The opinion of the court was delivered by: GRIM
The gravamen of plaintiffs' complaint is that from 1939 to 1951 defendants unreasonably and as the result of a conspiracy denied plaintiffs the right to exhibit pictures on a territorial release basis at their Norris and Grand theatres in Norristown, Pennsylvania; that is, that defendants, the seven major motion picture distributors, unreasonably and as the result of a conspiracy granted the downtown Philadelphia first-run theatres clearance over the Norristown theatres.
One of plaintiffs' principal problems was to prove that their Norristown theatres were not in substantial competition with the downtown Philadelphia first-run theatres. Defendants' position, on the other hand, was that the two groups of theatres were in substantial competition and that therefore clearances in favor of the Philadelphia theatres were justified in accordance with the usual economic criteria.
Defendants' first contention in support of its motions is that there was no credible evidence of a demand for territorial release.
David Sablosky, one of the plaintiffs and one of the partners trading as the Norris Amusement Company, testified that at the end of 1938 or the beginning of 1939, after the Norris theatre had been air-conditioned in 1938, he and his three brothers, Abe, Lewis, and Nathan visited the Philadelphia branches of the defendants and requested territorial release for the Norristown theatres from nine men associated with the local branches. Of these nine men, eight were living at the time of the trial and each of the eight men denied that any Sablosky had ever requested territorial release from him. The jury resolved the question of credibility raised by this conflicting testimony in favor of plaintiffs.
David Sablosky also testified that during these visits defendants suggested that plaintiffs write a letter embodying their request and that the plaintiffs did write such a letter and sent the same letter to each defendant. He testified he composed part of the letter, to the effect that Norristown was a separate and independent metropolitan area and that the Norristown theatres should have a run based on national release in Norristown instead of having to wait until after pictures had played in Philadelphia. He testified further that Abe Sablosky completed the letter by stating that if they had national (territorial) release, the grosses in Norristown would improve tremendously and it would be an asset to the distributors to give Norristown national release. They also mentioned the air-conditioning in the letters, he testified, and said that they had gone into extensive alterations to put it in.
Neither plaintiffs nor defendants could produce any copies of these 1939 letters and defendants have taken the position that the letters were not sent. Nor could plaintiffs produce a single reply to these letters. However, the jury had a right to believe David Sablosky's testimony that the letters had been sent to defendants and to find in accordance with testimony that they had all been lost during the intervening sixteen years.
As further support for their contention that plaintiffs did not demand territorial release in 1938 or 1939 defendants produced an attorney who testified that Abe Sablosky told him in 1940 that he approved Philadelphia's clearances over Norristown in 1940 and that he had stated this to the Justice Department. Defendants argue that Abe's statement in 1940 is inconsistent with David's statement that the Sabloskys have been demanding territorial release since 1938 or 1939. This contention is nothing more than proper argument to the jury.
David also testified that plaintiffs renewed their requests for territorial release orally from time to time during the period in suit. He testified that they finally succeeded in 1949, upon one of the occasions when they were demanding territorial release, in obtaining a reduction in clearance from twenty-one to seven days from defendant Twentieth Century-Fox (except that it was fourteen days if pictures played in the Warner theatres). Thereafter, he stated, plaintiffs again renewed their demands for national release with all the defendants and defendants suggested that plaintiffs, on the strength of the Twentieth Century-Fox reduction, should write in and request similar reductions to seven days, as a step in their obtaining national release. Lewis Sablosky wrote such letters in November of 1949, obtained reductions to fourteen days in the following year from Columbia and Paramount, and continued thereafter, David stated, to press their demands for national release.
Except for the addressee, the 1949 letters were identical. In them Lewis Sablosky requests an availability seven days after first-run Philadelphia and states that 'we should get seven days after first-run Philadelphia and we would get the benefit of the Philadelphia and National advertising.' The letters also contained the postscript: 'Fox has already granted us seven days after first-run Philadelphia and we would like you to do likewise.'
Lewis Sablosky, who was called as on cross-examination by the defendants, testified that the 1949 letters were written at the suggestion of defendants and on their promise that plaintiffs would be in line for national release after they first asked for and received a reduction to seven days.
Defendants contend that the postscript relating to the Fox change in clearance furnishes the only true reason for the 1949 letters and completely negates the Sabloskys' claim that they had been requesting, or were then requesting, territorial release. Defendants also point out that in response to the 1949 letter Paramount reduced Philadelphia's clearance over Norristown from twenty-one to fourteen days, which prompted Lewis Sablosky to voice his dissatisfaction to Paramount in his letter of January 9, 1950:
'* * * I cannot understand why we should not be entitled to seven days after Philadelphia first-run.
'We should be really entitled to day and date with Philadelphia first-run, and I tried to make it easy for you in asking for seven days, and insist on getting it.'
Defendants contend that the only inference that can be taken from this 1950 letter, as well as from the 1949 letters, is that plaintiffs had never asked for national release. This, too, is proper argument to the jury and not a question of law.
Of the fourteen representatives of the defendants from whom David Sablosky testified he requested territorial release from 1939 to 1949, three are dead and eleven took the stand and denied that any Sablosky had ever made such a request. Again this contradiction presented a question of credibility to be resolved by the jury.
