`Case 1:19—mc-00544-AT Document 41 Filed 01/17/20 Page 1 of 24
`
`[IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF NEW YORK
`
`UNITED STATES OF AMERICA,
`
`Plaintiff,
`
`V.
`
`PARAMOUNT PICTURES, INC,
`
`Defendant.
`
`
`UNITED STATES OF AMERICA,
`
`Plaintiff,
`
`V.
`
`LOEW’S INCORPORATED, ET AL,
`
`Defendants.
`
`
`vvvvvvvvvvvvvvvvvvvvv
`
`Case 1:19-mc—00544-AT
`
`AMICUS CURIAE INDEPENDENT CINEMA ALLIANCE’S MEMORANDUM
`IN OPPOSITION TO THE DEPARTMENT OF JUSTICE’S
`MOTION TO TERMINATE THE PARAMOUNT CONSENT DECREES
`
`G. Kendrick Macdowell
`
`'
`
`James J. Mahon
`
`Counsel, Independent Cinema Alliance
`D,C. Bar No. 436375
`
`(214) 7 82—9985
`kendriok27
`ahoo.com
`
`Becker & Poliakoff LLP
`Local Counsel for ICA
`
`45 Broadway
`17th Floor
`
`New York, New York 10006
`(212) 599—3322
`
`.'l'mahon(d)beckerlawyers.com
`
`
`
`Case 1:19-mc-00544-AT Document 41 Filed 01/17/20 Page 2 of 24
`Case 1:19—mc-00544-AT Document 41 Filed 01/17/20 Page 2 of 24
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`TABLE OF CONTENTS
`
`Table of Authorities ...........................................................................
`
`iii
`
`INTERESTS OF AMICI .....................................................................
`
`INTRODUCTION .............................................................................
`
`1
`
`3
`
`ARGUMENT ................................................................................... 4
`
`I.
`
`II.
`
`The DOJ Suggests a Standard of Review
`Contrary to Case Law and Common Sense ................................................ 4
`
`The DOJ' Project Concerning “Legacy” Consent Decrees Sweeps
`Too Far in Targeting the Paramount Consent Decrees, Which Have
`Brilliantly Served the Motion Picture Industry ............................. ................
`
`A.
`
`B.
`
`C.
`
`The DOJ’s Inadequate Inquiry Conspicuously Ignored the
`“Theatre~By—Theatre” Mandate, Identified by This Court as the
`Heart of the Paramount Consent Decrees ......................................
`
`The DOJ’s Mere Incantation of “Change” in the Motion Picture
`Industry Is No Substitute for a Factual Inquiry Into Whether Such
`Change Materially Eliminates the Inclination to Antitrust Abuse ............
`
`The Paramount Consent Decrees Call for None of the Scrutiny
`Sometimes Associated With Collusive and Other Problematic
`Consent Decrees .....................................................................
`
`6
`
`7
`
`11
`
`17
`
`CONCLUSION ................................................................................
`
`19
`
`ii
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`
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`Case 1:19-mc-00544-AT Document 41 Filed 01/17/20 Page 3 of 24
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`Cases
`
`TABLE OF AUTHORITIES
`
`Admiral Theatre Corp. v. Douglas Theatre Co., 585 F.2d 877 (8th Cir. 1978) .................. 16
`
`Cobb Theatres III, LLC v. AMC Entmt. Holdings, Inc, 101 F.Supp.3d 1319, 1331
`
`(N.D. Ga. 2015) .......................................................................................................... . .............. 16
`
`Don George, Inc. v. ParamountPictures, 111 F. Supp. 458 (W.D. La. 1951) ................... 18
`
`Patterson v. Newspaper & Mail Deliverers Union, 797 F. Supp. 1174 (S.D.N.Y. 1992) ....... 5
`
`Regal Entm't Grp. v. [pic-Gold Class Entm’t, LLC, 507 S.W.3d 337 (Tex. App. 2016) ........ 16
`
`Rufo v. Inmates ofSuffolk Cty. Jail, 502 US. 367 (1992) ........................................... 5
`
`United States v. American Cyanamid Co, 719 F.2d 558 (2d Cir. 1983) .............. . ............ 6
`
`United States v. District Council ofNYC and Vicinity of the United Brotherhood of
`Carpenters and Joiners ofAmerica, 571 F. Supp. 2d 555, 557, 563 (S.D.N.Y. 2008) .......... 5
`
`United States v. International Business Machines Corp, 163 F.3d 737 (2d Cir. 1998) ........ 4, 5
`
`United States v. Loew’s Inc., 705 F. Supp. 878 (S.D.N.Y. 1988) .............................. 7, 9, 17
`
`United States v. Paramount Pictures, Inc., 1940—1943 Trade Cas. (CCH) ‘11 56,072
`(S.D.N.Y. 1940) .......................................................................................... 19
`
`United States v. Paramount Pictures, Inc., 334 US. 131 (1948) ................................. 1, 17
`
`United States v. Swift & Co., 286 US. 106 (1932) ...................................................4
`
`Other Authorities
`
