UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
September 20, 1968
Goldlawr, Inc., Plaintiff
Jacob J. Shubert , et al, Defendants
Kraft, District Judge.
The opinion of the court was delivered by: KRAFT
KRAFT, District Judge.
In this private antitrust action, involving booking and presentation of legitimate theatre attractions, after a lengthy trial to the Court upon the issues framed by our final pre-trial order and after careful consideration of the oral and documentary evidence, the stipulations, requests for findings of fact, conclusions of law and supporting memoranda of counsel, we find the following:
I. Historical Background of the Parties and the Litigation
A. The Plaintiff
1. The plaintiff, Goldlawr, Inc., was incorporated on August 31, 1950 under the laws of Pennsylvania.
2. Following its incorporation, Goldlawr, on September 19, 1950 issued 500 shares of its capital stock to William Goldman and 500 shares to Lawrence. Each paid $250 in cash and gave a personal note for $2,250. On the same day Goldman was elected President and Lawrence Vice-President and General Manager, which positions they held until June 25, 1956.
In June 1956 Lawrence transferred his 500 shares of Goldlawr stock to Goldman, making Goldman the only stockholder of Goldlawr. The sole consideration for this transfer was the assumption by Goldman of Lawrence's obligation upon his $2,250 note to Goldlawr. Lawrence and his nominees resigned as officers and directors of Goldlawr and were promptly replaced by nominees of Goldman who have served continuously since that date.
3. Goldman's entire cash investment in the stock of Goldlawr in the period September 1, 1950 to October 17, 1960 was $250. No payments on account of either promissory note have ever been made to Goldlawr.
4. By its charter Goldlawr was authorized to engage in a general theatrical business involving booking and presentation of legitimate attractions and the exhibition of motion pictures.
5. Goldlawr leased the Erlanger Theatre from the First Pennsylvania Company for Banking and Trusts from September 19, 1950 (as of September 1, 1950) until December 2, 1953; from November 24, 1954 through January 1, 1955; from October 1, 1955 to September 30, 1970.
6. Having retained counsel for that purpose, on or about June 15, 1956, Goldman caused Goldlawr to commence the present action claiming treble damages, injunctive relief and attorneys' fees for alleged violations of the antitrust laws for the period September 1, 1950 to October 17, 1960. Civil Action No. 21506 was begun on October 17, 1956; Civil Action No. 22092 was begun on February 18, 1957.
B. The Defendants and Co-Conspirators
7. The present defendants are:
(a) The executors of the estate of Jacob J. Shubert, deceased, who died December 26, 1963.
(b) The executors of the estate of John Shubert, deceased, who died November 17, 1962.
(c) The executors of the estate of Lawrence Shubert Lawrence, Sr., deceased, who died April 15, 1965.
(d) Select Theatres Corporation, a New York corporation, incorporated April 5, 1933.
(e) Modern Theatre Corporation, a wholly-owned subsidiary of Select.
(f) Barrymore Theatre Corporation, a wholly-owned subsidiary of Select.
8. The individuals and corporations, not defendants herein, who are claimed by the plaintiff to have engaged with the defendants in the conduct of which the plaintiff has complained are:
(a) The late Lee Shubert, who died December 25, 1953
(b) The late Marcus Heiman, who died September 9, 1957
(c) Milton Shubert
(d) United Booking Office, Inc.
9. Lee Shubert and Jacob J. Shubert were brothers. John Shubert was the son of Jacob J., a nephew of Lee and a cousin of Lawrence Shubert Lawrence, Sr. and of Milton Shubert. Lawrence, Sr. and Milton were brothers, nephews of Lee and JJ and cousins of John.
10. Lee and JJ entered into a formal partnership agreement on December 30, 1936, reciting, inter alia, that they had been co-partners doing business under the name of "Lee and J. J. Shubert" for a number of years, and providing that all profits or losses arising from the operations of the partnership venture should be equally divided. Through this partnership JJ was continuously engaged in the theatrical business until Lee's death.
11. After Lee's death, JJ continued the partnership business, individually and as the surviving partner, and took over sole and complete control of the business, which included approximately 75 closely held corporations owning theatres and other assets. He had final authority over bookings in Shubert-operated theatres in New York City.
12. Lee and JJ owned or controlled all of the preferred stock and a very substantial majority of the common stock of STC, which was incorporated in New York in 1933. Through STC and its numerous subsidiaries, Lee and JJ conducted their theatrical business enterprises.
13. John Shubert was the president and secretary of nearly all the Shubert-owned companies and until his death was very active in the Shubert theatrical business.
