Court Opinion

ID: 9548491
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:04:20.052296+00
Date Added: 2024-06-11T15:19:02.560245
License: Public Domain

Andersen, J.
(dissenting) — I disagree with the majority's interpretation of section 4 of the Washington Motion Picture Fair Competition Act, RCW 19.58. I agree with the defendant that RCW 19.58.040 does not apply to licensing by negotiation. As the statute states, its restrictions apply *16only if bids are solicited.
It is important initially to discuss the practical implications of the majority's decision, since the majority does not do so. Before discussing these implications, it is equally important to understand the processes of bidding and negotiating.
One court describes the elements of bidding as follows:
distributors use bidding in areas where competition among exhibitors exists. . . . normally the distributor sends exhibitors in the area an "invitation to bid" which contains a brief description of the film, the time at which it will be available and the suggested licensing terms. The exhibitor submits a bid which will include not only financial terms, but also minimum length of run and any requested "clearances" over other theatres in the area. . . . Traditionally, terms on licenses procured by bidding are "firm"; the distributor will not be expected to reduce the agreed terms if the picture is unsuccessful.
Associated Film Distrib. Corp. v. Thornburgh, 614 F. Supp. 1100, 1103 (E.D. Pa. 1985).
The more flexible negotiation process is then described:
Distributors normally use negotiation in areas where there is little or no competition among exhibitors. Under negotiation, a representative of the distributor contacts a specific exhibitor and, without soliciting other offers, attempts to work out a licensing arrangement. Traditionally, terms under negotiated licenses are not firm. If a picture bombs, the distributor may renegotiate the terms downward.
Associated Film, at 1103.
A variation of this practice is competitive negotiation, which is oral bidding. The distributor contacts the exhibitor and indicates that he is soliciting offers from more than one theatre.1
Both bidding and negotiating have their advantages. The advantage of licensing pictures by negotiation is that it enables distributors to finalize exhibition licenses within a *17relatively short period of time.2 On the other hand, while bidding may be more time consuming, many distributors prefer it because they believe the competitive nature of the bidding process results in higher rental terms.3
Under the majority's analysis, the distinctions between negotiating and bidding will disappear. The time and money saving advantages of negotiation will be lost in a process that requires written negotiations (now turned into bids), examination of those bids and rebidding if no bids are submitted. It is interesting to note that the majority goes even farther than the plaintiff requested. Seven Gables sought to force only competitive negotiation (negotiation between a distributor and more than one exhibitor) to comply with the bidding requirements of RCW 19.58.040. Plaintiff also would have allowed negotiation if no bids were submitted. The trial court ruled accordingly and exempted distributors from the procedures of RCW 19.58-.040 if they dealt with only one exhibitor and if no written bids were received in response to an invitation to bid.
In a sweeping and uninvited incursion into private business relationships, however, the majority holds that a distributor must comply with RCW 19.58.040 even when dealing with only one exhibitor. This means that an exhibitor must submit proposed terms in writing, must be present when that offer is read, and may examine the terms of his own offer. The majority also holds that negotiation is forbidden even if no written offers are submitted. The flexibility of negotiation is thus outlawed, and in its place is substituted an unwieldy and impractical set of guidelines.
Not only is the result of the majority's analysis unwieldy, it is also unnecessary under RCW 19.58. The majority illogically interprets the motion picture fair competition act in order to conclude that negotiation is subject to the bid*18ding requirements of RCW 19.58.040.
A review of legislative enactments regulating motion picture competition in Pennsylvania and Ohio, and decisions interpreting those enactments, is helpful in interpreting our own statutes on the subject. The Washington act is almost identical to Pennsylvania's, and is in many ways similar to the Ohio statutes. The Sixth Circuit interpreted Ohio's motion picture license agreements act as follows:
Although the statute allows producers and distributors to market films to exhibitors through negotiations rather than competitive bidding, the statute establishes guidelines for competitive bidding if distributors choose bidding as the method of marketing a film.
Allied Artists Picture Corp. v. Rhodes, 679 F.2d 656, 658 (6th Cir. 1982).
A federal District Court similarly recognized that Pennsylvania's Feature Motion Picture Fair Business Practices Law "leaves open to the choice of distributors whether to license by bidding or negotiation."4 Commentators with no axes to grind in the matter have recognized that the acts in all three of these states — Pennsylvania and Ohio, as well as Washington — allow both negotiating and bidding.5
The majority finds comparison of the three acts "inutile" because of "key distinctions" in their wording. I fail to see the variations in wording as "key" at all, and I do find an actual comparison of these statutes to be most helpful in interpreting RCW 19.58.
First of all, several sentences in the purpose provisions of the Washington and Pennsylvania acts are identical.6 Sec*19ond, the definitions of "bid" in all three acts are similar. Washington defines a bid as
a written or oral offer or proposal to buy made by an exhibitor to a distributor in response to an invitation to bid for the license or right to exhibit a motion picture, the license stating the terms under which the exhibitor agrees to exhibit the motion picture.
RCW 19.58.020(1).
