342 F. Supp. 3d 126
D.C. Cir.2018Background
- Four independent specialty theaters (West End Cinema, Avalon, Denver Film Society/Sie FilmCenter, Cinema Detroit) allege Landmark Theatres (51 theaters in 22 markets, subsidiary of 2929 Entertainment) used its circuit power to secure exclusive "clearances" from distributors and block rivals from showing specialty films.
- Plaintiffs say Landmark obtained blanket or multi-theater clearances and coerced distributors (through threatened or actual retaliation) to deny licenses to independent exhibitors, reducing distributor revenue, consumer choice, and competition.
- West End Cinema closed in 2015 and Landmark leased its former space; plaintiffs seek injunctive relief, treble damages, and costs under Sections 1 and 2 of the Sherman Act and a state tortious-interference claim.
- Landmark moved to dismiss for failure to state claims, and sought dismissal of parent 2929 Entertainment for lack of allegations of parent-level liability.
- The court dismissed 2929 Entertainment without prejudice but denied dismissal of Counts I (circuit dealing/§1), II (monopolization/§2), III (attempted monopolization/§2), and IV (tortious interference), finding plaintiffs pleaded sufficient factual matters to survive Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs plausibly pleaded a circuit-dealing (§1) claim | Landmark used national circuit power to coerce distributors into blanket clearances, denying plaintiffs access | Plaintiffs allege only lawful theater-by-theater deals, unilateral conduct, and no coercion or agreement | Denied — allegations (market share, distributor statements, cancellations, examples) permit inference of coercion/concerted action and antitrust injury |
| Whether plaintiffs pleaded concerted action required by §1 | Distributors agreed to Landmark's demands out of fear of losing Landmark business; parallel conduct plus context implies agreement | Conduct is unilateral and explainable by independent self-interest and market forces | Denied — pleadings raise plausible inference of agreement and justify discovery |
| Whether plaintiffs pleaded monopolization/attempted monopolization (§2) (leveraging and market power) | Landmark leveraged closed-market power across its circuit to obtain exclusives in competitive markets; alleges dominant shares in several cities and entry barriers | Plaintiffs do not identify specific closed towns or sufficiently allege monopoly power or leveraging | Denied — alleged market shares in key markets, nationwide dominance, and entry barriers suffice at pleading stage |
| Whether tortious interference claim stands given Sherman Act outcome | Derivative of Sherman Act harms from Landmark's clearance practices | Claim should be dismissed if Sherman Act claims fail | Denied — because Sherman Act claims survive, tortious-interference claim survives too |
Key Cases Cited
- United States v. Paramount Pictures, 334 U.S. 131 (establishes per se rule against circuit dealing and pooling circuit purchasing power)
- United States v. Griffith, 334 U.S. 100 (discusses unlawful monopoly leveraging across competitive and noncompetitive towns)
- United States v. Crescent Amusement Co., 323 U.S. 173 (circuit dealing and exclusive privileges enforcement)
- Schine Chain Theatres v. United States, 334 U.S. 110 (monopolistic advantages reflected in exclusive agreements)
- Grinnell Corp. v. United States, 384 U.S. 563 (elements for monopolization liability)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for plausible inference of agreement)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for plausibility)
- Cobb Theatres III, LLC v. AMC Entm't Holdings, Inc., 101 F. Supp. 3d 1319 (district court denial of dismissal on similar circuit-dealing/leveraging facts)
- United States v. Microsoft Corp., 253 F.3d 34 (monopoly power inference from market share and entry barriers)