United States District Court, S.D. New York
March 30, 2004.
SIX WEST RETAIL ACQUISITION, INC., Plaintiff, -against- SONY THEATRE MANAGEMENT CORP., et al., Defendants
The opinion of the court was delivered by: LORETTA PRESKA, District Judge
OPINION AND ORDER
Show business is a tough business.*fn1 After managing and operating
plaintiff's theatres for nearly two decades defendants found themselves
parties to a suit filed by plaintiff alleging breach of contract, breach
of fiduciary duties, unjust enrichment, tortious interference, and
violations of the federal antitrust laws. Now, after almost seven years
of litigation, after voluminous submissions, numerous motions, and
depositions taken on the other side of the globe, I address defendants'
motions for summary judgment.
The plaintiff, Six West Retail Acquisition, Inc. ("Six West"), brings
this action against various corporate and individual defendants alleging
(1) breach of contracts related to the defendants' management of three
movie theatres owned by Six West; (2) breach of fiduciary duties arising
from defendants' management of those theatres; (3) tortious interference
with the plaintiff's prospective business relations; (4) unjust
enrichment; (5) restraint of trade in violation of Section 1 of the
Sherman Act, 15 U.S.C. § 1; (6) attempted monopolization in violation
of Section 2 of the Sherman Act, 15 U.S.C. § 2; and (7)
anticompetitive merger in violation of Section 7 of the Clayton Act,
15 U.S.C. § 18. (First Amended Complaint dated Dec. 4, 1997 ("Amended
Compl.") ¶¶ 86-131). Following the close of discovery, plaintiff
announced that it was abandoning the merger claim as it had "been
compromised by subsequent events" (Letter from Jeffrey K. Howard to Judge
Preska of 3/14/03, at 1 n.2), and I now address defendants' motions for
summary judgment on the remaining allegations pursuant to Fed.R.Civ.P.
56.*fn2 For the reasons set
forth below,*fn3 defendants' motions are granted.
I. The Facts
A. The Parties
Plaintiff Six West is a New York corporation with its principal place
of business in New York, New York. (Amended Compl. ¶¶ 6, 34).
Plaintiff leases out and controls three movie theatres in Manhattan: the
New York Twin (the "Twin"), the Paris Theatre (the "Paris"), and the
former Festival Theatre (the "Festival"). (Amended Compl. ¶¶ 4, 6).
Sheldon H. Solow ("Solow") is a real estate developer who is Six West's
owner, sole shareholder, and a corporate officer. (Amended Compl. ¶¶
Defendant Loews Theatre Management Corporation ("Loews Theatres"),
formerly known as Sony Theatre Management Corporation, is a Delaware
corporation with its principal place of business in New York. (Amended
Compl. ¶ 7). Defendant Loews Fine Arts Cinema, Inc. ("Loews Fine
Arts") is a subsidiary of Loews Theatres through which Loews Theatres
conducted business with the Paris and Festival theatres.*fn4 (Amended
Compl. ¶ 10). Defendant Talent Booking Agency, Inc. ("TBA") is a New
York corporation and Loews affiliate. (Amended Compl. ¶ 9). Loews
Theatres, TBA, and Loews Fine Arts refer to themselves collectively
as the "Loews Defendants" and shall be referred to herein as the "Loews
Defendants" or "Loews". (Loews Def.'s 56.1 Stmt at 3).
Defendant Sony Pictures Entertainment Corporation ("Sony Pictures") is
a Delaware corporation and the parent company of Loews Theatres. (Amended
Compl. ¶ 11). Sony Pictures produces and distributes motion pictures,
which are then (along with films from other companies) exhibited by Loews
Theatres and other exhibitors. (Amended Compl. ¶ 11). Defendant Sony
Corporation of America ("Sony USA") is a New York corporation, and is the
parent company of Sony Pictures. (Amended Compl. ¶ 12). Defendant
Sony Corporation is a Japanese corporation that is the ultimate parent of
all the Sony entities. (Amended Compl. ¶ 13). Sony Pictures, Sony
USA, and Sony Corporation refer to themselves collectively as the "Sony
Defendants" and shall be referred to herein as the "Sony Defendants".
(Loews Def.'s 56.1 Stmt at 1).
Defendants James Loeks and Barrie Lawson Loeks are former
Co-Chairpersons of Loews Theatres. (Amended Compl. ¶ 14-15).
Defendant Travis Reid ("Reid") is President of Loews Theatres and TBA.
(Amended Compl. ¶ 16). Defendant Seymour H. Smith ("Smith") is
Executive Vice President of Loews Theatres and TBA. (Amended Compl. ¶
18). Defendant Thomas Brueggeman
("Brueggeman") is Vice President of Loews Theatres. (Amended Compl.
¶ 17). Hereinafter, James and Barrie Loeks, Reid, Smith, and
Brueggeman shall collectively be referred to as the "Individual
B. The Twin
On December 13, 1978, Solow Theatre Corporation ("STC"), which leased
the Twin from Solow pursuant to a lease agreement (the "Lease Agreement")
of the same date (Loews Def.'s 56.1 Stmt ¶ 4), and TBA entered into
an agreement (the "Twin Agreement"), whereby TBA would operate and manage
the Twin. (Twin Agreement § 3.01; Amended Compl. ¶ 33; Loews
Def.'s 56.1 Stmt ¶ 2). Pursuant to the Twin Agreement, STC would
receive 60% of the net theatre income, and TBA would receive 40%. (Twin
Agreement § 4.04). STC and Solow, as tenant and landlord,
respectively, entered into a Four Party Agreement dated December 13,
1978, with TBA and Loews, as operator and guarantor, respectively,
whereby TBA and Loews agreed to assume the obligations of tenant, such as
maintaining the premises, under the lease. (Pl's 56.1 Counterstmt to
Loews ¶ 4b).*fn5 As part of
a transaction involving Chartwell Theatres, Inc., TBA and Solow
entered into a letter agreement dated July 3, 1985, that amended the Twin
Agreement (the "Chartwell Consent"). The Twin Agreement had a term of 15
years, from 1979 through 1993, and Loews exercised its right to extend
the Twin Agreement, as amended by the Chartwell Consent, for another ten
years. (Loews Def.'s 56.1 Stmt ¶¶ 19-20; Pl.'s 56.1 Counterstmt to
Loews ¶ 20 (disputing when Loews exercised its right of renewal)).
C. The Paris and Festival
Solow began to operate the Paris theatre, which is allegedly one of the
most prestigious theatres in the country and commonly used for movie
premiers (Amended Compl. ¶¶ 43, 51), in 1990, and beginning on March
23, 1990, Loews and Solow Management Corporation began discussions
regarding Loews' management of the Paris for Solow. (Loews Def.'s 56.1
Stmt ¶ 40). Solow and Loews continued discussions and exchanged draft
operating agreements until 1993 or 1994 but never executed a written
agreement that explicitly set forth the terms governing Loews' operation
of the Paris. (Loews Def.'s 56.1 Stmt ¶ 41, Pl.'s 56.1 Counterstmt to
Loews ¶ 41, 41a-g). Nevertheless, it is undisputed Loews did operate
the Paris theatre even though the parties now dispute the terms that
governed Loews' operation of that theatre. Loews ceased operating the
Paris on April 30, 1997. (Loews Def.'s 56.1 Stmt ¶ 75).
At the same time as Loews began operating the Paris, Loews also began
operating the Festival. (Amended Compl. ¶ 47; Loews Def.'s 56.1 Stmt
¶ 79). As with the Paris, draft operating agreements were exchanged
by the parties, but the parties never entered into a signed agreement.
(Loews Def.'s Stmt ¶ 80; Pl.'s Counterstmt to Loews ¶ 80a-d). The
Festival ceased operations on August 21, 1994. (Loews Def.'s 56.1 Stmt
II. Procedural History
Six West filed the original complaint in this action on July 24, 1997,
and the case was assigned to the Honorable David N. Edelstein. Following
the public announcement of the merger between Loews and Cineplex Odeon,
Six West filed the Amended Complaint on December 4, 1997, which added a
Clayton Act claim alleging that the merger was anti-competitive
(subsequently abandoned). All of the defendants filed a motion on January
8, 1998 to dismiss the Amended Complaint for failure to state a claim
pursuant to Rule 12(b)(6). In an Opinion & Order dated March 9, 2000,
Judge Edelstein denied most of defendants' motion to dismiss, but did
dismiss the contract claims as against the Individual Defendants and held
that the block-booking allegations could only proceed against Sony
Pictures, as Sony Pictures is the only film distributor. See Six
West Retail Acquisition, Inc. v. Sony Theatre Management Corp., 2000
WL 264295 (S.D.N.Y. March 9, 2000).
