Source: https://supreme.justia.com/cases/federal/us/327/251/
Timestamp: 2019-04-24 16:50:09+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 327 › Bigelow v. RKO Pictures, Inc.
in consequence of respondents' unlawful acts, they had suffered a loss of earnings in excess of $120,000 during the 5-year period from 1937 to 1942. Two classes of evidence were introduced by petitioners to establish their damage. One was a comparison of earnings during the 5-year period of petitioners' theater with those of a comparable theater of the respondents, which showed a difference of nearly $116,000 in favor of the latter. The second was a comparison of the receipts of petitioners' theater for the five years following July 1937 with the receipts for the four years immediately preceding, which showed a decline aggregating more than $125,000. The jury returned a verdict for petitioners in the sum of $120,000, and the trial court gave judgment for treble that amount. The circuit court of appeals reversed on the sole ground that the evidence of damage was insufficient for submission to the jury, and directed entry of judgment for respondents non obstante veredicto.
Held: that the evidence was sufficient to sustain the verdict for the petitioners. Pp. 327 U. S. 253-254, 327 U. S. 266.
(a) The evidence was ample to support a just and reasonable inference that petitioners were damaged by respondents' acts. P. 327 U. S. 266.
(b) Whatever restraints respondents' distribution system may have imposed, and whether the policy later adopted of showing double features was or was not itself a product of an unlawful conspiracy, petitioners were entitled, as of right, to continue to purchase and show films which had not had prior showing, free of restraints of the unlawful distribution system. P. 327 U. S. 262.
(c) A fair measure of the damage to that right of the petitioners was the loss of petitioners' admission receipts resulting from the operation of the unlawful distributing system. Pp. 327 U. S. 262-263.
(d) The fact that, by reason of respondent's tortious acts in maintaining the discriminatory distribution system, the petitioners were unable to prove what their earnings would have been under freely competitive conditions did not preclude a verdict for the petitioners. P. 327 U. S. 263.
(e) The comparison of petitioners' receipts before and after respondents' unlawful action impinged on petitioners' business afforded a sufficient basis for the jury's computation of the damage where respondents' wrongful action had prevented petitioners from making any more precise proof of the amount of the damages. P. 327 U. S. 266.
a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly. In such circumstances, juries are allowed to act on probable and inferential, as well as upon direct and positive, proof. Story Parchment Co. v. Paterson Co., 282 U. S. 555; Eastman Kodak Co. v. Southern Photo Co., 273 U. S. 359. P. 327 U. S. 264.
3. Elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty in computing damages which his wrong has created. P. 327 U. S. 265.
From a judgment for the plaintiffs in a suit for damages under the antitrust acts, the defendants appealed. The circuit court of appeals reversed. 150 F.2d 877. This Court granted certiorari. 3 26 U.S. 709. Reversed, p. 327 U. S. 266.
some date prior to November 1, 1936, to the date the suit was brought, July 28, 1942, pursuant to which film was distributed among moving picture theaters in the Chicago district in such a manner that theaters owned by some of the conspirators were enabled to secure and show feature pictures in advance of independent exhibitors, not affiliated with respondents, such as petitioners.
The gist of the complaint is that, by reason of the conspiracy, petitioners were prevented from securing pictures for exhibition in their theater until after the preferred exhibitors had been able to show them in the earlier and more desirable runs, and that petitioners have thus been discriminated against in the distribution of feature films in favor of competing theaters owned or controlled by some of the respondents. Petitioners charged that, in consequence, they had been subjected to loss of earnings in excess of $120,000 during the five year period from July 27, 1937, to July 27, 1942. The matter of the injunction was reserved, and the case went to trial solely on the question of damages. The jury returned a verdict for $120,000 in petitioners' favor. The trial court gave judgment for treble that amount, as prescribed by § 4 of the Clayton Act. The Circuit Court of Appeals for the Seventh Circuit reversed on the sole ground that the evidence of damage was not sufficient for submission to the jury, and directed the entry of a judgment for respondents non obstante veredicto. 150 F.2d 877. We granted certiorari, 326 U.S. 709, because of the importance of the problem presented.