`H. Alexander and R. Blakely, “The Triumph of Digital Will Be the Death of Many
`Movies,” The New Republic (Sep. 12, 2014) ......................................................... 15
`
`K. Fox, Paramount Revisited: The Resurgence of Vertical Integration in the
`Motion Picture Industry, 21 Hofstra L.R. 505 (1992) ............................................... 19
`
`Comments of Harkins Theatres (Oct. 4, 2018), available at
`https://www.justice.gov/atr/page/file/ 1 10244l/download....................................................... 1 1
`
`M. Conant, Antitrust in the Motion Picture Industry: Economic and Legal Analysis
`(Univ. of Cal. Press 1960) ............................................................................ 14, 16
`
`M. Conant, The Paramount Decrees Reconsidered, 44 LAW & CONTEMP.
`PROBS. 79 (1981) ......................................................................................... 12
`
`iii
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`
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`Deadline Hollywood, “Distribs & Exhibs Hold Line On Clearances Despite
`Fox’s Position Change” (Mar. 31, 2016) ................................................................ 8
`
`“Department of Justice Announces Initiative to Terminate ‘Legacy’ Antitrust Judgments”
`
`(April 25, 2018) ............................................................................................. 6
`
`WA. Galston & C. Hendrickson, A policy at peace with itself." Antitrust remedies for our
`concentrated, uncompetitive economy, Brookings Institute (Jan. 5, 2018) ........................ 13
`
`A. Grossman, Former Visiting Fellow, American Heritage Foundation, Use and Abuse
`of Consent Decrees in Federal Rulemakz‘ng, Testimony before the Subcommittee on the
`Courts, Commercial and Administrative Law, Committee on the Judiciary, United States
`
`House of Representatives (February 3, 2012) ......................................................... 18
`
`The Hollywood Reporter, “Cobb Theatres Argues Jury Should Decide Antitrust Case
`Against AMC” (Nov. 7, 2016) ........................................................................... 8
`
`Independent Cinema Alliance http s://www.cinemaalliance.org/ .................................... 1
`
`J, Shapiro, “The DOJ, Exhibition, And That Terrible, Horrible, No Good, Very Bad Day”
`(BirthMoviesDeath.com Nov, 21, 2019) ......................................................... . ...... 2
`
`Open Markets newsletter, “Lights, Camera, Monopoly: DOJ Could Revive the Studio
`System” (Aug. 24, 2018) ............................................................................... 12—1 3
`
`
`“The Paramount Decrees” https://www.justice.gov/atr/paramount-decree—review
`(updated October 20, 2018) .............................................................................. 7
`
`Wikipedia, the Free Encyclopedia, “Virtual Print Fee” ............................................... 16
`
`iv
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`
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`Case 1:19—mc-00544-AT Document 41 Filed 01/17/20 Page 5 of 24
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`INTERESTS OF AMICUS INDEPENDENT CINEMA ALLIANCE
`
`The Independent Cinema Alliance (“ICA”) is a non-profit corporation representing 236
`
`independent cinema companies with 2,672 screens, and growing. The ICA’s stated mission is to
`
`promote the preservation and prosperity of independent cinemas1 as an essential part of a healthy
`
`motion picture industry. As an advocacy group on behalf of independent cinemas, the ICA is
`
`uniquely positioned to urge preserving the Paramount Consent Decrees, which foremost seek to
`
`protect independent cinemas. The Paramount Consent Decrees happened because the
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`Department of Justice (“DOJ”) seven decades ago stepped into an industry rife with antitrust
`
`abuse and on behalf of independents and their patrons. As the Supreme Court declared:
`
`The trade victims of this conspiracy have in large measure been the small
`independent operators. They are the ones that have felt most keenly the
`discriminatory practices and predatory activities in which defendants have freely
`indulged. They have been the victims of the massed purchasing power of the larger
`units in the industry. It is largely out of the ruins of the small operators that the large
`empires of exhibitors have been built.
