors

into granting Landmark exclusive licenses, preventing plaintiffs

and other independent theaters from showing specialty films.

Plaintiffs’ four-count complaint charges Landmark with: (1)

1 circuit dealing in violation of Section 1 of the Sherman Act;

(2) using its monopoly power in violation of Section 2 of the

Sherman Act; (3) attempting to use its monopoly power in

violation of Section 2 of the Sherman Act; and (4) interfering

with plaintiffs’ business relations.

Pending before the Court is Landmark’s motion to dismiss

plaintiffs’ complaint. See Defs.’ Mot., ECF No. 16. After

careful consideration of the motion, the response, the reply

thereto, and the applicable law, Landmark’s motion to dismiss is

GRANTED IN PART and DENIED IN PART.

II. Background

Plaintiffs are four independent, community theaters that

primarily show specialty films. Compl., ECF No. 1 ¶¶ 14-17.

Specialty films include “independent films, art films, foreign

films, and documentaries.” Id. ¶ 24. Unlike mainstream

commercial films, specialty films are not intended to appeal to

a broad audience and are therefore released less widely than

commercial films. Id. The first plaintiff, West End Cinema,

operated in the District of Columbia from 2010 until 2015. Id. ¶

14. In 2015, West End Cinema was “forced” out of business,

allegedly by Landmark’s anticompetitive licensing practices. Id.

Landmark leased the West End Cinema’s space and has since opened

a Landmark theater in its place. Id. The Avalon is another

independent theater located in the District of Columbia. Id. ¶

2 15. The Denver Film Society is a nonprofit organization located

in Denver, Colorado that provides specialty film programming via

“year-round screening, film festivals, and other special

events.” Id. ¶ 16. It operates the Sie FilmCenter, a specialty

film theater. Id. Finally, Cinema Detroit is a non-profit

specialty film theater located in Detroit, Michigan. Id. ¶ 17.

Defendant Landmark is a Delaware corporation and subsidiary

of 2929 Entertainment, LP. Id. ¶ 18. It operates fifty-one

specialty film theaters in twenty-two geographic markets

nationwide. Id. It is “the largest specialty film movie theater

chain in the country” and is purportedly opening new theaters on

a regular basis. Id.

Both plaintiffs and Landmark are “exhibitors,” the industry

term for movie theaters. Id. ¶ 21. Exhibitors must negotiate

with film distributors for licenses to exhibit films at their

theaters. See id. ¶ 22. Distributors are the entities

responsible for marketing the film; they act as a “middleman”

between the production studio and the exhibitor. Id. ¶ 5.

Generally, a distributor’s income for each film is tied to the

revenue earned by the exhibitor during its run of the film. See

id. ¶¶ 75-76. License agreements between distributors and

exhibitors specify the terms under which the exhibitor may show

a particular film. See id. ¶¶ 21-22, 25. In some instances,

license agreements may include “clearances,” or an exclusive

3 right to show a film. Id. ¶ 25. In acquiescing to a clearance, a

distributor agrees not to license a film to any other exhibitor,

or to specific exhibitors, in the same geographic market. Id.

Clearances are generally negotiated either for the first few

weeks a film is shown, a “first-run” clearance, or for the

entire period a film is screened by an exhibitor, a “day and

date” clearance. See id. ¶¶ 21, 25, 28. Clearances must be

negotiated on a theater-by-theater, film-by-film basis.

Therefore, exhibitors may not engage in circuit-dealing, whereby

“a dominant movie theater chain,” known as a “circuit,” “uses

its market power to obtain preferential agreements, particularly

clearances, from distributors for the licensing of films . . .

in multiple geographic markets.” Id. ¶ 28 (citing United States

v. Paramount Pictures, 334 U.S. 131, 154-55 (1948)).

Plaintiffs allege that Landmark, as the “dominant theater

‘circuit’ for the exhibition of specialty films in the United

States,” leverages its market position to obtain clearance

agreements nationwide. Id. ¶¶ 29, 30. Rather than negotiating

clearances on an individual theater-by-theater, film-by-film

basis, plaintiffs assert that Landmark obtains “blanket

clearances” for more than one film or theater from distributors

that accede to Landmark’s demands for fear of retribution and

loss of Landmark’s business. Id. ¶ 29. Plaintiffs seek an

4 injunction, treble damages, costs and fees, and actual damages.

See id. ¶¶ 89-90, 97-98, 102-04, 112-13.

III. Standard of Review

A motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6) tests the legal sufficiency of a complaint.

Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A

complaint must contain “a short and plain statement of the claim

showing that the pleader is entitled to relief, in order to give

the defendant fair notice of what the . . . claim is and the

grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007) (quotations and citations omitted).

Despite this liberal pleading standard, to survive a motion

to dismiss, a complaint “must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible

on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quotations and citations omitted). A claim is facially

plausible when the facts pled in the complaint allow the court

to “draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Id. The standard does not amount to

a “probability requirement,” but it does require more than a

“sheer possibility that a defendant has acted unlawfully.” Id.

