Calderone Enterprises Corporation v. United Artists Theatre Circuit, Inc.

Before MANSFIELD, KAUFMAN and Judges, LEYET, Circuit District Judge.* MANSFIELD, Judge: appeal again ques- This raises once “target” tion whether one who is not a of an Clayton Act, of4 § 15 U.S.C. for treble the sue amount suffered it in- cidentally. case, brought In this suit is City David B. Bernfeld, New York non-operating landlord of theatres (Herbert Schrank, Sehrank, Goldstein & allegedly used its tenant and various City, brief), plain- New York on the picture motion distributors and exhibi- tiff-appellant. tors in furtherance of an antitrust con- Amabile, City spiracy John L. New York to restrain the trade of com- (Schwartz, Mermelstein, Burns, peting Lesser & distributors and exhibitors. We * York, by desig- sitting Of the United States District Court the Southern District of New nation. issue, house, prior quality, decisions on the

adhere to our first-class to UATC for an rental, plus fixed see Fields Inc. v. United annual minimum upon percentage Artists 432 F.2d 1010 additional rental based (S.D. affirming, gross F.Supp. receipts annually realized cert, denied, N.Y.1969), pictures, exhibition of motion the term of (1971); Billy 932, being May 7, S.Ct. L.Ed.2d 232 lease later extended to Baxter, Company, Plaintiff, Inc. Coca-Cola as the landlord of the cert, denied, 1970), (2d right F.2d 183 401 three theatres, did not reserve 877, 877, participate operations U.S. S.Ct. 27 L.Ed.2d in the or rehearing management alleges denied, 401 U.S. S.Ct. It that the them. defendant-distributors, pursuant L.Ed.2d 553 S.C.M. ato con- Corp. America, spiracy v. Radio with UATC and other motion cert, (2d Cir.), denied, 943, picture operators 395 U.S. theatre violation of rehearing laws, 23 L.Ed.2d the federal antitrust established denied, system distributing 24 L.Ed. pictures motion Inventions, Metropolitan 2d Productive the New York area called Inc. v. Products Trico F.2d 678 “Showcase.” Under “Showcase” UATC compete exhibitors did not (1956), against 100 L.Ed. 818 one another licenses from affirm the district court’s dismissal of pictures distributors to exhibit motion on complaint. neighborhood a first run basis. Instead they divided all theatres for such suitable The action arises out of groups runs into known as “tracks” and of three lease theatres located in Nassau pictures allocated motion first (the Calderone, County, New Rivoli York neighborhood among runs the different Cove) Metropolitan to defendant “tracks.” In the absence of such an Playhouses, Inc., which, along de- arrangement, alleges, better Theatres, fendant United Eastern Artists quality theatres such as the three leased subsidiary is a of defendant by plaintiff competi- to UATC would on a (all Circuit, United Artists Theatre Inc. pictures having tive basis exhibit three of which are referred collective- greatest appeal, realizing box office thus UATC), ly operation as motion higher gross receipts than from less picture theatres The remain- UATC. popular pictures. “Showcase,” Under ing engaged defendants however, alleged it is that each of the pictures distribution motion obligated three theatres was to exhibit throughout States, theatres the United assigned all features to that theatre’s including operated those UATC. “track,” including pictures inferior Invoking jurisdiction pursuant federal would not have been exhibited under laws, the federal antitrust on competitive conditions, normal with the April complaint filed its con- plaintiff’s percentage result that of rental taining claims, six the first three of substantially income was less than it which seek more than million treble $7 otherwise would have been and the damages defendants, upon from all based market value of its fee interest participation alleged their in an anti- impaired. theatres has been Plaintiff trust to restrain trade in the seeks treble the amount of the distribution and exhibition of motion loss in income and value pictures. claims, predi- The last three theatres. pendent on $2,- cated jurisdiction, seek 350,815 damages complaint UATC for The last three claims of the single damages against breach of its lease of the three theatres. seek the UATC Each of the first three charge claims of the com- defendants on the based their plaint alleges plaintiff’s predecessor pictures exhibition in the three leased (the one of the pursuant three theatres theatres to “Showcase” con- Calderone, Rivoli, Cove), high duty stituted a of their breach under the seeking damages producer picture acts which refrain from willful leases to reducing gross upon its television the effect of distributor based would have by “block percentage latter’s of films receipts rentals distribution booking” re- the films with a view three theatres. straining the trade television stations granted defendants’ The district court producers, and other distributors but 12(b) (6), pursuant F.R. to Rule motion, Fields Artists v. United Civ.P., counts dismiss the first three Corp., supra. non-operating ground as a theatre, picture of a motion landlord The rationale behind fore did not have § going simple, demarcation is fair and Clayton to recover Act respects purpose It reasonable. allegedly of mo- caused a combination Act, provide which is to picture theatre tion private weapon enforcement that will operators restrain trade in the exhibi- to deter of the antitrust violation federal pictures in violation of the of motion tion any by permitting person injured laws Accordingly the laws. federal antitrust by in his reason of an antitrust business pendent also dis- state claims were three damages to violation recover treble teaching pursuant of to missed acknowledges actually It suffered. Gibbs, 383 U.S. Mine Workers v. United remotely persons many while situated 715, 726, 16 L.Ed.2d damage degree may in some as the suffer Maytag, see also O’Neill v. violation, an antitrust their result of 1964). n. damage usually speculative more much prove series of decisions over the of a In a and difficult to than that years, competitor certiorari in all of which who is an immediate victim last 15 by Supreme this Court, denied of the violation. Furthermore if was principle flood-gates permit opened has committed itself to were to treble “standing” by every creditor, to sue in to have suits stock order damages holder, subcontractor, sup employee, under 4 of for treble might Act, goods Clayton person plier must be a be within of and services recovery, affected, antitrust lure of a area” of availability e., against person by conspiracy, implemented whom of the a i. aimed, by conspiracy such a com the amend was as suit as facilitated class F.R.C.P., According persons in sued. would result petitor of the ment of Rule 23 excluding enlargement over-kill, of the ly an drawn a line those due to we have an exceeding damage by weapon far private to a have suffered economic caliber who Congress. relationships by If contemplated of their virtue crystal precise “targets” participants an al or with in antitrust laws might leged conspiracy, something favor of said in rather than lized potential being “targets” expansion For ex themselves. enormous such an damage liability, speculative standing as the ample, a has been denied to .treble might claiming remains patent But the fact harm as be. owner derivative “bright lines” conspiracy directed there are few the result of that because de licensees, area, experts have against who its Inven Productive in even swpra; professional tions, Corp., lives Trico Products their entire voted Inc. America, find Corp. practice law often Corp. of antitrust v. Radio S.C.M. complaining impossible a client with an to advise supra, a franchisor certainty degree his contem whether at directed combination transgress lawful Baxter, franchisee, plated will Billy conduct v. Coca- Inc. Company, motion and a bounds.1 Cola time, perhaps, (“By 1954) an abid- Austera, Dealing Uncertainties