14. Lawrence Shubert Lawrence, Sr. was general manager of the Shubert-operated theatres in Philadelphia, Pa. and was an incorporator and, until June 1956, 50% shareholder of the plaintiff corporation.
15. (a) UBO was incorporated on June 9, 1932, as a result of the merger of the Shubert and Erlanger interests. A. L. Erlanger, who died in 1930, was succeeded by his nephew L. A. Bergman, who was associated with Marcus Heiman, a part-owner of the Erlanger Booking office.
(b) One half of UBO's stock was owned by STC and the other half by Marcus Heiman until his death.
(c) UBO was engaged in the business of booking legitimate theatrical attractions in theatres throughout the United States outside New York City.
(d) From 1933 to December 25, 1953 Lee Shubert was an officer and director; from 1933 to September 9, 1957 Marcus Heiman was an officer and director; from 1933 to 1958 J. J. Shubert was an officer and director.
(e) A certificate of dissolution of UBO was filed with the New York Department of State on March 27, 1958.
16. Through LAB Amusement Co., Marcus Heiman operated the following theatres: Biltmore in Los Angeles; Erlanger in Chicago; Colonial in Boston; Ford's in Baltimore; and Nixon in Pittsburgh (until 1950). On June 20, 1952 LAB transferred its interest to Heiman. Heiman had an interest in the National, Washington, and a 25 per cent interest in the Walnut, Philadelphia.
17. Milton Shubert operated the Shubert Theatre in Washington during a portion of the period 1950-1960.
C. Abbreviations and Definitions
18. The following abbreviations, where used, identify the following persons or corporations
JJ - Jacob J. Shubert
Lee - Lee Shubert
John - John Shubert
LSL - Lawrence Shubert Lawrence
WG - William Goldman
STC - Select Theatres Corporation
SOC - Select Operating Corporation
MTC - Modern Theatre Corporation
BTC - Barrymore Theatre Corporation
UBO - United Booking Office
IBO - Independent Booking Office
MH - Marcus Heiman
LAB - LAB Amusement Corporation
ATS - American Theatre Society, Inc.
TG - Theatre Guild, Inc.
NYC - New York City.
19. The following terms are used with the meanings stipulated by counsel as appears in the Notes of Testimony, pp. 411-415: legitimate attractions; theatre; producer; presentation; operator; booking; Shubert-operated theatre; Heiman-operated theatre; franchise; affiliated theatre; independent theatre; try-out town; road-show town; and theatrical season.
20. The following terms are used herein with the following meanings:
(a) "suit period" means 1933 to October 17, 1960.
(b) "damage period" means the period from September 1, 1950 (the day after plaintiff's incorporation) until October 17, 1960.
(c) "government case" refers to United States of America v. Lee Shubert, et al., Civil Action No. 56-72, Southern District of New York, commenced on February 21, 1950.
(d) Shubert(s)-refers to Jacob J. Shubert, individually and as surviving partner of the firm of Lee and J. J. Shubert and the corporations owned by Lee and J. J. Shubert; Lee Shubert during his lifetime; John Shubert; Lawrence Shubert Lawrence; Select Theatres Corp. (including its subsidiaries, Modern Theatre Corp., Barrymore Theatre Corp. and other subsidiaries). Except as otherwise noted, the term refers also to the foregoing acting in concert together with Marcus Heiman; LAB Amusement Corporation and other corporations controlled by Heiman and United Booking Office.
21. The legitimate theatre business consists of production,
booking and presentation.
It is generally, but not always, true that production involves acquisition of the script, employment of the star, cast and other personnel, rehearsals, booking the attraction in a try-out city or cities, in New York City, and the road-show cities.
22. Booking involves the negotiation of arrangements, (generally, though not always, through a booking office,) between producers and theatre operators for the presentation of legitimate attractions in theatres, including contracts fixing playing dates and financial terms.
23. Presentation generally involves the operation of a theatre or theatres in which legitimate attractions are presented to the public by producers.
II. The Relevant Theatrical Market for Legitimate Attractions
24. Between 1932-50, the key try-out cities were: Philadelphia, Boston, Baltimore, and New Haven. Other try-out cities were Washington, Detroit, San Francisco, Toronto, Hartford and Princeton.
25. During the relevant period, there were five theatres for presentation of legitimate attractions in Philadelphia:
(a) The Shubert was leased by the Shuberts from September 1, 1944 to July 24, 1946, when title was acquired and it was owned thereafter until December 9, 1957. It was operated by the Shuberts from September 1, 1944 to December 9, 1957, after which it was operated by William McKnight, through his manager, Samuel Schwartz.