`
`United States v. Paramount Pictures, Inc., 334 US. 131, 162 (1948).
`
`In stark contrast, the current DOJ treats independent cinemas as inconsequential players
`
`in an industry rightly dominated by Big Production, Big Exhibition, and increasingly, Big
`
`Streamers. But independents make unique and essential contributions to a healthy motion picture
`
`industry. They are not merely incidental miniatures of the big circuits and not small businesses
`
`1
`
`For purposes of eligible membership in the ICA, “independent” means:
`
`° not publicly owned or owned in whole or in part by a motion picture distributor, motion picture
`studio or other content supplier, including a supplier of electronic content;
`° market share of domestic theatrical revenue does not exceed 2%;
`° not owned in whole or in part by a national or regional circuit having a domestic theatrical
`revenue share of more than 2%; and
`' consolidated screen count does not exceed 500 screens.
`See generally Independent Cinema Alliance b1338://www.cinemaallianceorgl
`
`1
`
`
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`V seeking special treatment. Quite the contrary, independents ensure a healthy motion picture
`
`industry because:
`
`'
`
`°
`
`0
`
`-
`
`0
`
`°
`
`-
`
`independents serve small-town and rural markets that would typically not have a cinema
`but for the dedication of independents to their communities;
`
`hundreds of thousands of Americans who love big-screen entertainment would never see
`motion pictures on the big screen if independents disappeared, because the big circuits
`would never go into such small markets;
`
`independents are frequently industry innovators because they must innovate to find ways
`to survive in an industry dominated by big players;
`
`independents often depart (necessarily) from the Big Exhibition paradigm of featuring
`only the biggest Hollywood fare, and thus diversify the motion picture entertainment
`available to patrons2 (e. g., art films, niche films such as Hispanic and faith-based films,
`and films by independent producers generally);
`
`independents frequently become integral components of their communities and provide
`services and contributions that connect the big screen to special community watersheds
`(film festivals, community fundraising, children’s matinees, showings of classic movies,
`special pricing for veterans/first—responders/active military, sponsoring local events on
`the big screen);
`
`the average ticket price for independents is significantly lower than the average ticket
`price for big circuits, and independents generally operate at lower margins than circuits
`command; and
`
`even in urban markets, where a few independents survive, they are the only remaining
`check against big circuit monopoly power, and frequently innovate in pro—consumer ways
`to compete (e.g,, family entertainment centers).
`
`See J. Shapiro, “The DOJ, Exhibition, And That Terrible, Horrible, No Good, Very Bad
`2
`
`Day” (BirthMoviesDeath.00m Nov. 21, 2019), at https://birthmoviesdeath.com/20l. 9/1 1/21 /the—
`
`doj~exhibition-and~that~terrible-horriblemo-good—very—bad~day (detailing “diversity index” of
`exhibitors, i.e., the diversity of content featured by exhibitors, and confirming that top exhibitors
`have, by far, the lowest diversity index, meaning they all show the same highly promoted big
`studio content, and concluding: “The DOJ assumes that since we have so many theaters now and
`these theaters have so many screens, they are competing with different kinds of product. As we
`can see, that is not the case. The biggest chains are competing with everything EXCEPT
`content. A main factor the smaller chains use for competition is their diversity of content,
`and the DOJ is making it harder for that type of content to have a chance”) (emphasis
`added).
`
`
`
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`In sum, motion picture consumers benefit enormously because, compared to big circuits,
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`independents vitally contribute more diverse content, in more diverse places, more
`
`inexpensively, and in more diverse and creative ways. But they achieve these pro—competition
`
`and pro—consumer benefits increasingly in competitively hostile and cost—crippling
`
`circumstances. The big players in the motion picture industry are doing fine. For independents it
`
`is a labor of love, and they are being forced out of business in growing numbers.
`
`INTRODUCTION
`
`In conspicuous contrast to decades of DOJ predecessors, this DOJ insists upon fixing a
`
`system that is not broken and does so with a breezy and inadequate factual inquiry and literally
`
`no meaningful investigation. Its driving motivation has little to do with the merits of the
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`Paramount Consent Decrees or what impact they have historically had on the motion picture
`
`industry, and much more to do with the housekeeping concern that the Decrees lack a
`
`termination date. Thus the DOJ is concerned to be rid of nearly 1,300 so-called “legacy” consent
`
`decrees, including the Paramount Consent Decrees.