I was assigned this case from Judge Edelstein on September 26, 2000,
following Judge Edelstein's passing after almost fifty years of service
on this Court.
On April 16, 2003, the Loews Defendants, Sony Defendants, and
Individual Defendants all moved for Summary Judgment on all remaining
claims in the Amended Complaint. The defendants also submitted joint
motions in limine to exclude the testimony and reports of two
of plaintiff's experts. On April 16, 2003, plaintiff also filed a motion
in limine to exclude the testimony and report of one of
defendants' experts. Submissions filed under seal from both parties
I. Summary Judgment Standard
Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment
shall be rendered forthwith if the pleadings, depositions, answers,
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby, 477 U.S. 242, 250
The moving party has the initial burden of "informing the district
court of the basis for its motion" and identifying the matter that "it
believes demonstrate[s] the absence of a genuine issue of material fact."
Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). The substantive law determines the facts
which are material to the outcome of a particular litigation. See
Anderson, 477 U.S. at 250; Heyman v. Commerce & Indus. Ins.
Co., 524 F.2d 1317, 1320 (2d Cir. 1975). In determining whether
summary judgment is appropriate, a court must resolve all ambiguities,
and draw all reasonable inferences against the moving party. See
Matsushita Elec. Industr. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986)(citing United States v. Diebold, Inc., 369 U.S. 654,
If the moving party meets its burden, the burden then shifts to the
non-moving party to come forward with "specific facts showing that there
is a genuine issue for trial." Fed.R.Civ.P. 56(e). The non-moving
party must "do more than simply show there is some metaphysical doubt as
to the material facts." Matsushita, 475 U.S. at 586. However,
only when it is apparent that no rational finder of fact "could find in
favor of the non-moving parry because the evidence to support its case is
so slight" should summary judgment be granted. Gallo v. Prudential
Residential Servs., Ltd., 22 F.3d 1219, 1223 (2d Cir. 1994).
II. Plaintiff's Antitrust Claims
A. Sherman Antitrust Act § 1 Tying Claims
Six West alleges, under two related but distinct theories, that the
Sony Defendants' film distribution practices and the Loews Defendants'
and Sony Defendants' licensing
relationships are unreasonable restraints of trade in violation of
Section 1 of the Sherman Act. That provision makes illegal "[e]very
contract, combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several States, or with
foreign nations." 15 U.S.C. § 1. To establish such a claim plaintiff
must show: "Ml) a combination or some form of concerted action between at
least two legally distinct economic entities; and (2) such combination or
conduct constituted an unreasonable restraint of trade either per
se or under the rule of reason.'" Virgin Atlantic Airways Ltd.
v. British Airways PLC, 257 F.3d 256, 263 (2d Cir. 2001) (quoting
Tops Mkts., Inc. v. Quality Mkts, Inc., 142 F.3d 90, 95-96 (2d
The Sony Defendants allege for the first time in their Reply that if
there was any injury caused by the alleged block-booking by Sony Pictures
the injury was only inflicted upon Loews and, thus, Six West lacks
standing.*fn6 (Sony Def.'s Reply at 14). The Sony Defendants assert that
as a landlord, Six West "was neither a consumer nor a competitor in the
market in which trade was [allegedly] restrained" and, therefore, lacks
complain about foreclosure from the bidding process. (Sony Def.'s
Reply at 14 (quoting Associated Gen. Contractors of Cal. v. Cal.
State Council of Carpenters, 459 U.S. 519, 539 (1983))). In support
of this lack of standing defense, the Sony Defendants cite to
Calderone Enter. Corp. v. United Artists Theatre Circuit, Inc.,
454 F.2d 1292, 1296 (2d Cir. 1971), in which a non-operating landlord of
a theatre, which had been leased to an exhibitor, was held to lack
Calderone is easily distinguishable from the situation at
bar. Here, Six West is much more than a mere landlord as Six West hired
Loews to be its agent and perform the service of managing the three
theatres and retained 60% of net profits. Pl.'s Suppl. Opp. to Sony at
1).*fn7 This is in contrast to the situation in Calderone in
which the non-operating landlord charged an annual rental (in which it
did receive a percentage of the theatre's gross receipts on top of a
fixed minimal rent) and did not pay the exhibitor for the provision of
services in managing the theatres. Id. at 1294. The Twin, Paris
and Festival are owned by Six West, and, if Six West's allegations of
block-booking are true, then as a competitor in the film exhibition
market, Six West has been directly injured by such
anticompetitive behavior and has standing to pursue these claims.
b. Substantive Block-Booking Allegations
As Judge Edelstein described in his Opinion and Order denying the
defendants' motion to dismiss plaintiff's Section 1 claims, block-booking
is "the practice of licensing, or offering for license, one feature or
group of features on condition that the exhibitor will also license
another feature or group of features released by the distributors during
a given period" and is a type of tying arrangement. See Six
West, 2000 WL 264295, at *14 (quoting United States v.
Paramount Pictures, Inc., 334 U.S. 131, 156 (1948)). Such tying
arrangements are per se illegal. See Paramount
Pictures, 334 U.S. at 158-59 (1948). Judge Edelstein noted that
"actual coercion `is an indispensable element' of a block-booking
violation," id. (quoting Unijax, Inc. v. Champion Int'l,
Inc., 683 F.2d 678, 685 (2d Cir. 1982)), and Unijax, 683
F.2d at 685, makes clear that "[a]ctual coercion by the seller that in
fact forces the buyer to purchase the tied product" is required. Thus,
"unless the buyer can prove that it was the unwilling purchaser
of the allegedly tied products, actual coercion has not been established
and a tying agreement cannot be found." Trans Sport, Inc. v. Starter
Sportswear, Inc., 364 F.2d 186, 192 (2d Cir. 1992) (emphasis added).
At most, the facts to which Six West cites suggest that there were
voluntary relationships between the Loews Defendants and film
which are not per se illegal but rather ought to be
evaluated under the rule of reason.
Though allowing both the block-booking and relationship licensing
claims to go forward, Judge Edelstein warned Six West that it must
delineate the Section 1 claims more cogently as the case proceeded.
See Six West, 2000 WL 264295, at *20. Yet, Six West has
continued to conflate the evidence relevant to the block-booking and
relationship licensing allegations. A good deal of the evidence Six West
cites to support the block-booking claim against Sony Pictures does not
implicate Sony Pictures but rather touches on the relationships that
Loews Theatres had with distributors other than Sony Pictures. From these
descriptions of Loews' relationships, which very often do not even hint
at coercion by any distributor let alone name Sony Pictures
specifically Six West attempts to maintain a block-booking claim
against Sony Pictures. Six West points out that at the summary judgment
stage a court:
should not view each piece of evidence in a
vacuum. Seemingly innocent or ambiguous behavior
can give rise to a reasonable inference of
conspiracy in light of the background against
which the behavior takes place. Evidence can take
on added meaning when viewed in the context with
all the circumstances surrounding the dispute.
(Pl.'s Opp. to Sony at 23 (quoting Apex Oil Co. v.
DiMauro, 822 F.2d 246
, 254-55 (2d Cir. 1987))). Viewing Six West's
argument in context, Six West proffers no evidence from which a jury
find that there was any "actual coercion" by the Sony Defendants
that "in fact" forced any film exhibitor to purchase any unwanted films
constituting a per se Section 1 violation.
Six West refers to a number of letters, statements and documents that
purportedly demonstrate, or create a reasonable inference of possible,
coercion by Sony Pictures even though this evidence merely refers to
distributors generally and not Sony Pictures. For example, Six West cites
a 1990 letter from Alan Friedberg, Chairman of Loews, to Solow that
states, "[w]e do not have total control over the situation (film
companies are increasingly arrogant and demanding) . . . and there are
`relationships' with the film companies that dictate certain decisions."
((P)Misc. 9 (8/9/90 Letter from Friedberg to Solow)). This letter only
refers to "film companies" in general, not Sony Pictures, and
demonstrates only that exhibitors and distributors had relationships.
Likewise Sony Theatres' (a.k.a. Loews Theatres) 1994 strategic plan,
Due to the smaller number of screens per location
in many of our free zone theatres, [Loews]
Theatres is forced to make film selections,
leading to better relationships with certain
distributors. These distributors also tend to play
more of their product in our competitive zones
locations. . . .
((P)PX 141). Again this evidence simply demonstrates that Loews
Theatres' decisions regarding what movies to exhibit may have been
influenced by relationships that Loews had with unnamed distributors. Six
West's use of deposition testimony by Lawrence
Ruisi, President and CEO of Loews Cineplex Entertainment, that
Loews had relationships with distributors and sometimes took less
desirable films to maintain access to more desirable films is similarly
unavailing as evidence that Sony Pictures engaged in block-booking.
