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UNITED STATES v. SHUBERT

July 24, 1969

United States, Plaintiff
v.
Lee Shubert, et al., Defendants


Lasker, D.J.


The opinion of the court was delivered by: LASKER

Memorandum Opinion

LASKER, D.J.:

 Select Theatres Corporation, a defendant herein ("Select"), moves for an order permitting it to acquire a beneficial interest in and to operate the theatre being constructed at the Century City complex in Los Angeles, California. The motion is made pursuant to the final judgment filed in this action on February 17, 1956, which provides in relevant part in Section XXVII:

 
"Jurisdiction is retained by this Court for the purpose of enabling any of the parties of this Final Judgment to apply to this Court at any time for such further orders or directions as may be necessary or appropriate for the construction or carrying out of this Final Judgment, for the amendment or modification of any of the provisions, for the enforcement of compliance therewith, and for the punishment of violations thereof."

 and in Section XXV:

 
"Defendants are enjoined from acquiring a beneficial interest in any theatre, provided that
 
. . .
 
"(B) . . . defendants may acquire a beneficial interest in any theatre
 
"(1) . . . upon an affirmative showing to this Court that such acquisition will not unduly restrain competition . . ."

 By the terms of the 1956 decree, defendants were enjoined from a variety of practices and required to divest themselves of their interests in a large number of theatres in New York, Boston, Chicago, Detroit and Philadelphia. In addition, the Shuberts since the date of the decree have disposed of their interests in theatres in Baltimore and Toledo and theatres in Boston and Chicago other than those which they were ordered to sell.

 The decree provides that representatives of the Department of Justice may have access to the records and papers of the defendants for the purpose of securing compliance, and the Department of Justice has in fact kept itself continually advised on this subject. It is undisputed that the defendants have been and are presently in compliance with the decree as it has been amended from time to time.

 In December of 1968, the defendant Select advised the Justice Department of its desire to acquire an interest in the theatre being constructed at the Century City complex in Los Angeles. *fn1" The Department considered the proposal and found no objection from its point of view. On May 13, 1969, in anticipation of the argument on the motion herein, the Assistant Attorney General of the Antitrust Division addressed letters to persons who were operating legitimate theatres or were "connected with the production of legitimate attractions," and who therefore, in the opinion of the Assistant Attorney General, would have an interest in the outcome of Select's motion. The letter requested the addressees to indicate their "views on the question whether the acquisition of this theatre by Select would unduly restrain competition." It also advised such interested persons: "In addition regardless of what the Government's position will eventually be, if you should desire to make your position known to the Court as an amicus curiae and the Court sees fit to permit you to do so, we will have no objection to your doing this." The letter concluded by specifying the scheduled date of the hearing on the motion and requested an early reply so that the Government would have such information available in advance of that date.

 A number of persons responded to the Assistant Attorney General's letter favoring defendant's application. (Exhibits F-1 through F-10 to Affidavit of Lawrence S. Lawrence, Jr., sworn to July 7, 1969). The only objector, and the only person to appear at the argument on the motion, was Nederlander Theatrical Corporation ("Nederlander"). At that argument a representative of the Antitrust Division appeared and orally stated to the Court that the Government found the defendants in compliance with the decree, that except for the objection of Nederlander no interested persons had indicated any opposition, and that the Government would not oppose the granting of the motion. Nederlander appeared by counsel and applied for leave to appear as amicus curiae and to submit evidence to the Court in opposition to the motion. No such evidence in affidavit or other form was offered by Nederlander at the argument. The Court allowed Nederlander two days in which to submit an affidavit intended to constitute an offer of proof, and reserved decision.

 Pursuant to the Court's permission, Nederlander submitted on June 26, 1969, an affidavit of James N. Nederlander, President of Nederlander Theatrical Corporation, sworn to that day. The Nederlander affidavit argues that the acquisition by the defendant Select of an interest in the Century City theatre in Los Angeles would "unduly restrain competition" within the meaning of the decree and of the relevant statute. Nederlander contended that the relevant market by which restraints of competition in the theatre industry were to be measured consisted of Chicago, Los Angeles and New York; that the defendants already had a dominant position in New York and Chicago and that the acquisition of an interest in what will be the largest legitimate theatre in Los Angeles, when added to their ownership in Chicago and New York, would indeed restrain competition. *fn2" Further, Nederlander contends that the characteristics and operating policies of ...


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