Starlight Cinemas, Inc. v. Regal Entertainment Group
691 F. App'x 404
| 9th Cir. | 2017Background
- Starlight Cinemas sued Regal Entertainment Group alleging violations of California’s Cartwright Act (antitrust), California’s Unfair Competition Law, and interference with prospective economic advantage, claiming Regal used its national exhibitor status to secure preferential clearance deals for first-run blockbusters.
- The district court dismissed Starlight’s complaint under Rule 12(b)(6) and initially denied leave to amend without explanation.
- The Ninth Circuit found that an unexplained outright denial of leave to amend was an abuse of discretion but reviewed the district court’s later dismissal that provided reasons for futility.
- The district court concluded any amendment would be futile because Starlight failed to allege injury to competition (as opposed to injury to a competitor) and failed to plead sufficient facts supporting a conspiracy.
- Starlight’s state-law claims were derivative of the Cartwright Act claim; dismissal of the Cartwright claim required dismissal of the related claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether denial of leave to amend without explanation was proper | Denial was improper; should be allowed to amend | District court has discretion to deny leave | Initial unexplained denial was abuse of discretion; appellate review considered later explained dismissal |
| Whether complaint adequately pleads unlawful restraint of trade under Cartwright Act | Regal used market power to secure preferential clearances, harming Starlight’s access to first-run films | Alleged harms are to a competitor, not to competition; conduct is competitive behavior | Dismissed: Starlight alleged harm to competitor, not injury to competition; antitrust protects competition, not competitors |
| Whether complaint sufficiently alleges a conspiracy | Starlight alleged an agreement by Regal and others to disadvantage rivals | Regal argued allegations were boilerplate, lacking time/place/person specifics | Dismissed: Conspiracy allegations were conclusory and lacked specific facts required to plead an agreement plausibly |
| Whether derivative state-law claims survive after Cartwright dismissal | State claims depend on antitrust predicate | Dismissal of antitrust claim negates derivative claims | Dismissed: Because Cartwright claim fails, related UCL and tort claims fail too |
Key Cases Cited
- Sharkey v. O'Neal, 778 F.3d 767 (9th Cir. 2015) (district court must give reasoned explanation when denying leave to amend)
- Novak v. United States, 795 F.3d 1012 (9th Cir. 2015) (amendment futile where amended complaint would be subject to dismissal)
- AT&T Mobility LLC v. AU Optronics Corp., 707 F.3d 1106 (9th Cir. 2013) (antitrust protects competition, not competitors)
- United States v. Syufy Enters., 903 F.2d 659 (9th Cir. 1990) (vigorous competition and efficiency are not antitrust violations)
- Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) (conspiracy claims require specific facts—time, place, person—to be plausible)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (conclusory conspiracy allegations insufficient; need plausibility)
- City of San Jose v. Office of the Comm'r of Baseball, 776 F.3d 686 (9th Cir. 2015) (derivative claims dependent on antitrust predicate)
- CRST Van Expedited, Inc. v. Werner Enters., Inc., 479 F.3d 1099 (9th Cir. 2007) (similar principle on dependency of derivative claims)