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GOLDLAWR, INC. v. SHUBERT

December 22, 1958

GOLDLAWR, Incorporated, Plaintiff,
v.
Jacob J. SHUBERT and Lawrence Shubert Lawrence, Milton Shubert, William Klein and Sylvia W. Golde, individually and as Trustees of the Estate of Lee Shubert, Deceased, Marcus Heiman, United Booking Office, Incorporated, Select Theatres Corporation, Select Operating Corporation and L.A.B. Amusement Corporation, Defendants. GOLDLAWR, Incorporated, Plaintiff, v. Jacob J. SHUBERT and Lawrence Shubert Lawrence, Milton Shubert, William Klein and Sylvia W. Golde, individually and as Trustees of the Estate of Lee Shubert, Deceased, individually and as co-partners, John Shubert, Marcus Heiman, United Booking Office, Incorporated, Select Theatres Corporation, Select Operating Corporation, Modern Theatre Corporation, Barrymore Theatre Corporation and L.A.B. Amusement Corporation, Defendants



The opinion of the court was delivered by: KRAFT

Plaintiff commenced these two actions against substantially the same defendants under relevant provisions of the antitrust laws. The first action (21506) was commenced on October 17, 1956 and the second (22092) on February 18, 1957. The actions are essentially identical except that the second (a) added certain defendants, (b) sued several original defendants in additional capacities and (c) extended the period for which damages are sought. Now pending are numerous pre-trial motions which will be disposed of seriatim.

I. Motions To Dismiss For Improper Venue

 These motions were filed by all defendants in both actions except Barrymore Theatre Corporation (Barrymore) and Modern Theatre Corporation (Modern). *fn1" Disposition of these motions requires some analysis of the facts germane to two classes of defendants, i.e., individuals and corporations.

 (a) Individual Defendants

 After granting a cause of action under the antitrust laws to anyone injured in his business or property, 15 U.S.C.A. § 15 lays the venue in such actions in '* * * any district court of the United States in the district in which the defendant resides or is found or has an agent, * * *' We reject defendants' contention that 28 U.S.C.A. § 1391(b), a general venue statute, applies. By its express terms § 1391(b) does not apply where a different law provides otherwise. *fn2"

 Plaintiff does not contest the averments in the remaining individual defendants' affidavits that each resided in New York and, since none of them was found here, we must determine whether any of them had an agent here.

 Prior to 1914, venue in antitrust actions was laid in the district in which the defendant resided or was found. *fn3" The addition of the district in which defendant 'has an agent' was a change made by the Clayton Act, which also enlarged prior venue provisions as to corporations by adding thereto the district in which a corporation transacts business. *fn4" In Eastman Kodak Co. of New York v. Southern Photo Materials Co., 1927, 273 U.S. 359, 47 S. Ct. 400, 71 L. Ed. 684, the court construed the latter addition as one intended to broaden the concept of 'found' in the earlier venue provisions. A corporation could thus be held to be transacting business, and venue established, ' -- although not present by agents carrying on business of such character and in such manner that it is 'found' therein and is amenable to local process -- if in fact, in the ordinary and usual sense, it 'transacts business' therein of any substantial character.' *fn5" To meet the test of 'found' in the earlier venue provisions, People's Tobacco Co., Ltd., v. American Tobacco Co., 1918, 246 U.S. 79, 84, 86, 38 S. Ct. 233, 62 L. Ed. 587 required the presence of agents carrying on business as described above.

 We believe 'or has an agent' broadened the concept of 'found' in the case of individual defendants, just as 'transacts business' broadened the concept of 'found' in the case of corporate defendants, although Eastman did not decide this question. The purpose of these two changes was to '* * * give the plaintiff the right to bring suit and have it tried in the district where the defendant had committed violations of the Act and inflicted the forbidden injuries.' *fn6" The difference in the choice of words applicable to individual and corporate defendants was intended to avoid too broad a change which might have jeopardized passage of the entire bill. *fn7"

 'Thus strict uniformity in the two sections' venue provisions was not achieved. But whatever their differences may be, each addition was designed to aid plaintiffs by giving them a wider choice of venues, and thereby to secure a more effective, because more convenient, enforcement of antitrust prohibitions.' *fn8" (Emphasis supplied).

 From the affidavits filed by the parties it appears that both J. J. Shubert and John Shubert had the unquestioned right and power to control Lawrence and that each repeatedly exercised such right and power in directing Lawrence's business activities in this district. The extent of J. J. Shubert's exercise of control over Lawrence is somewhat surprising, in view of the latter's high position in the Shubert enterprises. J. J. Shubert ratified the orders of Lawrence for repairs to local theatres, authorized his vacations, negotiated contracts with local unions, arranged schedules for the lengths of runs in local theatres, and, in some instances, even personally inspected local theatres. *fn9" John Shubert, a defendant in 22092, exercised a like degree of control over Lawrence in the operation of local theatres. He instructed Lawrence on the changes to be made in contracts, on the changes of performances from one Philadelphia theatre to another, on the orders for tickets for performances, on increases and decreases in ticket prices, on price scales, advertising, and on other matters. It is difficult to conceive of a more scrupulous control than that exercised both by J.J. and by John Shubert over Lawrence in the business conduct of the local theatres. We find, therefore, that, as the term is defined at common law and under the more liberal intendment of antitrust cases, Lawrence was the agent of both@ Shuberts within the meaning of 15 U.S.C.A. § 15. *fn10" See Riss & Company, Inc. v. Association of Western Railways, D.C.D.C.1958, 159 F.Supp. 288, 293.