1. See With may ing sympathy enlisted Comply have been Antitrust With the How to lawyers in this (Van must advise Dunn, who those eds. & Cise 367-68 Laws. alleged conspiracy necessary Accordingly use distri- it is area construing exhibitors, re- the re was to butors of reason a rule competition Clayton 4 of the Act strain exhibition quirements of § pictures. alleged conspracy just has motion standing, as such a rule been determining admittedly plaintiff, aimed adopted at wheth violations, per competing than se er but restraints, trangress does Act. exhibitors.3 Nor fact 1 and 2 the Sherman §§ allegedly party Railway Co. v. lessee was Northern Pacific United distinguish States, 4-5, materially 2 to the 78 S.Ct. standing has Co. Standard Oil this case from those where States, having Jersey denied rela- been one a similar New tionship competitor A vic- innocent L.Ed. 619 Billy conspiracy, g., to those timized e. Bax- line which limits supra; ter, Company, whom antitrust violation v. Coca-Cola Congress’ Corp. M. of Amer- directed fulfills fundamental S. C. v. Radio ica, supra. reecently Indeed, purpose same we de- and at the time establishes suing easily cut nied one a reasonable and identifiable on the basis co-conspirator. con a contract with a Fields off that avoids unfortunate all, flood-gate sequences opening Inc. v. United Artists supra. determining plain- interest or no matter how remote their whether relationship.2 Competi tiff incidental their § target Act, only tors the area of an the relevant is whether who are within factor alleged illegal usually “target” conspiracy plaintiff have antitrust is a of the activity. plaintiff them more than others to avail If the not within incentive is they legally area,” im- of 4. In those cases where it selves then is § may, through so, person of do material fail to Government whether injunctive plaintiff punitive relief was course, seek or whom the derives his conspiracy laws. inno- other sections a member of or was under 1, 2, 4, any See, g., wrongdoing. plaintiff not e. 9 cent of A §§ U.S.C. target does antitrust violation Applying these established target by not become a virtue non-operating principles here, plaintiff, a lessee, patentee, culpability fran- an of a theatre leased to landlord chisee, customer, target supplier, exhibitor, clearly debtor.4 is outside of the non-operating suggest that a field. Even the most should We do not uncharitable 3. may who never have commiserate with the businessman theater lessor working damages 4 of for under § seeks to obtain definitive rules to sue Clayton alleged, daily operations.”) for his Act. If Calderone had example, had that defendants Despite dissenting sugges- 2. our brother’s by it, at aimed tlieir such tion that is standard profita- agreeing to and exhibit distribute vague confusing, possess we it to find by pictures the de- theaters owned ble simple the virtue of definiteness. terms they which flat-lease fendants or with bad “target” person against is a or business arrangements, not to them distribute competitive which aim is The line taken. they percentage which had to theaters with clearly by requiring is drawn that leases, be in a different Calderone would object have one must an of an posture. conspiracy. contrast, antitrust “foreseeability” urged by not feel bound test dissent 4. The dissent does itself permit anyone regardless previous sue, men- of this would decisions relationship above, it views each of how tioned because distant his interest or competitor’s distinguishable (including from the these decisions as a customer any legal customer, supplier supplier present fail find to a deal- case. We or a ing alleged significance conspirator), factual differences in the since length by Judge disprove Levet. it would the fact described at some be difficult judges repercussions Indeed, dissenting in two even that remote economic Corp. Billy (S.C.M. Bax- the eases result from almost distribution .line disagree- Ine.) ter, every their indicated antitrust violation. contrary persuaded by Although decision of not have does Calderone Act, Congress Building the Seventh Circuit in 4 of (7th nothing v. 246 F.2d 587 precludes or exhibi- Loew’s a distributor against alleged conspiracy 1957), which has the soundness of Cir. tor whom the Judge Hastings bringing questioned by dam- a treble been from is directed Sandidge Rogers, defendants, age have court. See v. we suit (7th 1958). non- such actions advised that been pending Circuit’s decision in Steiner participating now Ninth exhibitors Century-Fox Corp., Film Court 20th District United States See, clearly is distin New York. the Southern District guishable present Theatre, for the from the case g., e. Cove Glen plaintiff-landlord Corp., there reason Artists Civ. alleged her mo tenant and various significant legally no differ We see conspired picture tion had position plaintiff’s ence between plaintiff’s destroy the value of theatre Baxter, Billy franchisor threatening to withhold first-run mo Company, supra, and Inc. v. Coca-Cola pictures tion from it unless producer picture in Fields the motion agreed monthly fixed rental reduce the Inc. v. United Artists grant lease, options and to to renew were denied stand both whom forced do. Plain was ing. respected held Indeed alleged target of the tiff there thus a non-operating lacks stand that a landlord allegation piracy.5 No such cons ing to from its ten seek treble present made case. vio ant and others leave decision not theatre rent Our does lations which decreased its remedy. Realty See, g., Assum e. Co. here without als. Melrose meritorious, ing (3d Cir.), Loew’s, Inc., claims to be 234 F.2d 518 recovering single precluded 128, 1 L. (1956), in a state court leave to file UATC Ed.2d motion for 85 lease, denied, rehearing petition for of the U.S. suit breach of terms for 355 pend (1957); three which forms the basis of the 2 198 present Inc., Pictures, action. claims asserted in the ent Harrison v. Paramount affd., federally-based F.Supp. (E.D.Pa.1953), were 115 claims 312 Since trial, prior (3d Cir.), properly how 211 348 dismissed F.2d 405 pendent claims must also ever, the U.S. 653 state 75 99 L.Ed. relegated plaintiff be dismissed and the Ra Skouras v. Theatres F.Supp. relief. United dio-Keith-Orpheum to the state 193 Gibbs, (S.D.N.Y.1961); Mine Workers 383 401 v. North Lieberthal 218 Country Lanes, Inc., 16 L.Ed.2d F.Supp. Maytag, grounds, F.2d (S.D.N.Y.1963), O’Neill affd. on other (2d 1964). 1964). n. 3 Cir. We are not F.2d Cir. analogous upon sta- situation to the television not whether ments centered Productions, factually distinguishable precedents who tions in Fields pictures them, motion whether wore exhibitors from the case before but subjected booking. applied. a to block different test should provide any Nor does the dissent ration- employed addition, support here ale in In test of a differentiation based plaintiff’s relationship upon later Ninth Cir- consistent with that of whether Hoopes Oil was cuit decisions. Union with a victim by Indeed, California, pari F.2d with in one delicto. Co. Mulvey 1967), (9th denying standing v. Samuel in the in Cir. latter situation Goldwyn Productions, Inc., supra, we failed Fields found of such a distinction. to see relevance plaintiff Moreover, agree Calderone, be within we do not lessee-exhibitor, in the antitrust violation. its an rather than Judge (dissenting): However, VET, prerequisites there three LE District recovery. First, in there must be to reverse the deter- and vote I dissent injury. plead fact an Plaintiff must District Court. mination of the character, specificity nature, appeal is presented in issue this injury. Second, and extent of his Enterprises appellant, whether Calderone injury complained of must be “Calderone”), Corporation (hereinafter Third, property. business or picture thea- motion an owner-lessor of injury proximately must be caused agreement, percentage under lease tres alleged e., violation, i. defendant, lessee, standing to sue its has must show some causal connection be- Circuit, Artists Theatre injury illegal tween and the acts his alleged (hereinafter “UATC”), and other the defendant. co-conspirators for antitrust violations statutory Under this scheme Calderone Clayton Act, Section has to sue. Plaintiff has in substantial resulted