Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp.

133 F.R.D. 510, 1990 U.S. Dist. LEXIS 15262, 1990 WL 212342
Procedural entryThis page is a short order in Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp.. Read the opinion of the Court — 732 F. Supp. 1503
District Court, N.D. Illinois·Decided November 13, 1990·No. No. 82 C 3141·Published

Opinion

MEMORANDUM OPINION

BRIAN BARNETT DUFF, District Judge.

The plaintiffs have moved to amend their complaint to include an additional theory of liability. This alternative theory will be referred to throughout this opinion as the “modern rule of reason.” This court must now determine whether to give the plaintiffs leave to amend under rule 15(a) of the Federal Rules of Civil Procedure. The focus of this decision is on whether the defendants will be unduly prejudiced by this amendment.

The events leading up to the trial of this case span nearly a decade. There have been numerous decisions, and the court will assume that the reader is familiar with them. See Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp., 732 F.Supp. 1503 (N.D.Ill.1990); Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp., 855 F.2d 465 (7th Cir. 1988). The court, however, does feel compelled to review, in rather broad strokes, the procedural history, because the enormous passage of time has influenced the court’s decision that undue prejudice does in fact exist.

The gravamen of this dispute arose over certain clearance agreements that were given to the Evergreen Theater. These agreements entitled the Evergreen to show first run movies to the exclusion of the Chicago Ridge. They became operative sometime in the spring of 1981.

In 1982, the plaintiffs filed an antitrust suit under § 1 of the Sherman Act, 15 U.S.C. § 1 (1982). The plaintiffs’ theory of recovery was that clearance agreements between two theaters is unlawful if those theaters are not in substantial competition. (Hereinafter “substantial competition test”). After a motion for summary judgment was entertained by the district court, Judge Marshall limited the trial to three issues. Relevant to this discussion is the determination by the court that the issue that would be tried was whether the Evergreen and the Chicago Ridge were in substantial competition. The plaintiffs moved for reconsideration of this order. In that motion, the plaintiffs raised four arguments, none of which concerned the modern rule of reason.

In the summer of 1983, the plaintiffs amended their complaint. The defendants again moved for summary judgment. In the plaintiffs’ briefs they continued to rely on the substantial competition test. The plaintiffs stated that the key issue was still the existence of substantial competition. Nowhere in the plaintiffs’ second set of briefs did they argue that the modern rule of reason applied to this case.

[512]*512The case was tried without a jury in 1985. At the close of the plaintiffs’ case, the defendants moved to dismiss the action pursuant to Rule 41(b). After entertaining arguments from the parties, Judge Marshall took the motion under advisement. In July of 1987, the court entered an order dismissing the action.

The plaintiffs appealed this decision contending that the district court had considered certain unintroduced testimony from the defendants’ experts. The appellate court found that in fact this was the case, and held that as a consequence the plaintiffs’ due process rights had been violated. Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp., 855 F.2d 465 (7th Cir.1988). The court remanded the case “for a new trial or for other proceedings not inconsistent with this opinion.” Id. at 471. Before the court ended its discussion, it brought into question the vitality of the substantial competition test upon which the parties had relied. The court briefly considered a more modern mode of analysis derived from Continental T.V. Inc. v. G.T.E. Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). The discussion was prompted by an argument made for the first time in the defendants’ reply brief. The court, however, made no determination on the applicability of this new theory to the present action.

The case was remanded to this court. Pursuant to the remand order, this court determined that the best way to proceed was to rule on the defendants’ 41(b) motion, without considering any of the evidence that was not properly introduced at trial. After considering the evidence on the theory advanced at trial, this court held that the theaters were in fact in substantial competition and as a result entered a judgment for the defendants. The plaintiffs also moved to reopen their case to present their modern rule of reason theory. For the reasons stated in the opinion, the plaintiffs were not allowed to advance this new theory. Chicago Ridge Theater Ltd. Partnership v. M & R Amusement Corp., 732 F.Supp. 1503 (N.D.Ill.1990).

The plaintiffs requested that the court reconsider its decision and allow them to put forth their case under the modern rule of reason. The plaintiffs requested leave to amend their complaint under Rule 15(a) to include this new theory, which had not been previously pleaded. The court decided to hold a hearing to determine whether the defendants would be unduly prejudiced by this proposed amendment.1

As a result, the parties were ordered to come into court for a hearing to determine whether undue prejudice does in fact exist. The parties also filed briefs in support of their position. Having heard the arguments and the evidence, the court determined that:

1. Many witnesses that the defendant would call, if a trial were to take place today, are' scattered throughout the country and beyond the subpoena power of this court.
2. Legal fees paid by the defendants through 1985 far exceed $200,000.
3. The defendants had not taken a survey of their own in preparation for the original trial.
4. No evidence has been presented concerning any shift in population densities around the two theaters since the date of Bradburn’s original survey, or other demographics.

DISCUSSION

When looking at the entire record, the court is convinced that allowing the plaintiff to proceed on this new theory of [513]*513liability would be unduly prejudicial to the defendants. While the court is not unmindful that the judicial system has not functioned with alacrity, this does not erase the existence of prejudice nor excuse the contribution of the parties to it.

In reviewing the record, it is clear that the defendants were prepared only to defeat the plaintiffs’ case under the substantial competition test and not try the case under the modern rule of reason, which was neither plead nor argued. Seminal in this decision is the fact that Judge Marshall, in the original litigation, made it unmistakably clear that this case would be tried under the substantial competition test. Although the plaintiffs amended their complaint in the summer of 1983, they did not include the modern rule of reason.

Free access — add to your briefcase to read the full text and ask questions with AI

Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp., 133 F.R.D. 510, 1990 U.S. Dist. LEXIS 15262, 1990 WL 212342 (N.D. Ill. 1990).

133 F.R.D. 510 (Chicago Ridge Theatre Ltd. Partnership v. M & R Amusement Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related