(b) The Forrest was owned and operated by the Shuberts from August 1, 1938 until the end of the suit period, October 17, 1960.
(c) The Locust was leased and operated by the Shuberts through MTC from October 1, 1937 to September 30, 1957. During the 1957-1958 season the theatre was operated by Manny Davis. From May 1958 through October 17, 1960 it was operated by William Goldman Theatres, Inc., a corporation wholly-owned by William Goldman.
(d) The Walnut was owned in part by the Shuberts through Ninth and Walnut Corporation from 1946 to January 1, 1956, and wholly-owned thereafter. It was operated entirely by the Shuberts between September 1, 1950 and October 17, 1960.
(e) The Erlanger Theatre was leased and operated by plaintiff, Goldlawr, Inc., from September 19, 1950 through December 2, 1953, from November 24, 1954 through January 1, 1955, and from October 1, 1955 through October 17, 1960.
26. In 1950 the Shuberts controlled all 6 theatres in Boston. The Shuberts operated: Copley, Opera House, Plymouth, and Shubert. Heiman through LAB operated the Colonial. The Shuberts and Heiman jointly operated the Wilbur.
27. The Boston theatres controlled by the Shuberts were disposed of as follows after 1956: (a) Colonial - sold on November 1, 1958 to Princess Virginia Corp. (McKnight); (b) Wilbur - surrendered to landlord September 30, 1956; (c) Copley - leased on April 17, 1957 to Richard Davis who assigned to Copley Theatre Inc.; (d) Plymouth - leased on May 29, 1957 to Gary Theatre, Inc.; (e) Majestic - leased on June 30, 1956 to Saxon Theatre Corp.; (f) Boston Opera House - sold to S & A Allen Co. of Boston on September 25, 1957.
C. New Haven
28. In New Haven the only theatre, the Shubert, was Shubert-operated before 1941. In that year a new corporate tenant, York Haven Enterprises, Inc., leased and operated the theatre. This agreement was renewed in 1946 for a period of 5 years. After 1951 UBO continued to book the theatre in New Haven.
(a) On July 31, 1941 SOC entered into an agreement with the new tenant whereunder SOC was exclusively designated as the booking agent of the theatre for 5 years commencing on September 11, 1941.
(b) On May 22, 1946 SOC entered into an agreement with York Haven Enterprises, Inc. wherein SOC was to act as sole and exclusive booking agent for the theatre for 5 years to May 31, 1951, receiving 5 per cent of the gross receipts up to $10,000 and 2 1/2 per cent thereafter. The contract also provided:
"During the term of this agreement Yorkhaven shall not assign, transfer or dispose of its lease of the theatre unless the assignee thereof agrees with Select in writing to be bound by the terms of this agreement and assumes the same."
(c) In an addendum to the contract UBO agreed that it would not book any theatre with legitimate attractions in the City of New Haven since SOC is the exclusive booking agent for the Shubert theatre there. UBO also agreed to make available to SOC all of the legitimate attractions booked by it or its affiliates for the purpose of having SOC book the Shubert theatre in New Haven.
(d) In 1955 JJ included New Haven as one of "our theatres."
29. The New Parsons Theatre in Hartford, Connecticut was operated by Philip Langner from 1951 to 1954. The Shuberts had no interest in the New Parsons Theatre.
D. Washington, D.C.
30. Before 1950 the Belasco and National Theatres in Washington were once available for presentation of legitimate attractions and both were then controlled by the Shuberts-Heiman.
(a) The Belasco was kept "dark" prior to October 1933, and attractions sent to the National, Washington. The Heiman-Erlanger interests shared the cost of keeping the Belasco closed in 1932.
(b) In early 1937 a lease was executed for the Belasco between Washington Theatre Co. (by JJ), and J. Leventhal. The lease provided for the presentation only of old plays. Heiman objected to the Belasco playing Tobacco Road because it had refused to play his theatre in Pittsburgh.
(c) In September 1939 L. A. Bergman of Rapley Theatre Co. wrote Heiman confirming an arrangement
"* * * that the Belasco Theatre in Washington shall not play in legitimate shows in competition with the National * * * and we agree to pay you as a booking fee for your services in helping to secure attractions for the National, not to exceed 5% of the house share * * *."
(d) On March 19, 1940, Heiman summarized the general and Washington situation:
"The Booking Office is not involved in this. The facts are as you say - the Booking Office is owned fifty per cent by the Shuberts and fifty per cent by Mr. Bergman and myself.
These same interests have theatres throughout the country, and they have a pooling arrangement involving these theatres as to profits and losses.
