Interstate Circuit, Inc. v. United States

306 U.S. 208 (1939)

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Nature of the Case

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Facts

Interstate Circuit, Inc., (D) and Texas Consolidated Theaters, Inc., (D1) are movie theater chains. D has forty-three first-run and second-run motion picture theaters, located in six Texas cities. D has a complete monopoly of first-run theaters in most cities, except for Houston. The admission price for adults for the better seats at night is 40 cents or more. D1 operates sixty-six theaters, some first- and some subsequent-run houses, in various cities and towns in the Rio Grande Valley and elsewhere in Texas and New Mexico. In some of these cities, there are no competing theaters, and in six leading cities, there are no competing first-run theaters. It has no theaters in the six Texas cities in which D operates. Ds each contributed more than 74 percent. of all the license fees paid by the motion picture theaters in their respective territories to the distributor. Ds entered into contractual agreements with eight film distributors such that A product films would never be exhibited at any time in any theater at a smaller admission price than $0.25 for adults in the evening. Further, they agreed that A pictures which are exhibited at a night, admission of 40¢ or more, shall never be exhibited in conjunction with another feature picture under the so-called policy of double features. D's manager mailed a letter to each distributor that identified all eight distributors as being addressed on the initial proposal. Conferences followed and, each distributor was represented by its local branch manager and by one or more superior officials from outside the state of Texas. In the course of them, each distributor agreed with D for the 1934-35 season to impose both the demanded restrictions upon their subsequent-run licensees in the six Texas cities served by D, except Austin and Galveston. The agreements for the restrictions were carried into effect by each of the distributors' imposing them on their subsequent-run licensees in the four Texas cities during the 1934-35 season. None of the distributors yielded to the demand that subsequent runs in towns in the Rio Grande Valley served by D1 should be restricted. Ds were charged with violations of the Sherman Antitrust Act. The trial court found that the distributor appellants agreed and conspired among themselves to take uniform action upon the proposals made by D, and that they agreed and conspired with each other and with D to impose the demanded restrictions upon all subsequent-run exhibitors in Dallas, Fort Worth, Houston, and San Antonio; that they carried out the agreement by imposing the restrictions upon their subsequent-run licensees in those cities, causing some of them to increase their admission price to 25 cents. The court found this to be a combination and conspiracy in restraint of interstate commerce in violation of the Sherman Act. It also concluded that each separate agreement between D and a distributor that D should subject itself to the restrictions in its subsequent-run theaters and that the distributors should impose the restrictions on all subsequent-run theaters in the Texas cities as a condition of supplying them with its feature pictures was likewise a violation of the Act. The Court enjoined the conspiracy and restrained the distributors from enforcing the restrictions in their license agreements with subsequent-run exhibitors and from enforcing the contracts or any of them. Ds appealed.