Syufy Enterprises v. National General Theatres, Inc.

575 F.2d 233
CourtCourt of Appeals for the Ninth Circuit
DecidedApril 7, 1978
DocketNo. 76-2003
StatusPublished
Cited by7 cases

This text of 575 F.2d 233 (Syufy Enterprises v. National General Theatres, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Syufy Enterprises v. National General Theatres, Inc., 575 F.2d 233 (9th Cir. 1978).

Opinion

KILKENNY, Senior Circuit Judge:

Appellant appeals from a directed verdict granted on its antitrust claim against appel-lees. The district court concluded that the evidence of violation of § 1 of the Sherman Act, 15 U.S.C. § 1, was insufficient. We affirm.

FACTS

This action was filed in federal district court in 1971 alleging violations of §§ 1 and 21 of the Sherman Act. In essence, the complaint charged certain Las Vegas thea-tre owners of conspiring with non-named film distributors to confine the exhibition of first run films to appellees’ theatres. In addition, appellees were charged with secretly agreeing to divide first run films among themselves to the exclusion of the appellant. Appellees answered and also counterclaimed alleging that the appellant had engaged in abuse of the litigation process. The trial before a jury commenced in 1975, and at the conclusion of the appellant’s case the court granted appellees’ motion for a directed verdict. Appellant filed a notice of appeal which was dismissed without prejudice in light of the pending counterclaim. The counterclaim went to trial in 1976, and appellant’s motion for mistrial was granted. The counterclaim was then severed from the original complaint allowing for this appeal.

THE LAS VEGAS THEATRE MARKET

Appellant entered the theatre business in Las Vegas in 1966 when it opened the Las Vegas Drive In. Four of the named appel-lees were operating theatres at that time, the Nevada Theatre Corporation [NTC], National General Theatres [National General], Las Vegas Cinerama [Cinerama], and Cragin. (Hereinafter collectively referred to as exhibitors.) All of these appellees were operating conventional indoor theatres when the appellant opened its drive-in thea-tre. There were two other drive-ins in Las Vegas in 1966, one operated by National General and the other by a non-party. Another named appellee, ABC Intermountain Theatre Co. [ABC], opened its first Las Vegas theatre in 1970.2 The record does show that during the 1966-1971 period there was at least one other theatre, the Bonanza, operating in the Las Vegas market.

During the five years preceding this action Las Vegas theatre owners drifted in and out of so called “split agreements.” As defined by the district court a split is an arrangement among participating exhibitors in a market area entered into with the knowledge and consent of distributors. The participants therein agree that a member thereof shall have the first right to negotiate with a licensing distributor. A split can be by company or by picture. In a company split, the participating exhibitors agree that a member thereof shall have the right to negotiate for the pictures released by a given company prior to any other members doing so. In a picture split, the participants agree that a member thereof shall have the right to negotiate for a particular picture prior to the other members so doing. From 1951 to 1965 there were only two exhibitors in Las Vegas, and they were parties to a split agreement. During 1966 and 1967 there was no split agreement, and all theatre owners competed freely for films. In 1968 another split agreement was born among National General, Cragin, and NTC. The split dissolved, and for all of 1969 and 1970 the Las Vegas exhibitors again bid without restraint for their films. In 1971 all of the named appellees, as well as the appellant, formed yet another split agreement. Appellant withdrew later that year and filed this claim. At no time was the Bonanza Theatre a party to any split [235]*235agreement. Appellant does not challenge nor would such a challenge be sustained to the various split agreements. Dahl, Inc. v. Roy Cooper Co., 448 F.2d 17, 20 (CA9 1971).

In addition to the split agreements, the process of procuring a motion picture for showing in a particular theatre is complicated by the terms of the distributor’s contract with the individual exhibitor. Generally, distributors ask for bids on all their films. They can seek bids on at least three sets of terms. First, the distributor can extend bid invitations to an exhibitor on an “exclusive” basis. As the district court found, a picture exhibited on an exclusive basis is shown at only one theatre in any one particular market area. Second, the distributor can offer to bid the film on a “day/date” basis. This would mean that the film would be shown at more than one theatre, either drive-in or conventional, in a given market area at any one time. Third, the distributor could offer the film to bidders under either plan and then decide which one to accept. This is commonly referred to as “either/or” bidding. The decision on how to offer films for bids and what bids to accept rests solely with the distributor.

The business reasons for the differing types of exhibition contracts are obvious. The day and date allows the theatre owners to submit lower bids for films since they will not have the exclusive showing rights. This is balanced by the fact that the thea-tres using day and date will be competing for the same customers. The exclusive showing rights afford just the opposite considerations. Exhibitors pay higher film rental rates, but are guaranteed exclusivity. In addition, the distributors will have a greater opportunity to profit from second showings in other theatres if the first run was on an exclusive basis.

The appellant contends that the named appellees agreed not to bid for films on a day/date basis. Consequently, appellant charges that it was forced to bid for all films on an exclusive basis. Appellant claims that it was new to the Las Vegas theatre market, and consequently was unable to offer the sort of past attendance figures to allow it to bid successfully for most exclusive pictures. The district court found that there was no evidence to show that the appellees had conspired to refuse to bid day/date to the detriment of the appellant. We agree.

STANDARD OF REVIEW

Since this matter is before the court from the entry of a directed verdict, our standard of review is quite strict. Our recent opinion in Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674 (CA9 1976), cert. denied 429 U.S. 940, 97 S.Ct. 355, 50 L.Ed.2d 309, accurately describes our task:

“Our inquiry, therefore, is not whether there is substantial evidence supporting a finding of independent business purpose, but whether no reasonable jury could have found that Distributor participated in a conspiracy to restrain trade. The burden is on the party moving for summary judgment to show the absence of any genuine issue of material fact, and, in determining whether the burden has been met, we must draw all inferences of fact against the movant and in favor of the party opposing the motion.” at 683.

Although this language speaks with respect to a motion for summary judgment, the Calnetics court properly expanded it to review of directed verdicts. See also, Santa Clara Valley Distributing Co. v. Pabst Brewing Co., 556 F.2d 942, 944 (CA9 1977).

EXHIBITORS’ INVOLVEMENT

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

Related

Wright v. Southern Mono Hospital District
631 F. Supp. 1294 (E.D. California, 1986)
Filco v. Amana Refrigeration, Inc.
709 F.2d 1257 (Ninth Circuit, 1983)
Filco v. Amana Refrigeration
709 F.2d 1257 (Ninth Circuit, 1983)
Charles Zoslaw v. Mca Distributing Corporation
693 F.2d 870 (Ninth Circuit, 1982)
Zoslaw v. MCA Distributing Corp.
693 F.2d 870 (Ninth Circuit, 1982)
General Cinema Corp. v. Buena Vista Distribution Co.
532 F. Supp. 1244 (C.D. California, 1982)
Syufy Enterprises v. National General Theatres
575 F.2d 233 (Ninth Circuit, 1978)

Cite This Page — Counsel Stack

Bluebook (online)
575 F.2d 233, Counsel Stack Legal Research, https://law.counselstack.com/opinion/syufy-enterprises-v-national-general-theatres-inc-ca9-1978.