Washington has been a separate arrangement between these same interests; on a fifty-fifty basis of profits and losses, excepting that Messrs. Bergman and Heiman have paid the Shuberts their share of Washington by a deduction of monies due them from Shuberts in other cities. The money now being paid me is to offset some of the losses on account of the Washington arrangement which permits the National Theatre to get the legitimate attractions exclusively."
(e) On March 24, 1943, Pitou of UBO advised Weinstock that Heiman said that they were not to book any more try-outs in Washington.
(f) In 1948 Heiman converted the National into a motion picture theatre. Louis Lotito, operator of eight non-Shubert theatres in New York City, took over operation of the National in 1952 and presented legitimate attractions there during each ensuing theatrical season.
(g) In 1951 Milton Shubert acquired the Shubert Theatre and presented legitimate attractions therein during the theatrical seasons 1950-51 through 1956-57.
31. In December 1943, Lee Shubert caused a new subsidiary of STC to be formed known as Harris & Schwyn Theatres, Inc. for the purpose of acquiring the title to the Harris and Schwyn theatres in Chicago. The purchase was concluded January 7, 1944.
(a) In 1944 Select Lake City Theatre Operating Co. a subsidiary of STC, leased the Studebaker Theatre, Chicago, for 10 years ending July 31, 1954.
(b) On February 15, 1945, Great Northern Amusement Co. assumed a lease between the Receiver and Pfeiffer and Goldberg entered into on June 21, 1943, covering the Great Northern Theatre, Chicago, the lease expiring on June 30, 1945.
(c) On March 5, 1945, Select Lake City Operating Co., as lessee, leased the Majestic Theatre, Chicago, for 5 years ending February 28, 1950, with an option for a further term of five years.
(d) On February 8, 1945, STC entered into a lease for the Civic Opera House, Chicago, for the purpose of presenting a season of musical operetta productions.
(e) On October 23, 1945, STC purchased 50 per cent interest in the Blackstone Theatre Company.
(f) The Shuberts in 1950 operated the following theatres in Chicago: Blackstone, Great Northern, Harris, Selwyn, Shubert, and Studebaker. Heiman through LAB operated the Erlanger.
(g) As of May 1958 the Erlanger was retained by Heiman's estate. The Selwyn was leased on December 3, 1956 to Michael Todd with an option to purchase the Selwyn and Harris. The lease on the Studebaker was surrendered to the landlord on December 31, 1955.
32. On October 13, 1932, D.T. Nederlander and Lee and JJ entered into an agreement regarding the Cass Theatre, Detroit. It asserted that the Shuberts had an interest in half of the common stock of a corporation which controlled the theatre, and the Shuberts agreed to pay Nederlander one-fourth of the net profits arising from the theatre. It was provided that the theatre "may be booked exclusively for productions owned or controlled" by the Shuberts.
(a) Detroit Downtown Theatre Corp., wholly-owned subsidiary of SOC, leased the Wilson Theatre, Detroit, from Wilson Amusement Co. until March 31, 1941.
(b) On August 20, 1941, Lee and JJ wrote to D.T. Nederlander confirming his 25 per cent interest in the Lafayette Theatre, Detroit. Lafayette Dramatic Productions, Inc., in which the Shuberts had a 50 per cent interest, leased and operated the Lafayette. Nederlander was given a 50 per cent interest in the Shubert's stock. A pooling arrangement with the Cass Theatre was contemplated and Nederlander would get his share of the profits. The agreement of October 13, 1932 was cancelled.
(c) A memo of September 25, 1942, regarding the Lafayette in Detroit, noted that Nederlander, Stair, Shubert and Heiman each had 25 per cent.
(d) As late as August 31, 1948, JJ authorized the issuance of stock to Stair and Heiman and the Shuberts, but he did not want the stock issued to Nederlander.
(e) The Shuberts in 1950 had an interest in the Cass and Shubert-Lafayette, Detroit.
(f) On February 17, 1956, the Shuberts and Stair interests were jointly interested in the Shubert-Lafayette and the Cass. They were both stockholders of Lafayette Dramatic Productions, Inc., which operated the theatre under lease dated June 9, 1945. Shubert and Stair stock interests were 50 and 25 per cent and D.T. Nederlander owned 25 per cent of the corporation that operated the theatre. The interests of the Shuberts and Stair in the Cass were set forth on a Declaration of Trust executed by Stair and JJ providing for an equal sharing of profits from the operation of the Cass. The lease of Lafayette Dramatic Productions, Inc. on the Shubert-Lafayette was terminated on August 31, 1957. After March 1, 1957 the theatre was operated by Nederlander.
