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Auwood v. Harry Brandt Booking Office Inc.

decided: June 17, 1988.

WILLIAM AUWOOD AND NEAL S. OSSEN, AS TRUSTEES IN BANKRUPTCY FOR LIBERTY THEATRE CORPORATION, PLAINTIFFS-APPELLANTS, CROSS-APPELLEES,
v.
HARRY BRANDT BOOKING OFFICE, INC., GROTON CINEMA, INC., AND UNITED ARTISTS COMMUNICATIONS, INC., DEFENDANTS-APPELLEES, CROSS-APPELLANTS



Appeal and cross-appeals from a judgment of the United States District Court for the District of Connecticut, entered after a jury trial before Peter C. Dorsey, Judge, awarding plaintiffs $3.00 in treble damages for injury resulting from violation of antitrust laws, 15 U.S.C. § 1 et seq. See 647 F. Supp. 1551 (1986). Vacated in part, and remanded for entry of judgment in favor of plaintiffs in the amount of $225,000 in treble damages, less settlement amounts.

Timbers, Kearse, and Mahoney, Circuit Judges.

Author: Kearse

KEARSE, Circuit Judge:

Plaintiffs William Auwood and Neal S. Ossen, as Trustees in bankruptcy for Liberty Theatre Corporation ("Liberty"), appeal from a final judgment entered in the United States District Court for the District of Connecticut following a jury trial before Peter C. Dorsey, Judge, awarding them $3.00 as treble damages for injury suffered by Liberty as a result of an agreement or conspiracy among the defendants to allocate "first-run" films among theatres other than Liberty, in violation of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (1982). On appeal, plaintiffs contend that the district court erred (1) in denying their motion for a new trial on the issue of damages, and (2) in reducing the jury's damage award of $75,000, labeled by the jury as "nominal," to $1. Defendants Harry Brandt Booking Office, Inc. ("Brandt"), Groton Cinema, Inc. ("Groton Cinema"), and United Artists Communications, Inc. ("UA Communications"), cross-appeal, contending (1) that the court should have granted judgment in their favor notwithstanding the verdict ("n.o.v.") because plaintiffs failed to prove a conspiracy of which defendants were members and failed to prove injury, and (2) that any award of costs or attorneys' fees to plaintiffs should be reduced by amounts previously received by plaintiffs in settlements with other defendants. For the reasons below, we conclude that the judgment of the district court should be modified to award plaintiffs $225,000 in treble damages, less amounts plaintiffs have received from other alleged coconspirators in settlement of their claims.

I. BACKGROUND

From 1976 to 1981, Liberty operated a movie theatre in Uncasville, Connecticut, midway between the cities of Norwich and New London. In the operation of its business, Liberty sought to license motion pictures for exhibition on a "first-run" basis, i.e., to give the first exhibition of a film released by a major film distributor in a given geographical market. It secured few first-run films, and in 1981 it declared bankruptcy.

In 1979, Liberty and Auwood, its principal, commenced the present action against several theatre chains and film distributors, alleging that the defendants had entered into an agreement among themselves to allocate the rights to license first-run films among the exhibitor parties to the agreement, to the exclusion of Liberty, thereby causing injury to Liberty in its business and property in violation of § 1 of the Sherman Act, 15 U.S.C. § l. The complaint sought an unstated amount in damages, to be trebled in accordance with § 4 of the Clayton Act, 15 U.S.C. § 15 (1982).

After some years of discovery, several of the defendants entered into settlement agreements with plaintiffs. They paid plaintiffs a total of at least $97,000 and were dismissed from the case. The case proceeded to trial against the present defendants: Groton Cinema, which operated a movie theatre in New London; UA Communications, which is Groton Cinema's parent (also referred to as "UATC"); and Brandt, which was a booking agent for Groton Cinema and a theatre in Norwich (the "Norwich Cinema").

A. The Jury Verdicts

A 13-day jury trial was held, with the jury considering separately the issues of liability and damages. Pursuant to Fed. R. Civ. P. 49(a), special verdict interrogatories were given to the jury on each set of issues.

On the liability issues, the jury found that Brandt, Groton Cinema, and UA Communications had formed, joined, or participated in a conspiracy, combination, or agreement which was intended to and did constitute an unreasonable restraint of trade. It found that these actions adversely affected Liberty's opportunities to obtain a fair allocation of first-run films and proximately caused injury to Liberty's business.

As to damages, plaintiffs had contended that they were entitled to lost profits calculated either on the basis that Liberty bid on and was denied its fair share of first-run films (the "demand theory"), or on the basis that it was futile for Liberty to bid but that absent the conspiracy Liberty would have earned profits comparable to those earned by Norwich Cinema (the "comparability theory"). Plaintiffs also contended that because prior to being driven into bankruptcy, Liberty had never been a profitable operation, plaintiffs were entitled to recover any out-of-pocket losses Liberty had sustained. Plaintiffs claimed that Liberty's actual losses totaled $218,610 and that they should recover an additional $125,024 in lost profits.

Although plaintiffs eventually appeared to back away from the demand theory, the trial court instructed the jury that it could award damages on the basis of either the comparability theory or the demand theory. If plaintiffs had proven that Liberty "bid for the right to show a particular picture and that its bid was rejected because of the unlawful conspiracy," the jury could award the difference between the profits Liberty would have made on the picture it bid on unsuccessfully and the profits it made on the picture actually shown. If the jury found that Liberty was comparable to the Norwich Cinema and that, because of the conspiracy, it was futile for Liberty to bid on first-run films, the jury could award plaintiffs the difference between Liberty's net receipts (box office receipts minus costs and expenses) and the Norwich net receipts.

The court also instructed the jury that it could award nominal damages, stating, in part, as follows:

Nominal damages are a minimal sum that may be awarded when a person's rights have been violated, but when he has not proved any actual damages or when he has been unable to prove an amount to which his injuries might entitle him.

You have found defendants have violated plaintiffs' legal rights, and if you should further find that plaintiffs have not proven any of the damages alleged in the complaint, you may award plaintiffs nominal damages.

In response to specific interrogatories, the jury found that as of June 1977, it would have been futile for Liberty to attempt to obtain first-run films in open bidding. It also found that Liberty was not comparable to the Norwich Cinema for the period 1978-1981. As to the amount of damages, the jury answered interrogatories as follows:

3. What amount, if any, have plaintiffs proven would fairly, reasonably and justly compensate plaintiffs for any actual losses sustained, that is, from costs exceeding revenues, as proximately caused by defendants' conduct:

(a) For the period 1976-1977 . . . $3,000.00

(b) For the period 1978-1981 . . . $67,000.00

(c) For the period 1982-1985 . . . $5,000.00

4. What amount, if any, have plaintiffs proven would fairly, reasonably and justly compensate plaintiffs for any lost profits sustained during the period 1978-April 1981 ...


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