(See Ruisi 115:6-16). At issue is whether there was any
coercion by Sony Pictures, and evidence that Loews maintained
relationships with distributors does not permit a reasonable juror to
infer Sony Pictures engaged in coercion or the practice of block-booking.
Even when Six West does cite to evidence that relates to actions by
Sony Pictures, the evidence fails to suggest that Sony Pictures attempted
to coerce anyone. For instance, Six West cites Reid's deposition
testimony that Loews had "relationships" with Sony Pictures, similar to
relationships it had with other distributors, such that certain Sony
Pictures releases were taken in order to preserve the ability to maintain
access to other pictures. (Reid 68:18-70:8). Nowhere, however, does Reid
imply that Loews' decisions were the result of any type of coercion by
Sony Pictures. Despite Six West's statement to the contrary, without any
hint of coercion by Sony Pictures, such conduct is not "archetypical
block-booking" but rather archetypical relationship licensing. (Pl.'s
Opp. to Sony at 18).
Perhaps Six West's strongest evidence, and the evidence that Judge
Edelstein relied upon in allowing Six West's block-booking
claim to survive defendants' motion to dismiss, is a letter dated
January 16, 1996 from Reid to Solow responding to an inquiry of whether
the film Sense and Sensibility, a Sony Pictures release, could
be exhibited at the Twin. See Six West, 2000 WL 264295, at *15.
In that letter, Reid responded to Solow's inquiry by stating "this
business does not work in such a way that we would only play `Sense and
Sensibility', but that we would become obligated to play a full portion
of the Sony Pictures release schedule." (PX 46). Based on this language,
Judge Edelstein wrote, "[a]t this point in the litigation, the facts
suggest that Plaintiff's difficulty in acquiring more profitable movies
may be attributed to its unwillingness or its inability to accept all of
Sony Pictures' films." Six West, 2000 WL 264295, at *15. I do
not disagree with Judge Edelstein's finding that the language contained
in Reid's letter was sufficient to survive a motion to dismiss. At that
stage of litigation a court will not dismiss a complaint unless it
appears beyond doubt that the plaintiff can prove no set of facts
supporting a claim for relief. See Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984); Branum v. Clark,
927 F.2d 698, 705 (2d Cir. 1991). Yet, at the summary judgment stage of
litigation, while it is important not to deprive a deserving plaintiff of
his or her day in court, when there are no genuine issues of material
fact, summary judgment is both appropriate and required. Fed.R.
Civ. P. 56(c); see Anderson v. Liberty Lobby,
477 U.S. 242, 250 (1986).
After years of discovery, Six West's block-booking claim rests almost
entirely on these statements in Reid's letter, and I do not see how any
reasonable juror could infer actual coercion from these few words.*fn8
Reid's use of the word "obligated" does not imply that Sony was
exercising any economic muscle or coercing anyone. See American
Mfrs. Mut. Ins. Co. v. American Broad-Paramount Theatres,
446 F.2d 1131, 1137 (2d Cir. 1971) (coercion by a film distributor consists
of the "actual exertion of economic muscle"). As Reid testified in his
deposition, in a "competitive" exhibition market Loews would sometimes
play films it did not "want as much" so as to preserve certain
relationships with distributors. (Reid Depo. at 294:7-12; 308:5-12). This
is a far cry from evidence of a distributor's actually conditioning
access to one film on an exhibitor's taking a less desired film. See
United States v. Twentieth Century Fox Film Corp., 882 F.2d 656,
658-59 (2d Cir. 1989) (finding direct evidence that a distributor's agent
forced an exhibitor to take one film in order to play another
film). Taking a film that an exhibitor does not "want as much" in order
to preserve a relationship with a distributor is not block-booking, is
not per se illegal, and no reasonable juror could infer from
Reid's letter to Solow that Sony Pictures was coercing Loews into taking
one Sony film in order to get another Sony film. No other evidence
presented by plaintiff suggests that the letter reflected anything more
than the existence of a relationship between Sony Pictures and Loews.
I do not mean to insinuate that a plaintiff must present
incontrovertible oral or written proof that a defendant has engaged in
block-booking. Inferences of tying agreements drawn from circumstantial
evidence are often all that is available, and if the evidence is
sufficient to support such inferences these inferences are quite
sufficient to survive a motion for summary judgment. See Capital
Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc.,
996 F.2d 537, 545 (2d Cir. 1993); Oreck Corp. v. Whirlpool Corp.,
639 F.2d 75, 79 (2d Cir. 1980); Caldwell v. American Basketball Assoc.,
Inc., 825 F. Supp. 553, 566 (S.D.N.Y. 1993), aff'd,
66 F.3d 523 (2d Cir. 1995). The evidence presented by Six West, however, is
insufficient for any reasonable juror to infer that the Sony Defendants
coerced any exhibitor to carry any films and engaged in unlawful
For the above reasons, as Six West has failed to demonstrate any
coercion by Sony Pictures, Six West's block-booking claim under Section 1
2. Relationship Licensing
In Paramount Pictures the Supreme Court rejected the notion
that it was necessary to require a competitive bidding system in which
exhibitors bid on films on a film-by-film basis. See, 334 U.S.
at 162-166. The Court questioned whether such a competitive bidding
system would in fact foster competition, id. at 162, and more
recently the Antitrust Division of the Department of Justice has found
that relationship licensing, in which an exhibitor agrees to license a
substantial number of a distributor's films, is often both permissible
and pro-competitive. See Report of Department of Justice on the
Legality of Customer Selection Under the Injunction in the Paramount
Decrees Against Discrimination in Film, United States v. Loew's
Inc., Equity No. 87-273 (ELP) (S.D.N.Y. Dec. 5, 1988), at 3
[hereinafter DOJ Report].
Plaintiff does not bring a separate relationship licensing claim in the
Amended Complaint. Six West, 2000 WL 264295, at *16-17. Rather,
Judge Edelstein noted that in attempting to bring a block-booking claim,
Six West had unwittingly alleged an alternative claim under Section 1.
Id. He observed that while statements that identified booking
relationships as voluntary could not support a block-booking claim,
because the requisite coercion was lacking, they could support a
relationship licensing claim. Id. Judge Edelstein held that if
a voluntary relationship between an exhibitor and distributor "hinder[s]
other exhibitors' ability to acquire quality movies, then such
relationship licensing would violate § 1." Id. at 18. Thus,
unlike a block-booking violation of Section 1, in which actual coercion
is the key to the claim, in a relationship licensing violation of Section
1, the key is the exclusion of other exhibitors from fair access to
films. See id.; see also Paramount, 334 U.S. at 154
(relationships that eliminate the opportunity for small theatres to
obtain first run films stifle competition and violate Section 1);
United States v. Loews, Inc., 705 F. Supp. 878, 880 (S.D.N.Y.
1988). Also unlike block-booking, because a relationship licensing claim
involves a consensual agreement between exhibitors and distributors such
a claim may stand against both a distributor and exhibitor if such an
agreement forecloses access to films to other exhibitors. Six
West, 2000 WL 264295, at *18 n.34.
A claim for a relationship licensing violation of Section 1 is analyzed
under the rule of reason, and in order to survive a motion for summary
judgment a plaintiff must show that a material question of fact exists as
to whether the allegedly unlawful relationship reduced competition in the
See Virgin Atlantic Airways, 257 F.3d at 264;
PepsiCo., Inc. v. Coca-Cola Co., 114 F. Supp.2d 243, 258-59
(S.D.N.Y. 2000), aff'd 315 F.3d 101 (2d Cir. 2002). Although
the relevant geographic market is disputed by each side, I find it
unnecessary to resolve this issue because Six West has failed to proffer
evidence that the alleged relationships have had any harmful effect on
competition in any remotely relevant geographic market, including the
"Upper Manhattan" market propounded by Six West.
Six West offers limited evidence concerning the Sony Defendants'
relationships with any exhibitor in Upper Manhattan or any other market,
and thus no reasonable juror could find that the Sony Defendants have
engaged in illegal relationship licensing in violation of Section 1. Six
West offers more evidence concerning the relationships that Loews had
with film distributors, but that evidence does not even begin to suggest
that such relationships were anticompetitive.
The DOJ Report found that relationships between exhibitors and
distributors are not necessarily anticompetitive. The DOJ Report
suggested that such relationships may reflect rational economic choices
based on complimentary risk-taking attitudes and may reflect an
on-the-merits consideration of transaction costs of licensing films
separately. DOJ Report at
43-44. However, the DOJ Report recommended that exhibitor and
distributor relationships might violate Section 1 if they involve:
circuit dealing, favoritism towards affiliates,
preferential contract terms, or rejection
out-of-hand of competing exhibitors' offers
without any "on-the-merits" determination, [and]
the mere fact that relationship licensing is also
involved will not immunize that conduct.