“[W]hen ruling on a defendant’s motion to dismiss [pursuant

to Rule 12(b)(6)], a judge must accept as true all of the

factual allegations contained in the complaint.” Atherton v.

5 D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)

(quotations and citations omitted). In addition, the court must

give the plaintiff the “benefit of all inferences that can be

derived from the facts alleged.” Kowal v. MCI Commc’ns Corp., 16

F.3d 1271, 1276 (D.C. Cir. 1994). Even so, “[t]hreadbare

recitals of the elements of a cause of action, supported by mere

conclusory statements” are not sufficient to state a claim.

Iqbal, 556 U.S. at 678.

“To survive a 12(b)(6) motion to dismiss a claim in an

antitrust case, plaintiffs must do more than simply paraphrase

the language of the antitrust laws or state in conclusory terms

that the non-movant has violated those laws.” WAKA LLC v. DC

Kickball, 517 F. Supp. 2d 245, 249 (D.D.C. 2007) (citing Dial A

Car, Inc. v. Transp., Inc., 884 F. Supp. 584, 588 (D.D.C. 1995),

aff'd 82 F.3d 484 (D.C. Cir. 1996)). “[I]f [the plaintiff]

claims an antitrust violation, but the facts he narrates do not

at least outline or adumbrate such a violation, he will get

nowhere merely by dressing them up in the language of

antitrust.” Dial A Car, 884 F. Supp. at 588 (quoting Sutliff,

Inc. v. Donovan Companies, Inc., 727 F.2d 648 (7th Cir. 1984))

(internal quotation marks omitted). That said, because “the

proof is largely in the hands of the alleged conspirators,”

dismissal procedures “should be used sparingly in complex

antitrust litigation” until the plaintiff is given ample

6 opportunity for discovery. Poller v. Columbia Broad. Sys., 368

U.S. 464, 473 (1962).

IV. Analysis

Landmark moves to dismiss the plaintiffs’ complaint for

failure to state a claim pursuant to Federal Rule of Civil

Procedure 12(b)(6), putting forth several arguments. See Defs.’

Mot., ECF No. 16. First, it contends that 2929 Entertainment

should be dismissed, because the complaint does not allege that

the parent corporation was responsible for the actions of its

subsidiary. Id. at 29. 1 Second, Landmark argues that plaintiffs

fail to state a plausible circuit dealing claim (Count I)

because plaintiffs fail to allege: (1) that Landmark wielded its

circuit power to coerce distributors; (2) concerted action or

agreement; and (3) an antitrust injury. Id. at 13-25. Third,

Landmark argues that plaintiffs fail to state a plausible

monopolization or attempted monopolization claim (Counts II and

III) because plaintiffs fail to allege: (1) that Landmark

exercised leveraging conduct; and (2) that Landmark has monopoly

power. Id. at 25-28. Finally, Landmark contends that plaintiffs

fail to state a plausible tortious interference claim (Count

IV). Id. at 28-29. The Court analyzes each argument in turn.

1 When citing electronic filings throughout this opinion, the Court cites to the ECF page number, not the page number of the filed document. 7 A. Defendant 2929 Entertainment, LP is Dismissed Without Prejudice

Landmark argues that its parent corporation 2929

Entertainment should be dismissed because the complaint does not

allege that it was responsible for the actions of its

subsidiaries. Defs.’ Mot., ECF No. 16 at 29. Plaintiffs agree

and reserve the right to seek leave to amend the complaint and

add 2929 Entertainment as a defendant as discovery unfolds.

Pls.’ Opp’n, ECF No. 17 at 37. Therefore, the Court GRANTS

Landmark’s motion and dismisses without prejudice defendant 2929

Entertainment, LP from this action.

B. Plaintiffs Sufficiently Allege a Circuit Dealing Claim

Landmark argues that Count I must be dismissed because

plaintiffs fail to state a plausible circuit dealing claim in

violation of Section 1 of the Sherman Act. Defs.’ Mot., ECF No.

16 at 13-25. First, Landmark argues that plaintiffs fail to

allege that Landmark wielded its national circuit power to

coerce distributors to agree to clearance agreements. Id. at 13-

19. Landmark also argues that plaintiffs do not allege that it

negotiated any unlawful blanket clearances covering more than

one theater or film. Id. Instead, it contends that plaintiffs

merely allege a series of theater-by-theater, city-by-city

negotiated clearance agreements for individual films, a lawful

industry practice. Id. at 14-18. Plaintiffs respond that they

8 allege “six specific instances of Landmark’s circuit dealing at

work.” Pls.’ Opp’n, ECF No. 17 at 10. Moreover, plaintiffs argue

that they allege that Landmark coerces and penalizes

distributors, forcing them to enter into unlawful clearance

agreements to avoid retribution. Id. at 19-21.

Alternatively, Landmark argues that plaintiffs fail to

allege concerted action or agreement between Landmark and the

distributors. Defs.’ Mot., ECF No. 16 at 19-22. Instead,

Landmark contends that plaintiffs’ allegations merely “indicate

unilateral decision-making.” Id. at 21. Plaintiffs argue that

the complaint alleges that distributors agree to provide blanket

clearances for fear of retribution, even though such clearances

are against the distributors’ own economic interests. See Pls.’