given to the jury, taking that view of the evidence most favorable to petitioners. Petitioners have been, since November 1, 1936, the owners in partnership of the Jackson Park Theater, located on the south side of Chicago. Respondents RKO Radio Pictures, Inc., Loew's, Inc., Twentieth Century-Fox Film Corporation, Paramount Pictures, Inc., and Vitagraph, Inc., are distributors of motion picture films. Respondent RKO also owns two large first-run theaters in the Chicago Loop. Respondent Balaban & Katz Corporation is a motion picture exhibitor which operates a chain of some fifty theaters in Chicago and its suburbs, including the Maryland Theater and others on the south side of Chicago which compete with the petitioners' Jackson Park Theater. Balaban & Katz is a subsidiary of Paramount. Respondent Warner Bros. Circuit Management Corporation is an exhibitor which operates more than twenty theaters in Chicago, including several on Chicago's south side which also compete with petitioners' theater. Warner Bros. Circuit Management Corporation and Vitagraph are subsidiaries of Warner Bros. Pictures, Inc. Respondent Warner Bros. Theaters, Inc., is also affiliated with Warner Bros. Pictures, Inc., and holds title to certain of the Warner theaters.
theaters in the competitive area. In Chicago, these contracts uniformly provide that the larger theaters in the Chicago Loop, all owned, leased, or operated by one or more of the respondents, shall have the right to the "first run" of the motion pictures distributed by the respondents, for one week or such longer period as they may desire to exhibit them. Following the "first run," the motion picture may not be shown in any Chicago theater outside the Loop for three weeks, a period known as "clearance." In the fourth week following the end of the Loop run, the film is released for exhibition in theaters outside the Loop for successive runs in various theaters, for periods known as the "A," "B" and "C" "pre-release weeks," followed by weeks of "general release."
The earlier a playing position, the more desirable it is, since it is preferable to exhibit pictures before they have been shown to the public in other theaters in the competitive area. There was evidence that respondent distributors and exhibitors conspired to give to the distributor controlled or affiliated theaters preferential playing positions in the release system over the positions allotted to independent competing theaters, including that of petitioners, with the result that petitioners' theater was unable to obtain feature films until the first week of "general release," or ten weeks after the end of the Loop run. By that time, most of respondent exhibitors' theaters, with several of which petitioners' theater competes, and which enjoyed the prior "A," "B" or "C" pre-release runs, had finished their showings. Regardless of the price offered for rental of film, the respondent exhibitors, in execution of the conspiracy, refused to release films to petitioners' theater except for the first week of "general release."
from acquiring films for exhibition until they had been shown in respondent distributors' theaters competing with the Jackson Park, evidence was introduced in the course of the trial tending to show that respondents conspired to maintain the release system as part of a conspiracy to maintain minimum admission prices to be charged by exhibitors generally. This proof indicated that the object of this conspiracy was to make it possible to maintain high admission prices in the Loop theaters by restricting the price competition of the subsequent run theaters. The distributors' contracts with the Loop theaters provided for film rentals based on a percentage of the admission fees collected. It appeared that the rental contracts entered into between respondent distributors and the Chicago exhibitors, including respondent exhibitors and petitioners, uniformly contained schedules of minimum admission prices fixed on the basis of the playing position assigned. There was thus evidence tending to show that the release system and the price-fixing system were each an integral part of an unlawful conspiracy to give to the Loop theaters the advantages of a first-run protected from low-price competition.
Respondents' evidence, on the other hand, tended to show that the release system was a natural growth in the industry, and that the fixed price system had resulted from the individual action of distributors, not acting in concert, to market their copyrighted product in such a manner as to secure the best possible financial return from the film distributed. See Interstate Circuit v. United States, 306 U. S. 208; consent decree in United States v. Balaban & Katz Corp., C.C.H.Fed.Trade Reg.Serv., 7th Ed., Court Decisions Supplement, p. 5025.
Maryland Theater, the two being comparable in size, the Jackson Park being superior in location, equipment, and attractiveness to patrons. Under the discriminatory release system, the Maryland had been allowed to exhibit pictures in the C pre-release run, one week ahead of petitioners' first week of general release. The evidence showed that, during the five year period, the Maryland's net receipts, after deducting film rentals paid to distributors, exceeded petitioners' like receipts by $115,982.34.
theaters with playing positions ahead of petitioners' used nearly all of the films distributed, and the pictures which petitioners were able to exhibit in the first week of general release, by reason of the distribution system, had had prior showing in nearly every case.
"was taken away by defendants' prior contracts, made pursuant to and a part of the conspiracy, and placed under the restriction of the illegal system, and thereafter was not obtainable by plaintiffs, except by use of the illegal system."
"If plaintiffs have been injured by the alleged acts of the defendants, they must choose one or the other of the said two theories of determining damages or the amount of damages."
was greater before the adoption of double billing did not serve to show what petitioners' earnings would have been afterwards in the absence of the release system.
Similarly, the Court of Appeals rejected the comparison between petitioners' receipts and those of the Maryland Theater during the five years in question, since, as it thought, the comparison would not tend to prove what the earnings of either theater would have been during the critical period under any system other than that which was the product of the unlawful conspiracy.