`
`The Paramount Consent Decrees have well served the motion picture industry for
`
`decades, and indeed have become an integral part of industry culture. These are not esoteric or
`
`merely technical legal documents. People who may not have heard of the Sherman Act or the
`
`Clayton Act have heard of, and invoke, the Paramount Consent Decrees. For independent
`
`cinemas especially — the express beneficiaries of the Paramount litigation that led to the Decrees
`
`— the Decrees constitute a continuing lifeline, a way to remain competitive in an industry still
`
`inclined to anticompetitive abuse. Independents especially rely upon what this Court has
`
`expressly described as the heart of the Paramount Consent Decrees: the mandate that motion
`
`pictures be licensed “theatre by theatre, solely upon the merits and without discrimination in
`
`
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`favor of affiliated theatres, circuit theatres or others.” Yet that heart gets no attention or
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`meaningful mention by this DOJ. Instead, this DOJ points aimlessly to “changes” in the industry,
`
`without making any persuasive argument or evidentiary showing that such changes warrant
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`disturbing Consent Decrees that have demonstrably deterred significant anticompetitive conduct.
`
`To be sure, the motion picture industry has “changed” — most relevantly in the direction
`
`of even greater concentration and consolidation. It is not the time to strip the industry of the most
`
`powerful and elegant expression of motion picture distribution fairness ever articulated.
`
`ARGUMENT
`
`I.
`
`The DOJ Suggests a Standard of Review
`Contrary to Case Law and Common Sense.
`
`As a threshold matter, the DOJ correctly identifies the appropriate “public interest”
`
`standard in assessing termination of consent decrees, but then adds a frankly bizarre burden-
`
`shifting requirement that the consent decree should be terminated unless other parties somehow
`
`prove that anticompetitive conduct is likely to recur. See, e.g., DOJ Mem. at 5 (“not one
`
`comment identifies any ground to conclude that — absent the Decrees ~ Defendants would
`
`collude to re—impose uniform distribution and licensing schemes on movie theatres. Under
`
`Second Circuit law, that is the key question for this motion”) (misconstruing United States v.
`
`International Business Machines Corp, 163 F.3d 737 (2d Cir. 1998)). Disturbing a consent
`
`decree, especially an antitrust decree reached, as here, after extensive litigation proving abundant
`
`antitrust abuse, has always required a substantial showing by the moving party.3 The DOJ cannot
`
`now shift the burden to some other party to “prove” the future recurrence of antitrust abuse.
`
`Compare United States v. Swift & C0,, 286 US. 106 (1932) (requiring strict review of
`3
`whether changes truly warrant disturbing antitrust consent decree and concluding that “[t]he
`inquiry for us is whether the changes are so important that dangers, once substantial, have
`become attenuated to a shadow” and insisting that “[n]othing less than a clear showing of
`
`4
`
`
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`The DOJ’s only authority, US. v. IBM, 163 F.3d 737 (2d Cir. 1998), condemns in
`
`multiple ways what the DOJ breezily seeks here. Conspicuously unlike the circumstances here,
`
`the US. v. IBM court agreed to the termination of an antitrust consent decree only because:
`
`° most provisions of the consent decree had already been terminated, without concern or
`disturbance to the market, and the question was whether the final two surviving
`provisions could properly be terminated in the public interest, id. at 739,
`
`°
`
`°
`
`°
`
`’
`
`the motion to terminate the two remaining provisions was preceded by the DOJ’s
`“detailed investigation [which] included the review of more than 100,000 pages of IBM
`documents, including its strategic business plans, and interviews with IBM's customers,
`competitors, and executives,” id.,
`
`the DOJ’s “detailed investigation” yielded the finding that none ofIBM’s customers
`opposed termination of the remaining provisions of the consent decree, id,
`
`despite this substantial fact-finding by the DOJ befbre it presumed to disturb what little
`was left of the decree, the district court still ordered a period of public comment, id.,
`
`during the period of public comment, only one oleM’s customers commented, and that
`customer favored termination, id.
