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VOGELSTEIN v. NATIONAL SCREEN SERV. CORP.

March 30, 1962

Harry VOGELSTEIN, trading as Baltimore Poster Company
v.
NATIONAL SCREEN SERVICE CORPORATION, Metro-Goldwyn-Mayer Inc. (formerly Loew's Incorporated), TCF Film Corporation (formerly Twentieth Century-Fox Film Corporation), United Artists Corporation, Warner Bros. Pictures Distributing Corporation,Paramount Film Distributing Corporation, and Universal Film Exchange, Inc.



The opinion of the court was delivered by: LUONGO

In this antitrust action, defendants' motion to dismiss the complaint has presented the Court with the following issue:

Does a stipulation entered into by the parties on November 4, 1957 during the course of a prior suit *fn1" and the dismissal of that action in accordance with the terms of the stipulation compel us likewise to dismiss the instant complaint?

 The details of the history of the litigation are essential to the resolution of the issue. The matter really has a pre-history. In 1942 various poster leasing dealers instituted a treble damage antitrust action against National Screen Service Corporation (hereinafter referred to as National Screen) and others. Allied Poster & Supply Corporation v. National Screen Service Corporation Civil Action No. 2472. The complaint alleged that exclusive license agreements whereby motion picture producers authorized National Screen to manufacture and distribute motion picture advertising accessories, constituted a violation of the antitrust laws. That action was settled and dismissed with prejudice. One of the terms of the settlement agreement required National Screen to make available, by sublicense, certain material to the dealers who were plaintiffs in that action.

 On December 5, 1950, while the sublicense agreements were in effect, Vogelstein, who was not a party to the Allied suit but who was permitted to purchase materials from National Screen, filed a complaint (hereinafter referred to as 'Vogelstein #1') in this Court (Civil Action No. 11678) against the same defendants who are named as party defendants in the matter now before us. 'Vogelstein #1' alleged that defendants '* * * had conspired to monopolize, and had actually monopolized the business of distributing motion picture advertising posters throughout the United States in violation of Sections 1 and 2 of the Sherman Antitrust Act (15 U.S.C.A. ยงยง 1, 2).' That suit was one of seven similar suits in which various poster dealers sued the same defendants stating their claims in substantially the same terms and basing their actions on identical theories of the case.

 Like the Allied case the allegations of unlawful monopoly and conspiracy in these seven suits were predicated on the exclusive licenses to produce and distribute advertising accessories which various motion picture producers had granted to National Screen. The period for which damages were sought and the period during which the alleged unlawful monopoly and conspiracy came into existence and flourished was 1943-1949. The events alleged to have occurred during those years, as we shall demonstrate later in this opinion, are crucial in resolving the issue in the instant case.

 Of the seven cases, Lawlor v. National Screen Service Corporation, D.C., 99 F.Supp. 180, Civil Action No. 10020 (hereinafter referred to as 'Lawlor') had been docketed earliest. *fn2" At pre-trial conferences held in October and November 1957, Judge Kraft, to whom the Lawlor case had been assigned, aware of the six companion case, '* * * suggested that the parties endeavor to reach some agreement which would obviate the necessity to retry in any of the companion cases certain of the issues to be litigated in the Lawlor case'. Lipp v. National Screen Service Corporation, 188 F.Supp. 245, 246 (D.C.E.D.Pa.1960).

 On November 4, 1957, those discussions resulted in an agreement between the parties which provided in part:

 'In the remaining six cases if, by final judgment in whatever shall have been the court of last resort, it is determined in Civil Action No. 10,020 that no conspiracy or unlawful monopoly existed, that finding shall be determinative of that issue in the remaining six cases. On the contrary, if such final determination therein shall be that the unlawful conspiracy or monopoly did exist, then the remaining six cases shall be consolidated for trial and tried without a jury.'

 During the conference at which the above agreement was recorded, attention was called to another case, Civil Action No 22707, (hereinafter referred to as 'Vogelstein #2') in which parties plaintiff to the seven suits then pending joined in one complaint containing seven counts, one for each plaintiff, alleging the same cause of action as was contained in the pending suits, but seeking damages for the period subsequent to the commencement of those original suits. 'Vogelstein #2', the supplemental action, was not included in the stipulation.

 Lawlor was tried in November-December 1957, and January 1958, and resulted in judgment for defendants. One hundred forty findings of fact and twelve conclusions of law were issued by the Court, including the following two conclusions of law:

 '3. The defendant, National Screen, did not monopolize or attempt to monopolize within the meaning of Section 2 of the Sherman Act.'

 '4. No defendant herein combined or conspired with any other defendant or defendants within the meaning of Section 1 of the Sherman Act.'

 Judgment was affirmed on appeal, 270 F.2d 146 (3rd Cir. 1959) and plaintiffs' petition for certiorari was denied by the Supreme Court, 362 U.S. 922, 80 S. Ct. 676, 4 L. Ed. 2d 742 (1960).

 At this point we must reemphasize that in Lawlor, in 'Vogelstein #1', and in the other five cases as well, the acts alleged to be the basis of unlawful monopoly and conspiracy occurred during the period 'from August 19, 1943 to August 18, 1949, inclusive'. Judge Kraft, in Lawlor, found that that conduct did not constitute an unlawful conspiracy and monopoly.

 Defendants thereupon moved for summary judgment not only in the six companion cases (including 'Vogelstein #1'), but in the supplemental action (including 'Vogelstein #2') as well. Dissatisfied with the Lawlor decision, plaintiffs in the companion cases tested the effect of the stipulation by opposing those motions. In Lipp v. National Screen Service Corporation, supra, 188 F.Supp. at pages 247-248, Judge Kraft entered judgments in favor of defendants, and discussed the valid and binding effect of the stipulation in the following terms:

 'Since the issues of liability were determined adversely to the plaintiffs in Lawlor, the clear and unequivocal terms of the pre-trial agreement require judgments for the defendants in the six companion cases, which were expressly made the subject of the agreement. Plaintiffs' contentions to the contrary are wholly devoid of merit.

 'Plaintiffs assert that they have not 'had their day in court.' They urge the fact that at the Lawlor trial, on objection, we excluded certain evidence inadmissible in the Lawlor trial which might have been admissible in the trial of one of the six companion cases. Our ruling was clearly correct for the reason, as we then stated, that 'the stipulation did not embrace any agreement that evidence which was admissible in ...


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