 The evidence does not persuade us, however, that any other of the moving individual defendants had an agent within this district.

 Accordingly, the motions of Lawrence and J. J. Shubert in 21506 and 22092 and of John Shubert in 22092 will be denied. The motions of Milton Shubert, William Klein, Sylvia W. Golde and Marcus Heiman, individually, in each action, will be granted.

 (b) Corporate Defendants

 United Booking Office, Inc. (U.B.O.), Select Theatres Corporation (Select Theatre), Select Operating Corporation (Select Operating), and L.A.B. Amusement Corporation (L.A.B.) are defendants in both actions. Barrymore Theatre Corporation (Barrymore) and Modern Theatre Corporation (Modern) are defendants only in 22092. There are no motions before us by Barrymore or Modern or by L.A.B. which appears to have been dissolved on June 19, 1952. We have for consideration the motions of U.B.O., Select Theatre and Select Operating.

 From the affidavits and accompanying exhibits filed by the parties it is evident that the material facts affecting the internal organization, the inter-corporate functions and dealings of the corporations are not matters of substantial dispute. It is upon the legal significance of those facts that disagreement exists. The complicated nature of the arrangements among these corporations necessitates a somewhat detailed discussion of the relevant facts.

 Select Theatre was the parent corporation. All of its preferred and 90% of its common stock was owned by various members of the Shubert family. Select Theatre was the owner of all of the stock of Select Operating, Barrymore and Modern and was the owner of 50% of the stock of U.B.O., the other 50% of which was owned by Marcus Heiman, President of U.B.O.

 The two wholly-owned local subsidiaries, Barrymore and Modern, ostensibly operated the Philadelphia theatres and were the only corporate defendants licensed to do business in Pennsylvania. Purportedly, Barrymore operated the Forrest Theatre and Modern the Walnut, Locust and Shubert Theatres. All the corporate defendants, except Modern, a Pennsylvania corporation, were incorporated in New York and had their offices there in the same building. U.B.O., Select Theatre and Select Operating were not licensed to do business in Pennsylvania and had no address, telephone listing or officers resident in that state.

 Corporate separateness in accounting procedures was observed in the actual day to day operation of these enterprises. The treasurer of each Philadelphia theatre collected the receipts, deducted the local amusement tax and remitted the amount of the tax to Select Operating, which kept the books of all the corporations. Select Operating deposited the tax remittance in a special account in New York to the sender's credit and issued its own check to the taxing authority for the respective account of Barrymore or Modern. The tax returns for the local corporations were prepared by Select Operating and forwarded with the remittances.

 Each week the manager of each local theatre deposited the balance of the weekly receipts in a Philadelphia bank and issued a check to Select Operating for that amount. Customary payroll deductions, etc., were computed in Philadelphia and a check for such deductions was likewise issued to Select Operating. These were accumulated in New York and appropriate returns were prepared and payments made by Select Operating for Modern and Barrymore.

 Defendant Lawrence was the general manager of the Philadelphia theatres and was ostensibly employed by Barrymore and Modern. Each of these corporations sent its proportionate share of Lawrence's salary to Select Operating in New York and the latter issued its own check in payment of his salary. Both Barrymore and Modern contributed to the operational cost of Select Operating and also paid it a 'home office fee' for 'executive and management services'.

 Shows were booked in New York through the services of Select Operating or U.B.O. This entailed agreements for the use by producers of designated theatres on specific dates. The terms of each booking agreement were embodied in a written contract signed by the producer and either Barrymore or Modern as the case might be. Either J. J. Shubert or John Shubert executed the contract as an officer of Barrymore or Modern.

 Select Operating also executed blanket contracts for concessions in all four Philadelphia theatres and the amounts received therefrom were apportioned on its books between the corporate operators of the local theatres.

 The foregoing facts which appear in defendants' affidavits indicate clearly that in accounting procedures, at least, corporate separateness was carefully observed. In the exhibits accompanying plaintiff's affidavit, however, are strong indications that, in other respects, corporate separateness was not so meticulously adhered to.

 Excerpts from the minute books of Select Theatre show that the corporate existence of Barrymore and Modern was largely discretionary with the parent. Correspondence between Select Theatre and Philadelphia, signed by J. J. Shubert and others on Select Theatre stationery, evidences a close control by Select Theatre of the minutiae of day to day operating procedures. The insurer of the local theatres addressed all correspondence to Select Theatre. Documents relating to the opening of a local bank account by a subsidiary were sent to Philadelphia by Select Theatre. Office materials such as stationery, ticket envelopes, etc., for Barrymore and Modern were supplied by Select Theatre. The advertising of the four local theatres was consolidated. Each theatre used its facilities to advertise plays presented at the others.

 Select Theatre sent to Philadelphia 'termination of contract notices' to be signed by local employees. J. J. Shubert for Select Theatre was kept carefully advised of the status of contracts with musicians in Philadelphia and other cities. Select Theatre instructed local managers about obtaining discounts for advertising in Philadelphia papers, about excessive expenditures for telephone calls and requested weekly reports on the operation of the local theatres.

 Although bookkeeping seems to have been the major function of Select Operating, it was also the center from which supplies were sent to the Philadelphia theatres. Employment records and copies of ...


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