33. The only theatre in Pittsburgh, Pa., the Nixon, was Heiman operated until 1948 when it was sold and demolished.
34. The Shuberts owned the Shubert and Cox Theatres in Cincinnati which adjoined. As of May 1958, the theatres were retained by the Shuberts.
I. Los Angeles
35. The only theatre in Los Angeles in 1950 was the Biltmore, which was Heiman operated.
36. On September 19, 1947 Town Hall Realty Co. leased to Pat Broder, the Town Hall, Toledo, Ohio, for five years ending October 31, 1952. The lease provided for certain renewal options. The lease provided also:
"Tenant agrees to present only such legitimate theatrical attractions as shall be booked by the United Booking Office, Inc., provided they are acceptable to the Tenant. Tenant agrees to sign, upon the demand of the United Booking Office, Inc., the regular and customary booking agreement for the full term of the lease effective only at such times as legitimate theatrical attractions are being presented at the theatre. The Tenant shall not be obliged to pay any charge or fee to United Booking Office, Inc., for the services rendered by the booking office."
The lessor agreed that:
"all Shubert controlled legitimate attractions will be presented at no other theatres in Toledo, Ohio * * *."
(a) The lease provided for a rental equal to 1/3 of the net profits actually realized from the presentation of attractions.
(b) In 1950 the Town Hall, Shubert-controlled, was the only theatre in Toledo.
(c) The Town Hall was sold on January 26, 1956 to Realty Parking Corporation.
37. In 1950, Ford's Theatre was the only theatre in Baltimore. It was leased and operated by UBO and the lease was surrendered to the landlord on July 31, 1956.
L. New York
38. The theatres in New York City are the most important to the producers, particularly the key theatres in the 44th and 45th Street area, controlled by Shuberts.
39. During the suit period, there were 32 theatres in New York City, at least 15 of which were operated at one or more times by the Shuberts. They had an interest in two other theatres.
40. They operated the Barrymore, Booth, Broadhurst, Broadway, Century, Cort, Golden, Imperial, Majestic, National, Plymouth, Royale, St. James, Shubert, and Winter Garden.
41. From 1933-1950, STC owned one-third of the corporation which operated the Music Box, and from 1950-1960 owned 50 per cent. From 1949-1952, STC had a one-third interest in the Lyceum, and from 1952-1960, a 100 per cent interest.
42. During each theatrical season between September 1, 1950 and October 17, 1960, although varying from season to season, the average number of theatres operating in New York City was 33.35 of which 17.60, or 52.77% were theatres which the Shuberts operated or in which they had an interest.
43. Between September 1, 1950 and October 17, 1960 a total of 744 legitimate attractions were presented in theatres in New York City, 48.92% of which were presented in theatres operated by or in which the Shuberts had an interest.
44. During the damage period, the Shubert share of the total number of presentation days at NYC Broadway theatres was an average of 57.81 per cent. The next largest competitor - City Investing had an average of 13.45 per cent of the market. Since the Morosco and Helen Hayes, NYC, were owned by Producers Theatre, City Investing's percentage of the market was appreciably less than 13.45 per cent.
45. New York City theatres owned by the Shuberts were disposed of in 1956-1957, as follows: St. James, sold July 29, 1957 to Scarborough House, Inc. (McKnight); National, sold September 26, 1956 to Playhouse Properties, Inc.; Elliott, sold July 23, 1956 to Urban Survey Corp.; Ritz, sold May 23, 1956 to John T. Javasile.
46. In 1960, the Shuberts operated 17 theatres in NYC.
III. Booking of Legitimate Attractions
A. Basic Principles
47. Legitimate attractions were generally booked by their producers or their general managers.
48. Producers made New York City bookings through direct negotiation with the theatre operators and not through a booking office.
49. Producers generally booked New York theatres and out-of-town theatres separately and at different periods in time, since the New York booking generally preceded the out-of-town booking and because the producer's preference with respect to out-of-town bookings often depended upon the characteristics of the theatre in which the producer had engaged to play in New York.
50. Post-New York road-shows and pre-New York try-outs are booked in a different fashion. Try-out bookings are generally made separately and after New York City bookings.
51. Road-show bookings are made after the New York presentation has established the success of the attraction. Road-show tours are generally laid out by the producer, who then contacts the booking office far in advance in an attempt to arrange the entire tour at the same time.
