Before: CLARK, Chief Judge, and HINCKS and WATERMAN.*fn1 Circuit Judges.
WATERMAN, Circuit Judge: The appellants, four affiliated corporations formerly engaged in the production and distribution of motion pictures, appeal from a judgment dismissing their complaint after a trial before the Court without a jury. 141 F.Supp. 658 (S.D.N.Y. 1956). The appellants had brought suit against Loew's, Inc., RKO Theares, Inc., and RKO Film Booking Corp., the appellees, to recover treble damages under the anti-trust laws, 15 U.S.C.A. §§ 1, 2, 15. These defendants, during the period in issue, were engaged in the exhibition of motion pictures. The complaint, insofar as it concerned the appellees, set forth a claim for damages for losses allegedly resulting from a conspiracy to exclude the plaintiffs during the period 1946-1950 from licensing their films on a competitive basis to the "first subsequent run" theatres of Loew's and RKO in the metropolitan area of New York City.*fn2
Since the facts pertinent to this litigation were set forth in detail by Judge Dawson in his comprehensive opinion below, see 141 F.Supp. 658, we will mention only those facts necessary to the disposition of this appeal.
The plaintiffs and their predecessor organizations produced and distributed motion pictures from 1943 to 1951. During this period they also distributed the films of certain other domestic and foreign producers made either in this country or abroad. The defendants, at the times material to this action, operated motion picture theatres in metropolitan New York, which were known, respectively, as the Loew's and RKO circuits. During the years 1946 to 1950, the years involved in this suit, the Loew's circuit in the metropolitan area comprised approximately 60 "subsequent run" theatres, and the RKO circuit between 30 and 40 such theatres. The term "subsequent run" applies to all theatres in the New York area except the 40 or more "first run" theatres concentrated in the Broadway midtown area of New York City. During this period in suit there were at least 600 subsequent run theatres in metropolitan New York, as that area was defined by the pleadings. However, these theatres fell into an elaborate hierarchy of "first subsequent run," "second subsequent run," and so forth. Approximately 45 of the Loew's theatres were in the "first subsequent run" category, whereas from 31 to 36 of the RKO theatres (depending on the year in question) were so designated.
Although no findings were made below as to the total number of "first subsequent run" theatres in the New York metropolitan area, it is apparently undisputed that the defendants occupied a dominant position in the "first subsequent run" exhibition market. The evidence at trial also tended to show that this market was the crucial one in the entire New York metropolitan subsequent run exhibition field, because the rental rates, billings, and playing positions of individual films throughout their subsequent run history were substantially influenced, if not determined, by the treatment they received from the "first subsequent run" theatres.
Each of the two defendant circuits exhibited about 208 pictures a year - or approximately 4 a week. Generally the same program, comprised of a double feature, would be played simultaneously throughout the first subsequent run theatres of an entire circuit. The playing engagements were typically for the "long half" of the week (Thursday through Sunday) or for the "short half" of the week (Monday through Wednesday). An individual film could receive "top" or "equal" billing, or could be placed as the "second" feature, during either the long or short half of the week.
From 1946 to 1950, the plaintiffs distributed 195 films, which earned total gross film rentals of $39,107,800 in this country, of which $2,362,200 was received from subsequent run theatres in the New York metropolitan area. The trial court found, 141 F.Supp. at 663, that
"of the 195 pictures distributed by the plaintiffs during the period in question, the defendants exhibited 85 pictures on one or the other of its circuits in the New York metropolitan area * * * Each of the defendants exhibited certain other pictures distributed by the plaintiffs in one or more theatres amounting to less than the full circuit. Loew's played some 39 additional pictures in addition to the 50 which it played on the entire circuit. RKO exhibited in one or more of its theatres during the period in question some 55 additional pictures."
Thus the plaintiffs did not attempt to prove below, nor do they contend on appeal, that the defendants conspired to totally exclude their pictures from exhibition in the defendants' theatres. Rather, the issues in controversy were framed in a pretrial order as follows:
"1. Did the defendants combine and conspire in violation of the anti-trust laws of the United States to exclude the plaintiffs from the opportunity of licensing on a competitive basis their feature motion pictures to Loew and Rko theatres which exhibit feature motion pictures in the New York metropolitan area on runs subsequent to first run Broadway?
