Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc.

Summary

The California Court of Appeal considered an antitrust dispute concerning alleged circuit dealing through multi-theater film-licensing agreements. The court held that the challenged conduct was not per se illegal under the Cartwright Act and that Flagship failed to present substantial evidence of anticompetitive effects in the relevant market. The court reversed the judgment in favor of Flagship in case B292609 and dismissed Flagship’s related attorney-fee appeal in case B299014.

Holdings

1. A Cartwright Act claim based on non-monopoly circuit dealing is subject to the rule of reason, not per se treatment, because modern multi-theater film-licensing agreements are vertical restraints that may have either procompetitive or anticompetitive effects.
2. The evidence did not substantially support a finding of net anticompetitive harm in either Flagship's proposed Rancho Mirage clearance-zone market or Century's broader Coachella Valley market.
3. The lack of substantial evidence supporting competitive harm required reversal of the judgment, and the court therefore did not reach Century's hearsay and compromise-verdict arguments.

Questions Presented

1. Whether non-monopoly circuit dealing through multi-theater film-licensing agreements is per se illegal under the Cartwright Act or instead subject to rule-of-reason analysis.
2. Whether substantial evidence supported the relevant geographic market and the jury's finding that Century's licensing agreements caused net anticompetitive harm in that market.
3. Whether Century's remaining hearsay and compromise-verdict arguments required a new trial.
4. Whether Flagship's separate appeal concerning the amount of attorney fees remained justiciable after reversal of the underlying judgment.

Disposition

reversed