Six West Retail Acquisition, Inc. v. Sony Theatre Management Corp.

203 F.R.D. 98, 51 Fed. R. Serv. 3d 708, 2001 U.S. Dist. LEXIS 13572, 2001 WL 1033571
CourtDistrict Court, S.D. New York
DecidedSeptember 6, 2001
DocketNo. 97 Civ. 5499(LAP)(JCF)
StatusPublished
Cited by29 cases

This text of 203 F.R.D. 98 (Six West Retail Acquisition, Inc. v. Sony Theatre Management Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Six West Retail Acquisition, Inc. v. Sony Theatre Management Corp., 203 F.R.D. 98, 51 Fed. R. Serv. 3d 708, 2001 U.S. Dist. LEXIS 13572, 2001 WL 1033571 (S.D.N.Y. 2001).

Opinion

MEMORANDUM AND ORDER

FRANCIS, United States Magistrate Judge.

The plaintiff, Six West Retail Acquisition, Inc. (“Six West”), brought this action against various corporate and individual defendants alleging (1) breach of contracts related to the defendants’ management of three movie theaters owned by Six West; (2) breach of fiduciary duties arising from these contracts; (3) tortious interference with the plaintiffs prospective business relations; (4) unjust enrichment; (5) restraint of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; (6) attempted monopolization in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; and (7) anticompetitive merger in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. Six West has now moved to compel the depositions of certain high-ranking officers of two corporate defendants. For the reasons that follow, the plaintiffs motion is granted.

Background1

[100]*100A. Parties2

Six West, formerly known as Solow Theatre Corporation, is a New York corporation with its principal place of business in New York, New York. (First Amended Complaint dated Dec. 4, 1997 (“Amended Compl.”), ¶¶ 6, 34). The plaintiff leases out and otherwise controls three movie theaters located in Manhattan: (1) the New York Twin (the “Twin”), a thousand-seat, two-screen theater, located at 265 East 66th Street; (2) the Paris Theatre (the “Paris”), a single screen theatre with a seating capacity of 575, located at 4 West 58th Street; and (3) the premises of the former Festival Theatre (the “Festival”), located at 6 West 57th Street. (Amended Compl. ¶ 4, 6). Sheldon H. Solow, a real estate developer, is Six West’s owner, its sole shareholder, and a corporate officer. (Amended Compl. ¶ 4, 6).

Defendant Loews Theatre Management Corporation (“Loews Theatres”), also known at various times as Sony Theatre Management Corporation (“Sony Theatres”), is a Delaware corporation with its principal place of business in New York. (Amended Compl. ¶ 7). Defendant Loews Fine Arts Cinemas, Inc. (“Loews Fine Arts”) is a subsidiary of Sony Theatres through which the latter conducted business with the Paris and the Festival Theatres. (Amended Compl. ¶ 10). Defendant Talent Booking Agency, Inc. (“TBA”) is a New York corporation. (Amended Compl. ¶ 9). Originally a Loews subsidiary, TBA is now affiliated with Sony Theatres. (Amended Compl. ¶ 9, 34).

Defendant Sony Pictures Entertainment Corporation (“Sony Pictures” or “SPE”), a Delaware corporation and the parent company of Sony Theatres, produces and distributes motion pictures and exhibits them through Sony Theatres, along with other companies. (Amended Compl. ¶ 11). Defendant Sony Electronics Corporation (“Sony USA”), a New York corporation formerly known as Sony Corporation of America (“SCA”), is the parent company of Sony Pictures. (Amended Compl. ¶ 12). Defendant Sony Corporation, a Japanese corporation, is the ultimate parent company of Sony USA and the other Sony defendants.3 (Amended Compl. ¶ 13).

Individual defendants include James Loeks and Barrie Lawson Loeks, formerly Co-Chairpersons of Sony Theatres; Travis Reid, President of Sony Theatres and TBA; Seymour H. Smith, Executive Vice President of Sony Theatres and TBA; and Thomas Brueggemann, Sony Theatres’s Vice President. (Amended Compl. ¶¶ 14-18).