Id. at 50-51. None of Six West's evidence suggests that
any rational juror could find that any of the Loews Defendants engaged in
any of this prohibited behavior. While it is reasonable to believe that
Loews' relationships may have reflected certain efficiencies or
risk-taking attitudes, there is no evidence that Loews engaged in any
activities that foreclosed Six West's theatres or other exhibitors from
access to films.
As discussed above, much of the evidence Six West relies on for its
block-booking claim against Sony Pictures relates to the relationships
that Loews has with distributors generally. This evidence regarding
relationships, however, amounts to at most that Loews sometimes exhibits
movies it is less interested in order to maintain relationships with film
distributors. That Loews had relationships with distributors is
undisputed, but Six West's evidence fails to suggest that these
relationships foreclosed other exhibitors from access to films and harmed
competition. Six West attempts to demonstrate foreclosure through
evidence that the Twin has been "unable to
acquire movies from Sony [Pictures]," but Six West fails to explain
how relationship licensing by the Sony Defendants or the Loews Defendants
is in any way connected to that failure. (Pl.'s Opp. to Sony at 27).
In addition to Six West's failure to put forth evidence of
anticompetitive licensing relationships that stifled competition, the
indirect evidence available suggests that competition in the Manhattan
theatre market is not dwindling but is actually quite robust. During the
time in which Loews' relationships are alleged to have decreased
competition, the number of movie screens in Manhattan increased almost
60%, as exhibitors including, but not limited to Loews
opened numerous new theatres or expanded old ones. (Loews Def.'s 56.1
Stmt ¶ 11). Along with the new screens more films are shown in
Manhattan (Loews Def.'s 56.1 Stmt ¶ 23), and multi-screen theatres
are becoming more prevalent (Loews Def.'s 56.1 Stmt ¶ 7); see
also United States v. Syufy Enters., 903 F.2d 659, 665 (9th Cir.
1990) (success of more efficient multi-screen theatres can be evidence of
robust competition). While movie ticket prices have risen in Manhattan,
the rise has been at a slower pace in Manhattan than in the rest of the
country. See National Assoc. Theatre Owners,
www.natoonline.org/statistictickets.htm (33% increase in Manhattan versus
38% average national increase from 1994-2001). Nor could Six West's
assertion that Loews
increased prices in order to increase profits (why else would a
theatre increase ticket prices) and allegation that a Loews employee once
stated "Loews theatre is of course a leader in admission prices" lead a
reasonable juror to believe that Loews had the power unilaterally to
raise prices or had anticompetitive market power. See K.M.B
Warehouse Dist., Inc. v. Walker Mfg. Co., 61 F.3d 123, 129 (2d Cir.
1995) (a prerequisite for recovery in all Section 1 claims is either
actual adverse effect on competition or market power to raise prices
significantly without losing all of one's business).
Six West also cites to an alleged decrease in the quality of the
movie-going experience as evidence of a harm to competition and
consumers. See Virgin Atlantic Airways, 257 F.3d at 264
("reduced output, increased prices and decreased quality" can all
constitute harm to consumers). Though true that a reduction in quality
can constitute a harm to consumers, the mere possibility that a consumer
might have to see his or her first choice movie at his or her second
choice theatre or his or her second choice movie at his or her first
choice theatre (Pl.'s Opp. to Sony at 34-35), is not an actionable
restraint of trade. Every licensing agreement between an exhibitor and
distributor will restrain trade to some extent, as licensing agreements
necessarily entail that a film is shown at one theatre and not another.
See Business Elecs. Corp. v. Sharp Elecs. Corp.,
485 U.S. 717, 723 (1988) (Section 1 is only intended to prohibit
"unreasonable" restraints of trade). But the mere fact that a consumer
who might, for example, prefer to watch a film at the Twin has to instead
go to another nearby theatre to see that film does not mean that there
has been an actionable harm to consumer choice or competition. See
Virgin Atlantic Airways, 257 F.3d at 259 ("[t]he antitrust laws are
designed to protect competitive conduct, not individual competitors.").
Six West essentially asks that I compel Sony Pictures to license its
films to Six West's theatres. The antitrust rules require no such
compulsion. See Orson, Inc. v. Miramax, Inc., 79 F.3d 1358,
1365 (3d Cir. 1996).
For the above reasons, because Six West has failed to demonstrate that
the Sony Defendants or the Loews Defendants have been involved in any
anticompetitive relationship licensing, Six West's Section 1 claim for
relationship licensing must fail.
B. Six West's Sherman Antitrust Act § 2 Monopolization Claims
In order to demonstrate attempted monopolization a plaintiff must prove
(1) that the defendant has engaged in predatory or anticompetitive
conduct with (2) a specific intent to monopolize and (3) a dangerous
probability of achieving monopoly power. Spectrum Sports, Inc. v.
McQuillan, 506 U.S. 447, 456 (1993); Tops Market, Inc. v.
Quality Markets, Inc., 142 F.3d 90, 99-100 (2d Cir. 1998). In order
to determine whether
there is a dangerous probability of monopolization, it is necessary
to consider the relevant market and the defendant's ability to lessen or
destroy competition in that market. Spectrum Sports, Inc., 506
U.S. at 456.
As the Sony Defendants point out in their brief, Six West only opposes
the motion for summary judgment on the Section 2 monopolization claims as
against the Loews Defendants. (Def.'s Reply at 19; Pl.'s Opp. to Sony at
39). As plaintiff presents no facts supporting the claim that any of the
Sony Defendants have done anything to render themselves dangerously close
to achieving a monopoly, summary judgment on behalf of the Sony
Defendants for the Section 2 claims is granted. Though Six West attempts
to mount a more significant opposition to summary judgment with regards
to the Loews Defendants, it is to no avail. On the basis of the facts
presented by plaintiff, there is no possibility that a rational finder of
fact could determine that any of the Loews Defendants attempted to
monopolize any Manhattan theatre markets.
As discussed above, some question remains as to the relevant geographic
market. Even conceding the possibility of Upper Manhattan as the relevant
geographic market, however, the facts do not support a finding that the
Loews Defendants attempted to monopolize that, or any other, market.
After extensive discovery, Six West has not proffered evidence to support
the elements necessary to maintain an attempted
monopolization claim against Loews.
Most tellingly, there are no facts to suggest that Loews engaged in any
predatory or anticompetitive behavior or had a specific intent to
monopolize the Upper Manhattan theatre market. None of the Loews
Defendants could have engaged in block-booking (as Loews was an exhibitor
not a distributor), and the facts do not support an inference that they
engaged in any illegal licensing practices. As such, the Loews
Defendants' licensing practices are not anticompetitive or predatory.
With respect to Six West's allegations that Travis Reid once told a Mr.
Robert Smerling who then allegedly told Mr. Solow that Mr. Reid and other
defendants "would make every effort to influence distributors not to
deliver quality films to plaintiff's theaters, "`Amended Compl. ¶ 84;
Solow 10/25/02 Depo. at 63:12-64:2, Solow 9/28/99 Depo. at 336:8-12), Six
West does not point to a single fact, aside from this inadmissible
hearsay, to support that this was ever actually said or that any
defendant ever attempted to prevent Six West's theatres from receiving
any films from any distributor. See, e.g., Manesis v. N.Y. City
Dep't of Transp., No. 02 Civ. 359 (SAS), 2003 WL 289969, at *14
(S.D.N.Y. Feb. 10, 2003) ("[Inadmissible hearsay] cannot create a
material issue of fact to defeat summary judgment."), aff'd
2004 WL 206316 (2d Cir. 2004).
Six West's assertion that Loews' alleged mismanagement
of the theatres could amount to predatory conduct is similarly
unhelpful. Six West hypothesizes that Loews mismanaged the theatres in
order to divert "would-be customers of plaintiff's theatres" to a "Loews
theatre in Upper Manhattan," where Loews retained 100%, rather than 40%,
of the net profits (Pl.'s Opp. to Sony at 39). This hypothesis does not
create a triable issue of fact. Mismanaging theatres in which Loews
itself had an interest is not a typical predatory or anticompetitive
activity, and it is somewhat far-fetched to suggest that the alleged
mismanagement of the three theatres was predatory or anticompetitive.
That said, it is not inconceivable that Loews' alleged mismanagement of
plaintiff's theatres could be anticompetitive if the alleged
mismanagement was intended to, or did result in, an increase in Loews'
net market power. I need not consider this unlikely possibility, however,
because the facts do not support this hypothesis.