"2. If so, were the plaintiffs directly damaged in their business or property as the result of the said illegal combination and conspiracy, and, if so, in what amount?"
The trial court answered both questions in the negative, and, dismissing the complaint, entered judgment for the defendants. On appeal, we affirm that judgment, since we discern no error of law in the proceedings below, and we do not believe that the trial court's findings of fact were "clearly erroneous." Fed. R. Civ. P. 52(a).
At trial, in order to sustain their burden of proof on both issues, the plaintiffs relied primarily upon (1) the findings of fact and conclusions of law contained in the final decree of the Paramount case, United States v. Loew's Inc. et al., Equity No. 87-273, S.D.N.Y., filed Feb. 8, 1950, aff'd, 339 U.S. 974 (1950) (for prior history, see United States v. Paramount Pictures, Inc., 66 F.Supp. 323, 70 F.Supp. 53 (1946), reversed and remanded in part, 334 U.S. 131 (1948); 85 F.Supp. 881 (1949)); (2) detailed statistics comparing film rentals earned by the plaintiffs during the period in question with those earned by the eight major distributors in the Paramount case; (3) the testimony of the president of one of the plaintiffs; (4) a letter written by the president of another of the plaintiffs to the president of Loew's.
On appeal, the plaintiffs urged two principal grounds for reversal: (1) that the trial court erred in its construction of the Paramount judgment; and (2) that the trial court did not properly evaluate the comparative film rental statistics.*fn3 We find both of these contentions without merit.
1. The Paramount Judgment
"A government [anti-trust] suit, while primarily in the public interest, if successful, also accrues to the immediate benefit of those injured by the wrongful conduct." T. C. Theatre Corp. v. Warner Bros. Pictures, Inc., 113 F.Supp. 265, 269 (S.D.N.Y. 1953). Under section 5 of the Clayton Act, 15 U.S.C.A. § 16,
"A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding 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 action or proceeding brought by any party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties * * *"
Relying on section 5, the appellants have strenuously contended throughout this litigation that the judgment in the Paramount case constitutes prima facie evidence of a conspiracy by the appellees to deny the plaintiffs competitive access to the appellees' theatres in metropolitan New York.
The Paramount judgment embodied findings of fact and conclusions of law based on the situation in the motion picture industry as it existed in 1945. The plaintiffs argue, however, that the conditions found to exist at that time continued until 1950, the date of the final order in the Paramount case.
As the trial court pointed out, "the primary issue in that case related to the effect under the anti-trust laws of a combination between the large producers of motion pictures who also controlled, to a substantial extent, the places of exhibition of those motion pictures." The great bulk of the many findings of fact and conclusions of law contained in the final Paramount decree do not touch upon the narrow issue here at bar. See United States v. Loew's Inc. et al., Equity No. 87-273, S.D.N.Y., filed Feb. 8, 1950, aff'd, 339 U.S. 974 (1950). The appellants direct our attention, however, to several findings and conclusions, particularly Finding No. 154(d) and Conclusion No. 16, which they contend are evidence of the alleged conspiracy set forth in their complaint. Especial emphasis is placed on the following sentence of Finding No. 154(d):*fn4
"In New York City Loew and RKO divided the neighborhood prior run product of the various defendant distributors under a continuing arrangement so that there was no competition between them in obtaining pictures."
Conclusion of Law No. 16 in the Paramount case reads as follows:
"Loew's, Incorporated, has violated the Sherman Act by conspiring with RKO to monopolize and monopolizing the first neighborhood run in New York City, and by the dividing of that market between itself and RKO."
After examining Finding No. 154(d) and Conclusion No. 16, as well as the other portions of the Paramount record that were relied upon by plaintiffs,*fn5 the trial court, see 141 F.Supp. at 667, concluded that
"While the findings may perhaps constitute evidence * * * that Loew's and RKO had no competition between themselves in obtaining pictures from the defendant distributors who were parties to the Paramount case and had monopolized between themselves the first neighborhood run in New York City, the findings, standing by themselves, are certainly not evidence that there was no competition between Loew's and RKO in obtaining and distributing pictures of so-called 'independents' such as the plaintiffs in the present case."
