Regal Entertainment Group v. IPIC-Gold Class Entertainment, LLC and IPIC Texas, LLC
507 S.W.3d 337
| Tex. App. | 2016Background
- iPic opened an 8-screen, 578-seat premium theater (iPic Houston) near Regal’s 24-screen, 5,000-seat Greenway theater and alleges Regal sought "clearances" from six major film distributors to prevent day‑and‑date licensing with iPic Houston.
- iPic argues the clearance reduced its ability to license first‑run films, harming its premium product, consumer choice in the premium exhibition market, and iPic’s goodwill and long‑term viability.
- At the temporary‑injunction hearing, evidence showed three distributors allocated films between the theaters (reporting they did so because of Regal’s request) while three others licensed to both but Regal declined some offerings; distributors at issue account for ~90% of box‑office revenue.
- Experts and witnesses offered conflicting evidence on: whether the theaters compete in the same product market (iPic: premium exhibition market; Regal: general first‑run exhibition), the appropriate geographic market (iPic urged ~3‑mile Greenway zone), and Regal’s market power.
- The trial court granted a temporary injunction prohibiting Regal from requesting or demanding exclusive film licenses or refusing to play films because they were licensed to iPic Houston; Regal appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether iPic showed a probable right to relief under §15.05(a) (rule of reason) | iPic: clearance was a vertical nonprice restraint that harmed competition in the premium exhibition market and distributors allocated because of Regal’s pressure; raises a bona fide issue on all elements | Regal: evidence shows unilateral, permissible conduct; insufficient to prove contract/combination, relevant market, or market power | Court: evidence supported a bona fide issue on conspiracy/pressure, market definition, market power, and competitive harm; affirmed injunction |
| Existence of a contract/combination/conspiracy | iPic: distributors allocated contrary to self‑interest and told iPic they did so because of Regal’s request — inference of coercion/conspiracy | Regal: requests were unilateral and distributors independently decided; conduct consistent with competition | Court: conduct inconsistent with self‑interest supports inference of coercion/conspiracy; enough evidence to raise bona fide issue |
| Relevant market and market power | iPic: premium first‑run exhibition (distinct product market) and a local (≈3‑mile) license market where Greenway has power to exclude | Regal: broader first‑run exhibition market, larger geographic radius, Greenway share ~12–16% so no market power | Court: factual dispute; trial court could credit iPic’s evidence of distinct premium market and narrow geographic license market and find sufficient market power; defer to trial court |
| Probable, imminent, irreparable injury (injunction standard) | iPic: lost film licenses, damage to reputation/goodwill, and difficulty monetizing reputational harm make injury imminent and irreparable | Regal: iPic’s damages are quantifiable and not imminent; iPic performing above expectations | Court: conflicting evidence resolved for plaintiff; reputational/goodwill injury may be irreparable and imminent — injunction proper |
Key Cases Cited
- United States v. Paramount Pictures, 334 U.S. 131 (1948) (clearances may be lawful when theaters are not in substantial competition; informs analysis of clearances under rule of reason)
- Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717 (1988) (vertical nonprice restraints evaluated under rule of reason)
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (temporary injunction standards in Texas and requirements for probable right and irreparable injury)
- Coca‑Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671 (Tex. 2006) (need to show adverse effect on market competition, not merely harm to single competitor)
- Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358 (3d Cir. 1996) (clearances are vertical restraints analyzed under rule of reason; anticompetitive effects shown by reduced output or deterioration in quality)
- Admiral Theater Corp. v. Douglas Theater Co., 585 F.2d 877 (8th Cir. 1978) (conduct contrary to self‑interest can support inference of conspiracy)
- Cobb Theatres III, LLC v. AMC Entmt. Holdings, Inc., 101 F. Supp. 3d 1319 (N.D. Ga. 2015) (analysis of premium‑theater clearance allegations; market definition and competitive effects relevant to clearance challenges)