52. Producers generally made out-of-town bookings through a booking office: through United Booking Office, Incorporated (UBO) in the period 1932-56 and Independent Booking Office, Incorporated (IBO) in the period 1957-60. Attractions were occasionally booked directly by the producer with the theatre operator without utilizing the facilities of a booking office.
B. Organization and Operation of UBO
53. Prior to 1932 there were two theatrical booking organizations, Klaw-Erlanger and Shubert. They merged in 1932 and became the UBO. Erlanger died in 1930 and was succeeded by his nephew Leonard A. Bergman who was associated with Marcus Heiman who, in turn, owned part of the Erlanger booking office.
54. In the period 1932 to 1956, UBO was the principal booking office in the United States, although other small booking offices existed from time to time.
55. The Shuberts, together with Heiman, were in active charge of the management, direction and operation of UBO during that period.
56. Illustratively, in the 1948-49 season UBO booked 100 attractions outside New York State. These attractions played 846 times in different towns in States other than New York and played 907 times in different theatres in all States.
57. UBO charged non-Shubert theatre operators a "booking fee" of 5 per cent of the gross receipts resulting from their presentation of legitimate attractions. Such a fee was similar to the commission paid by the operator to an agent or booking representative such as Alexander H. Cohen who maintained offices in N.Y.C. and booked attractions for Goldlawr from May 13, 1958 until August 26, 1960.
58. The booking office acted as an intermediary or middleman between the producer and theatre operator. The booking office would advise the producer upon the availability of various out-of-town theatres on the dates in which the producer was interested and would furnish other information concerning the capacity and stage dimensions of the various theatres and the terms which the theatre operator desired.
C. Booking Practices of UBO 1932-1949
59. Between 1932 and 1948 the Shuberts usually conditioned the booking of attractions in New York City theatres upon agreements by the producers to book such attractions thereafter exclusively through UBO. In contracts providing for the presentation of attractions in theatres in that city controlled by the Shuberts they generally required the inclusion of a provision which obliged the producer to give to UBO the "exclusive right to book" the attraction in any and all cities "in the United States of America and Canada." This standard provision was as follows:
"As part consideration for the booking herein provided for, it is agreed that United Booking Office, Incorporated, shall have the exclusive right to book the said play in any and all cities in the United States of America and Canada. If the said play is being presented in the different cities, it shall receive the same terms in the same cities as other plays of like calibre and drawing power. Due consideration shall be given to the relative expense of the play and of the theatre in arriving at such terms."
In the record is a list of more than 425 such contracts with producers for different attractions.
60. During the period 1932-50 presentation in road-show cities was an integral part of the exploitation of an attraction, and a substantial part of its profits were so obtained. The successful operation of a theatre in a road-show city required the presentation of series of attractions so scheduled as to keep the theatre as continuously occupied as possible during the theatrical season. In the period 1932-50, operators outside of New York City were generally dependent upon a steady flow of legitimate attractions. Theatres in try-out and road-show cities supplied a market for an attraction which was of vital importance.
61. Between 1932 and 1948 the Shuberts very frequently conditioned the booking of attractions in theatres operated by the Shuberts in try-out cities upon agreements by the producers to book each of those attractions thereafter exclusively through UBO. In the record is a list of more than 360 such contracts containing a UBO exclusive booking clause.
62. The Shuberts frequently utilized the UBO exclusive booking provision in connection with booking contracts for attractions in the theatres controlled by them in Philadelphia during the period January 12, 1944 to March 2, 1946.
63. The booking monopoly was frequently used from 1932 to 1949 to favor Shubert or Shubert-affiliated theatres in try-out and road-show cities to the detriment of non-affiliated theatres in such cities.
64. Even producers of "smash hits" such as Oscar Serlin of "Life With Father" were not immune from the exercise of the Shubert monopoly power.
65. In the years 1940-41 Serlin attempted independently to arrange a national tour of his attraction in road-show cities throughout the United States.
66. His efforts to book theatres were frustrated by the Shuberts and UBO until Serlin capitulated and agreed to accept the Shubert terms which were discriminately unfavorable as a condition precedent to booking the tour through UBO for the season 1942-43.
D. Booking Practices of UBO 1949-1960
67. After 1949 the obtaining of an out-of-town booking by a producer was not conditioned or dependent upon the producer's booking his attraction in a Shubert-operated theatre in New York City nor was the obtaining of a booking in a New York Shubert theatre dependent or conditioned upon the booking of the attraction in a Shubert-operated theatre outside New York City.
68. After 1949 producers frequently presented their attractions in non-Shubert theatres outside New York City and Shubert theatres in New York City, as well as in Shubert theatres outside New York City and in non-Shubert theatres in that city.
