The opinion of the court was delivered by: Campbell, District Judge.
Plaintiff brought this action, seeking damages and injunctive
relief, for the alleged violations by defendants of Sections 1
and 2 of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1, 2.
Plaintiff, a so-called neighborhood movie house, charges, among
other things, in its complaint that the defendants violated the
Act by engaging in such practices as block booking; forcing of
short subjects and news reels; arbitrary designation of play
dates; protection and clearance; arbitrary, unconscionable and
discriminatory film rentals; and minimum admission prices. All
defendants filed answers to the complaint and, simultaneously,
defendants Balaban and Katz Corporation and Paramount Pictures,
Inc., moved to strike Paragraphs 18, 24 and 25 of the complaint
as being immaterial. It is on these motions that the cause is now
before the Court.
The subject paragraphs contain the following allegations:
"18. The City of Chicago was one of the first cities in the
United States where motion pictures were exhibited to the public.
In the early 1900's motion pictures were being exhibited in the
City of Chicago, both in the downtown business district,
hereinafter referred to as the `Loop', and in the outlying
business and residence districts, hereinafter referred to as
`neighborhood theatres'. Several small motion picture studios
were active in the early 1900's in the City of Chicago and the
business of exhibiting motion pictures spread rapidly throughout
the city. The defendant, Balaban and Katz Corporation, a Delaware
corporation, was organized and the management of said corporation
proceeded to acquire, either by purchase or by building, most of
the large movie houses in the Loop and in the neighborhoods. Over
a period of years the stockholders of Balaban and Katz
Corporation acquired stock interests in some of the other
defendant producers and distributors. As a result of the
acquisition of such stock the defendant, Balaban and Katz
Corporation, has been enabled to acquire such influence and power
that it now owns and controls most, if not all of the
metropolitan deluxe motion picture houses in downtown Chicago.
"24. On July 20, 1938, the United States of America filed a
suit in equity in the District Court of the United States for the
Southern District of New York, in cause numbered Equity No.
87-273 entitled `United States of America, Plaintiff, v.
Paramount Pictures, Inc., et al., defendants,' charging the
defendants or their privies in substance with the same violations
of Sections 1 and 2 of the Sherman Anti-Trust Act as are charged
in this complaint against the same defendants or their privies.
On June 11, 1946, a Three Judge Statutory Court filed its
memorandum as reported in 66 F. Supp. 323-359, making certain
findings and conclusions. This memorandum is incorporated herein
and made a part hereof. On December 31, 1946, the said District
Court filed a final decree in said cause. Plaintiff states the
said adjudication conclusively determines the issues in this
complaint in favor of the plaintiff and that defendants are
estopped from relitigating any of the issues so previously
"25. On the 28th day of July, 1942, a suit was filed in the
District Court of the United States for the Northern District of
Illinois entitled Bigelow et al. v. RKO Pictures et al., Equity
No. 4525, reported subsequently in 150 F.2d 877 (the decision of
the Circuit Court of Appeals for the 7th Circuit) and
327 U.S. 251 [66 S.Ct. 574, 90 L.Ed. 652] (the decision of the United
States Supreme Court). On October 16, 1946, this Court made and
entered its final decree in said cause. Plaintiff incorporates
herein and makes a part hereof the aforesaid opinions in the two
decisions of this cause. Plaintiff also requests this court to
take judicial notice of the files and records of said cause in
this court. Plaintiff states that the said adjudications
conclusively determine the issues raised in its complaint in
favor of plaintiff and that defendants are estopped from
relitigating any of the issues so adjudicated."
Paragraph 18 should not be stricken upon these motions. It may
be true, as defendants contend, that the stockholders of Balaban
and Katz Corporation were not alleged to be parties to an illegal
conspiracy, that there was nothing illegal in the acquisition by
Balaban and Katz Corporation of the deluxe downtown theatres, and
that there is nothing illegal in the stockholders of Balaban and
Katz Corporation owning stock in other defendant producers and
distributors. However, the Court's power to strike a pleading
should be applied judiciously and where, as here, the allegation
provides background and historical data, it should be retained.
To a certain extent the allegations are conclusory, but it is
doubtful whether they are prejudicial to defendants. It must be
remembered that almost invariably violations of the Anti-Trust
laws are proved inferentially. In the instant case, the
defendants have been charged with a conspiracy to violate those
laws, and the matter set forth in Paragraph 18 would tend to
indicate an opportunity and a motive for engaging in such a
Paragraphs 24 and 25 of the complaint are not, however, subject
to the same protections. Apparently, plaintiff seeks to invoke
15 U.S.C.A. § 16 to effect their retention, but is prevented from so
doing by those very provisions. The pertinent portion of that
section provides: "A final judgment or decree rendered in any
criminal prosecution or in any suit or proceeding in equity
brought by or on behalf of the United States under the antitrust
laws to the effect that a defendant has violated said laws shall
be prima facie evidence against such defendant in any suit or
proceeding brought by any other party against such defendant
under said laws as to all matters respecting which said judgment
or decree would be an estoppel as between the parties thereto:
Provided, This section shall not apply to consent judgments or
decrees entered before any testimony has been taken. * * *"
At the time this action was commenced, the case of United
States v. Paramount Pictures, Inc., Equity No. 87-273, referred
to in Paragraph 24 of the complaint, was on appeal to the United
States Supreme Court. It follows, therefore, that no final
judgment or decree had been entered in the cause which would
constitute prima facie evidence here. Furthermore, the Supreme
Court, 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, remanded the
cause to the District Court for further proceedings, whereupon
Paramount Pictures, Inc., and other defendants therein entered
into a consent decree with the United States before any testimony
had been taken. By so doing, Paramount brought itself within the
proviso of Section 16 set forth above. In any event, Balaban and
Katz Corporation was not a party to that proceeding and could not
be estopped from litigating similar issues in this cause. The
same disposition was made of this same problem in Fifth & Walnut,
Inc., v. Loew's, Inc., et al., 2 Cir., 1949, 176 F.2d 587.
Clearly, the case of Bigelow et al. v. RKO Pictures, et al.,
referred to in Paragraph 25 of the complaint, creates no estoppel
against the defendants in the present suit, since the alleged
estoppel lacks the requisite mutuality. The doctrines of res
adjudicata and estoppel by judgment are inapplicable unless the
same parties have had their day in court touching the matter
litigated and unless the judgment is equally available to both
parties. Quite obviously, if the judgment in the Bigelow case had
been rendered in favor of the defendants, they would not now be
permitted to interpose it as a bar to plaintiff's action. Lacking
mutuality of reliance, therefore, no estoppel can be asserted.
Lastly, in regard to plaintiff's contention that defendants'
motions should not properly be considered as motions to strike
since they were filed simultaneously with their answers, it is
sufficient to state that plaintiff's argument is without merit.
The practice of submitting a motion to strike with the answer is
both sound and efficient, and serves to avoid protracted
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