U.S.C. which property an his business and appellant financial resulting from an antitrust violation. (a) of: reduction amount terms However, interpretation ap- judicial by appel- percentage rental received plication imposed statute has lessee; (b) damage to lant from longer requirement. additional It is no reversionary appellant’s and fee interest sufficient that a mere- establish present decline in the in the form of a ly “injured” he was his “business market value theatre. property” “by an anti- reason of” opinion majority In the it is asserted satisfy Now, trust violation. in order to question this has answered been statute, must demonstrate negative by the am Second Circuit. I in- was a result of a direct his loss disagree forced with that conclusion. jury he to him the defendant or issue never determined been was area” of the vio- within appellant does have this Court and the lation. to sue action. This notion directness whole accept case the facts in this as re- of Loeb in the 1910 case first enunciated majority opinion. cited in the (3rd Co., v. Eastman Kodak 183 F. 704 event, appealed as since this action was 1910). plaintiff, In Loeb a share- granting of a result of the defendants’ corporation, holder and creditor motion dismiss failure state by de- forced of business which was out granted, upon relief could be claim violations, brought an fendant’s antitrust Fed.R.Civ.P., pursuant 12(b) (6) Rule of under Section the Sherman action 7 facts in must assume that all the the The rea- Act of 1890. court Anti-Trust complaint are correct. injury complained of was that the soned corporation and not at at the directed Standing Sue I. only re- the The individual stockholders. Clayton Act, 15 of the U.S.C. Section 4 therefore, lief, plaintiff the could obtain part: 15, provides pertinent in through in the derivative suit would a be corporation. However, the injured of the name person “That who shall in that case was property by individual stockholder or reason in his business right. bringing in his own an action anything in the antitrust forbidden of injury Hence, the court termed the may . and sue therefor . laws “remote,” “indirect,” damages as stockholder threefold of the shall recover suit, sustained, “consequential” and denied by him and the cost of attorney's sue. including fee.” a reasonable added.) (Emphasis reasoning underlying of the court The the fear e., to be in Loeb case seemed Any person, i. or natural artificial multiplicity actions association, possible of organization corporation, or cor- brought by plaintiff-creditors bring this can section. an action Damages plain- permit Under 4 of Treble Section pora it were to ti on if Clayton Act, an ac- to maintain Colum.L.Rev. in this situation tiff Congress Building (1964). Corp. tion. The said: Loew’s, 246 F.2d 587 Cir. barrier which must exist some “There plaintiff, 1957), the court said effectually prevent a multi- such will owner-lessor, nonoperating a whose lease plaintiff’s posi- plicity of suits as pircture property of motion theatre enti- only suggests, and we believe tion plus tled to a minimum rental fixed exists, it is but that that that barrier gross percentage a re- lessee’s prior just it was found where now ceipts, private a antitrust could maintain question.” passage in of the act inju- suit to recover Co., supra, at Kodak v. Eastman Loeb alleged ries a have been as sustained conspiracy result a lessees with cer- approach type “privity” picture tain motion and af- attempted to create with relegate filiated exhibitors theatre corpo- requirement in the the directness exhibiting position. to an inferior Plain- Loeb, cases, rate such as in has been ex- deprived tiff thus was of rentals under and a number tended into areas percentage clause that it otherwise examined decisions have Second Circuit would have ruled received. The court alleged question. example, in this For injury was direct because violations where the actively participated il- lessee had resulting injuries suffers losses legal conspiracy. case the Sev- relations, profitable some a diminution appropri- enth an Circuit demonstrated hold has no courts still flexibility application ate in the Productions, Inc. cause of action. Fields standing requirements of the antitrust Corp., Artists 432 F.2d 1010 v. United Note, The as laws. See Franchisor cert, (2d denied, 401 U.S. 1970), Cir. Damage An Plaintiff in Treble Actions: (1971). 28 L.Ed.2d Anomaly, 49 Antitrust B.U.L.Rev. generally Also, denied the courts have 327-329 patentee a franchisee Building Congress royalties profits rationale sue loss Corp. adopted specifically case was its licensee result caused to Corp., Corp. dealings competitor. Erone v. Skouras Theatres into entered America, F.Supp. Corp. (S.D.N.Y.1957). There S. C. M. v. Radio cert, denied, plaintiff had Cir.), (2d court held that against to maintain suit 89 S.Ct. partici rehearing denied, lessees of theatres who 396 U.S. illegal pants to violate Productive L.Ed.2d 125 laws, Inventions, the lessees but Inc. v. Trico Products victims, merely no (2d there was who were 1955), 224 F.2d 678 Furthermore, ear cause of action. 100 L.Ed. case, (1956); Billy Baxter, lier York District New Southern v. Coca-Cola Co., Dis Company, Film Camrel Inc. v. Paramount 431 F.2d 183 cert, tributing Corp., 923, 877, al., denied, Trade Cas. et CCH 401 U.S. 91 denied, 877, rehearing (S.D.N.Y.1944), court in ¶ very L.Ed.2d proposed similar factual situation L.Ed.2d 553 U.S. 91 S.Ct. Congress and (1971). exact rationale Erone cases followed. “privity” Another area that doc- Congress developed The rationale trine has invaded is in the landlord-ten- we However, clearly applicable here. In this case ant here the courts situation. nonoperating who have a owner-lessor have made clear distinction between injury by illegal has direct participated in ac- suffered substantial lessees who participation and merely his other those inno- lessee who were tivities Standing violations. Un- Note, in antitrust distributors cent victims. See Sue Inc., Bergjans formula, Dairy, Farm 368 F.2d Congress plaintiff Cal- der the 1966); (8th Cir. Carolina South to sue. derone has Producers, v. New- Council Milk not been doctrine The directness cert, denied, (4th Cir.), ton, 360 F.2d 414 by and an- universally adopted U.S. requirement, judicial or alternative other (1966). test, This “target has evolved. person approach on whether focuses courts, Recently, especially in the some injured by violation the antitrust Circuit, developed a more Ninth activity. illegal by the and hit aimed at term flexible definition of the plain- words, test the under this In area” and have directed the test towards he was within demonstrate tiff must foreseeability, e., question i. whether endangered by economy the area reasonably fore- would be in the ap- competitive This breakdown. by anti- area to affected seeable be proposed in proach Conference was first Initially articulated trust violations. Inc., Loew’s, Unions Studio Century-Fox Corp. v. Twentieth Film cert, denied, 1951), (9th Cir. F.2d 51 Goldwyn, (9th Cir. 328 F.2d 96 L.Ed. 687 72 S.Ct. applied 1964), this test the Ninth Circuit (1952). said: The court Hoopes Company Union Oil Cali- (9th 1967). In fornia, Cir. state a cause 374 F.2d 480 . order to “. . [i]n Hoopes the court held that an owner anti trust laws of action under the standing to attack . that he a service station had show . must economy illegal upon conditional that area of the restraints his is within vendee, lessees, endangered potential by successive a breakdown which is illegal allegedly partic- competitive in a The defendant’s lessees. conditions restricting industry.” conduct was “aimed” at ular Studio Conference “Appellants Loew’s, supra,, appellants’ property. use of 193 F.2d Unions property ‘tar- and their were within the at 54-55. get area area’ of that conduct—‘the more clear area” test was reasonably foreseen which it could be ly v. Rich articulated Karseal would antitrust viola- be affected’ (9th field Oil 221 F.2d 358 foreseeability tions.” Id. at defendant, 1955). a dis Karseal appeared to more con- test to the court illegal wax, of car had entered tributor purposes of the sistent with the statute. exclusive-dealing contracts with service generally Donnici, Stand- See Alioto causing retailers, station