The appellants would have us believe that this was a niggardly construction of the Paramount judgment and that the only fair import of that judgment, as applied to the issue at bar, was that the plaintiffs were denied the opportunity to compete on an equal basis with the eight major distributors in the sale and licensing of their films to the defendants. Their argument appears to be: The defendants not only agreed not to compete with each other for the films of the eight major distributors, but each defendant also agreed to give preferential treatment to the films of those distributors that were allocated to it, provided that the films of those distributors met the particular defendant's minimal exhibition standards and were obtainable by it on satisfactory terms. That is, according to the appellants, the finding in Paramount of a concerted assignment by the defendants here of certain distributors necessarily implied a finding that there was an affirmative duty on the part of each defendant to use, whenever possible, the product of the distributors assigned to it, in addition to the negative duty not to compete for the product of those distributors that were assigned to the other defendant. The impact of such a conspiracy upon the plaintiffs would be to deny them truly competitive access to the defendants' theatres, inasmuch as their product would be purchased by each defendant only to fill marginal needs that were not satisfactorily met by the Paramount distributors assigned to it.
The appellants contend that the construction they argue for is the only reasonable inference to be drawn from the Paramount finding and conclusion quoted above. In so doing, however, they misconceive the import and applicability of section 5.In determining, under that section, the effect of a judgment in a prior anti-trust suit it is not our function to consider inferences, whether reasonable ones or not, that might be drawn from the language of the prior judgment. Under section 5 a judgment in a prior suit is prima facie evidence "as to all matters respecting which said judgment * * * would be an estoppel as between the parties thereto * * *" Thus, in construing a prior judgment for purposes of this statute, the court in the subsequent action does not sit as a trier of fact, i.e., it does not have wide license to draw inferences from the judgment and record in the prior litigation. Rather, the court is circumscribed by the relatively narrow limits of the doctrine of estoppel:
"The evidentiary use which may be made under § 5 of the prior conviction of respondents is * * * to be determined by reference to the general doctrine of estoppel * * * Such estoppel extends only to questions 'distinctly put in issue and directly determined' in the criminal prosecution." Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 568-69 (1951).
See also Partmar Corp. v. Paramount Pictures Theatres Corp., 347 U.S. 89, 102 (1954); Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 542 (1954); Paramount Film Distributing Corp. v. Village Theatre, 228 F.2d 721, 727 (10 Cir. 1955); Loew's, Inc. v. Cinema Amusements, Inc., 210 F.2d 86, 90 (10 Cir. 1954), cert. denied, 347 U.S. 976; Monticello Tobacco Co. v. American Tobacco Co., 197 F.2d 629, 631-32 (2 Cir. 1952), cert. denied, 344 U.S. 875; T. C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp. 265, 269-70 (S.D.N.Y. 1953).
Subsequent to the Emich decision, this court stated in Monticello Tobacco Co. v. American Tobacco Co., 197 F.2d 629, 631-32 (2 Cir. 1952) (per Judge Clark):
"* * * whatever is crucial to the trebledamage case and is not distinctly determined in the previous government suit must be proven by direct evidence. Dipson Theatres v. Buffalo Theatres, 2 Cir. 190 F.2d 951, 958, certiorari denied 342 U.S. 926, 72 S. Ct. 363. Section 5 does not permit a haphazard use of a criminal judgment merely for its aura of guilt, or 'to imply new wrongdoing from past wrongdoing.' Hastie, C.J., dissenting an Milgram v. Loew's, Inc., 3 Cir., 192 F.2d 579, 595. See also Note, 65 Harv.L.Rev. 1400, 1404-1407."
Hence, in determining the import of the Paramount judgment, we must be guided by the well-established principles of collateral estoppel. It is true that where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action. But "a judgment on one cause of action is not conclusive in a subsequent action on a different cause of action as to questions of fact not actually litigated and determined in the first action." Restatement, Judgments § 68 (1942).
Applying these principles to the Paramount judgment we conclude that the issue here in suit was not "distinctly determined" in the Paramount litigation. In that case the court found that these defendants had agreed not to compete with each other for the films of the eight major distributors. The aim, and apparent effect, of that conspiracy was the monopolization by the defendants of the first subsequent run exhibition market in metropolitan New York, to the detriment of other theatre exhibitors in that area. Thus the court in Paramount did not address itself to the different issue now before us, i.e., whether these defendants conspired together to exclude these ...