69. After 1949 producers desiring to present their attractions in non-Shubert theatres outside New York City were not discouraged or prevented from doing so by the Shuberts or by UBO; nor were those who did so penalized or discriminated against by the Shuberts or UBO for having done so.
70. Grants by producers to UBO of the exclusive right to act as booking agent of the attraction involved were not required by the Shuberts during the period 1950-1960, the elimination having occurred about 1948.
71. Thereafter the producer selected the cities in which his attraction was to be presented, as well as the theatre in each such city.
72. The producer's choice of city and the producer's selection of the theatre or theatres in which his attraction was presented was based on the exercise of the producer's own free judgment.
73. UBO ceased doing business on approximately December 29, 1956.
74. At no time between September 1, 1950 and October 17, 1960 did plaintiff intend or seek to engage in the business of booking legitimate attractions in theatres operated by others.
75. UBO acted as booking agent for the Erlanger from September 1, 1950 until the transfer to Goldman of Lawrence's stock interest in the plaintiff and rendered booking services to the Erlanger without charge during that period.
76. After the date on which UBO ceased doing business, defendants did not engage in the business of booking legitimate attractions in theatres other than those operated by defendants. At about the time UBO ceased doing business, a group from the League of New York Theatres were instrumental in the formation of Independent Booking Office, Incorporated (IBO), which was created to perform booking services for producers and theatre operators outside New York in the place of UBO. The Shuberts were not members of the League of New York Theatres and did not participate in the formation of IBO, which has been functioning since 1957.
77. IBO was not, at any time after it began to function, owned, controlled or dominated by the Shuberts.
78. In the period 1957-1960 the Erlanger was booked, in part, by IBO. From the beginning of the 1957-1958 theatrical season through October 17, 1960, a total of 16 attractions were presented at the Erlanger. IBO was active in connection with the booking of 14 of these 16 attractions.
IV. Pooling of Theatres Before 1950
79. On September 24, 1929, a then typical agreement was entered into regarding the Pitt and Alvin Theatres, Pittsburgh, for the period August 1, 1929 to April 26, 1938. As explained by William Klein, attorney for Lee, in a memorandum to Lee and JJ and others:
"Shubert is the sole booking agent for both houses during the term of the agreement. No attractions may be presented there unless booked by you. * * *
If you decide to become interested in any other theatre in Pittsburgh, you must first offer to place the theatre in the pool. * * *"
80. After 1932 the Shubert and Erlanger theatres were booked "out of one office, the United Booking Office."
81. With the merger of the Klaw-Erlanger and the Shubert booking offices in 1932 came, as well, the pooling of the theatres of the two circuits. The Shuberts and Heiman pooled their theatres and agreed not to compete with each other.
82. This substantially reduced competition in the presentation of attractions through nationwide and local pooling arrangements. The Shuberts and Heiman systematically attempted to enlarge their theatre holdings, often at the expense of independent operators.
83. During the 1938-39 season there was a pool described as the "Shubert-Select, Heiman-Bergman Pool" which included the following theatres: Copley, Boston; Plymouth, Boston; Harris, Chicago; Selwyn, Chicago; Chestnut St. Opera House, Philadelphia; and National, Washington. Lee and Heiman had beneficial interests.
84. On May 29, 1943, SOC by JJ general manager, and Lou Waters, entered into a license agreement to use the title Artists & Models in connection with an attraction on a royalty basis. Included in the agreement was the provision:
"You further agree that all productions presented by you hereunder shall be presented only in such theatres as may be owned, operated, controlled or booked by us or the United Booking Office, Inc. and in no other theatres whatsoever without our written consent. * * *"
85. In early 1942, the Heiman-Bergman interests and Lee, JJ and STC (and all of their affiliated interests) agreed to a further pooling arrangement for three years from July 1, 1942. It was recognized that the Shuberts controlled designated theatres in the following cities: Philadelphia, Boston, Chicago, Cincinnati, and New Haven; that Heiman controlled designated theatres in the following cities: Boston, Washington, Chicago, Pittsburgh, Buffalo, Los Angeles and Baltimore; that the Shuberts and Heiman had 50 per cent interests each in designated theatres in: Boston and Philadelphia; and that designated theatres would be controlled in Detroit. UBO was to take a lease for the benefit of the respective interests in Ford's, Baltimore. It was provided, inter alia, that:
"7. All of the above theatres are to be booked exclusively through the United Booking Office (except the Shubert Theatre in New Haven, which is booked by Select). No charges for booking are to be made by the United Booking Office against any of these theatres, except as stated in the next paragraph.