Opp’n, ECF No. 17 at 24-27.

Finally, Landmark argues that plaintiffs fail to allege an

injury to competition and consumers. Defs.’ Mot., ECF No. 16 at

22-25. Landmark contends that plaintiffs merely assert

individual harm, an insufficient antitrust injury. See id.

Plaintiffs respond that the complaint alleges injury to

competition by way of decreased output and revenue for

distributors and increased prices, fewer choices, and decreased

quality for consumers. Pls.’ Opp’n, ECF No. 17 at 29.

9 1. Coercive Use of National Power

Circuit dealing constitutes a per se violation of the

Sherman Act, as “[t]he inclusion of theatres of a circuit into a

single agreement gives no opportunity for other theatre owners

to bid for the feature in their respective areas and . . . is

therefore an unreasonable restraint of trade.” United States v.

Paramount Pictures, 334 U.S. 131, 154 (1948); see Cobb Theatres

III, LLC v. AMC Entm’t Holdings, Inc., 101 F. Supp. 3d 1319,

1342 (N.D. Ga. 2015)(citing Paramount, 334 U.S. at 153-55;

United States v. Griffith, 334 U.S. 100, 106-09 (1948),

disapproved on other grounds by Copperweld Corp. v. Indep. Tube

Corp, 467 U.S. 752 (1984)). Circuit dealing occurs when an

exhibitor “pools the purchasing power of an entire circuit to

‘eliminate the possibility of bidding for films [on a] theatre

by theatre [basis].’” Cobb Theatres, 101 F. Supp. 3d at 1342

(quoting Paramount, 334 U.S. at 154). An exhibitor may pool its

purchasing power by negotiating “agreements that cover

exhibition in two or more theatres in a particular circuit . . .

.” Paramount, 334 U.S. at 154 (emphasis added). Such

anticompetitive conduct “eliminate[s] the opportunity for a

small competitor to obtain the choice of first runs,” and

“put[s] a premium on the size of the circuit.” Id.

An exhibitor may also engage in circuit dealing by

“unlawful monopoly leveraging,” Cobb Theatres, 101 F. Supp. 3d

10 at 1342, which occurs when an exhibitor “with a monopoly of

theatres in any one town . . . . uses that strategic position to

acquire exclusive privileges in a city where [the exhibitor] has

competitors,” Griffith, 334 U.S. at 107; see United States v.

Crescent Amusement Co., 323 U.S. 173, 181 (1944) (finding

circuit dealing when “the . . . defendants insist that a

distributor give them monopoly rights in towns where they had

competition or else defendants would not give the distributor

any business in the closed towns where they had no

competition”). Monopolistic advantage may be reflected in the

agreements obtained or the favorable terms therein. See Schine

Chain Theatres v. United States, 334 U.S. 110, 115-16 (1948),

overruled on other grounds by Copperweld Corp., 467 U.S. 752.

Plaintiffs sufficiently allege that Landmark leverages its

monopoly power by coercing film distributors to accept

clearances agreements that favor Landmark and to deny

plaintiffs’ requests to show specialty films. See, e.g., Compl.,

ECF No. 1 ¶¶ 4, 63. Rather than negotiating clearances on an

individual theater-by-theater, film-by-film basis, as Landmark

must, plaintiffs assert that Landmark wields its circuit power

to obtain exclusive clearances against independent theaters. See

id. ¶¶ 29, 64. First, plaintiffs allege that Landmark, as the

largest specialty film exhibitor in the nation, exerts

considerable influence over distributors. See id. ¶ 18. Landmark

11 has fifty-one theaters in twenty-two major geographic markets

nationwide. Id. ¶ 71. Specifically, plaintiffs allege several

major markets in which Landmark occupies the majority of the

specialty film exhibitor market, including St. Louis (80%),

Houston (60%), Philadelphia (54%), Detroit (60%), Denver (73%),

and the District of Columbia (68%). Id. ¶¶ 44-62. Taking such

allegations in the light most favorable to plaintiffs, the Court

must infer that distributors may be inclined to accede to

Landmark’s demands.

Next, plaintiffs allege that Landmark uses its considerable

market power to deny smaller competitors, like plaintiffs,

access to the market. See id. ¶ 71 (“Landmark’s message to the

distributors is clear: if you license a specialty film to any

one of the plaintiffs when Landmark intends to exhibit that

film, Landmark can and will use its national circuit power to

retaliate against you by refusing to play that film or other

films at various, if not all, of the 51 Landmark theaters in 22

major geographic markets throughout the country.”). Despite

Landmark’s arguments to the contrary, plaintiffs allege that

distributors must agree to Landmark’s clearance demands or risk

damaging their relationship with the largest specialty film

exhibitor. For example, “distributors have informed plaintiffs

that the only reason they were refusing to license a particular

specialty film was because of clearances demanded by Landmark,

12 and not because they desired to restrict the number of theaters

playing the film.” Id. ¶ 75 (emphasis added); see Cobb Theatres,

101 F. Supp. 3d at 1327 (denying motion to dismiss circuit

dealing claim when defendant’s conduct “operated as a demand . .