As Six West's own expert concedes, Loews could not ensure that diverted
customers would end up at other Loews theatres. (Warren-Boulton Rep. at
13). As such, the likelihood is that any mismanagement of the Twin,
Paris, or Festival would cause customers to go to theatres unaffiliated
with Loews, thereby decreasing, rather than increasing, Loews' share of
exhibition market. (Warren-Boulton Rep. at Ex. 2).*fn9 Because Six
West's hypothesis that Loews intentionally mismanaged the Twin, Paris,
and Festival in order to divert customers from plaintiff's theatres into
Loews' theatres is both unlikely on its face and has no factual support,
no rational juror could infer that this alleged mismanagement was
In addition to failing to expose facts suggesting predatory behavior or
specific intent, Six West also fails to establish that Loews is close to
achieving a dangerous probability of achieving market power. Assuming
arguendo that Upper Manhattan is the relevant market and that
plaintiff's expert is correct that Loews' share of that market has risen
from 23% to 53% in nine years (Pl.'s Opp. to Sony at 4), as a matter of
law this fact alone does not create a dangerous probability of
monopolization. Judge Hand's oft-cited numerical test of 90% yes, 64%
maybe and 33% no for monopoly power in United States v. Aluminum Co.
of America, 148 F.2d 416, 424 (2d Cir. 1945), suggests that a market
share of 53% might justify further inquiry.*fn10 Yet, an inquiry into
whether there is a dangerous
probability of achieving monopoly power cannot be resolved by
simply by looking at Loews' market share of the Upper Manhattan theatre
market. See, e.g., PepsiCo, Inc. v. Coca-Cola Co.,
315 F.3d 101, 109 (2d Cir. 2002) ("Absent additional evidence, such as an
ability to control prices or exclude competition, a 64 percent market share
is insufficient to infer monopoly power."); Tops Mkts., 142 F.3d
at 99 (holding that "a share between 50% and 70% can occasionally show
monopoly power," but only if other factors support the inference). Aside
from pointing to Loews' market share, Six West does not provide any
evidence from which a reasonable juror could infer that the Loews
Defendants had a dangerous probability of achieving market power.
For the above reasons, Six West has not proffered evidence from which
any of the elements required to sustain an attempted monopolization claim
could be found and, therefore, the Section 2 claims must fail.
III. Plaintiff's State Law Claims
A. The Twin
1. Assignment of the Twin Agreement
The Twin Agreement expressly stated that any assignment from STC to
another party required that the intended assignee deliver a written
agreement to Loews stating that the assignee agreed unconditionally to be
bound by and perform all of STC's obligations. (DX 34 § 10.01). When
STC assigned all of its "right, title and interest" to Solow in 1979, an
Assignment and Assumption Agreement was executed in compliance with the
Twin Agreement. (DX 39). However, Loews now complains that a subsequent
assignment was never made to Six West, and, therefore, Six West has no
standing to assert its claims relating to the Twin. (Def.'s Br. at 18).
Loews' argument is unavailing.
The January 16, 1992 request of Steve Cherniak, Controller of Solow
Development Corp., that Loews void uncashed checks to Solow and reissue
them to Six West was not a sufficient written document evidencing
assignment to comply with the assignment clause of the Twin Agreement.
(See DX 42 (1/17/92 letter from Claude J. Baptiste, Asst.
Treas. of Loews, to Cherniak acknowledging 1/16/92 request and enclosing
reissued checks)). Additionally, deposition testimony does raise some
question as to whether Six West was ever intended to be an
assignee or whether Solow was to remain the designated "Tenant"
under the Twin Agreement despite the payment of monies to Six West.
(Cherniak Depo. at 65:17-66:24). At the very least, whether assignment to
Six West was ever intended creates a triable issue for the jury.
If the assignment to Six West was intended but did not comply with the
written assignment requirement of the Twin Agreement, then there is a
triable issue of fact as to whether Loews waived that requirement. Loews
cites to a number of cases to support the proposition that contractual
limitations on assignment are binding conditions and will be enforced.
(Loews Def.'s Br. at 18-19). While in no way disputing the holdings in
those cases that assignment clauses are enforceable, I note that a party
can waive a contractual right if there is a "voluntary and intentional
abandonment of a known right which, but for the waiver, would have been
enforceable." See AXA Global Risks U.S. Ins. Co. v. Sweet Assoc.,
Inc., 755 N.Y.S.2d 759, 760 (3d Dep't 2003) (internal quotations and
citations omitted). A waiver "may be established by affirmative conduct
or by failure to act as to evince an intent not to claim a purported
advantage." Id. Here, following the 1992 letter, Loews
willingly made payments to, and dealt with, Six West for eleven years.
See Belge v. Aetna Cas. & Sec. Co., 334 N.Y.S.2d 185, 189
(4th Dep't 1972) (holding that passive conduct constituted a waiver of
the provision against the
assignment of the contract). Certainly this raises a question of
material fact as to whether Loews' failure to raise any objections waived
the right to have a proper written notification of the assignment
pursuant to Section 10.01 of the Twin Agreement.
2. Loews' Alleged Breach of the Twin Agreement
a. Film Booking at the Twin
Section 7.01 of the Twin Agreement, as modified by the Chartwell
Consent, required that Loews exhibit at the Twin:
only first run motion pictures (or reissues
distributed on a first run basis) of the type,
quality and character equal to or better than
motion pictures exhibited at the other theatres
operated under the "Loews" name and situated on
the east side of Manhattan such as the Loews Tower
East and the Loews 34th Street Showplace Theatre.
(DX 6; DX 34). Six West alleges that Loews breached this
contractual standard by exhibiting films that were not "first run motion
pictures" and did not comply with the "type, quality and character"
requirement. I disagree and do not see how any reasonable juror could
find Loews breached this contractual obligation.
Six West attempts to demonstrate a breach of the "type, quality and
character" requirement with evidence that revenues per seat at the Twin
were lower than at other Loews theatres and that Loews had a tendency to
exhibit films for a longer length of
time at the Twin. However, as a matter of law I find that neither
this nor other similar evidence has anything to do with the "type,
quality and character" of a film. New York courts interpret a contract by
giving unambiguous terms their plain and ordinary meaning, and a court
may determine such meaning as a matter of law. See Greenfield v.
Philles Records, Inc., 750 N.Y.S.2d 565, 569 (N.Y. 2002);
Levitt v. Computer Assoc. Int'l, 760 N.Y.S.2d 356, 357 (2d
Dep't 2003). The plain and unambiguous meaning of "type, quality and
character" unquestionably refers to the attributes and traits of the
films themselves and not the manner in which those films are
exhibited.*fn11 Though quality is a subjective measure that Six West
correctly notes is often a question of fact to be decided by a jury
(Pl.'s Opp. to Loews at 7 (citing cases)), in this instance, Six West
presents no evidence from which a jury could infer that the films
exhibited at the Twin did not meet the "type, quality and character"
standard. Six West's argument notwithstanding, the duration of a film's
run at a theatre, when the film began showing at the theatre relative to
when the film opened, or ultimate box office
revenue do not relate to the inherent quality of a film. (Pl.'s
56.1 Counterstmt to Loews ¶¶ 11-14).
This is not to say that if Loews exhibited films for an excessively
long duration or undertook other actions that failed to maximize profits
at the Twin Loews could not be in breach of the Twin Agreement. If, as
Six West is fond of pointing out, Loews exhibited the same film for 52
weeks at the Twin then Loews would most likely not be maximizing profits,
as films usually generate lower revenues at the end of their runs. (Pl.'s
Opp. to Loews at 10). This may be true and it may be a breach of the Twin
Agreement, but such an action cannot be a breach of Section 7.01, as
modified. Six West simply defies the plain meaning of the Chartwell
Consent when it states that a film in its fifty-second week of exhibition
is of a different "type, quality and character" than that very same film
in its first week of exhibition. The essential character of the film,
whether it be a "good" film or a "bad" film or somewhere in between,
remains the same throughout the duration of the films exhibition.
Exhibiting a "good" film for 52 weeks may fail to maximize profits, which
may be a breach of the Twin Agreement, but that breach would not violate
Section 7.01. However, such conduct could breach Section 5.09.*fn12
Section 5.09 of the Twin Agreement requires that Loews "use every
reasonable effort to promote and further the profitable operation of [the
Twin]." (DX 34). Much of the conduct about which Six West complains; such
as exhibiting films for too long, exhibiting the same film on both
screens at the Twin, or failing to maximize revenue per seat; has nothing
to do with the quality of the films booked at the Twin but instead
relates to a possible failure by Loews to operate the Twin in a profit
maximizing manner. Without passing judgment on the adequacy of Six West's
proffered evidence to support such a claim of failure to maximize
profits, such a failure relates only to Section 5.09, for which the sole
remedy for a breach is the termination of the Twin Agreement. (DX 34).