`
`That was a consent decree that had clearly outlived its usefulness. At a minimum, US. v. IBM
`
`points to the necessity of a much fuller factual inquiry than the DOJ has done. More to the point,
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`as the party bearing the burden to prove that a consent decree must be disturbed, the DOJ’s
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`motion should be denied outright because the DOJ failed to make the showing it must. Changing
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`antitrust enforcement philosophy and undertaking a housekeeping operation to get rid of old
`
`grievous wrong evoked by new and unforeseen conditions should lead us to change what was
`decreed after years of litigation with the consent of all concerned”) with Rafo v. Inmates of
`Suffolk Cty. Jail, 502 US. 367, 383 (1992) (at least in the special context of “institutional
`reform” cases, a more flexible standard applies, but still requires the moving party to prove that
`significant changes warrant disturbing the decree and that “the proposed modification is suitably
`tailored to the changed circumstances”); see also United States v. District Council ofNYC and
`Vicinity ofthe United Brotherhood ofCarpenters and Joiners ofAmerica, 571 F. Supp. 2d 555,
`557, 563 (S.D.N.Y. 2008) ("Before exercising its power to modify or vacate ajudicial decree, a
`court must be convinced by the party seeking relief that the purposes of the litigation as
`incorporated into the decree have been fully achieved") (quoting Patterson v, Newspaper &
`Mail Deliverers’ Union, 797 F. Supp. 1174, 1179 (S.D.N,Y.1992)).
`
`5
`
`
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`consent decrees comes nowhere near making the showing that the DOJ must make to disturb the
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`Paramount Consent Decrees. See United States v. American Cyanamz'd C0,, 719 F.2d. 558 (2d
`
`Cir. 1983) (new DOJ opinions do not suffice to disturb an antitrust consent decree).
`
`II.
`
`The DOJ Project Concerning “Legacy” Consent Decrees Sweeps Too Far in
`Targeting the Paramount Consent Decrees, Which Have Brilliantly Served
`the Motion Picture Industry.
`
`Since issuance of the Paramount Consent Decrees, the DOJ has several times parachuted
`
`into the motion picture industry to investigate competitive circumstances and monitor the impact
`
`of the Decrees. On every past occasion, the DOJ has concluded that there was no reason to
`
`disturb the Decrees — even when, as was the case during the Reagan administration, the DOJ was
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`ideologically hostile to muscular antitrust enforcement. On this most recent occasion, however,
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`the DOJ made no secret from the beginning of its negative predisposition. That was because the
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`DOJ was not really investigating the motion picture industry or even the Paramount Consent
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`Decrees, but was instead engaged in a vast housekeeping operation to get rid of nearly 1,300 so-
`
`called “legacy” consent decrees (decrees without “termination dates”).4 In short, the DOJ has
`
`been far less concerned about the details of the Paramount Consent Decrees themselves (or the
`
`industry they civilize), and far more concerned that the Decrees belonged to a category of
`
`consent decrees without termination dates. In multiple respects, the DOJ’s hasty and inadequate
`
`treatment of the motion picture industry fails the evidentiary seriousness required to disturb fully
`
`litigated antitrust consent decrees.
`
`See generally “Department of Justice Announces Initiative to Terminate ‘Legacy’
`Antitrust Judgments” (April 25, 2018), available at:
`
`https://www.justice.gov/opa/pr/department-justice-announces—initiative—terminate—legacv-
`antitrust—judgments.
`
`
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`A.
`
`The DOJ’s Inadequate Inquiry Conspicuously Ignored the “Theatre-By-
`Theatre” Mandate, Identified by This Court as the Heart of the Paramount
`Consent Decrees.
`
`For independents, and for this Court (that issued the Paramount Consent Decrees), “the
`
`heart of the consent judgment was the licensing injunction, prohibiting the defendants ‘from
`
`licensing any feature for exhibition upon any run in any theatre in any other manner than that
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`each license shall be offered and taken theatre by theatre, solely upon the merits and without
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`discrimination in favor of affiliated theatres, circuit theatres or others.”’5
`
`That declaration was a magnificent antitrust achievement. It synthesized better probably
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`than any other single statement in cinema history the essential principle of free and fair
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`competition in the exhibition industry. It deserves to be preserved.
`
`Yet the DOJ’s invitation to public comment altogether ignored this vital center of the
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`Decrees, and not a single specific question posed by the DOJ directly or indirectly referenced or
`
`mentioned the “theatre-by—theatre” mandate.6 It is a conspicuous and telling omission. Most of
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`the specific prohibitions of the Decrees follow naturally from this essential proposition: if
`
`distributors truly license each motion picture “theatre by theatre, solely upon the merits and
`
`without discrimination in favor of affiliated theatres, circuit theatres or others,” then pernicious
`
`practices such as circuit dealing, block booking and overbroad clearances would be impossible.
