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WILLIAM GOLDMAN THEATRES, INC. v. LOEW'S

September 10, 1946

WILLIAM GOLDMAN THEATRES, Inc.,
v.
LOEW'S, Inc., et al.



The opinion of the court was delivered by: KIRKPATRICK

This action is for injunctive relief and for damages alleged to have been incurred as the result of a conspiracy among the defendants to monopolize the motion picture business in Philadelphia. Evidence relating to the primary issue of the existence of the conspiracy was taken and the Circuit Court of Appeals, 150 F.2d 738, 745, reversing the judgment of this Court, 54 F.Supp. 1011, has ruled that there was a conspiracy as charged. In accordance with an agreement of the parties the plaintiff did not offer evidence relating to the issue of damages at the first stage of the trial, pending the decision of the Court on the question of liability under the Sherman Anti-Trust Act, 15 U.S.C.A. ยงยง 1-7, 15 note. Testimony relating to damages has now been taken and that issue is before this Court for disposition.

The only reference to damages in the opinion of the Circuit Court of Appeals is the following:

 'As the trial court also found, plaintiff has unquestionably suffered loss. We have no means of knowing the extent of that loss. Perhaps, upon remand plaintiff may be able to prove its damages; or, the factors to be considered may be subject to so many unknowns that such damages may veer toward the speculative. We specifically pass no opinion on these problems.'

 In view of the differences between the parties as to the effect of certain findings of fact made in the first stage of the case, it may be well to say before going further that I do not understand that any finding not adopted by the Circuit Court of Appeals either expressly or by necessary implication as a basis for its decision is irrevocable. In as much as this is merely a continuance of the trial begun November 15, 1943, all relevant evidence in the first as well as the second stage of the trial will be considered, and I see no reason why the findings may not be changed or modified, if, in the light of the entire record now before me, I should conclude that they are wrong or that, as stated, they did not correctly express what I meant to say.

 The basic facts of the case, appearing in the findings of this Court and in the opinions of this Court, 54 F.Supp. 1011, and of the Circuit Court of Appeals, 150 F.2d 738, will not be restated here.

 The 'damage period' is from September 1, 1941, to December 8, 1942, the date of bringing this suit. During this period the plaintiff's theatre, the Erlanger, was to all intents and purposes closed, although some few exhibitions given in it produced gross rentals and other income, amounting in all to $ 7,237.50. Being unable to obtain first-run pictures, Mr. Goldman did not attempt to operate the theatre on second or subsequent runs. He was not bound to do so. The duty to lessen damages which the law imposes on an injured party does not go beyond the exercising of ordinary care and incurring moderate expense. He is certainly not required to enter upon and carry on a business differing in important particulars from that in which he has been or intends to be engaged.

 The plaintiff claims as damages (1) loss of the profits which it contends it would have made during the damage period had it been able to operate the Erlanger as a first-run theatre in free competition, plus (2) out-of-pocket expenses amounting to $ 25,007.34, being what it actually cost it to maintain its lease of the Erlanger during the damage period, less the $ 7,237.50 of income obtained from it.

 Obviously, the plaintiff is not entitled to both items of its claim. They are based upon two entirely distinct and mutually exclusive theories of recovery. On the profit theory the plaintiff's damages are the excess of income over cost of a purely hypothetical operation of a going business. Of couse, any loss arising from the use to which the property was actually put, such as the so-called out-of-pocket expenses, does not enter into the calculation at all, except possibly as evidence in connection with estimating the hypothetical cost figure. On the out-of-pocket theory, the damages are what it actually cost the plaintiff not to operate the property as a first-run theatre. If it be assumed that the plaintiff would have made money had it operated the theatre, no loss would have been incurred in the hypothetical operation and I do not see how the plaintiff can ask the Court first to assume a state of facts under which it lost no money but, on the contrary, realized a profit, and they say 'But, as a matter of fact, the property was not operated as a moving picture theatre at all, but simply maintained for what use could be made of it,' and ask the Court to be allowed to have its theoretical profit and, in addition, add to that the amount spent to maintain the property. The plaintiff may not have damages both for a net profit and a net loss, for the same fifteen months.

 Because I am of the opinion that the plaintiff is entitled to recover the larger item, of profits, I shall not deal further with the out-of-pocket expenses, remarking only that, had the plaintiff failed to make a case for profits, it would unquestionably be entitled to its net actual loss.

 The allowance of profits as damages is entirely a question of sufficiency of evidence. There is not objection to profits, as such, as an element of recoverable damage. In every case the question is whether the date of which the evidence consists is such that a just and reasonable estimate can be drawn from it, so that a verdict will not be based on mere speculation or guesswork, it being fully recognized that it is not necessary to show with absolute accuracy how much profit would have been earned.

 I do not find in any decision of the Supreme Court the hard and fast rule, which the defendants assert exists, that under no circumstances can there be any recovery for loss of profits in an anti-trust case unless an established business has suffered. If there were such a rule it would end the plaintiff's case on profits, because the plaintiff had no established going business in first-run showings at the time of the tort. In fact the Erlanger had not, since it was built, been operated as a moving picture theatre at all, except for a period of about nine months, occurring more than ten years before the plaintiff leased it.

 There are several lower federal court opinions in which general statements in accor with the defendants' contention appear, but in them there were no facts rom which the amount of profits could have been determined otherwise than by a pure guess, and that was the nub of the decision in each case. Of course, when the plaintiff has no established business showing potentiality of profits to start with, it will not be so easy for him to produce evidence from which profits can be determined with any degree of certainty, and in most cases it has turned out that he was unable to do so. But there is not logic or sound policy in a rigid rule that will foreclose him if his evidence, without it, is sufficient to get the Court beyond the guessing stage. The whole matter is a question of the evidence. 'It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate.' Eastman Dokad Co. v. Southern Photo Material Co., 273 U.S. 359, 379, 47 F.St. 400, 405, 71 L. Ed. 684. ' * * * it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate.' Story Parchment Co. v. Paterson Parchment Co., 282 U.S. 555, 563, 51 S. Ct. 248, 250, 75 L. Ed. 544. If these standards are met, the absence of the additional factor of past performance of a going business -- a useful factor no doubt -- should not be fatal to the plaintiff's case.

 Recent decisions of the Supreme Court appear to be putting more and more emphasis upon the effect of the defendant's wrongful act where it is the cause of the plaintiff's inability to produce complete and accurate data from which his loss can be ascertained. Of course, he must always produce all the evidence that he can but the Supreme Court seems to be coming to the point of view that, where the tort itself has created a partial blackout, the standard which the plaintiff's evidence must meet will be somewhat lowered.

 Bigelow et al. v. RKO Radio Pictures, Inc., et al, 327 U.S. 251, 66 S. Ct. 574, 580, filed February 25, 1946, the most recent decision of the Supreme Court upon the question, was stressed by both sides as supporting their respective views. In that case the plaintiff's theatre had been operated for some 20 years by the plaintiff's predecessor, so there was an established business and the decision is not in point, but there is nothing in the opinion not consistent with the view just expressed. The Supreme Court, reversing the Circuit Court of Appeals, reversing the Circuit Court of Appeals, reinstated a verdict for loss of profits, holding that the jury had made 'a just and reasonable estimate of the damage based on relevant data.' The relevant data before the jury was of tow kinds: (a) 'The comparison of petitioners' (plaintiffs') receipts before and after' the defendants' wrongful acts, and (b) 'the comparison between petitioners' receipts and those of the Maryland Theatre (a comparable theatre operated by ...


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