Section 5.09 explicitly precludes damages for any failure to "promote and
further the profitable operation of [the Twin]," and Six West cannot get
around such unambiguous language by bringing a claim for damages under
Section 7.01, when the conduct about which Six West complains has nothing
to do with the "type, quality or character" of the films exhibited at the
With respect to the obligation created by Section 7.01 for Loews to
book only "first run" films at the Twin, I find that Six West's proposed
meaning of the term, which would require that
a film have never been exhibited in any theatre prior to being
exhibited at the Twin, does not comport with the unambiguous meaning or
customary use of the term. See Hernandez v. Schenectady Non Invasive
Vascular Diagnostics, P.C., 699 N.Y.S.2d 232, 233 (3d Dep't 1999)
(trial court properly accorded term its customary and ordinary meaning).
Instead, as used in the Twin Agreement, "first run" refers to the initial
stages of a film's release in which the film is exhibited at a theatre
charging full price. (Loews Def.'s Br. at 6; Loews Def.'s Reply at 13).
Both Loews' and Six West's experts agreed with this definition of the
term "first run," and Six West offers no convincing rationale for
abandoning this plain meaning. (Jacobs Depo. at 38:23-41:9; Reid Depo. at
28:2-11, 111:5-112:5; Brueggemann Depo. at 52:18-54:3, 55:10-20; Bunnell
Depo. at 213:18-214:5). Under this definition, Six West fails to proffer
sufficient evidence from which a reasonable juror could find that Loews
did not comply with its obligation to book "first run" films as required
by the Twin Agreement.
b. Maintenance of the Twin
Under Section 3.02 of the Twin Agreement, Loews accepted the obligation
to maintain the Twin pursuant to Section
15.04 the lease agreement. (DX 34; DX 35).*fn13 Six West has put
forth evidence allegedly demonstrating Loews' failure to maintain the
Twin, but even when viewed in the light most favorable to Six West, this
evidence could not lead a rational juror to conclude that Loews did not
fulfill its contractual obligation.
A good deal of the evidence cited by Six West as proof of Loews' breach
consists of no more than a recognition by Loews that, as in any business
into which the public is invited, business tools, objects and premises
sometimes need to be repaired, replaced and updated. For example, Six
West cites to a "Loews Theatres Visitation Report" dated August 16, 1997
that notes a "bad smell" in the theatre as evidence of Loews' breach, but
Six West fails to note that the same evaluation also gives the Twin a 92%
score and writes "Good job by our staff." ((P)PX
164).*fn14 This hardly suggests a failure to maintain the Twin.
Loews' recognition of items for improvement could not lead a rationale
juror to the conclude that Loews' breached the Twin Agreement.
Also unavailing is Six West's suggestion that because the Twin did not
have a new Sony Dynamic Digital Sound ("SDDS") System installed until
after a number of Loews' other theatres received SDDS, that was somehow a
breach of the Twin Agreement. (Pl.'s Opp. to Loews at 18). Nowhere did
the Twin Agreement require Loews to provide upgrades to the Twin before
other theatres, and a reasonable decision as to how to allocate resources
cannot amount to a breach of a contractual maintenance obligation.
Six West also cites to a July 1997 memorandum in which Loews writes
that the Twin "is in dire need of major renovations." ((P)PX 71). Taken
out of context this language could be read to suggest that Loews had
failed to maintain the Twin to such a degree that major renovations were
needed. However, the context of the memorandum makes clear that the Loews
was considering "major renovations" as necessary in order to keep pace
with the competition in the neighborhood, specifically
United Artist's Gemini theatre and Cineplex's Beekman theatre,
which were being renovated. ((P)PX 71). No reasonable jury could find
that Loews' determination that renovations were necessary to upgrade the
Twin in order to keep pace with the competition meant that Loews had
previously failed to fulfill its contractual obligations to maintain the
3. Six West's Claims for Unjust Enrichment
"The existence of a valid and enforceable written contract governing a
particular subject matter ordinarily precludes recovery in quasi-contract
for events arising out of the same subject matter." EUA Cogenex
Corp. v. North Rockland Cent. Sch. Dist., 124 F. Supp.2d 861, 874
(S.D.N.Y. 2000). Here, there is no dispute as to the existence of a
contract governing the dispute, and neither Six West nor Loews contends
that the Twin Agreement is not an enforceable contract meant to govern
the operation of the Twin; the only dispute is as to Six West's standing
to assert claims under that agreement. However, the preclusion of an
unjust enrichment claim when there exists a valid contract governing the
conduct in question holds "true whether the contract is one between
parties to the lawsuit, or where one party to the lawsuit is not a party
to the contract." Granite Partners, L.P. v. Bear, Stearns &
Co., 17 F. Supp.2d 275, 311 (S.D.N.Y. 1998); see also
Metropolitan Elec. Mfg. Co. v. Herbert Constr. Co., Inc.,
583 N.Y.S.2d 497, 498 (2d Dep't 1992).
As it is undisputed that the conduct about which Six West now complains
was governed by the Twin Agreement, Six West's claims for unjust
enrichment must fail even if Six West were found not to have standing.
Alternatively, for the reasons stated above, even if the existence of the
Twin Agreement did not somehow preclude a claim for unjust enrichment,
Six West has not set forth facts from which a reasonable juror could
determine that Loews did anything improper that would entitle Six West to
the quasi-contractual remedy of restitution.
4. Loews' Alleged Breach of Fiduciary Duties
Both Six West and Loews agree that Section 5.09 of the Twin Agreement
defined a contractual fiduciary duty whereby Loews would act as Six
West's fiduciary in managing the Twin. (DX 34 § 5.09). Both parties
also agree that Section 5.09 limited Six West's remedy for any breach by
Loews to termination. Section 5.09 in relevant part stated:
[Six West's] sole remedy for any violation of
[Loews'] obligations under this Section shall be
to terminate this Agreement and [Six West] shall
not assert any claim for damages for any such
(DX 34). Six West attempts to get around this limitation on
remedies by arguing that Loews "intentionally, willfully and maliciously"
breached its fiduciary duties, rendering the liability limitation
unenforceable. (Am. Compl. ¶ 97; Pl.'s Opp. to Loews at 21). See
Kalisch-Jarcho, Inc. v. City of New York,
461 N.Y.S.2d 746, 749-50 (N.Y. 1983).
Six West's evidence of willfulness consists of Loews' alleged
mismanagement of the Twin, Loews' and the Sony Defendants' alleged
relationships with film distributors meant to keep the Twin from
receiving quality films, and Loews' alleged diversion of customers from
the Twin to its own theatres. With respect to the mismanagement claim, I
find that the evidence is wholly lacking, and, in any event, such
mismanagement would not rise to the necessary level to void the express
limitation of liability contained in Section 5.09. See Metropolitan
Life Ins. Co. v. Noble Lowndes Int'l, 600 N.Y.S.2d 212, 216 (1st
Dep't 1993), aff'd 618 N.Y.S.2d 152 (N.Y. 1994). With respect
to Loews' alleged relationships to keep films from the Twin, as discussed
more fully above, I hold that there was nothing improper regarding any of
the Loews Defendants' or Sony Defendants' relationships with any film
distributors or that the Twin was improperly precluded from obtaining any
films from distributors as a result of any defendants' actions. See
supra, part: II.A. Similarly, with respect to the allegation that
Loews diverted customers from the Twin to its other theatres, as
discussed in more detail above, I find such a theory both implausible and
mere conjecture wholly unsupported by the facts. See supra,
For the reasons stated above, Six West's claims for
breach of the Twin Agreement, unjust enrichment, and breach of
fiduciary duties at the Twin must fail.
B. The Paris
1. The Alleged Breach of the "Paris Agreement"
It is undisputed that a final written agreement governing Loews'
management of the Paris was never executed. (Loews Def.'s 56.1 Stmt ¶
41, Pl.'s 56.1 Counterstmt to Loews ¶ 41a-g). Rather, Six West
alleges that despite the absence of a final written contract, documents
exchanged by the parties and the parties' course of dealing demonstrate
that Six West and Loews entered into a binding agreement whereby Loews
would operate the Paris according to certain agreed upon terms and
conditions (the "Paris Agreement"). (Pl.'s Opp. to Loews at 25; Pl.'s
56.1 Counterstmt to Loews ¶ 41a-g). In essence, Six West is proposing
that the Paris Agreement is an implied-in-fact contract, a contract
evidenced by the acts of the parties rather than the oral or written
words of the parties. See Radio Today, Inc. v. Westwood One,
Inc., 684 F. Supp. 68, 71 (S.D.N.Y. 1988); Miller v.
Schloss, 218 N.Y. 400, 406 (1916). The existence and terms of
implied-in-fact contracts are generally issues of fact for a jury to
decide. See Rocky Point Properties, Inc. v. Sear-Brown Group,
Inc., 744 N.Y.S.2d 269, 271 (2d Dep't 2002). However, the facts of
the situation at bar make it clear that the implied-in-fact contract
proposed by Six West did not exist and
that the implied-in-fact contract that did exist was never breached
by any of the defendants.