In asking the Court to grant judgment notwithstanding the verdict or a new trial on the issue of demand, the defendants place great reliance on the case of Milwaukee Towne Corp. v. Loew's, Inc., 7 Cir., 1951, 190 F.2d 561. The district Court tried that case without a jury and awarded plaintiff damages for the periods May 2 to August 15, 1946, and from December 26, 1946 to July 20, 1948. The Court of Appeals for the Seventh Circuit held that there was no credible evidence to support the finding that plaintiff had demanded first runs in April 1946 and that therefore the plaintiff could not recover for the period from May to August of that year, before the theatre was closed for extensive remodeling at a cost of $ 200,000. The court affirmed the judgment as to the latter period, from December 1946 to July 1948, in the amount of $ 313,858.10, which was trebled.
The facts were these: Plaintiff, Milwaukee Towne Corporation, acquired the Towne theatre in April 1946, at which time the theatre had been running only second-run pictures. Pursuant to an arrangement with United Artists that it could supply first runs, plaintiff closed the theatre on August 15, 1946, remodeled it as mentioned above, and reopened on December 26, 1946. After the reopening plaintiff got an exclusive first-run on United Artists pictures for six months and in June 1947 wrote the defendants: "We are now desirous of negotiating with you for first-run product in the City of Milwaukee" and, according to the court, 'Some complied in part and some refused.' The court also pointed out that the sole witness (Spheeris) to testify as to the demand 'testified that each of the requests or demands which he made upon the defendant distributors was in the presence of his partner, Papas, yet the latter, while present during the trial, failed to corroborate Spheeris, in fact was not called as a witness.' 190 F.2d 567. However, the court seems to have relied chiefly on the evidence that the plaintiff's theatre was not suitable for first-run films during the earlier period before the remodeling: 'The point is that the clear recognition by plaintiff and others that its theatre was unsuitable for such purposes (i.e., first-run pictures) militates strongly against the testimony of Spheeris that such a demand was made.' 190 F.2d 568.
Assuming this holding on demand with respect to the first damage period to be good law
and disregarding the fact that Milwaukee Towne was a nonjury case, the facts on the question of demand in the present case are clearly distinguishable from those in Milwaukee Towne. Lewis Sablosky, although present during the trial and not called as corroborating witness by plaintiffs, was called as on cross-examination by defendants and, when asked whether there was any reason he had not been called by his attorney to testify, replied: 'Well, it would be a duplication of whatever was testified to (by David Sablosky).' Abe Sablosky and the three remaining Sablosky brothers, all of whom were plaintiffs, were too ill to testify. (One of them, Thomas, died on April 19, 1955). And, more importantly, in the present case plaintiffs' theatres were admittedly physically suitable for a first-run operation immediately before 1939, when plaintiffs testified they made their demands.
The conflicting evidence on demand raised questions of credibility for the jury, who resolved them in favor of plaintiffs. Their conclusion was a reasonable one and will not be disturbed.
Defendants' second contention in support of its motions is that there was prejudicial error in the handling of the decrees and other materials from United States v. Paramount Pictures, Inc., 1948, 334 U.S. 131, 68 S. Ct. 915, 92 L. Ed. 1260, a civil antitrust suit begun by the United States Government against these same defendants in 1938. The following were the seven Paramount case decrees introduced: (1) Decree against RKO, November 8, 1948; (2) Decree against Paramount, March 3, 1949; (3) Decree against Loew's, Warner Brothers and Twentieth Century-Fox, February 8, 1950; (4) Decree against Columbia and Universal, February 8, 1950; (5) Decree against Warner Brothers, January 4, 1951; (6) Decree against Twentieth Century-Fox, June 7, 1951; (7) Decree against Loew's, February 7, 1952. The decrees against RKO (1948) and Paramount (1949) are consent decrees. The decrees of February 8, 1950, referred to and incorporated by reference findings of fact and conclusions of law, which the plaintiffs also put in evidence.
'A final judgment or decree rendered in any criminal prosecution or in any suit or proceeding in equity brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any suit or proceeding brought by any other party against said defendant under said laws as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto; Provided, This section shall not apply to consent judgments or decrees entered before any testimony has been taken.'
The jury also was told by the Court that it was permitting the reading of (1) 'only such portions of the final decrees and findings of fact and conclusions of law incorporated therein as relate to the specific charges of conspiracy contained in the complaint in the present case' and (2) 'those portions of the decrees which relate directly to the evidence of the particular acts of the defendant distributors which are claimed to be illegal in the case now on trial.'
The jury also was instructed that the Paramount decrees 'are based on findings that the same distributor-defendants as those named in this present suit had up through the year 1945 engaged in a nationwide conspiracy to establish uniform systems of runs, clearances, and admission prices in the principal cities of the United States in order to protect their first-run licenses from competition in these areas; and that these defendants had discriminated in favor of theatre circuits, affiliated with one or more of them, in granting various license privileges.' The Court also emphasized that the Paramount decrees dealt with a nationwide conspiracy and not specifically with the alleged conspiracy relating to the Norristown theatres and that plaintiffs were required to ...