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ESTATES THEATRES, INC. v. COLUMBIA PICTURES INDUS.

July 17, 1972

Estates Theatres, Inc., Plaintiff,
v.
Columbia Pictures Industries, Inc., Columbia Pictures Corp., Paramount Pictures Corp., Paramount Pictures, Inc., United Artists Corp., Twentieth Century-Fox Film Corp., Metro-Goldwyn-Mayer, Inc., Cinerama, Inc., Cinerama Releasing Corp., Marvin Films, Inc., Interboro Circuit, Inc., Interboro Management, Inc., Century Circuit, Inc., and Combined Century Theatres, Inc.


Weinfeld, Edward, D. J.


The opinion of the court was delivered by: WEINFELD

WEINFELD, Edward, D. J.

Plaintiff, owner and operator of the Utopia, a motion picture theatre in Flushing, Queens, commenced this action against various distributors of motion pictures and theatre owners, charging a conspiracy in violation of the antitrust laws. It now moves for leave to issue a supplemental complaint and to add defendants to those originally named as co-conspirators upon an allegation that since the commencement of the action the proposed defendants have joined and participated in the claimed conspiracy. The motion, while not opposed on the merits, was countered by allegations by attorneys for various defendants that the plaintiff's attorney herein also represented litigants in other actions pending in this court, in violation of Disciplinary Rule (DR) 5-105(B) of the Code of Professional Responsibility, *fn1" which provides:

 
"A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DR 5-105(C)."

 The latter section provides:

 
"In the situations covered by DR 5-105 . . . (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."

 Accordingly, the defendants urge that before the instant motion is granted the Court determine the issue of conflict of interest raised under the Code of Professional Responsibility.

 The facts with respect to the matter as presented to the Court are as follows. Plaintiff's attorney is Joseph A. Ruskay. He also represents United Artists Theatre Circuit, Inc. (hereafter UATC), plaintiff in two consolidated actions pending in this court since 1953, wherein various defendants are charged with violations of the antitrust laws in the New York metropolitan area in the distribution and exhibition of motion picture films -- a claim not unlike that made by plaintiff in this action. UATC, through one of its subsidiaries, operates the Roosevelt Theatre, located in Flushing, Queens, where plaintiff operates its Utopia Theatre, allegedly the object of discriminatory conduct violative of the antitrust laws charged to the defendants herein. Plaintiff has not named UATC a defendant in this action, although it charged, in answer to an interrogatory, that UATC is a co-conspirator.

 At or about the filing of the instant motion for leave to file its supplemental complaint, plaintiff sent a letter, drafted under the supervision of Mr. Ruskay, to some of the defendants, the facts of which are said to be the predicate of the present motion, as follows:

 
"You have discriminated and continue to discriminate against the Utopia and improperly granted favored treatment to other theatres . . . . These patterns of conduct . . . have involved the following types of discrimination among others: --
 
* * *
 
"(c) The licensing of pictures to the Main Street and/or Roosevelt (recently reopened as the Quartet I-IV theatres in Flushing) and/or Parsons Theatres on intermediate runs after first run Queens, and not permitting the Utopia to exhibit these pictures on the same availability; or not permitting the Utopia to exhibit said pictures on such availability unless it was willing to bid against the above theatres; notwithstanding the fact that the Utopia was not and is not in substantial competition with such theatres and for years the Utopia had exhibited pictures on the same availability as the Main Street, Roosevelt, Parsons and other theatres now being granted such favored playing positions."

 Upon the factual allegations it appears that the interests of the Utopia and Roosevelt theatres, respectively owned by different clients of Mr. Ruskay, are antagonistic -- that defendants in this suit allegedly are discriminating in favor of one of Mr. Ruskay's clients, to the detriment of the other. It is contended that should plaintiff (operator of the Utopia) prevail in this action, it would be entitled to a decree in equity against all the defendants, requiring them to cease and desist from any illegal conduct which favors the Roosevelt, owned by Mr. Ruskay's other client. It is further urged that the naming of UATC as a co-conspirator, although it is not named as a defendant, has sharpened the antagonism.

 The conflict of interest issue has been accentuated by an antitrust suit commenced by the government against UATC after the instant suit was filed. The government suit, brought under section 7 of the Clayton Act, charges that large motion picture theatre circuits, including UATC, have advantages over smaller theatre circuits and individual theatres in competing for exhibition licenses from distributors. UATC, which acquired another circuit, accounted for approximately 27.5% of all motion picture theatres in Queens County in the year 1968. The government alleges that the effect of the acquisition may be to substantially lessen competition or tend to create a monopoly in various ways, including that UATC's bargaining power with motion picture distributors has been significantly advanced to the detriment of smaller theatre circuits and individual theatres with which it competes for licenses to exhibit feature motion pictures. Mr. Ruskay does not represent UATC in the government's antitrust suit. However, it is urged that, as plaintiff's attorney in the instant case, to support its claim he would necessarily be required to offer evidence that the Roosevelt, as one of the theatres operated by UATC, was the beneficiary of unlawful conduct at the expense of plaintiff, his other client. Additionally, it is contended that any evidence unearthed by plaintiff in this action which may show possible involvement of UATC in unlawful conduct in Queens County would be helpful to the government in the prosecution of its case and correspondingly detrimental to UATC in its defense of that suit. *fn2"

 Upon the facts, Mr. Ruskay appears to be involved in a conflict of interest in representing both the plaintiff herein and UATC as plaintiff in its consolidated antitrust suits. However, upon the return of the motion, he presented an affidavit of the principals of plaintiff, who averred in substance that when they retained Mr. Ruskay he had advised them of his representation of UATC and of all the pertinent facts, and that UATC was not named as a defendant in this action with their approval. They further expressed a desire that he continue to act as plaintiff's attorney. In addition, upon the argument of this motion Mr. Ruskay stated that prior to the commencement of this action he had obtained the consent of UATC's general counsel, evidently in compliance with DR 5-105(C) of the Code of Professional Responsibility, referred to above. However, no written consent, as in the instance of the plaintiff herein, was submitted. Moreover, the asserted oral consent of UATC's general counsel had been obtained prior to the naming of UATC as a co-conspirator and to the commencement of the government antitrust suit against it. Accordingly, Mr. Ruskay was afforded an opportunity to submit the written consent of UATC. It has not been presented. Instead, Mr. Ruskay has advised that UATC would not consent to his continuing to represent the plaintiff in this case; also that UATC's general counsel "emphasized when he and his client gave their original ...


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