them to cease ing Requirements Plain- for Antitrust purchasing plaintiff’s from distributors Judicially Exceptions to tiffs in Created manufactured the brand of car wax Statutory Policy, a Clear 4 U.S.Fran.L. plaintiff. the manu The court held that Rev. 212-214 facturer had the defend to sue distributor, though the distrib The latest determination the Ninth ant even subject squarely on this affirmed utor and the manufacturer were Hoopes e., competitors (i. foreseea- different articulation classes they compete bility Mulvey v. Samuel Gold- did not at the same market test. level) though wyn Productions, the manufac even own were the imme turer’s (1971), injured. parties the court diate the defend 28 L.Ed.2d 662 Since impeding plaintiff had held that ant’s violation was aimed competitive products and was the defendant distributor the sale of sue where thereby block-booked films directed the manufacturers causing profit his less products, the court him to earn distributors of such arrangement percentage-of-net-receipts competing manufac concluded that accepted turers, producers all with the defendant. The court illegal findings target practices. the district of the were Mulvey supplier Sanitary of motion See, g., neither a v. was e. Milk Producers laws, pictures also to deter to television nor a customer in trust but by possible pictures, private that de- violations reason of the market for such licensing protect Goldwyn’s suits and to fendant were acts injured by compensate and there- those who are aimed at television stations Mulvey misconduct, such fore not within the area as Calderone here. was was economy See, endangered by g., e. Zenith Radio Hazel breakdown v. However, 321, 336, competitive Research, tine conditions. 401 U.S. findings, 340, 795, court, despite (1971); lower court’s S.Ct. 28 L.Ed.2d 77 applied Hoopes Enterprises, unequivocally Fortner test and United Mulvey, plaintiff, 495, 502, Corp., found was States Steel 394 U.S. 1252, reasonably (1969); ille- foreseeable victim of such 22 L.Ed.2d 495 Per gal and, thus, activities must be afford- ma Life Mufflers Inc. v. International Corp., 134, ed to sue. The court said: Parts 139, 392 U.S. 88 S.Ct. 1981, (1968); 20 L.Ed.2d 982 Minnesota Mulvey squarely ‘hit’ “But was as Mining Manufacturing & Co. v. New Hoopes: Karseal and He nei- was Jersey Finishing 311, Co., Wood 381 U.S. sideswiped by a carom ther nor struck 318, 85 S.Ct. 14 L.Ed.2d 405 He within the area ‘which shot. was (1965); Lawlor v. National Serv Screen reasonably foreseen would could be ice 349 U.S. 75 S.Ct. booking.” by Mul- be affected’ block (1955); 99 L.Ed. 1122 Bruce’s Goldwyn vey v. Samuel Juices, Co., Inc. v. American Can 330 U.S. supra, (Emphasis F.2d at (1946). 67 S.Ct. 91 L.Ed. 1219 added.) application on tre- Restrictions Calderone should be allowed to recov- damage remedy clearly repug- ble seem er under the area” test. In this language nant of the statute present partici- action defendant UATC repeated pronouncements of the pated system (“Showcase system”) in a Supreme The Su- Court. States distribution and exhibition of motion preme recognized constantly pictures Court has deprived appellant’s the- given high laws should be quality atres and all theatres of bid- interpretation ding broadest and films, thus, most liberal reducing for better sub- Congressional in order to in- stantially effectuate profit the amount of of the See, g., Burners, tent. e. Radiant Inc. v. better theatres. Under the test formu- Gas, Peoples Co., Light, & Coke lated Studio Unions Conference of 656, 660, L.Ed.2d 81 S.Ct. Hoopes expanded and Karseal and (1961); Mulvey, Radovich v. National Football economy the area of the League, 445, 453-454, being 77 S.Ct. endangered by U.S. the breakdown Mandeville competitive posi- conditions was the Crystal Farms, Island Inc. American gain tion of all those who stood to finan- Sugar Co., 219, 236, cially showing U.S. from the of better films Bigelow L.Ed. 1328 in these theatres. Calderone was sub- Pictures, R. K. O. Radio stantially illegal hit defendant’s con- 265-266, 66 L.Ed. 652 reasonably duct and it was foreseeable consistently re- Court has that Calderone would affected be such jected judicial attempts impose addi- antitrust violations. an- tional restrictions testing sue, Calderone’s Radovich, titrust statutes. we must also consider the more basic court said: questions purpose Section consequently Act and only “Petitioner’s claim need ‘tested judicial require- reasonableness of the general pro- under the Act’s Sherman ments of and the directness hibition of restraints of unreasonable test. require- trade’ . . and meet the purposes Clay- thereby petitioner of Section 4 of the ment that suf- only Congress has, ton injury. by legis- Act are not to enforce the anti- fered Therefore, pro- imposition fiat, that such the of restric- determined lative judicial injurious requirements on to the tive the statute are hibited activities questionable. al- the of public provided First, is soundness and sanctions has lowing the For- private the anti- directness doctrine is dubious. of enforcement aggrieved party. early part in mulated the of nine- the trust to laws century concept priv- the teenth the of protect the of when victims These laws ity pub- dominated almost kind of recov- practice as well as the forbidden pol- judicially ery, such a the reasonableness this lic. ... face of require- coupled requirement icy, constituted with should not add this Court private litigant purpose Act Section 4 of the to ments burden Judge specifically beyond set should be reexamined. is Waterman what forth Billy Baxter, in Congress Coca-Cola Com- the laws.” Radovich pany, supra, vigorously supra, League, dissented v. National Football challenged 453-454, requirement. the directness at S.Ct. at 395. arguments persuasive I will His are accepted Supreme has never Court further elaborate on them. injury” “target area,” or “indirect plain- plain- “proximate It when a on seems that cause” limitations anomalous right injury anti- tiff ille- relief under suffers from defendant’s tiffs’ to claim Donnici, gal though activity, Alioto and even trust See violations. Standing plaintiff sepa- privity Requirements for Antitrust is not in with and Judicially Excep- rated from of an Plaintiffs Created the defendant means Statutory Policy, intermediary partici- to a or tions who is victim Clear (1970). pant misconduct, edi- Fran.L.Rev. may recovery Law Review be foreclosed from tors the Columbia because regard “indirect,” “remote,” injury expressed view in is similar his labeled By classifying purposes “consequential.” 4: or of Section such, precluded purpose man- is so broad “Its recovery regardless extent any person can date so clear who Thus, nature some loss. damage prima be show should facie approach courts have taken the protected within the class. ... property when business and inter- language view the section’s broad plaintiffs injured ests of such are be- presumption purpose, should injuries competitive mar- cause of plaintiff’s right of ac- favor of the persons they ket of con- with whom showing tion, allow his absent a that to nected, plaintiff’s position then congres- contrary claim would be “indirect.” Re- defendants labeled sional intent.” 64 Colum.L.Rev. sponding position of certain Judge courts, Waterman said: Unfortunately, lower federal courts deciding “. . whether [i]n tendency have demonstrated at times a pursue the possibility be more concerned federally codi- cause of action created recovery a windfall under the treble dam- me fied seems to U.S.C. § age provision Congress’ than with estab- perhaps in anti- the use encourage private lished intention opinions trust of inherited decisional as an suits enforcement may posi- have obfuscated the labels must con- laws. Courts plaintiffs so as to have tions some purpose first sider of the stat- the basic fact- denied them recoveries which uninterrupted ute and line Su- they analysis might have indicated preme upholding that Court decisions Baxter, Billy should have obtained.” demarcation, position. If limita- lines Company, Inc. v. Coca-Cola tions or are to restrictions be drawn leg- imposed statute, that is for the Second, is a con- islative do area” test branch to and not for vague, ceptual limitation, and at times court.