`
`Moreover, licensing with such meticulous fairness would blunt the anticompetitive effect of any
`
`vertical integration, In other words, this single pronouncement — expressly identified by this
`
`United States v, Loew’s Inc, 705 F. Supp. 878, 881 (S.D.N.Y. 1988) (emphasis added)
`5
`(quoting Warner Consent Judgment § 111(8), 1950—51 CCH Trade Gas. 11 62,765, at 64,266;
`Loew's Consent Judgment § 11(8), 1952-53 CCH Trade Cas. 11 67,228, at 67,327; Fox Consent
`Judgment § 11(8), 1950-51 CCH Trade Cas. 11 62,861, at 64,546; Columbia, Universal and UA
`Consent Judgment § 11(8), 1950-51 CCH Trade Cas. 11 62,573, at 63,678; Paramount Consent
`Judgment § 11(8), 1948-49 CCH Trade Cas. 11 62,377, at 63,011).
`
`See “The Paramount Decrees” littps://www.justice.gov/atr/pararnount-decree»review.
`
`6
`
`7
`
`
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`Court as the heart of the Decrees — contains in elegant miniature the entire thrust and effect of the
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`Decrees. The fact that the DOJ declined even to inquire about the “theatre—by-theatre” mandate
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`further exposes the inadequacy of the DOJ inquiry, such as it was, and its failure in this Court to
`
`make the requisite showing.
`
`Significantly, by ignoring the “theatre—by-theatre” mandate, the DOJ not only ignored the
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`heart of the Paramount Consent Decrees, but likewise thereby sidestepped any inconvenient
`
`inquiry into the remarkable extent to which the Paramount Consent Decrees have become woven
`
`into the essential fabric of the motion picture industry. For it is precisely the “theatre—by—theatre”
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`mandate that has become such an industry mantra, widely invoked by both distributors and
`
`exhibitors, including players who are not technically “bound” by the Paramount Consent
`
`Decrees. For example, in Cobb Theatres antitrust litigation against AMC, concerning clearances,
`
`AMC defended itself in part by insisting that “AMC has always licensed films at these theatres
`
`on a film—by-film, theatre-by-theatre basis.”7 Nothing about “general antitrust laws” would have
`
`suggested that specific phrasing. Nor, of course, was AMC a party in the original Paramount
`
`See The Hollywood Reporter, “Cobb Theatres Argues Jury Should Decide Antitrust Case
`7
`
`Against AMC” (N0v. 7, 2016), available at https://www.hollywoodreporter.com/thr—esq/cobb-
`theatres~argues~iury—should~decide~antitrust~case~amc~944852: (“AMC tells the judge in a
`summary judgment motion that ‘uncontroverted evidence disproves’ the allegation that it
`coerced distributors into granting it exclusive licenses. Specifically, AMC says in its court papers
`that the distributors ‘unequivocally testified that AMC never threatened or attempted to coerce
`'
`them into doing anything. To the contrary, both the distributor witnesses and AMC’s witnesses
`have sworn that AMC has always licensed films at these theatres on a film-by-film, theatre—by—
`theatre basis”); see also Deadline Hollywood, “Distribs & Exhibs Hold Line On Clearances
`Despite Fox’s Position Change” (Mar. 31, 2016) (“Added Sony’s distribution honcho Rory
`Bruer: ‘We will make decisions theater by theater, picture by picture and we aren’t looking to
`change that. It’s our intention to continue to distribute our pictures on what’s right for each
`
`film.”’). Available at https://dead.line.com/2016/03/20th—century—fox~exhibition—clearances—
`circuitvdealing—lZOI729061/. Again, significantly, nothing in “general antitrust laws” obliged
`Mr. Bruer to frame his company’s conduct that way. That is the continuing salutary legacy of the
`Paramount Consent Decrees.
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`litigation. For AMC (and its distributor witnesses) to frame AMC’s defense that way underscores
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`the continuing salutary and civilizing influence of the Paramount Consent Decrees.
