Court Opinion

ID: 9339250
Source: CourtListenerOpinion
Date Created: 2022-12-16 17:45:58.75274+00
Date Added: 2024-06-11T17:15:18.875848
License: Public Domain

HAYNSWORTH, Chief Judge:
In this civil antitrust action judgment was entered upon the verdict of a jury in favor of the plaintiffs of $100,000 actual damages, trebled under the provisions of 15 U.S.C.A. § 15 to $300,000. In entering the judgment, the district court declined to apply the doctrine of collateral estoppel to foreclose the claim, concluding that in the previous litigation in the state court the basic factual dispute had not been settled. We disagree and reverse.
The nine motion picture distributors, representing seventy-five per cent of the industry, leased moving pictures to theatres throughout the country under rental agreements providing for a payment of a per*714centage of the theatre’s box office receipts to the distributor. The agreements authorized the' distributor to make periodic inspections and to audit the books of the theatre in order to insure that the theatre is not underrepresenting box office receipts. The distributors employed the law firm of Sargoy, Stein and Hanft to conduct the required investigations.
Philip Kornfeld, an accountant employed by the Sargoy firm, undertook an investigation of the plaintiff Azalea Drive-In Theatre. He found that the reporting was consistent with the books maintained by Azalea, but he found other evidence from which the defendants estimated that there had been underdisclosure and underreporting by as much as $240,000. Azalea’s representatives insisted the books were accurate. After extensive negotiations, representatives of Azalea executed and delivered a promissory note for $70,000 in settlement of the controversy.
The first payment due on the note was never made, and a suit was filed in a state court to recover on the instrument. Azalea answered setting forth three affirmative defenses, (1) that the note was given without consideration, (2) that it was executed and delivered by Azalea’s president, Ernest Price, under duress, he allegedly having been threatened by Kornfeld with a group boycott, or that they would deal with him on less favorable terms than others if he did not, and, (3) the general allegation that the note was obtained in violation of the antitrust laws of the United States, generally and specifically in violation of the Robinson-Patman Act. There was also a counterclaim setting forth the antitrust claims. The state court judge struck the third affirmative defense and the counterclaim upon the ground that enforcement of the antitrust laws was within the exclusive jurisdiction of the federal courts, and the case proceeded to trial before the judge without a jury.
At the trial Price testified that Kornfeld had threatened a group boycott. This was denied by Kornfeld who testified that he had had many such negotiations and had never employed any such tactic.
After the conclusion of the trial, the judge incorporated his findings and conclusions in a letter during which he stated one of the questions to be determined by him “2. Was there sufficient and convincing evidence of duress on the part of the plaintiffs to the detriment of the defendants.” He included no detailed statement of his factual findings but stated “as the trier of the facts, the Court decides same in favor of the plaintiffs.” He directed the preparation and presentation of an order granting judgment in favor of the plaintiffs for $70,-000, the face of the note, plus interest and an attorney’s fee for 25%.
Meanwhile, the plaintiffs here had filed this action in the district court charging a violation of the Clayton Act and the use of “monopolistic and economic threat, coercion and duress” in obtaining the $70,000 note. After the conclusion of state court litigation, the answer was amended to include an assertion that the doctrine of collateral estoppel foreclosed any relitigation of the matter of the alleged threat and resulting duress. Reserving his ruling on the matter until after the verdict, the court then ruled that the doctrine was inapplicable. Noting the absence of specific findings, he reasoned that the state court judge may have found that the threat was made but that it did not constitute duress.
As it developed, however, the factual dispute in the federal court was exactly the same as the factual dispute in the state court. Price testified that he had been threatened with a group boycott and executed the note for money he did not owe only under the force of the threat. The testimony for the defense was that no such threat was made. No one suggested that a threat was made but that it was made and understood to have been in jest or for some other reason did not restrict the exhibitor in the free exercise of his will. When the state trial judge stated that he found the facts in the plaintiffs’ favor, he must have found that no threat had been made.
*715Under established principles of collateral estoppel, any issue of ultimate fact which was actually litigated and necessarily determined in a prior actipn cannot again be litigated between the same parties. Yates v. United States, 354 U.S. 298, 335-36, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957); United States v. Davis, 460 F.2d 792, 795-96 (4th Cir. 1972). We conclude that the issue of threat vel non was litigated and decided in the state court proceedings and was not open to relitigation in the district court.
Nor are we persuaded that application of collateral estoppel here materially compromises Azalea’s right to a trial by jury. With respect to the state court trial, that right was waived in the terms of the note, and the rules foreclosing relitigation of factual issues between the same parties serve such important policies that relitigation should not be allowed though the fact finding processes in the first tribunal were unlike those which otherwise would be available in the second.1
For these reasons we reverse the judgment in favor of the plaintiff theatres for damages under the antitrust laws measured by the amount of the valid state court judgment.

REVERSED.

. In this connection, the factual question did not turn alone upon the credibility of the checkers sent to the theatre by the defendants. Their testimony was strongly corroborated by objective evidence obtained from the independent concessionaire. If Azalea’s books were correct, the records of the concessionaire show that each patron of the theatre spent an extraordinarily large amount of money for refreshments.