. that distributors refuse to license certain films to the

[plaintiff] or, alternatively, risk damaging their relationships

with one of the nation’s largest film exhibitors”). Such

anticompetitive conduct may also be inferred by the distributors

assent to Landmark’s demands. See id. (denying motion to dismiss

in part because “several major distributors began to honor

[defendant’s] demand for preferential treatment”). Here,

plaintiffs allege that distributors frequently booked specialty

film showings with plaintiffs and later cancelled the bookings,

often at the last minute, “due to Landmark’s clearance demands.”

Compl., ECF No. 1 ¶ 67, see also id. ¶ 66. Landmark’s plausibly

coercive conduct is also reflected in the favorable clearances

and the advantageous terms that Landmark allegedly obtained from

distributors across the three markets at issue. See id. ¶ 29

(“[D]istributors have denied access to virtually every specialty

film for which Landmark has demanded a clearance . . . .”); see

also id. ¶¶ 63-72.

Landmark contends that plaintiffs do not allege facts to

suggest that Landmark actually threatened distributors. Defs.’

Reply, ECF No. 18 at 12. But plaintiffs need not specifically

13 allege any threats made by Landmark to state a plausible claim.

See Griffith, 334 U.S. at 107-08 (finding that an exhibitor

“need not be as crass” as to explicitly threaten a distributor

“in order to make [its] monopoly power effective in []

competitive situations”). Indeed, reading the complaint in the

light most favorable to plaintiffs, the Court may infer that the

favorable agreements and reduced market access are plausibly

attributed to Landmark’s allegedly anticompetitive, coercive

conduct. See Compl., ECF No. 1 ¶ 75; see also Cobb Theatres, 101

F. Supp. 3d at 1343 (“[An exhibitor] is guilty of circuit

dealing . . . . even when the exhibitor does not expressly

threaten distributors that it will withhold business of its

closed or monopoly markets unless it is given preferential

treatment”). That said, plaintiffs indeed allege that Landmark

dropped a film at a Landmark theater as retribution against a

distributor that failed to prevent plaintiff Avalon from showing

the film at the same time. Compl., ECF No. 1 ¶ 70.

In sum, such alleged conduct may plausibly “eliminate the

opportunity for the small competitor to obtain the choice first

runs, and put a premium on the size of the circuit.” Paramount,

334 U.S. at 154; see Griffith, 334 U.S. at 108 (holding that

defendants may not use monopoly “to stifle competition by

denying competitors less favorably situated access to the

market”); see also Cobb Theatres, 101 F. Supp. 3d at 1343

14 (finding that plaintiffs stated a “monopoly leveraging” circuit

dealing claim because the complaint “accuses AMC of using or

attempting to use its circuit power and its monopoly power in a

substantial number of non-competitive [closed] zones to drive

high-quality theatres out of markets in which they compete with

AMC,” even though the complaint did not identify coercive

threats, specific agreements, or specific closed markets).

Plaintiffs also allege that Landmark plausibly engaged in

circuit dealing by negotiating blanket clearance agreements that

unlawfully “cover exhibition in two or more theatres in a

particular circuit.” Paramount, 334 U.S. at 154. Such conduct

allows “the exhibitor to allocate the film rental paid among

theaters as it sees fit.” Id. In Cobb Theatres, the district

court denied defendant AMC’s motion to dismiss, finding that the

plaintiff had alleged an unlawful circuit dealing arrangement in

part because AMC “simultaneously negotiated clearances for both

of its Buckhead theatres.” 101 F. Supp. 3d at 1343. So here too.

Plaintiffs allege that Landmark negotiated a clearance for

multiple theaters in the Denver market when it moved a film

clearance from one theater to another, plausibly preventing

plaintiff Sie FilmCenter from competing on a theater-by-theater

basis. Compl., ECF No. 1 ¶ 65.

As such, the Court finds that plaintiffs allege sufficient

facts to state a plausible circuit dealing claim. The Court is

15 not persuaded by Landmark’s arguments to the contrary, all of

which rely on cases resolved with the benefit of discovery. See

Defs.’ Mot., ECF No. 16 at 17-19 (citing Orbo Theatre Corp. v.

Loew’s Inc., 156 F. Supp. 770 (D.D.C. 1957)(post-trial); Houser

v. Fox Theatres Mgmt. Corp., 845 F.2d 1225 (3d Cir. 1988)(motion

for summary judgment); Reading Int’l, Inc. v. Oaktree Capital

Mgmt. LLC, No. 03 Civ. 1895(PAC), 2007 WL 39301 (S.D.N.Y. Jan.

8, 2007)(motion for summary judgment)). Paramount cites Reading

International, Inc. v. Oaktree Capital Management, LLC as a case

in which the circuit dealing claim was dismissed. Defs.’ Mot.,

ECF No. 16 at 18. However, such reliance is inapposite, as the

district court did not reach the merits of the plaintiffs’

circuit dealing claim. Instead, it dismissed the claim because

“plaintiffs raise the allegation of circuit dealing for the

first time in their opposition papers.” 317 F. Supp. 2d 301, 318

n.9 (S.D.N.Y. 2003).