Six West proposes that the terms of the alleged Paris Agreement can be
discerned by examining two letter agreements exchanged between Six West
and Loews because those letters contained some overlapping terms. (Pl.'s
Opp. to Loews at 28). What Six West overlooks is that the first of the
proposed letter agreements sent by Six West on October 1, 1993 (DX-21)
was explicitly rejected by Loews on October 19, 1993 (DX-22), and the
second proposed letter agreement dated May 19, 1994 (DX-24) was never
accepted by Six West and negotiations continued. Thus, these letter
agreements do not provide any evidence of mutual assent to the material
terms of the alleged implied-in-fact contract.
From October of 1993 through May of 1994, when the two proposed letter
agreements were exchanged, Six West and Loews were no doubt involved in
negotiations for an operation and management agreement for the Paris.
That the parties' proposals happened to overlap on some proposed terms is
not surprising and is to be expected, but such an overlap on some terms
during negotiations is not evidence that the parties intended to enter
into a binding contractual relationship on those overlapping terms. When
an offeree responds to an offeror with an explicit rejection of the
offeree's proposal and makes a counteroffer that
accepts some of the terms of the original offer but rejects others
and adds new terms, the offer has not been accepted, and there is no
agreement between the parties. See Krumme v. Westpoint Stevens,
Inc., 143 F.3d 71, 83-84 (2d Cir. 1998); see also Wasserstein
Perla Emerging Markets Fin., L.P. v. The Province of Formosa, 97
Civ. 793 (BSJ), 2002 WL 145831 (July 2, 2002) ("In light of the history
of the parties' negotiations and the court's comparison of the terms
incorporated into the April 1 and April 11 letters, the court finds that
the communications never indicated mutual assent sufficient to give rise
to a binding contract."). In such a case, courts do not hold that there
is a partial agreement with regards to the overlapping terms; there is
simply no agreement. "`A contract cannot be implied-in-fact where the
facts are inconsistent with its existence; or against the declaration of
the party to be charged or against the intention or understanding of the
parties.'" Tjoa v. Julia Butterfield Memorial Hospital,
612 N.Y.S.2d 676, 677 (2d Dep't 1994) (quoting Miller v. Schloss,
218 N.Y. 400, 406-07 (1916)). Likewise, without an explicit or implicit
acceptance of either of the proposed letter agreements on the terms
contained therein, there was no agreement, and there is no
implied-in-fact contract comprised of the overlap in terms between the
October 1, 1993 and May 18, 1994 letters.
Six West cites a number of cases for the indisputable
proposition that if two parties come to an oral or preliminary
agreement that agreement is an enforceable contract regardless of whether
the parties ever execute a final written contract. (Pl's Opp. to Loews at
25-26). Yet, the cases cited by Six West, such as Lazard Freres
& Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1537 (2d Cir.
1997) and Consarc Corp. v. Marine Midland Bank, 996 F.2d 568,
574-76 (2d Cir. 1993), involve situations in which the parties have moved
beyond negotiations and have entered into a binding agreement. See
also Paper Corp. of the United States v. Schoeller Technical Papers,
Inc., 807 F. Supp. 337, 347 (S.D.N.Y. 1992); Teachers Ins.
& Annuity Ass'n of Am. v. Tribune Co., 670 F. Supp. 491, 497-98
(S.D.N.Y. 1987). That is simply not the situation here. Six West presents
no facts to suggest that Six West and Loews mutually assented to be bound
by an agreement while waiting to execute a final written agreement. As
there is no evidence that the letter agreements were ever assented to by
the parties, the cases relied upon by Six West are inapposite.
Compare Consarc, 996 F.2d 568, 573 ("[T]he combined writings
contain no expression by either party of any intent not to be bound by
them."), with Winston v. Mediafare Entm't Corp., 777 F.2d 78,
81 (2d Cir. 1986) (the writings exchanged make clear that no binding oral
agreement had been reached and the unexecuted versions of the agreement
were nothing more than drafts and not final binding agreements). Finally,
the mere fact
that there was performance by Loews is insufficient to support a
finding that the parties had reached an agreement on the alleged
overlapping letter agreement terms. See Teachers Ins. & Annuity
Ass'n of Am., 670 F. Supp. at 507 (partial performance does not
necessarily imply mutual assent as "[a] party may make some partial
performance merely to further the likelihood of consummation of a
transaction it considers advantageous."). Because Six West has set forth
no facts from which a reasonable juror could infer that the parties had
an implied-in-fact contract with the terms contained in the two proposed
letter agreements, no trier of fact could find that Loews breached such a
Although the fact that there was some overlap in the terms in proposals
exchanged between Six West and Loews cannot alone imply that the parties
had mutually assented to be bound by those terms, there can be no doubt
that the parties did have an implied-in-fact agreement regarding the
operation of the Paris. The conduct over the course of the seven years by
the two parties demonstrates that Loews was to book films at the Paris
and split profits with Six West, such that Six West would receive 60% of
the profits. (Loews Def.'s Br. at 10). Yet, Six West points to no other
conduct or facts to support the contention that any of the other alleged
terms of the Paris Agreement are to be implied. Nowhere does Six West
proffer any facts or course of conduct that
would suggest that Loews was required to obtain Six West's consent
before entering into "four-wall deals" at the Paris. (Pl.'s Opp. to Loews
at 33). Similarly, nowhere is there any course of conduct or facts to
support the contention that Loews would be responsible for maintaining
the Paris and supply such amenities as digital sound, (Pl.'s Opp. to
Loews at 35), or that Loews would be obligated to book films on an
exclusive basis at the Paris (Pl.'s Opp. to Loews at 37).
The RESTATEMENT (SECOND) OF CONTRACTS, section 205, states "[e]very
contract imposes upon each party a duty of good faith and fair dealing in
its performance and its enforcement," and New York courts hold that the
"implied covenant of fair dealing and good faith" is "implicit in all
contracts." Van Valkenburgh, Nooger & Neville v. Hayden Publ'g
Co., 330 N.Y.S.2d 329, 333 (N.Y. 1972) (citations omitted). Because
the parties' conduct makes clear that there was an agreement between Six
West and Loews, it follows that the agreement contained an implicit
covenant of good faith and fair dealing, which required that Loews would
exercise reasonable efforts in booking films at the Paris. Six West cites
to no evidence that suggests this implied covenant was breached. Six
West's conclusory assertions that certain films were played for too long
or that the Paris failed to generate profits equivalent to the Angelika
Theatre or Lincoln Plaza are insufficient for any rational juror to
Loews booked films for or operated the Paris in bad faith. (Pl.'s
Opp. to Loews at 34-37).
Lastly, Six West's contention that Loews breached the Paris Agreement
when it terminated its management of the theatre is equally unavailing.
First, the Paris Agreement was of an indefinite duration and terminable
at any time. See Lake Erie Distrib., Inc. v. Martlett Import, Co.,
Inc., 634 N.Y.S.2d 599, 602 (4th Dep't 1995). Second, even if Six
West's assertion that reasonable notice was required before terminating
the relationship as a result of the parties' seven year relationship and
the implied covenant of good faith and fair dealing, Loews' notice of its
desire to terminate the relationship at the Paris five months prior to
terminating the relationship requires a finding that reasonable notice
was provided. (DX 107; DX 71; DX 106; DX 107; DX 110). See Copy-Data
Sys., Inc. v. Toshiba Am., Inc., 755 F.2d 293, 301 (2d Cir. 1985)
(requiring reasonable notice); Colony Liquor Distrib., Inc. v. Jack
Daniel Distillery, 254 N.Y.S.2d 547, 549-50 (3d Dep't 1964) (same).
2. Breach of Fiduciary Duty Claims
Judge Edelstein held that Loews acted as Six West's agent and was Six
West's fiduciary in some capacity, Six West, 2000 WL 264295, at
*6, and I agree that in operating the Paris Loews acted as Six West's
agent. See Mandelblatt v. Devon Stores, Inc., 521 N.Y.S.2d 672,
676 (1st Dep't 1987) (Under New
York law, "`[a] fiduciary relation exists between two persons when
one of them is under a duty to act for or to give advice for the benefit
of another upon matters within the scope of the relation.'") (quoting
RESTATEMENT (SECOND) OF TORTS 874 cmt. a (1979)); see also Basic
Books, Inc. v. Kinko's Graphics Corp., 758 F. Supp. 1522, 1546
(S.D.N.Y. 1991) (an agency relationship exists where the principal
manifests an intent that the agent act on the principal's behalf, the
agent accepts the undertaking, and the parties understand the principal
is still in control). Thus, Loews owed Six West the general fiduciary
duties of good faith and loyalty required of all agents. See Elco
Shoe Mfr., Inc. v. Sisk, 260 N.Y. 100, 103-04 (1932).