Upon the record in this case, it is indisputable that the jury could have found that, during the period in question, a first- or prior-run theater possessed competitive advantages over later run theaters because of its greater capacity to attract patronage to pictures which had not been shown elsewhere and its ability to charge higher admission prices than subsequent-run theaters, and that, other things being equal, the establishment of the discriminatory release system was damaging to the petitioners, who were relegated by it to a playing position inferior to that of their competitors.
Each of the two classes of evidence introduced by petitioner tended to show damage. They were not mutually exclusive, as the courts below seem to have thought, since each, independently of the other, tended to show that petitioners' inability to obtain films for exhibition before they had been shown elsewhere adversely affected their receipts, in the one case by showing that those receipts decreased when petitioner could no longer purchase such films following the introduction of double-features and, in the other, that petitioners' receipts from its theater were less by substantially the same amount than receipts of its competitor, the prior-run Maryland Theater, operated under conditions in other respects less favorable than those affecting petitioners.
measure of damage, because the unlawful system which respondents have created has precluded petitioners from showing that other conditions affecting profits would have continued without change unfavorable to them during the critical period if that system had not been established, and petitioners had conducted their business in a free competitive market. Respondents also contend that the jury's verdict establishes that the release system was part of a price-fixing conspiracy and, on the assumption that price-fixing and the discriminatory system of release were inseparable parts of a single scheme, argue that, as the conspiracy as a whole probably enabled petitioners artificially to raise their prices to an undetermined extent, the overall effect of the conspiracy may well have been to benefit petitioners even though the plan of distribution, one of its features, may have injured them. But we think these arguments are based on a misapprehension of the precise conditions in which the jury was permitted to and did apply the tendered measure of damages, and that it also ignores controlling principles of the law of damages.
"Only in the event that you find that there exists no conspiracy or combination to fix minimum admission prices or no unreasonable restraint of trade by the defendants, by virtue of the Chicago system of release, will you have occasion to consider whether or not the plaintiffs demanded and sought to obtain a playing position in 'C' week."
The jury's verdict was, as the court below held, based on the damage suffered by petitioners in consequence of the deprivation, by the discriminatory operation of the release system, of their demonstrated freedom to rent and exhibit some films which had not had prior showing. Hence, we take it that the verdict did not establish that the fixed minimum admission prices were the result of the unlawful conspiracy, or that the petitioners' purchases of such films, and the operation of their theater, before the double-feature practice was inaugurated, were, for purposes material here, affected by the conspiracy.
right by respondents' unlawful distributing system was the loss of petitioners' admission receipts resulting from the application of that system to petitioners.
Respondents only answer is that, without the conspiracy, the conditions of purchase of films might not have been the same after as they were before July, 1937; that, in any case, it is not possible to say what those conditions would have been if the restraints had not been imposed, and that those conditions cannot be ascertained, because respondents have not removed the restraint. Hence, it is said, petitioners' evidence does not establish the fact of damage, and that, further, the standard of comparison which the evidence sets up is too speculative and uncertain to afford an accurate measure of the amount of the damage.
amount by which his current prices were higher before the conspiracy than after, and by the extent to which the value of petitioner's business property had declined after the conspiracy had begun to operate.
In each case, we held that the evidence sustained verdicts for the plaintiffs, and that, in the absence of more precise proof, the jury could conclude as a matter of just and reasonable inference from the proof of defendants' wrongful acts and their tendency to injure plaintiffs' business, and from the evidence of the decline in prices, profits, and values not shown to be attributable to other causes, that defendants' wrongful acts had caused damage to the plaintiffs. In this, we but followed a well settled principle. See Hetzel v. Baltimore & Ohio R. Co., 169 U. S. 26, 169 U. S. 38-39. The tortious acts had, in each case, precluded ascertainment of the amount of damages more precisely, by comparison of profits, prices, and values as affected by the conspiracy, with what they would have been in its absence under freely competitive conditions. Nevertheless, we held that the jury could return a verdict for the plaintiffs even though damages could not be measured with the exactness which would otherwise have been possible.
In such a case, even where the defendant, by his own wrong, has prevented a more precise computation, the jury may not render a verdict based on speculation or guesswork. But the jury may make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly. In such circumstances, "juries are allowed to act on probable and inferential as well as [upon] direct and positive proof." Story Parchment Co. v. Paterson Parchment Paper Co., supra, 282 U. S. 561-564; Eastman Kodak Co. v. Southern Photo Material Co., supra, 273 U. S. 377-379. Any other rule would enable the wrongdoer to profit by his wrongdoing at the expense of his victim. It would be an inducement to make wrongdoing so effective and complete in every case as to preclude any recovery, by rendering the measure of damages uncertain.