Indeed, plaintiffs’ allegations are not unlike those made

by Landmark in its 2016 complaint charging Regal Entertainment

Group (“Regal”) with anticompetitive conduct and circuit

dealing. See Landmark Theatres v. Regal Entm’t Grp., Civ. No.

16-123-CRC. 2 In opposing Regal’s motion to dismiss, Landmark

2 Landmark’s case against Regal was settled before the district court resolved Regal’s motion to dismiss. See Stipulation, ECF No. 19 (Civ. No. 16-123). 16 argued that it had adequately alleged a circuit dealing claim

because: (1) “it alleges that Regal derives substantial power

over distributors from its status as the largest exhibitor

circuit in the United States”; (2) it “alleges that Regal

demanded” that distributors deny Landmark access to the market

and “eliminate the opportunity for the small competitor

[Landmark] to obtain the choice first runs”; and (3) this demand

“deprive[s] Landmark of the inputs it needs to compete with the

threat that Regal could and would disadvantage distributors’

films across Regal’s circuit.” Landmark’s Opp’n, ECF No. 17 at

19-20 (Civ. No. 16-123)(citations and quotations omitted). When

confronted with a similar argument that Landmark had not alleged

specific facts regarding Regal’s allegedly coercive demands,

Landmark noted that it could not have “possibly” alleged

additional facts “[w]ithout the benefit of discovery.” Id. at

21. So here too.

2. Concerted Action

Landmark also argues that plaintiffs do not allege a viable

circuit dealing claim because plaintiffs do not allege facts

permitting a plausible inference of concerted action or

agreement between Landmark and the distributors. Defs.’ Mot.,

ECF No. 16 at 19-22. Instead, Landmark contends that plaintiffs’

allegations “at best . . . indicate unilateral decision-making”

in that Landmark prefers to not show the same films at the same

17 time as plaintiffs and that distributors prefer to honor

Landmark’s preferences. Id. at 21-22.

Under Section 1 of the Sherman Antitrust Act, “[e]very

contract, combination in the form of trust or otherwise, or

conspiracy, in restraint of trade or commerce among the several

States, or with foreign nations, is declared to be illegal.”

15 U.S.C. § 1. Therefore, “[t]o state a claim based on a Section

1 violation, a plaintiff must allege that ‘defendants entered

into some contract, combination, conspiracy, or other concerted

activity that unreasonably restricts trade in the relevant

market.’” WAKA LLC v. DC Kickball, 517 F. Supp. 2d 245, 250

(D.D.C. 2007)(quoting Dial A Car, Inc. v. Transp., Inc., 884 F.

Supp. 584, 591 (D.D.C. 1995)). To that end, “Section 1 does not

prohibit unilateral or independent conduct by one organization,

no matter how anticompetitive it might be.” Id. (quotations and

citations omitted). To plead concerted action, “antitrust

plaintiffs may (and often must) prove conspiracies by

‘circumstantial evidence and the reasonable inferences drawn

from such evidence,’ rather than through direct evidence.”

Reading Int’l, Inc. v. Oaktree Capital Mgmt. LLC, Civ. No. 03-

1895, 2007 WL 39301 at *7 (S.D.N.Y. Jan. 8, 2007)

(quoting Petruzzi's IGA Supermarkets, Inc. v. Darling–Del.

Co., 998 F.2d 1224, 1230 (3d Cir. 1993)).

18 Plaintiffs allege “enough factual matter (taken as true) to

suggest that an agreement was made.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556 (2007). As previously discussed,

plaintiffs allege that distributors and Landmark entered into

anticompetitive clearance agreements, whereby “Landmark

require[s] the distributor to agree that it will not license

specified specialty films that the distributor would otherwise

license to plaintiffs.” Compl., ECF No. 1 ¶ 6 (emphasis added);

see also id. ¶ 30 (“Distributors agree to Landmark’s clearance

demands because licenses with Landmark are essential to the

commercial success of most of the specialty films they

distribute.”). Moreover, plaintiffs allege that distributors

“refus[ed] to license” films to plaintiffs, id. ¶ 75, because

they could not “break precedent” from their prior agreements

with Landmark, id. ¶ 65. Plaintiffs place their allegations of

Landmark’s and the distributors’ parallel conduct “in a context

that raises a suggestion of a preceding agreement, not merely

parallel conduct that could just as well be independent action.”

Twombly, 550 U.S. at 557. As such, plaintiffs’ allegations

sufficiently “raise a reasonable expectation that discovery will

reveal evidence of illegal agreement.” Id. at 556.

Landmark argues that the plaintiffs merely allege

unilateral action, as both Landmark and the distributors are

acting independently for distinct, self-interested reasons. As

19 such, it contends that its conduct can be explained by market

forces. See Defs.’ Mot., ECF No. 16 at 21-22. For example,

Landmark argues that it prefers not to show the same films at

the same times as plaintiffs. See id. It also argues that

distributors likely prefer to show their films at a national,

profitable exhibitor chain. See id. However, in so arguing,

Landmark asks the Court to make a factual determination at this

early stage of proceedings. See id. at 21. The Court may not do

so. Indeed, at this stage, the plaintiffs “need not rule out

independent action.” Oxbow Carbon & Minerals LLC v. Union Pac.