Ohio and Pennsylvania define a bid as a written or oral proposal by an exhibitor to a distributor, which proposal is in response to an invitation to bid or negotiate and states the terms under which the exhibitor will agree to exhibit [a motion picture].
See Pa. Stat. Ann. tit. 73, § 203-3 (Purdon Supp. 1985); Ohio Rev. Code Ann. § 1333.05(F) (Page 1979).
The majority takes the position that since a bid in Washington (unlike those in Pennsylvania or Ohio) does not have to state the terms of exhibition, it encompasses negotiation. I consider this analysis unsound. Under the majority's reasoning, a traditional bid need not contain exhibition terms. If such terms are not present, what is the point of a bid? While the definition does not say so explicitly, it seems obvious that a bid must contain the terms under which an exhibitor will agree to exhibit a motion picture. Indeed, amendments to RCW 19.58.020(1) that Seven Gables (plaintiff herein) unsuccessfully pushed at the last session of the Legislature would have required bids to contain exhibition terms.7
It is true that Washington's bid definition does not state, as do the Pennsylvania and Ohio definitions, that a bid may be made in response to an invitation to bid or negotiate. Both licensing methods are referred to, however, in the *20definition of an invitation to bid. In Washington, as in Pennsylvania and Ohio, an invitation to bid is "a written or oral solicitation or invitation by a distributor to one or more exhibitors to bid or negotiate ...” (Italics mine.) See RCW 19.58.020(9); Pa. Stat. Ann. tit. 73, § 203-3 (Purdon Supp. 1985); Ohio Rev. Code Ann. § 1333.05(E) (Page 1979). In the statutes of all three states, therefore, negotiation is mentioned as a distinct activity. Here too the recent proposed amendments to RCW 19.58 are of interest. Seven Gables unsuccessfully urged the Legislature to omit the definition of an invitation to bid altogether, and had it been successful, would thereby have strengthened its present interpretation and the majority's interpretation of RCW 19.58.040.8 The Legislature, however, declined to adopt those proposed amendments.
The bidding/negotiating distinction is found in other sections of RCW 19.58, most of which House Bill 1342, had it been successful, would have deleted. For example, under our present act trade screening is defined as the exhibition of a feature motion picture "which is open to all exhibitors from whom the distributor intends to solicit bids or with whom the distributor intends to negotiate for the license or right to exhibit the feature motion picture." RCW 19.58-.020(14). RCW 19.58.030(2), in turn, states that "[n]o bids may be returnable [and] no negotiations for the exhibition or licensing of a motion picture may take place" before a motion picture has been trade screened. Then subsection 3 of this same statute provides that notice of the screening must be given to exhibitors "from whom bids will be solicited or with whom negotiations will be conducted". To me, at least, it is clear that throughout the act two distinct methods of licensing, namely bidding and negotiation, are contemplated. When RCW 19.58.040 states that it applies to solicitation of "bids", it should be understood to mean what it says — it pertains to "bidding", not negotiating.
As discussed earlier, the majority relies on parts of the *21bid definition contained in RCW 19.58.020(1) to support its position that "bid" includes "negotiation" under the Washington act. The majority dismisses that part of the statutory definition that a bid may be oral, however, in attempting to fit both bidding and negotiating into the requirements of RCW 19.58.040. That statute says that a bid must be submitted in writing.9 If the definition of a bid says that it may be oral or written, and if (as the majority now declares) that definition includes negotiations, then to my mind the most sensible way to resolve any conflict between the definition and RCW 19.58.040 is to simply conclude that negotiations, which are oral, need not comply with the requirements of section .040.
I also believe that the majority overemphasizes the importance of the written bid requirement in the act when it says that the two major issues covered by the Washington act are (1) the prohibition of blind bidding, and (2) the requirement that all bids be submitted in writing. To me this is a false dichotomy. The majority correctly says that the prohibition of blind bidding is a major issue covered by the act, since that prohibition comprises a major statute within the act.10 To my view the majority incorrectly states, however, that written bids are another major issue. The requirement that bids be in writing is found in only one subsection of one of the several statutes contained in the act.11 That statute is the one that comprehensively embraces what is obviously the second major issue covered by the act, namely, the rules that are to be followed when bids are solicited.121 would read this state's motion picture fair competition act to address the following two issues: (1) *22the prohibition of blind bidding and (2) the requirements to be met when bids are solicited.
The majority seemingly elevates the written bid requirement into a major concern of the act in order to justify requiring negotiations to meet the bidding requirements of RCW 19.58.040. I do not see any way, however, that such a forced interpretation can be reasonably justified. The written bid requirement of RCW 19.58.040(2) makes sense to me only when that statute is interpreted as applying only to bidding, and not to negotiating. The same writing requirement is also contained in both the Pennsylvania and Ohio acts, which contrary to the majority's position and supportive of mine, allow oral negotiations.13
I believe that the majority strains to interpret RCW 19.58.040 in a way that is both illogical and makes little practical sense. The benefits of oral negotiating referred to throughout the act are thus interpreted out of the statute by the majority's analysis, and in their place are inserted cumbersome and unnecessary procedures that are nowhere mandated in the act.14
Because I would conclude that RCW 19.58.040 does not apply when a distributor and one or more exhibitors negotiate to license a film, I dissent.
Goodloe and Durham, JJ., concur with Andersen, J.

