United States District Court, District of Columbia
G. SULLIVAN UNITED STATES DISTRICT JUDGE.
a film, a movie theater must obtain a license from the
film's distributor. The case before the Court involves
the competitive market between theaters for exclusive
licenses to show specialty films. Plaintiffs-2301 M Cinema
d/b/a West End Cinema (“West End Cinema”), the
Avalon Theatre Project, Inc. (“the Avalon”), the
Denver Film Society, and the Cinema Detroit (collectively,
“plaintiffs”)-bring this action against Silver
Cinemas Acquisition Co. d/b/a Landmark Theatres and its
parent corporation 2929 Entertainment, LP (collectively,
“Landmark”). Plaintiffs allege that Landmark
violated federal antitrust law by using its national market
power to coerce film distributors into granting Landmark
exclusive licenses, preventing plaintiffs and other
independent theaters from showing specialty films.
Plaintiffs' four-count complaint charges Landmark with:
(1) circuit dealing in violation of Section 1 of the Sherman
Act; (2) using its monopoly power in violation of Section 2
of the Sherman Act; (3) attempting to use its monopoly power
in violation of Section 2 of the Sherman Act; and (4)
interfering with plaintiffs' business relations.
before the Court is Landmark's motion to dismiss
plaintiffs' complaint. See Defs.' Mot., ECF
No. 16. After careful consideration of the motion, the
response, the reply thereto, and the applicable law,
Landmark's motion to dismiss is GRANTED IN
PART and DENIED IN PART.
are four independent, community theaters that primarily show
specialty films. Compl., ECF No. 1 ¶¶ 14-17.
Specialty films include “independent films, art films,
foreign films, and documentaries.” Id. ¶
24. Unlike mainstream commercial films, specialty films are
not intended to appeal to a broad audience and are therefore
released less widely than commercial films. Id. The
first plaintiff, West End Cinema, operated in the District of
Columbia from 2010 until 2015. Id. ¶ 14. In
2015, West End Cinema was “forced” out of
business, allegedly by Landmark's anticompetitive
licensing practices. Id. Landmark leased the West
End Cinema's space and has since opened a Landmark
theater in its place. Id. The Avalon is another
independent theater located in the District of Columbia.
Id. ¶ 15. The Denver Film Society is a
nonprofit organization located in Denver, Colorado that
provides specialty film programming via “year-round
screening, film festivals, and other special events.”
Id. ¶ 16. It operates the Sie FilmCenter, a
specialty film theater. Id. Finally, Cinema Detroit
is a non-profit specialty film theater located in Detroit,
Michigan. Id. ¶ 17.
Landmark is a Delaware corporation and subsidiary of 2929
Entertainment, LP. Id. ¶ 18. It operates
fifty-one specialty film theaters in twenty-two geographic
markets nationwide. Id. It is “the largest
specialty film movie theater chain in the country” and
is purportedly opening new theaters on a regular basis.
plaintiffs and Landmark are “exhibitors, ” the
industry term for movie theaters. Id. ¶ 21.
Exhibitors must negotiate with film distributors for licenses
to exhibit films at their theaters. See Id. ¶
22. Distributors are the entities responsible for marketing
the film; they act as a “middleman” between the
production studio and the exhibitor. Id. ¶ 5.
Generally, a distributor's income for each film is tied
to the revenue earned by the exhibitor during its run of the
film. See Id. ¶¶ 75-76. License agreements
between distributors and exhibitors specify the terms under
which the exhibitor may show a particular film. See
Id. ¶¶ 21-22, 25. In some instances, license
agreements may include “clearances, ” or an
exclusive right to show a film. Id. ¶ 25. In
acquiescing to a clearance, a distributor agrees not to
license a film to any other exhibitor, or to specific
exhibitors, in the same geographic market. Id.
Clearances are generally negotiated either for the first few
weeks a film is shown, a “first-run” clearance,
or for the entire period a film is screened by an exhibitor,
a “day and date” clearance. See Id.
¶¶ 21, 25, 28. Clearances must be negotiated on a
theater-by-theater, film-by-film basis. Therefore, exhibitors
may not engage in circuit-dealing, whereby “a dominant
movie theater chain, ” known as a “circuit,
” “uses its market power to obtain preferential
agreements, particularly clearances, from distributors for
the licensing of films . . . in multiple geographic
markets.” Id. ¶ 28 (citing United
States v. Paramount Pictures, 334 U.S. 131, 154-55
allege that Landmark, as the “dominant theater
‘circuit' for the exhibition of specialty films in
the United States, ” leverages its market position to
obtain clearance agreements nationwide. Id.
¶¶ 29, 30. Rather than negotiating clearances on an
individual theater-by-theater, film-by-film basis, plaintiffs
assert that Landmark obtains “blanket clearances”
for more than one film or theater from distributors that
accede to Landmark's demands for fear of retribution and
loss of Landmark's business. Id. ¶ 29.