R.R. Co., 81 F. Supp. 3d 1, 13 (D.D.C. 2015). While conspiracy

allegations may fail to state a Section 1 claim if there are

“obvious alternative explanations for the facts alleged,” id.

(quotations and alterations omitted), “‘it is also clear that

allegations contextualizing agreement need not make any unlawful

agreement more likely than independent action . . . at the

motion to dismiss stage,’” id. (quoting Evergreen Partnering

Grp., Inc. v. Pactiv Corp., 720 F.3d 33, 47 (1st Cir. 2013)).

Without the benefit of discovery, it is not obvious that the

favorable clearance agreements are caused only by market forces.

The Court is not persuaded by Landmark’s reliance on Cinema

Village Cinemart, Inc. v. Regal Entertainment Group, an

unreported case from the Southern District of New York, in which

the district court judge granted Regal’s motion to dismiss, in

20 part because the plaintiff failed to allege concerted action.

Defs.’ Mot., ECF No. 16 at 20-21 (discussing Civ. No. 15-5488,

2016 WL 5719790 (S.D.N.Y. Sept. 29, 2016)). Unlike plaintiffs’

complaint here, none of the plaintiff’s allegations in Cinema

Village Cinemart suggested an agreement between Regal and the

distributors. 2016 WL 5719790 at *3. Whereas the plaintiffs in

this case described in detail the various theaters and films

affected by Landmark’s allegedly unlawful agreements with

distributors, the plaintiff in Cinema Village Cinemart failed to

allege “what theaters or films [the clearances] concerned, or

the nature of the supposed threats that induced them.” Id. at

*3. In light of the significant differences between the two

cases, the Court cannot rely on the comparison.

3. Antitrust Injury

Finally, Landmark argues that the Court must dismiss the

plaintiffs’ circuit dealing claim because plaintiffs fail to

allege an antitrust injury. Defs.’ Mot., ECF No. 16 at 22-25.

Landmark argues that plaintiffs only allege that their

individual theaters have been harmed, while antitrust law

requires plaintiffs to allege that Landmark’s anticompetitive

conduct hurts competition and consumers. Id. at 22-23.

It is “clear that a plaintiff claiming federal antitrust

violations must plead and prove ‘more than injury casually

linked to an illegal presence in the market.’” WAKA, 517 F.

21 Supp. 2d at 249 (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat,

Inc., 429 U.S. 477, 489 (1977)). Because the antitrust laws

“were enacted for the ‘protection of competition, not

competitors,” Brunswick, 429 U.S. at 488, a plaintiff must

allege an anticompetitive impact on the market, id. at 488-89.

Therefore, to allege an antitrust injury, a plaintiff must plead

an “[actual] injury of the type the antitrust laws were intended

to prevent and that flows from that which makes defendants' acts

unlawful.” Id. at 489. “[A]bsent injury to competition, injury

to plaintiff as a competitor will not satisfy the pleading

requirement.” Mizlou Television Network, Inc. v. Nat'l Broad.

Co., 603 F. Supp. 677, 684 (D.D.C. 1984).

Throughout the complaint, plaintiffs allege harm to

competition and consumers. “[A]ctual anticompetitive effects

include, but are not limited to, reduction of output, increase

in price, or deterioration in quality.” Cobb Theatres, 101 F.

Supp. 3d at 1335 (quotations and citations omitted). Here,

plaintiffs allege just that. The complaint attributes decreased

output and revenues for distributors to Landmark’s unlawful

clearance agreements. See, e.g., Compl., ECF No. 1 ¶¶ 8-9, 73-

82. For example, plaintiffs allege that fewer consumers view a

film when it is shown in only one location, which leads to

decreased distributor revenue. Id. ¶ 76. Indeed, distributors

allegedly agree that clearance agreements are not necessarily in

22 their economic interest; Landmark’s clearance demands were

allegedly the “only reason” that distributors refused to license

films to plaintiffs. Id. ¶¶ 75, 77.

Additionally, plaintiffs allege that consumers have fewer

exhibitor choices and endure increased movie prices and

decreased theater quality as a result of the unlawful clearance

agreements. See, e.g., id. ¶¶ 8-9, 73-82. For example,

plaintiffs contend that consumers have fewer quality choices in

the specialty film exhibitor market; if a consumer seeks to see

a film shown by Landmark, the consumer will be unable to enjoy

the film at another theater. Id. ¶ 78. If a Landmark theater

sells out, a consumer may not be able to enjoy the film at all.