 Associated Film Distrib. Corp. v. Thornburgh, 614 F. Supp. 1100, 1103 (E.D. Pa. 1985).

 Bartasi, Trade Screening Laws: A Survey and Analysis, 6 Comm/Ent L.J. 91, 99 (1983).

 Bartasi, 6 Comm/Ent L.J. at 99.

 Associated Film, at 1112.

 Bartasi, 6 Comm/Ent L.J. at 107 n.65; Note, Motion Picture Licensing Acts: An Analysis of the Constitutionality of Their Provisions, 51 Fordham L. Rev. 293, 304 n.81 (1982).

 Both acts state that their purposes are to prevent unfair and deceptive acts or practices and unreasonable restraints of trade in the business of motion picture distribution and exhibition within the state, to promote fair and effective competition in that business, and to insure that exhibitors have the opportunity to view *19a motion picture and know its contents before committing themselves to exhibit it in their communities. See RCW 19.58.010; Pa. Stat. Ann. tit. 73, §§ 203-2(7), (8), (10) (Purdon Supp. 1985).

 See Arnold, Legislature Mulls a New Bill To Regulate Movie Bidding, Seattle Posi>-Intelligencer, at C5 (Feb. 4, 1986); House Bill 1342, 49th Legislature (1986). This bill passed the House of Representatives but not the Senate.

 See House Bill 1342.

 RCW 19.58.040(2).

 See RCW 19.58.030.

 See RCW 19.58.040(2).

 See RCW 19.58.040. Similar guidelines are contained in Pa. Stat. Ann. tit. 73, § 203-8 (Purdon Supp. 1985); Ohio Rev. Code Ann. § 1333.07 (Page 1979).

 See Pa. Stat. Ann. tit. 73, § 203-8(c) (Purdon Supp. 1985); Ohio Rev. Code Ann. § 1333.07(D) (Page 1979).

 RCW 19.58.