Failure to apply it would mean that the more grievous the wrong done, the less likelihood there would be of a recovery.
The most elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has created. See Package Closure Corp. v. Seal-right Co., 141 F.2d 972, 979. That principle is an ancient one, Amory v. Delamirie, 1 Strange 505, and is not restricted to proof of damage in antitrust suits, although their character is such as frequently to call for its application. In cases of collision where the offending vessel has violated regulations prescribed by statute, See The Pennsylvania, 19 Wall.125, 86 U. S. 136, and in cases of confusion of goods, Great Southern Gas & Oil Co. v. Logan Natural Gas & Fuel Co., 155 F. 114, 115; cf. F. W. Woolworth Co. v. NLRB, 121 F.2d 658, 663, the wrongdoer may not object to the plaintiff's reasonable estimate of the cause of injury and of its amount, supported by the evidence, because not based on more accurate data which the wrongdoer's misconduct has rendered unavailable. And, in cases where a wrongdoer has incorporated the subject of a plaintiff's patent or trademark in a single product to which the defendant has contributed other elements of value or utility, and has derived profits from the sale of the product, this Court has sustained recovery of the full amount of defendant's profits where his own wrongful action has made it impossible for the plaintiff to show in what proportions he and the defendant have contributed to the profits. Westinghouse Electric & Mfg. Co. v. Wagner Electric & Mfg. Co., 225 U. S. 604; Hamilton-Brown Shoe Co. v. Wolf Brothers & Co., 240 U. S. 251; see also Sheldon v. Metro-Goldwyn Pictures Corp., 309 U. S. 390, 309 U. S. 406.
"The constant tendency of the courts is to find some way in which damages can be awarded where a wrong has been done. Difficulty of ascertainment is no longer confused with right of recovery"
plaintiff's rights. Story Parchment Co. v. Paterson Parchment Paper Co., supra, 282 U. S. 565, and see also Palmer v. Connecticut Railway Co., 311 U. S. 544, 311 U. S. 559, and cases cited.
The evidence here was ample to support a just and reasonable inference that petitioners were damaged by respondents' action, whose unlawfulness the jury has found and respondents do not challenge. The comparison of petitioners' receipts before and after respondents' unlawful action impinged on petitioners' business afforded a sufficient basis for the jury's computation of the damage where the respondents' wrongful action had prevented petitioners from making any more precise proof of the amount of the damage.
preventive and punitive remedies: the injunction to put a prompt stop to illegal restraints, and the stern sanctions of the criminal law to deter such restraints. A right of action is also given to any individual who has been "injured in his business" by such illegality. But, while action by the Government to enforce the Anti-Trust Acts merely requires proof of illegality, an individual's right of recovery is dependent on proof of legal injury to him, and legal injury is not automatically established by proof of a restraint of trade in violation of the Sherman Law. See Keogh v. Chicago & N.W. R. Co., 260 U. S. 156, 260 U. S. 162-163.
Therefore, our real question is whether the respondents' violation of the Sherman Law illegally injured the petitioners. This necessarily involves substantial proof that the petitioners' business would have been more profitable if the distribution of movie films in Chicago had been a free-for-all, and if no factor of the scheme that constituted an illegal conspiracy had been in operation, than it was under the conditions that actually prevailed. Specifically, one feature of the conspiracy was stipulated rentals by distributors in furnishing films to exhibitors. The record appears devoid of proof that, if competitive conditions had prevailed, distributors would not have made rental contracts with their respective exhibiting affiliates to the serious disadvantage of independents like the petitioners. They might individually have done so and not have offended the Sherman Law.
"The rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of their amount."
282 U.S. at 282 U. S. 562. In the Eastman and Story cases, the plaintiffs established what their profit was when competitive conditions prevailed, and that the subsequent loss properly became exclusively attributable to restraint of such conditions. Such a comparison is not revealed by this record. It was wholly speculative, as the Circuit Court of Appeals properly held in applying the rule in the Story Parchment Co. case, whether the intake of petitioners would have been more profitable if the distribution of films in Chicago had been left wholly to the haggling of a free market. 150 F.2d 877. As to the subtleties involved in such speculation, compare International Harvester Co. v. Kentucky, 234 U. S. 216, 234 U. S. 223-224.
Where there is conceded legal injury, as for instance, where one man's chattel is taken by another, as in the old case of Armory v. Delamirie, 1 Strange 505, we start with the legal injury, and the problem is merely one of ascertaining damages "uncertain in respect to their amount." Such cases are not helpful where the crucial issue, as here, is whether there is solid proof of the existence of a legal injury.

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