The opinion of the court was delivered by: LORETTA PRESKA, District Judge
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.
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
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
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. ...