Plaintiffs seek an injunction, treble damages, costs and
fees, and actual damages. See Id. ¶¶
89-90, 97-98, 102-04, 112-13.
Standard of Review
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6) tests the legal sufficiency of a complaint.
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir.
2002). A complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled
to relief, in order to give the defendant fair notice of what
the . . . claim is and the grounds upon which it
rests.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (quotations and citations omitted).
this liberal pleading standard, to survive a motion to
dismiss, a complaint “must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quotations and citations omitted). A
claim is facially plausible when the facts pled in the
complaint allow the court to “draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. The standard does not amount to
a “probability requirement, ” but it does require
more than a “sheer possibility that a defendant has
acted unlawfully.” Id.
ruling on a defendant's motion to dismiss [pursuant to
Rule 12(b)(6)], a judge must accept as true all of the
factual allegations contained in the complaint.”
Atherton v. D.C. Office of the Mayor, 567 F.3d 672,
681 (D.C. Cir. 2009) (quotations and citations omitted). In
addition, the court must give the plaintiff the
“benefit of all inferences that can be derived from the
facts alleged.” Kowal v. MCI Commc'ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Even so,
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements” are
not sufficient to state a claim. Iqbal, 556 U.S. at
survive a 12(b)(6) motion to dismiss a claim in an antitrust
case, plaintiffs must do more than simply paraphrase the
language of the antitrust laws or state in conclusory terms
that the non-movant has violated those laws.” WAKA
LLC v. DC Kickball, 517 F.Supp.2d 245, 249 (D.D.C. 2007)
(citing Dial A Car, Inc. v. Transp., Inc., 884
F.Supp. 584, 588 (D.D.C. 1995), aff'd 82 F.3d
484 (D.C. Cir. 1996)). “[I]f [the plaintiff] claims an
antitrust violation, but the facts he narrates do not at
least outline or adumbrate such a violation, he will get
nowhere merely by dressing them up in the language of
antitrust.” Dial A Car, 884 F.Supp. at 588
(quoting Sutliff, Inc. v. Donovan Companies, Inc.,
727 F.2d 648 (7th Cir. 1984)) (internal quotation marks
omitted). That said, because “the proof is largely in
the hands of the alleged conspirators, ” dismissal
procedures “should be used sparingly in complex
antitrust litigation” until the plaintiff is given
ample opportunity for discovery. Poller v. Columbia
Broad. Sys., 368 U.S. 464, 473 (1962).
moves to dismiss the plaintiffs' complaint for failure to
state a claim pursuant to Federal Rule of Civil Procedure
12(b)(6), putting forth several arguments. See
Defs.' Mot., ECF No. 16. First, it contends that 2929
Entertainment should be dismissed, because the complaint does
not allege that the parent corporation was responsible for
the actions of its subsidiary. Id. at
Second, Landmark argues that plaintiffs fail to state a
plausible circuit dealing claim (Count I) because plaintiffs
fail to allege: (1) that Landmark wielded its circuit power
to coerce distributors; (2) concerted action or agreement;
and (3) an antitrust injury. Id. at 13-25. Third,
Landmark argues that plaintiffs fail to state a plausible
monopolization or attempted monopolization claim (Counts II
and III) because plaintiffs fail to allege: (1) that Landmark
exercised leveraging conduct; and (2) that Landmark has
monopoly power. Id. at 25-28. Finally, Landmark
contends that plaintiffs fail to state a plausible tortious
interference claim (Count IV). Id. at 28-29. The
Court analyzes each argument in turn.
Defendant 2929 Entertainment, LP is Dismissed Without
Landmark argues that its parent corporation 2929
Entertainment should be dismissed because the complaint does
not allege that it was responsible for the actions of its
subsidiaries. Defs.' Mot., ECF No. 16 at 29. Plaintiffs
agree and reserve the right to seek leave to amend the
complaint and add 2929 Entertainment as a defendant as
discovery unfolds. Pls.' Opp'n, ECF No. 17 at 37.
Therefore, the Court GRANTS Landmark's
motion and dismisses without prejudice defendant 2929
Entertainment, LP from this action.
Plaintiffs Sufficiently Allege a Circuit Dealing
argues that Count I must be dismissed because plaintiffs fail
to state a plausible circuit dealing claim in violation of
Section 1 of the Sherman Act. Defs.' Mot., ECF No. 16 at
13-25. First, Landmark argues that plaintiffs fail to allege
that Landmark wielded its national circuit power to coerce
distributors to agree to clearance agreements. Id.
at 13-19. Landmark also argues that plaintiffs do not allege
that it negotiated any unlawful blanket clearances covering
more than one theater or film. Id. Instead, it
contends that plaintiffs merely allege a series of
theater-by-theater, city-by-city negotiated clearance
agreements for individual films, a lawful industry practice.
Id. at 14-18. Plaintiffs respond that they allege
“six specific instances of Landmark's circuit
dealing at work.” ...