1309 Note, inconsistently applied. process the violation occurs. See confusing and (1971). Ap- 1031, Auto 45 Tul.L.Rev. 1035-1037 example, in Nationwide For Service, praiser Inc. Association regulations always Antitrust are not Casualty Surety Companies, 382 & judicial paragons clarity re- and both 1967), refused the court 925 Cir. “target quirements of directness and the “target test on apply to area” impre- frequently area” test have been ground “target area” cisely Therefore, applied. defined and test same direct-indirect fact as 4 violation under Section given just The a different name. but Clayton Act, mainly one at must look said, lan- need court “we not seek underlying policy new. and considerations at guage express particular Id. and to the same doctrine.” facts circumstances of the case. And if the district and cir- at 928. persist employing cuit courts labels “target more The area” test seems no “target like the directness area” capable doctrine of than directness tests, requirements these then should be vindicating policy. public oper- It still applied broadly liberally, in MuL- as suing by plaintiffs prohibit ates to from vey, in order to fulfill the fundamental applying trying to labels, rather than See, g., purpose of the e. laws. relationships examine the economic (1971); 129, 40 U.Cin.L.Rev. 133-135 19 prospective plaintiffs antitrust vi- to the (1967). 132, Case 137-138 W.Res.L.Rev. Although “target olations. approach attempted remedy the defects Second Circuit Decisions II. Judge of the directness doctrine that Wa- majority opinion The contends mentioned, cry it from terman is a far Circuit, prior in the decisions Second narrowly panacea By envisioned. ruling support here that the lower court construing area,” as the so-called appellant a claim for has failed to state done, taking some in- courts have without it relief under the laws is policy account basic considera- on this to follow that incumbent tions, denigration continued done disagree. precedent. instance, the statute. For there is when essentially knowing presented a issue now wilful antitrust violation previous competitive different from determinations market directed appellant, Here, entirely circuit. consequences in this foreseeable picture dealing market, theatres owner-lessor motion a business within the agreement percentage al- injured party lease afforded should be leges individ- Comment, lessee and other to sue. Fran- its See Standing conspired Damage the antitrust chisor uals violate Sue Treble causing 696, dam- financial Actions, laws substantial 702-703 119 U.Pa.L.Rev. age appellant. cases cited words, In other recovery preclude supposedly encompass area” should the foreseeable Inventions, following: totality not, competitive injury Inc. v. Productive (2d Corp., 678 interpreted, simply 224 F.2d some courts have Trico Products cert, 936, 1955), denied, product 350 U.S. 76 one level of Cir. distribution (1956); S. C. 100 where S.Ct. L.Ed. 818 occurred. When Corporation of Amer- M. Radio li- chooses receive its cert, (2d denied; Cir.), ica, precentage- F.2d 166 censee, 407 distributor or lessee a L.Ed.2d of-gross-receipts arrangement, 23 rather U.S. rehearing denied, sum, U.S. than a fixed intimate- has become ly Billy competitive into the mar- 24 L.Ed.2d 125 interwoven S.Ct. Here, Company, longer Baxter, bystander. ket and no Inc. Coca-Cola cert, denied, 1970), compensation (2d F.2d 183 deserves re- illegally L.Ed.2d whenever violator forces profit, hearing market to reduce no matter stage marketing Fields or level v. United Artists S. C. M. RCA a counterclaim affirming, allegations based sold on C. M. S. (S.D.N.Y.1969), de- F.Supp. Electrofax unlawful con- machines nied, purchasers buy L.Ed. dition not or that would goods competitor North 2d use of an M. Lieberthal C. in vi- S. Country F.Supp. 685 Lanes, Clayton olation of the also Act. RCA grounds, (S.D.N.Y.1963), aff’d on claimed S. that lured and induced C. M. 1964). ana- by personnel will 332 F.2d of breach contract lyze licensees, prospective competitors cases demonstrate each these its and controlling they royalties complained not here that of diminished par- they Judge injury. McLean, not considered this that in resulted question. below, ticular decided that there injury was no direct to RCA because Trico Inventions In Productive injuries by suffered were 63 licensees supra,, Corp., of a the owner Products standing and, hence, RCA no had sue. against brought patent its an action causing licensees-competitors, harm Judge Appeals in Moore Court damaging and, licensees, turn, in said agreed Judge seems to have with McLean royalties. plaintiff of reduced because injuries royalties that in RCA’s loss of wrongful that court concluded litigation expenses not sus- against plaintiff- were not directed acts plaintiff’s tained reason of the anti- and, against its licensees licensor but plaintiff's trust violations but because of standing hence, that lacked challenges patents. to RCA ours that This ease is unlike sue. Judge however, commented, Moore was an innocent defendant-licensee there seeking RCA not foreclosed from was party participant the anti- and not a damages injunctive treble or relief if it Moreover, the court trust violations. plead by proof could and establish the facts of limited that decision to required causation he statute. As saying: case said: fast laid hard and rule can “No be seeking “RCA is not foreclosed from as the line down these situations injunctive if treble relief damage direct and incidental between by proof, plead, it can and establish clarity. always not definable required by the statute. causation is that under All we here determine All that the district court decided was appellant pleaded has no the facts that ‘the second counterclaim does right damages.” Pro- to recover treble allege upon facts which confer defend- Products ductive Inventions v. Trico plaintiffs’ al- ant to sue supra, F.2d at 680. leged Act violations Sherman Furthermore, the Productive Inventions is all that and the Act.’ This seeming concept case, in to restrict Corp. v. Radio we affirm.” S. C. M. damages, apparent is in conflict America, supra, Corporation F. purpose with the of the statute and at 2d Supreme pronouncements, Court besides All the M. case held was S. C. being subject of much criticism. there no causal between connection g., See, e. 69 Harv.L.Rev. injuries the violations Corp. Corporation SCM v. Radio licen- the real occurred Cir., America, 172-173 M., Furthermore, (1969) dissenting). (Judge sees. S. C. Timbers Judge Timbers, judge, dis- a district then Corporation of S. M. v. Radio C. prece- strongly questioned the sented and America, like Productive Inven- Judge Inventions. dent in Productive tions, patent involved owner the de- that where concluded Timbers bringing against competitors an action competition deter acted to fendant had violations. licensees