See id. ¶ 79. Moreover, plaintiffs allege that the decreased

competition causes higher ticket and concession prices. Id. ¶

79. Finally, as a result of Landmark’s alleged anticompetitive

conduct, consumers may have to travel further to see a film. See

id.; see also id. ¶ 65 (alleging that patrons in metropolitan

Denver must travel an additional 6.5 miles to see a film at a

Landmark theater). As Landmark stated in its opposition to

Regal’s motion to dismiss, it is “bedrock antitrust law that

forcing consumers to travel well outside their market—at

considerable inconvenience and expense—to get access to the

product they desire does harm their welfare.” Landmark’s Opp’n,

ECF No. 17 at 43 (Civ. No. 16-123). In sum, the plaintiffs

23 sufficiently state an antitrust injury by “point[ing] to the

specific damage done to consumers in the market.” Cobb Theatres,

101 F. Supp. 3d at 1335 (citations and quotations omitted).

Finally, Landmark disputes the accuracy of plaintiffs’

allegations, arguing that plaintiffs misunderstand the relevant

economic consequences of the clearance agreements. Defs.’ Mot.,

ECF No. 16 at 22-25. For example, Landmark contends that the

number of films available to the public increased as a result of

“interbrand competition.” Defs’ Mot., ECF No. 16 at 23. In so

arguing, however, Landmark again relies on summary judgment

cases in asking the Court to make factual determinations

regarding actual economic effects at the motion to dismiss

stage. Again, the Court may not do so.

The Court therefore DENIES Landmark’s motion to dismiss

Count I of the complaint.

C. Plaintiffs Sufficiently Allege Monopolization

Landmark also argues that plaintiffs fail to state

monopolization (Count II) or attempted monopolization (Count

III) claims pursuant to Section 2 of the Sherman Act. Defs.’

Mot., ECF No. 16 at 25-28. Landmark argues that plaintiffs do

not allege two necessary elements of a Section 2 claim:

(1) leveraging conduct; and (2) monopoly power. Id.

“[T]he use of monopoly power, however lawfully acquired, to

foreclose competition, to gain a competitive advantage, or to

24 destroy a competitor, is unlawful.” Griffith, 334 U.S. at 107.

“To plead a claim for actual monopolization, a plaintiff must

allege: ‘(1) the possession of monopoly power in the relevant

market and (2) the willful acquisition or maintenance of that

power as distinguished from growth or development as a

consequence of a superior product, business acumen, or

historical accident.’” WAKA LLC, 517 F. Supp. 2d at 250 (quoting

City of Moundridge v. Exxon Mobil Corp., 471 F. Supp. 2d 20, 41

(D.D.C. 2007) and citing United States v. Grinnell Corp., 384

U.S. 563, 570-71 (1966)). “To state a claim for attempted

monopolization, a plaintiff must provide facts showing: ‘(1) a

specific intent to destroy competition or control competition in

the relevant market, and (2) a dangerous probability of success

in actually monopolizing the relevant market.’” Id. at 252

(quoting Dial A Car, Inc., 884 F. Supp. at 589-90). “The key

inquiry involves the power of the defendant in the market in

which it competes.” Id. (citations and quotations omitted).

1. Leveraging Conduct

Landmark argues that plaintiffs do not state that Landmark

leveraged any monopoly power because the complaint does not

allege that it combined its open and closed towns when

negotiating with distributors. Defs.’ Mot., ECF No. 16 at 26-27.

“When the buying power of the entire circuit is used to

negotiate films for [an exhibitor’s] competitive as well as

25 [its] closed [or non-competitive] towns, [the exhibitor] is

using monopoly power to expand [its] empire.” Griffith, 334 U.S.

at 108. The consequence of this conduct is “that films are

licensed on a non-competitive basis in what would otherwise be

competitive situations.” Id.

Plaintiffs’ Section 2 claims rely on the same allegations

of anticompetitive behavior as their Section 1 claim. Compare

Compl., ECF No. 1 ¶¶ 83-90 with id. ¶¶ 92-104. To that end,

Landmark essentially repeats its argument that plaintiffs do not

allege that Landmark leverages its monopoly power in non-

competitive markets to negotiate favorable clearance agreements

in competitive markets. Defs.’ Mot., ECF No. 16 at 26-27. As

thoroughly discussed, however, supra Sec. B.1, the Court finds

that plaintiffs allege sufficient facts to infer that Landmark

engaged in monopoly leveraging conduct. Indeed, at this stage of

the proceedings, the Court cannot agree with Landmark that

“there are no allegations that Landmark took advantage of its

position in closed geographic markets to strengthen its hand in

negotiations with distributors.” Id. at 27. As discussed,

plaintiffs allege that Landmark is the dominant specialty film

exhibitor and that it wields its considerable market power to

obtain favorable clearance agreements in competitive markets

nationwide. See, e.g., Compl., ECF No. 1 ¶¶ 18, 70-72, 75.

26 Nevertheless, Landmark argues that plaintiffs’ Section 2

claims must fail because the complaint “does not identify

Landmark’s closed [or non-competitive] towns, if any” and

because plaintiffs “say nothing about the competitive makeup of

the other 15 markets where Landmark exhibits specialty films.”