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`That civilizing influence of the Paramount Consent Decrees is vital to this proceeding
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`because it renders irrelevant many of the technical objections to continuation of the Decrees. It is
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`true, for example, that not all current industry players are technically subject to the Paramount
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`Consent Decrees. But that only means that these players cannot be hauled into court and cited for
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`criminal contempt of the Decrees. These “unbound” players are nevertheless decisively
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`influenced by the Paramount Consent Decrees. Comparable to case law from other jurisdictions,
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`the Decrees are like “persuasive” authority; they are not “binding” on all industry players, but
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`they usefully instruct. Thus, Disney,8 for example, in meetings with ICA members, has
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`reportedly assured that it licenses its movies on a “theatre~by-theatre basis without
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`discrimination.”
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`And why wouldn’t the Paramount Consent Decrees exercise such a broadly civilizing
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`influence? They constitute a highly particularized adjudication and application of “general”
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`antitrust laws to this very idiosyncratic industry. Nothing in “general” antitrust law comes
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`anywhere close to the very specifically tailored guidance of the Paramount Consent Decrees ~ as
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`most elegantly encapsulated by the theatre—by—theatre mandate. And if “general antitrust laws”
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`were truly adequate, as the DOJ weakly suggests, these particular consent decrees would never
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`have been necessary, which remains true today. See United States v. Loew’s Inc., 705 F. Supp.
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`878, 884 (S,D.N.Y. 1988) (“These consent judgments were fashioned after years of litigation in
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`Though beyond the scope of this amicus brief, it warrants note that while Disney (the
`8
`industry’s current studio behemoth) was not a party to the original Paramount litigation,
`Twentieth Century Fox was, and Disney’s recent acquisition of Fox, with full knowledge that
`Fox was bound by the Paramount Consent Decrees, arguably has made Disney likewise subject
`to the Decrees.
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`which this industry was shown to have a proclivity for anti-competitive behavior. If the specter
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`of criminal prosecution and civil litigation were a sufficient prophylactic for antitrust violations,
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`the consent judgments in this and many other cases would never have been necessary”).
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`The DOJ mistakenly imagines that it is only pulling at one inconsequential and very old
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`thread when it blithely moves this Court to terminate the Paramount Consent Decrees. Instead, it
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`threatens to unravel decades of industrial stability and innovation. Indeed, the DOJ’s pointed
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`neglect of the heart of the Paramount Consent Decrees admits only two possibilities: either the
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`DOJ fundamentally misunderstands the Paramount Consent Decrees and accordingly has no
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`business asking this Court to disturb them, or the DOJ simply wishes to sidestep the uniquely
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`compelling influence of these Decrees, and instead treat them with the same overbroad brush it
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`treats the many hundreds of other “legacy” consent decrees it seeks to dispatch in its
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`housekeeping operation. Either way, the DOJ has not even meaningfully begun to treat the
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`Paramount Consent Decrees with the evidentiary seriousness they deserve.
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`The remarkable history of Harkins Theatres — now the fifth largest exhibitor by box
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`office revenue in the United States — illustrates the salutary influence of the Paramount Consent
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`Decrees. Though now too large to qualify for ICA membership, Harkins was assuredly an
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`“independent” in the 19703, with eight screens at five locations in the Phoenix, Arizona market.
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`It verged on bankruptcy because the major studios systematically favored the largest circuits
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`over independent cinemas. Harkins filed an antitrust lawsuit in 1977, and fifteen years later
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`finally successfully settled the suit. As Harkins itself described in comments to the DOJ, “[o]ne
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`of the reasons this case succeeded was that the prohibitions set forth in the Paramount Decrees
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`were in effect, including the requirement that each film license be offered ‘...solely upon the
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`10
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`merits and without discrimination in favor of affiliated theatres, circuit theatres or others.”9 The
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`Decrees were not themselves “controlling” authority in Harkins’ antitrust litigation, but the
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`Decrees contributed clarity to antitrust jurisprudence in the still—antitrust—abuse-inclined motion
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`picture industry. According to Harkins, the Paramount Consent Decrees were a substantial factor
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`in its extraordinary rise from a small independent on the verge of bankruptcy to its modern status
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`as a regional circuit with 515 screens and 34 locations in five states.
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`For independent cinemas, the “theatre by theatre” mandate is a lifeline, the continuing
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`reason for their existence in the teeth of increasingly consolidated and powerful distribution and
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`exhibition industries. To dissolve the Decrees at this moment in cinema history would declare
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`open season on the most vulnerable players in the market and imperil access to the Big Screen
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`for tens of thousands of Americans in small towns and rural areas.
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`B.
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`The DOJ’s Mere Incantation of “Change” in the Mot