13Q5 bowling result, and, suffered diction does because not involve as a F.Supp. interstate Id. 221 injury, commerce. to sue should substantial Judge Wyatt 688. The fact went granted. further and intimated that Billy Baxter, v. Coca-Cola Com- purely has no sue is obiter supra,, pany, basically involved a similar Appeals dictum. The seems to Court Here, plaintiff-fran- relationship. have affirmed district court decision rights asserting chisor its fran- ground complaint on the “that does brought chisees a treble not establish a Anti-Trust vio- Sherman action manufacturers defendant occurring lation based on in inter- acts beverages of nonalcoholic carbonated expressed opin- state commerce” and no alleged per- improper use of methods to standing question ion as to the to sue. buy products suade retail outlets to oth- Id. 332 F.2d at Billy er than In those it manufactured. It is obvious from the examination of Baxter the franchisees were innocent parties these Second cases that none third and mere victims of the ille- Circuit are point. addition, They standing gal activity. on have denied In none of the in producers per- sue situations either where affected licensees who were Baxter, are innocent victims where a suasion were customers Inc. causal applies It connection has not been is difficult to see how this case established be- injury. tween the and to our violation situation. These cases have involved neither land- In Fields Productions v. Inc. relationships (except lord-tenant for Corporation, plaintiff, supra, Artists Lieberthal) nor cases where the lessee picture producer, alleged a motion participant conspir- was an active in the defendant, booking plaintiff’s in block acy. addition, a number the cases picture, money allocated a sum to such sharply par- have been restricted to their picture which than was less fair value of ticular facts. rights picture. the television in such The “target ap- Admittedly, district area” court test held that did not plied by standing pri- have and the Second Circuit has been to sue maintain a more vate restrictive than in circuits. How- action. The ever, here, pre- say however, distl’ict did factual circumstances sent a was “the different situation unlike the ones stations and oth- television presented previous in cases er . . discussed. who in [were] ” ‘target applied F.Supp. test area.’ this Id. 318 at 88. particular rationale, Under set of facts should follow the this Calderone’s three approach analogous Ninth conceived in theatres would be in situa- Circuit’s (an Karseal tion to the Studio Unions and television stations exhibi- Conference of Hoopes Mulvey. expanded tor of in pictures) the motion and here merely The test would fall should consider not within the so-called Therefore, Calderone, area.” whom the were aimed but violations rath- the owner er directly these at whom violations were reason- three theatres is affect- ably ed foreseen to affect. the loss of revenue these thea- tres, reasonably and it was foreseeable Decisions III. Other Circuit that Calderone would be so affected. Moreover, Fields, in the Court held that cases are not Circuit Since the Second asked unrelated to conclusive, the rationale I believe antitrust violations and thus validly Circuits the Seventh and Ninth standing held that there no to sue. ap- applicable while in this situation Finally, not. See proach v. the Third Lieberthal North Coun- Century-Fox try Lanes, Inc., Film Steiner 20th not dis- v. case 1956); Congress (9th majority opinion, cussed 232 F.2d 190 Loew’s, Inc., Building Corp. complaint amended was dismissed in the Co., Realty 1957); Melrose juris- district court of lack on account Inc., The Seventh to sue. F.2d 518 must Loew’s, Inc. cert, ap- year denied, later followed Cir.), 77 S.Ct. Circuit 352 U.S. Buildings Congress Corp., sur (1956), proach motion earlier, rehearing denied, pra, clear- petition discussed file leave reasoning Ninth ly 2 L.Ed.2d affirmed 355 U.S. Pic- Paramount rationale. Harrison Circuit’s (E.D.Pa. tures, F.Supp. 312 nonetheless, majority opinion, (3d Cir.), aff’d, 211 F.2d 405 in the Third Cir- mentions two decisions L.Ed. challenging Congress cuit the Steiner affording approach Century-Fox Film v. 20th Steiner Third Cir- These to sue. decisions (1956), supra,, de- a Ninth Circuit however, cuit, as to their not clear cision, a similar situation. involved meaning v. Par- In Harrison effect. case, aof appellant, an owner Pictures, (1944), supra, amount picture theatre, the said leased motion plaintiff-landlord court refused conspired with theatre to individuals who grounds nature sue monopolize .pic- first-run defendants property not fit within involved did tures, forcing appellant to re- thereby statutory scheme and that val- rental ceive than the reasonable less differenc- was too remote. Besides these detri- do ue of the theatre and to acts findings Harrison es factual between reversionary in- appellant’s mental to the case, present also lim- our the court ap- clearly The held that court terest. holding spe- import of to the ited the its pellant-landlord had sue un- court said: cific facts of that The case. der the antitrust laws. possible “It not formulate is appellees in asserted that The defense general to determine rule which appellant’s inter- as a matter of law the bring injuries what are too remote per- est as a landlord remote to was too plaintiff scope of the Act within the recovery mit and cited the Third Circuit attempt and I shall not to do so. Each of Harrison Pic- decision Paramount ease its own must be dealt with on tures, supra,, authority. their The is that facts. All that decided here is distinguished the Har- Steiner beyond any, loss, if is rison case and said Harrison there that in cognizable injuries un- the limit dealings were no direct between der the Harrison v. laws.” plaintiff Steiner, and the su- defendant. Pictures, Inc., supra, Paramount 115 pra, ap- 232 F.2d at 193. Steiner F.Supp. at pellees conspired prime lessee to appellant force the to receive less than Realty Loew’s, Melrose Co. v. Appellant rent. reasonable not (1956), appeals the court of seeking simply caused to an- per curiam Third short lessee, other, claiming but was direct opinion affirmed lower court decision injury to itself. solely authority the Harrison on the majority appeals seems opinion The court of present The case. in our impact suggests failed to of the heed case the Steiner decision is irrevocably distinguishable” “clearly ease stated Harrison from Calder- that each case must considered its one’s situation because the particular petition for rehear- facts. “target” On Steiner was the of the ing, though, appellants reiterated This, agree conspiracy. I cannot with. distinguish- the Harrison case was Here, The cases are similar. Calderone controlling, able and not the court still alleging lessee, UATC, con- although Judge petition, denied the Chief spired it in- with others to direct cause Biggs Judge dissented. de- The Chief reasonably jury and that fore- was a Harrison affirmed the illegal activity. cried the rule and seeable victim such giving formula, approach Under the Steiner in Steiner Calderone Ninth Circuit