Despite Six West's numerous submissions, I hold that there is no
genuine issue of material fact as to whether or not Loews breached its
fiduciary duties. Six West has presented no facts to suggest that Loews'
use of the Paris for movie premieres was in any way a violation of
fiduciary duty. Similarly, conclusory statements that "it is clear that
Loews mismanaged the Paris" and did not reasonably act to maximize
profits at the Paris are clearly insufficient to support a claim for
breach of fiduciary duties. (Pl.'s Opp. to Loews at 36-37). See
Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998) ("Conclusory
allegations, conjecture, and speculation, however, are insufficient to
create a genuine issue of material fact.").
With respect to the termination of the relationship between Six West
and Loews at the Paris, Six West alleges that termination involved a
breach of fiduciary duties. (Pl.'s Opp. to Loews at 38-39). As discussed
above, the allegations made by Six West are insufficient to suggest that
there was anything improper in the way Loews went about ceasing to
operate the Paris. However, Six West makes the additional suggestion that
the mere cessation of operation by Loews was a fiduciary breach. In an
internal memorandum, Loews stated that it wished to terminate the Paris
now that we have Lincoln Square, we would actually
receive greater profits without the
Paris Theatre, as many of the films that we now
book at the Paris would instead play at Lincoln
Square, as well as other [Loews] Theatres, where
we keep all the profits.
(PX 143) (emphasis in original). Although fiduciaries are expected
to act with nothing less than the "punctilio of an honor the most
sensitive", Meinhard v. Salmon, 249 N.Y. 458, 464 (1928)
(Cardozo, C.J.), even fiduciary duties cannot mandate that an individual
or entity remain a fiduciary for an infinite duration or until the
principal dismisses the fiduciary. A fiduciary may not maximize his or
her own profits at the expense of the person or entity to whom a duty is
owed, but fiduciary duties do not preclude the power of termination
even in order to maximize one's own profits so long as
termination is done in a fair and reasonable manner.
Six West also alleges that Loews breached its fiduciary duties by
allegedly diverting the film Anna Karenina from the Paris to
Loews' Sony Tower East theatre and usurping Six West's opportunity to
purchase the film Belle de Jour by taking the film to Miramax
in order to curry favor with the distributor. (Am. Compl. ¶¶ 67, 100).
With regards to Anna Karenina, I do not find that any rational
juror could infer a breach of fiduciary duty from the facts alleged by
Six West, and the theory that Loews took Belle de Jour to
Miramax in order to curry favor is, on the record, no more than pure
speculation. Six West's facts to support the notion that Loews took
Belle de Jour to Miramax amount to Solow's deposition testimony
that "I feel Mr. Brueggemann was a party to [taking the film to
Miramax]," and "I think Mr. Brueggemann took my idea because
they want to kiss Miramax's ring three times a day." (Solow Depo. 9/28/99
363:6-9). The only evidence Solow has to support these beliefs, however,
is that Brueggemann once allegedly said "that's my coup," which Solow
considered a "hint," while referring to Belle de Jour, (Solow
Depo. 10/25/02 256:9, 257:15-16). Solow admits that he has no idea when
Miramax might have begun negotiating for the film (Solow Depo. 10/25/02
257:7), and has no evidence other than the coincidental timing. At this
stage in the litigation, such pure speculation is insufficient to bring
the claim to a jury. See Morris v. Lindau, 196 F.3d 102, 109
(2d Cir. 1999) (to
avoid summary judgment the non-moving party, "may not rely simply
on conclusory allegations or speculation . . ., but instead must offer
evidence to show that [its] version of the events is not wholly
fanciful.") (citation and internal quotation marks omitted).
3. Tortious Interference Claims
Tortious interference with business relations requires: (1) business
relations with a third party; (2) the defendant's interference with those
relations; (3) the defendant acting with the sole purpose of harming the
plaintiff or using dishonest, unfair or improper means; and (4) injury to
the business relationship. See Nadel v. Play-by-Play Toys &
Novelties, Inc., 208 F.3d 368, 382 (2d Cir. 2000) (applying New York
law). As discussed above, Six West has failed to proffer any cognizable
evidence from which a jury could find any improper actions by Loews
respecting Anna Karenina or Belle de Jour.
Additionally, although Six West need not have had a contractual
relationship with a third party in order to maintain a claim for tortious
interference, PPX Enters. v. Audiofidelity Enters.,
818 F.2d 266, 269 (2d Cir. 1987), Six West points to no evidence that it had
any relationship with the third party that was selling Belle de
Jour, and the suggestion that "but for" Loews' acts Six West would
have entered into a contract to purchase the film is also unsupported by
any evidence. See Fine v. Dudley D. Doernberg &
Co., Inc., 610 N.Y.S.2d 566, 567 (2d Dep't 1994) (in an
action for interference with prospective contractual relations there is a
"but for" causation requirement that plaintiff would have received the
contract but for the acts of the defendant).
For the above reasons, Six West's claims for breach of the Paris
Agreement, breach of fiduciary duties, and tortious interference must
C. The Festival
Similar to the situation at the Paris, no final written contract was
ever executed for the operation and management of the Festival. (Loews
Def.'s 56.1 Stmt ¶ 80; Pl.'s 56.1 Counterstmt to Loews ¶ 80).
Yet, like at the Paris, Six West's and Loews' course of conduct over four
years makes clear that there was an agreement concerning the operation of
the Festival between the parties (the "Festival Agreement").
Six West again proposes that despite the lack of a final written
contract the parties agreed to numerous terms, and Loews agreed to be
bound by certain obligations. However, Six West has proffered no evidence
from which a jury could reasonably infer the existence of the obligations
allegedly assumed by Loews. In his opinion, Judge Edelstein wrote that
the Amended Complaint was "devoid of specific details governing the
Festival Agreement," including the obligation to book certain types of
films. Six West, 2000 WL 264295, at *8. Three years
later, after extensive, and undoubtedly expensive, discovery Six West
offers no more facts to suggest that Loews had an obligation to book
particular types of films or, if such an obligation existed, breached
Similarly, Six West's assertion that Loews had the obligation to
maintain the Festival is wholly unsupported by the evidence. In
particular, the undisputed fact that Solow agreed to pay fully for the
renovation of the Festival, which never was undertaken, directly
contradicts the contention that maintenance was ever intended by the
parties to be Loews' responsibility under the agreement. (Loews Def.'s
Br. at 45; DX 217 (May 13, 1994 letter from Loeks to Solow
("You [Solow] will be upgrading the [Festival] theatre . . .
at no cost to Loews . . .") (emphasis added))).
As evidence of contractual obligations assumed by Loews, Six West cites
statements that Loews had promised to maximize profits or box office
revenue at the Festival, (Pl.'s Opp. to Loews at 43 n.92; Pl.'s 56.1
Counterstmt. to Loews ¶ 80(a)), and had promised to make more money
than the previous operator, (Am. Compl. ¶ 48). Such statements are
to create legally enforceable obligations. See Landes v.
Sullivan, 651 N.Y.S.2d 731, 734 (3d Dep't 1997). Regardless, Six
West has not offered any evidence from which a jury could determine that
Loews did not work to maximize profits at the Festival or breached the
implied covenant of good faith and fair dealing. See Van
Valkenburgh, Nooger & Neville, 330 N.Y.S.2d at 333 (covenant of
good faith and fair dealing is implied in every contract).
Again, the parties' course of conduct demonstrates that Loews was Six
West's agent and fiduciary at the Festival, and therefore owed the
requisite duties to the principal, Six West. See Mandelblatt,
521 N.Y.S.2d at 676. However, without evidence to support the allegations
of breach of the Festival Agreement or any wrongdoing by Loews, no jury
could find Loews liable for breach of its fiduciary duties at the
For the reasons stated above, Six West's claims for breach of the
Festival Agreement and breach of fiduciary duties must fail.
IV. Six West's Claims Against the Individual Defendants
Because I grant summary judgment to the corporate defendants on Six
West's underlying state claims lying in tort, V breach of fiduciary duty
and tortious interference, and federal claims for violation of the
antitrust laws, Six West's claims
against the Individual Defendants must also fail.
V. Six West's, the Sony Defendants' and the Loews Defendants'
Motions In Limine to Exclude Expert Testimony
As I find that all claims against all defendants are without merit and
subject to summary judgment, the parties' motions in limine to
exclude expert testimony are deemed moot.
For the reasons stated above, defendants' motions for summary judgment
(docket nos. 133 and 134) are granted, and plaintiff's complaint is
dismissed. The Clerk of the Court shall mark this action closed and all
pending motions denied as moot.*fn16