Theatre Enterprises, Inc. v. Paramount Film Distributing Corp.

201 F.2d 306, 1953 U.S. App. LEXIS 4308, 1953 Trade Cas. (CCH) 67,413
CourtCourt of Appeals for the Fourth Circuit
DecidedJanuary 5, 1953
Docket6512_1
StatusPublished
Cited by10 cases

This text of 201 F.2d 306 (Theatre Enterprises, Inc. v. Paramount Film Distributing Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 201 F.2d 306, 1953 U.S. App. LEXIS 4308, 1953 Trade Cas. (CCH) 67,413 (4th Cir. 1953).

Opinion

SOPER, Circuit Judge.

This action was brought under the antitrust laws 1 by Theatre Enterprises, Inc., *308 a Maryland corporation, against the eight largest motion picture producing and distributing companies in the United States. The plaintiff sought injunctive relief as well as monetary damages for loss suffered as, a result of the defendants’ refusal to supply first-run motion pictures to the plaintiff’s theater in the City of Baltimore pursuant to an alleged conspiracy during the period from February, 1949 to March, 1950. The suit was originally instituted in the District Court for the Eastern District of Pennsylvania but on motion of the defendants, under § 1404(a) of the Judicial Code, 28 U.S.C.A., the case was transferred to. the District of Maryland. The case cam'e on for trial before a jury in the latter District and resulted in a verdict for all of the defendants; and the plaintiff appealed contending that the trial judge erred in denying plaintiff’s motion for a directed verdict in its favor and in giving certain instructions to the jury.

At the conclusion of all of the evidence the plaintiff prayed the court to instruct the jury that they must return a verdict for the plaintiff in such an amount as they estimated the plaintiff’s loss to have been. In other words, the court was asked to instruct the jury that the plaintiff had proved its case against the defendants and that the only question for their decision was the amount of the damages which the plaintiff had suffered. In order to pass on the refusal of this instruction the evidence submitted to the court must be summarized. The task is the easier because the facts presented by Harry D. Myerberg, the president of the plaintiff corporation and its only witness, and by the witnesses for the defendants are largely undisputed, and the decision turns on the question whether the only reasonable inference from the facts is that the defendants, in violation of the law, conspired to deny the plaintiff the rights to which it was entitled in the operation of its business.

The testimony on behalf of the plaintiff was to the following effect: For many years the showing in Baltimore of first-run 1 motion pictures produced by the defendant companies had been confined to eight theaters located in the downtown section of Baltimore as follows: The Century and the Valencia, with seating capacity of 3,000 and 1600-1800 respectively, are both owned by Loew’s. They have exhibited all of Loew’s product, half of Universal’s and some of United Artists’. The Stanley, seating 3,200, is owned by Warner’s Circuit Management Corporation and exhibits all of Warner’s films and one-half of Paramount’s. In the 1920s Warner exhibited first-run exclusively at the Metropolitan, two and a half miles from downtown. Keith’s, an independent, has played half of Universal’s output, half of Paramount’s, and “whatever else is available.” Seating capacity is 2200-2400. The New, seating 1300, is another independent and exhibits Fox films exclusively. The Hippodrome, seating 1800-2000, was also independently owned and exhibited RKO and Columbia films. The Town was opened in 1949 by the owner of the Hippodrome and split RKO and Columbia films with the Hippodrome. The Mayfair, independent, seating 1800, is situated next to the Stanley, but unable to obtain a continuous flow of films from defendant companies, getting “slough” and films of the smaller companies.

The Crest Theatre was built at a cost of $460,000 by Theatre Enterprises, Inc., a corporation whose entire stock is owned by Myerberg and his brothers.. It was completed in February, 1949. It is equipped with the most modern improvements and with 1600 seats, and is physically suitable to play first-run pictures, and if located downtown, probably would have been acceptable for the preferred showings. It is situated in a shopping center at Reistersto'wn Road and Rogers Avenue, six miles from the nearest downtown theater, in the midst of a population center estimated at about 105,000 people.

In January, 1948, before construction of the Crest had begun, Myerberg applied for. exclusive first-run privileges at the offices of the defendant distributors in Washington, D. C. He was told by all of them that np consideration could be given to his request until the theater was near completion. When the theater was under roof in October, 1948, Myerberg renewed his request and was told that the matter had to be decided by the New York .home offices of defendants, and that he should set forth *309 his requests by letter, which would then be referred to New York for decision. He wrote substantially identical letters requesting first-run to each defendant, except perhaps Columbia, which was approached subsequently.

Warner and Loew’s advised Myerberg that each of them operated a first-run house in Baltimore, and that he should not anticipate receiving their product. The branch managers of all of the companies expressed surprise that Myerberg sought first-run outside the downtown area, contrary to the general practice of the industry. Myerberg engaged in further correspondence with defendants from October, 1948 until the theatre opened on February 26, 1949, and was “stalled” by one company and two others did not reply. He was able to see top officials of only three of defendants, and all of his efforts resulted in rej ection of his request for first-run.

During the negotiations plaintiff made specific offers to various defendants for particular first-runs, and in all but one case the offer included a substantial guarantee of film rental and a percentage of the gross receipts, and plaintiff offered to post certified checks. None of the offers was accepted and in some instances plaintiff received no reply.

Plaintiff persisted in its efforts to induce -defendants to grant it first-run after the Crest opened, and when this proved fruitless, plaintiff engaged present counsel who entered into six more months’ futile correspondence and then brought this suit.

Plaintiff at first urged that it was not in substantial competition with the downtown theaters, and therefore was willing to take first-run on a day and date basis, that is, simultaneous showing with downtown and other non-competing suburban houses. Defendants contended that the Crest was in substantial competition with the downtown theaters, and plaintiff therefore expressed willingness to bid competitively for exclusive first-runs. Plaintiff denied claiming any superior rights over other comparable neighborhood theaters sufficiently far from downtown Baltimore and from each other as not to he in substantial competition with either downtown or each other, and was willing to play with them first-run day and date. Plaintiff pointed to the Northwood, Boulevard, Senator and Edmondson Village as theaters entering into such a scheme.

Defendants uniformly denied plaintiff first-run and uniformly granted it first-subsequent-run. They each gave the same basic reasons for their action, principally that each had a policy which limited showing of first-run films throughout the country to .theaters in the downtown areas of large cities, and theaters outside those sections were therefore precluded from the preferred run.

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Bluebook (online)
201 F.2d 306, 1953 U.S. App. LEXIS 4308, 1953 Trade Cas. (CCH) 67,413, Counsel Stack Legal Research, https://law.counselstack.com/opinion/theatre-enterprises-inc-v-paramount-film-distributing-corp-ca4-1953.