1307 Judge Bigelow See also Chief sue. R. K. O. Radio Pic tures, Inc., 264-265, Biggs 251, said: U.S. S.Ct. 574, 652, denied, rehearing 90 L.Ed. property damage “The lessor suffers 817, U.S. 66 S.Ct. 90 L.Ed. 1040 illegal because of the of the lessee act (1946); Eastman Kodak v. Southern Co. arising out of the and that 359, 379, Co., Photo Material 273 U.S. injury is direct and not remote. The Hays 71 L.Ed. 684 protection lessor should receive the Mfg. Co., United 420 F.2d Fireworks Act. Steiner v. 20th See (9th 1969); Cir. Riverside Coal Century-Fox Film . .” Co., Inc. v. United Workers Mine Loew’s, Realty Inc., su- Melrose Co. v. America, (6th Cir.), F.2d pra, 234 F.2d 519-520. cert, denied, judicial reasoning by the Seventh L.Ed.2d 95 Entis v. Atlantic logical presents and Ninth Circuits Wire & 763- Cable just approach while situation 1964); Wrestling National balancing policy the basic considerations Myers, Alliance v. 325 F.2d Third laws. The Cir- 1963); William H. Rankin Co. v. cuit rationale of Harrison has been se- Associated Bill Posters of States verely questioned applicable (2d Cir.), Canada, and cert, here. 75 L.Ed. 765 Arguments Other IV. majority expresses opinion also argu- There number the fear and the of windfall recoveries majority denying ments stated “flood-gates” opening to all that briefly to sue. will possible re- are lured comment on them. lief, result in an “over-kill” which would Although major- laws, as the “private enlarging weapon to cali- ity points out, always are not meticu- exceeding contemplated that ber far lously crystall defined and clear and sug- Therefore, majority Congress.” damages may speculative be more gests apply of reason” a “rule we prove difficult to as a result of the treble creating “easily identifiable cut-off” damage action, authority I no know of economy from save the and the compels deny plaintiff court this deluge opportunistic suitors —a veri- grounds. to sue on these Diffi- agree. The Ark. I table Noah’s cannot culty uncertainty determining language and the of the statute itself Su- damages has never been a bar to suit. considering preme this decisions Court Supreme The Court confirmed this view unequivocally very stated have question Story Parchment Co. Paterson 4 is en- purpose of Section Paper Co., Parchment damage suit, courage private to de- treble S.Ct. 248, (1931), 75 L.Ed. 544 a case compen- violations, ter involving a violation of the Sherman injuries If sustained. Con- sate those for Supreme Anti-Trust Act. The Court created, gress then not realize what it did said: courts, Congress, to limit. it is for not the “Where the tort Supreme itself Furthermore, though such a even preclude nature the ascertain- in a number Court has denied certiorari ment of the amount applied Second Circuit cases certainty, perversion test, would be a does restrictive justice principles fundamental giv- highest to de- mean that ny injured relief person, legislation. judicial en affirmance thereby wrongdoer relieve the in all the Sec- The denials of certiorari making any amend for his acts.” on different ond Circuit cases based Story Parchment backgrounds. Co. Paterson decisions of factual The Paper Co., supra, Parchment private Supreme Court still hold given S.Ct. at 250. actions should their and a most inter- broadest liberal