9. If either the Heiman-Bergman Interests or the Shubert-Select Interests should lose any of the above theatres it will have the right to acquire another theatre in the city or town to replace the theatre so lost. Except for the above right to acquire theatres for legitimate productions, neither party has the right to acquire any additional theatre, except pursuant to the requirements of paragraph 11.
10. Neither party will acquire any theatre in which the other had an interest without the consent of the other party.
11. Neither party can acquire any theatre in any other cities without offering the other party a 50% interest therein."
A. Franchise Agreements 1932 to 1947
86. In the years prior to 1947, UBO entered into yearly franchises, identical in form, with theatre operators throughout the country. Each franchise described UBO as:
"Booking the Principal Legitimate Theatres and Attractions in the United States and Canada."
The franchise recited that:
"WHEREAS the party of the first part controls the booking and playing of first class theatrical attractions throughout the United States and Canada, and
WHEREAS the party of the second part is desirous of securing the presentation of attractions thus controlled by [UBO] and is desirous of arranging with [UBO] for the production of such and other plays * * *"
87. The franchise provided that the theatre operator engaged the services of UBO "for the exclusive booking of attractions" and that the operator "irrevocably appointed UBO the sole and exclusive booking agent." The theatre operator agreed to pay UBO compensation of 5 per cent of the operator's share of the gross receipts of all legitimate attractions played by the operator during the term of this agreement. The franchise provided that the operator would not, during the term of the agreement, "sell, assign, transfer or dispose of his lease" of the theatre without the written consent of UBO.
88. The Shuberts through UBO agreed not to book competing theatres. These franchises were a powerful anti-competitive tool used against independent operators.
89. In many instances, even though a theatre had a franchise with UBO there were seasons from 1932-46 when, despite the existence of the franchises, no attractions were booked into the theatre.
90. Included in Exhibits P-517 to P-991 are more than 460 franchises. These franchises, in part, involve road-show cities and fall within the period 1935 through 1945.
91. Until 1946, UBO had entered into formal written franchises. Although formal franchises were generally not issued after 1946 the same pattern of booking continued until 1950.
B. Leasing of Theatres 1932-1950
92. Prior to 1950 the Shuberts conditioned the leasing of the theatres under their control upon agreements by the respective lessees not to utilize the leased theatres for the presentation of attractions.
93. In the years 1935-1948, the Shuberts leased ten theatres under their control in NYC, Boston, Washington and Cincinnati to others with contractual provisions which prohibited the lessee from using the theatre to present legitimate attractions.
V. Collateral Enterprises Necessarily Involved in the Presentation of Legitimate Attractions
94. Prior to 1950 the Shuberts frequently conditioned the booking of attractions into their New York City theatres upon agreements by the producers to place advertising only as directed by them, employing a contract provision substantially as follows:
"Attractions playing this Theatre shall advertise only through Blaine Thompson Company in such papers as are approved by the Manager of the Theatre and place such advertising only through such advertising agencies as the party of the first part shall designate. No billing or advertising of any kind shall be done by the party of the second part without the written consent of the party of the first part and a violation of this clause shall be considered a violation of the whole contract."
95. The record contains a list of more than 255 such contracts with producers containing such a provision and pertaining to attractions presented in New York City during the period 1936-48.
96. The advertising so handled by Blaine Thompson Company for the Shubert theatres during the 15 year period prior to 1946 amounted to more than 5 million dollars.
97. Stage Costumes, Inc. was a subsidiary of STC which repaired and rented costumes to be used for professional and amateur productions.
C. Musical Compositions
98. STC and Producing Associates, Inc. agreed on June 17, 1935 with Harms, Inc. to organize International Music Corp. The Shuberts gave the new corporation performing rights to musical compositions owned by STC or Producing Associates, Inc. for a period of five years.
99. Producers of legitimate attractions usually raised financial capital by soliciting investments from others. The legal relationship was that of a limited partnership in which the producer was the general partner and the investors limited partners. The investors, as distinguished from the producer, did not ordinarily participate in any manner in making business or artistic decisions or booking arrangements. Generally, such decisions and arrangements were made solely by the producer and his general manager.
100. During the period 1932-50 Lee and JJ, through corporations controlled by them, engaged in the production of attractions, the booking and presentation of which they controlled. Between 1933 and 1949 they produced 133 such attractions.
101. During the period 1933-49 the Shuberts invested in attractions in number and amount, as follows:
Shuberts 275 $3,588.392
Heiman 41 36,807
LAB 29 99,725
UBO 16 119,407
Total 361 $3,844,331
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