B. Allegations

In 1978, after Mr. Solow had allegedly developed a close relationship with a senior executive of Loews Theatres, Solow Theatre Corporation, the plaintiffs predecessor-in-interest, entered into an agreement with TBA regarding the management and the operation of the Twin (the “Twin Agreement,” attached as Exh. A to Affidavit of Rachel S. Fleishman dated Jan. 8, 1998 (“Fleishman Aff.”)). (Amended Compl. ¶ 33). The plaintiff contends that the Sony defendants did not fulfill their obligation under the Twin Agreement to play only first-run films of equal or better quality than the movies shown at the defendants’ other venues on the East Side of Manhattan. Six West further claims that the defendants violated the terms of the agreement by booking poorly performing films at the Twin, exhibiting movies for unnecessarily prolonged periods, and failing to maintain the theatre’s physical condition. (Amended Compl. ¶¶ 68-74).

Sometime in 1990, Mr. Solow, on behalf of Six West, began to operate the Paris Theatre, allegedly one of the country’s most prestigious venues used to premier “top quality films.” (Amended Compl. ¶¶ 43, 51). Shortly thereafter, Sony started managing [101]*101the Paris for Mr. Solow pursuant to a financial arrangement purportedly similar to the one governing the Twin.4 The plaintiff asserts that the defendants violated this arrangement by: (1) premiering various movies at the Paris, thereby affording these films the benefit of the theatre’s prestige, and then refusing to continue to exhibit them at the Paris or at the plaintiffs other venues; (2) showing films at the Paris for protracted periods; and (3) ignoring previous guarantees to continue the Paris’ history of exclusive bookings while diverting successful films to Sony’s Lincoln Square theatre. (Amended Compl. ¶¶ 51-67).

According to the plaintiff, at the time Sony assumed management of the Paris, it also agreed to operate the Festival.5 (Amended Compl. ¶ 47). Six West argues that the defendants “grossly mismanaged the Festival Theatre and allowed its profitability and physical appearance to deteriorate [so] dramatically” that the plaintiff decided to close it down in 1994. (Amended Compl. ¶ 75).

In support of its Sherman Act claim, Six West alleges that the defendants engaged in a series of block-booking agreements with distributors, limiting the availability of motion pictures to independent theatre owners and reducing competition. (Amended Compl. ¶ 78). Block-booking is an unlawful practice through which film distributors condition the license or sale of their more desirable movies on the acceptance of unwanted or inferior films. See United States v. Paramount Pictures, Inc., 334 U.S. 131, 156-59, 68 S.Ct. 915, 92 L.Ed. 1260 (1948) (describing block-booking and holding it to be per se violation of antitrust laws). According to the plaintiff, the defendants admitted to “a pattern of blatantly anticompetitive conduct” in their correspondence with Mr. Solow, after he expressed his dissatisfaction with the films Sony exhibited at the plaintiffs theatres. (Amended Compl. ¶¶ 78-82).

On September 30, 1997, shortly before the plaintiff filed its amended complaint, Loews Theatres entered into a merger agreement with Cineplex Odeon (“Cineplex”), a major national chain of movie theaters, making Cineplex a wholly owned subsidiary of Loews and creating the Loews Cineplex Entertainment Corporation (“LCE”). See Proposed Final Judgment and Competitive Impact Statement, 63 Fed.Reg. 25071, 25077 (May 6, 1998). The merger was consummated only after Loews and Cineplex agreed to divest themselves of a number of movie theatres in New York and Chicago. See id. at 25076.

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203 F.R.D. 98, 51 Fed. R. Serv. 3d 708, 2001 U.S. Dist. LEXIS 13572, 2001 WL 1033571, Counsel Stack Legal Research, https://law.counselstack.com/opinion/six-west-retail-acquisition-inc-v-sony-theatre-management-corp-nysd-2001.