pretation. holdings are Those the best Supreme posi-

indication of the Court’s

tion.

V. Conclusion convincing majority presents no

arguments justify precluding appel- suing

lant Calderone from under Section

4 of the claim Act. Calderone’s pur-

to relief is consistent with the basic

pose of the statute and with the inter-

pretation Supreme Court. It

would fit under the directness doctrine

or under the area” test as formu-

lated the Ninth Circuit. Second involving Circuit cases the restrictive

“target area” test not encountered presented

the essential facts or issues and, thus,

here are not conclusive on this precedent

court. Neither is the case law applicable

of the Third Circuit in this

case. The Seventh Ninth Circuits put forth a far more feasible and flexible

approach taking into funda- account the policy mental considerations of stat-

ute under which Calderone can sue. Kiley, Judge, Therefore, dissented have no alternative but opinion. filed

to dissent and vote to reverse. America, UNITED STATES Plaintiff-Appellee,

George GROOMS, James Defendant- Appellant.

No. 17421. Appeals,

United States Court of

Seventh Circuit.

Jan. 27,1972.

As Modified March

Case Details

Case Name: Calderone Enterprises Corporation v. United Artists Theatre Circuit, Inc.

Court Name: Court of Appeals for the Second Circuit

Date Published: Dec 28, 1971

Citation: 454 F.2d 1292

Docket Number: 293, Docket 71-1713

Court Abbreviation: 2d Cir.