Defs.’ Mot., ECF No. 16 at 27. However, plaintiffs are not

required to plead such specific facts at this early stage of the

litigation. In Cobb Theatres, the district court denied the

defendant’s motion to dismiss even though the plaintiffs had not

specifically identified non-competitive markets. 101 F. Supp. 3d

at 1343. “Identifying specific closed markets used for

leveraging” was “unnecessary” because plaintiffs alleged that

the defendant exhibitor was “using the power of its entire

nationwide circuit . . . to acquire exclusive privileges in

markets where it had competitors.” Id. So here too. Not only do

plaintiffs allege that Landmark “leveraged its dominant position

nationwide” by coercing distributors to enter into favorable

clearance agreements, see, e.g., Compl., ECF No. 1 ¶ 30, but

plaintiffs also allege that distributors agree that Landmark’s

demands are the “only reason” distributors enter into such

agreements, id. ¶ 75. 3

3 Moreover, the Court is not persuaded by Landmark’s misplaced reliance on Six West Retail Acquisition, Inc. v. Sony Theatre Management Corp. See Defs.’ Mot., ECF No. 16 at 27 (citing Civ. No. 97-5499, 2004 WL 691680 at *11 (S.D.N.Y. Mar. 31, 2004)). 27 2. Monopoly Power

Finally, Landmark argues that plaintiffs’ Section 2 claims

must fail because the complaint does not adequately allege that

Landmark possessed, or had a dangerous possibility of

possessing, monopoly power. Defs.’ Mot., ECF No. 16 at 27-28.

Monopoly power is the “existence of power to exclude competition

when it is desired to do so.” Griffith, 334 U.S. at 107

(quotations and citations omitted). It “may be inferred from a

firm’s possession of a dominant share of a relevant market that

is protected by entry barriers.” United States v. Microsoft

Corp., 253 F.3d 34, 51 (D.C. Cir. 2001)(citations omitted).

The Court disagrees that plaintiffs do not allege facts

regarding Landmark’s monopoly power. As the Court has discussed,

plaintiffs allege that Landmark is the largest specialty film

exhibitor in the nation. See Compl., ECF No. 1 ¶ 18. Landmark

does not dispute that allegation; it agrees that it has fifty-

one theaters in twenty-two major geographic markets nationwide.

See Defs.’ Mot., ECF No. 16 at 10; see also Compl., ECF No. 1 ¶

71. Moreover, plaintiffs describe several markets in which

Landmark occupies the majority of the specialty film exhibitor

Landmark states that the plaintiff’s attempted monopolization claim in that case was “dismiss[ed],” id., but Six West was actually resolved “after years of discovery,” 2004 WL 691680 at *3-4, 7.

28 market. See Compl., ECF No. 1 ¶¶ 44-62. Such allegations are

sufficient at this early stage of the proceedings. For example,

in Cobb Theatres, the district court denied the defendant’s

motion to dismiss in part because the plaintiff alleged that the

defendant had “69% share of [the] market,” an amount sufficient

to infer monopoly power. 101 F. Supp. 3d at 1340 (“in some

circumstances, ‘over two-thirds of the market is a

monopoly’”)(quoting Eastman Kodak Co. v. Image Tech. Servs.,

Inc., 504 U.S. 451, 480 (1992)). In this case, plaintiffs allege

several markets in which Landmark has close to 69% of the

market, if not more. See Compl., ECF No. 1 ¶¶ 44-62 (discussing

St. Louis (80%), Houston (60%), Philadelphia (54%), Detroit

(60%), Denver (73%), and the District of Columbia (68%)).

Not only do plaintiffs allege that Landmark possesses a

“dominant share” of the national market, but plaintiffs also

allege that high entry barriers protect Landmark’s monopoly and

prevent access the market. See Microsoft, 253 F.3d at 51; see

also Cobb Theatres, 101 F. Supp. 3d at 1340 (noting that “high

entry barriers to the market make it reasonable to presume [the

defendant] has monopoly power”). Here, plaintiffs allege that

high entry barriers, such as limited urban real estate and

difficulty in obtaining financing, reinforce and protect

Landmark’s monopoly. Compl, ECF No. 1 ¶ 36.

29 The Court therefore DENIES Landmark’s motion to dismiss Counts

II and III of the complaint.

D. Plaintiffs Sufficiently Allege Tortious Interference

Both parties agree that plaintiffs’ tortious interference

claim “rises and falls” with plaintiffs’ Sherman Act claims.

Defs.’ Mot., ECF No. 16 at 28 (one paragraph argument relying on

its previous arguments); see Pls.’ Opp’n, ECF No. 17 at 36-37

(“Landmark’s only argument for dismissing plaintiffs’ tortious

interference claim is derivative of its earlier arguments”).

Because the Court concludes that plaintiffs state claims

under the Sherman Act, the Court DENIES Landmark’s motion to

dismiss Count IV of the complaint.

V. Conclusion

For the foregoing reasons, the Court GRANTS IN PART and

DENIES IN PART Landmark’s motion to dismiss. The Court GRANTS

Landmark’s motion to dismiss, in so far as defendant 2929

Entertainment, LP is dismissed from the action without

prejudice. The Court DENIES Landmark’s motion to dismiss Counts

I, II, III, and IV of the plaintiffs’ complaint. An appropriate

Order accompanies this Memorandum Opinion.

SO ORDERED.

Signed: Emmet G. Sullivan United States District Judge September 28, 2018