IPIC-GOLD CLASS ENTERTAINMENT, LLC AND IPIC TEXAS, LLC, Appellants
AMC ENTERTAINMENT HOLDINGS, INC., AMC ENTERTAINMENT, INC., AND AMERICAN MULTI-CINEMA, INC., Appellees
Appeal from the 234th District Court Harris County, Texas
Trial Court Case No. 2015-68745
consists of Justices Lloyd, Kelly, and Hightower.
an appeal from a summary judgment in an antitrust case.
See Tex. Bus. & Com. Code § 15.05. In the
underlying suit, iPic alleged that AMC and
Regal conspired with each other and with third
parties to exclude them from exhibiting popular films at two
locations in Texas-Houston and Frisco. The trial court
granted a temporary restraining order in iPic's favor,
which this court affirmed. See Regal Entm't Grp. v.
iPic-Gold Class Entm't, LLC, 507 S.W.3d 337, 356
(Tex. App.-Houston [1st Dist.] 2016, no pet.) (iPic
I). Regal settled with iPic, leaving only AMC as a
moved for summary judgment on no-evidence and traditional
grounds. AMC argued that its evidence conclusively disproved
both the existence of a conspiracy and damages caused by
AMC's actions. Without specifying the grounds, the trial
court granted final summary judgment in favor of AMC, and
appeal, iPic asserts that: (1) the trial court erred by
granting summary judgment for AMC on iPic's restraint of
trade claim; (2) as a coconspirator, AMC is jointly and
severally liable for damages sustained by iPic Houston; (3)
it presented more than a scintilla of evidence that AMC and
Regal engaged in an illegal horizontal conspiracy; and (4)
AMC did not conclusively prove the absence of conspiracy,
and, alternatively, its responsive summary-judgment evidence
raised a genuine issue of material fact as to the existence
of a conspiracy.
reverse the trial court's judgment, and we remand the
case to the trial court for further proceedings.
THE FILM INDUSTRY AND ANTITRUST LAW
film industry is comprised of three segments: producers, who
make the movies; distributors, who license them to movie
theaters; and exhibitors, who play the movies at theaters for
movie-going audiences. AMC, Regal, and iPic are movie
exhibitors. AMC and Regal largely provide a traditional
theater experience, and iPic provides a premium experience
that includes larger seating, as well as enhanced food and
do not purchase the films they show; rather, they license the
right to show them by competitive bidding or negotiation.
See generally U.S. v. Paramount Pictures, 334 U.S.
131, 154-55 (1948) (discussing bidding and licensing); Note,
Blind Bidding and the Motion Picture Industry, 92
Harv. L. Rev. 1128 (1979) (explaining business practices in
the film industry). Exhibitors have obtained exclusive or
semi-exclusive licenses called "clearances."
See Paramount Pictures, 334 U.S. at 145 & n.5.
These exclusive licenses prevented other theaters from
playing the same movies at the same time, a practice called
"day-and-date" exhibition. See Theatre Enters.,
Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 539
industry licensing practices have given rise to numerous
antitrust lawsuits. E.g., Theatre Enters.,
346 U.S. at 539; Paramount Pictures, 334 U.S. at
131; Regal Entm't Grp. v. iPic-Gold Class Entm't,
LLC, 507 S.W.3d 337, 342 (Tex. App.-Houston [1st Dist.]
2016, no pet.); Cobb Theatres III, LLC v. AMC Entm't
Holdings, Inc., 101 F.Supp.3d 1319, 1330 (N.D.Ga. 2015);
Theee Movies of Tarzana v. Pac. Theatres, Inc., 828
F.2d 1395, 1398 (9th Cir. 1987); Paramount Film Distrib.
Corp. v. Applebaum, 217 F.2d 101, 124 (5th Cir. 1954).
cases challenge vertical restraints of trade like clearances,
as when an exhibitor plaintiff sues one or more distributors
and one or more exhibitors. E.g., Orson, Inc. v.
Miramax Film Corp., 79 F.3d 1358, 1366-68 (3d Cir.
1996); Theee Movies, 828 F.2d at 1397. Like other
vertical restraints of trade, clearances are evaluated under
the rule of reason, which requires the court to determine the
reasonableness of the restraint by balancing the
restraint's positive and negative effects on competition.
See Paramount Pictures, 334 U.S. at 145-46 (listing
competitive factors that could justify clearances as
reasonable, and therefore legal, restraints of trade);
Theee Movies, 828 F.2d at 1397. "Clearances
that are 'unduly extended as to area or duration,' or
granted over theatres 'not in substantial
competition,' may be unreasonable under section 1"
of the Sherman Act. Harkins Amusement Enters., Inc. v.
Gen. Cinema Corp., 850 F.2d 477, 486 (9th Cir. 1988)
(quoting Paramount Pictures, 334 U.S. at 145-46).
type of antitrust claim involving the film industry alleges a
group boycott. E.g., Southway Theatres, Inc. v.
Georgia Theatre Co., 672 F.2d 485, 487 (5th Cir. 1982)
("Southway alleged that the appellees-competing Atlanta
theatre chains and national film distributors-conspired to
deprive Southway of the opportunity to license first run
films and sought to eliminate it from competition in the
licensing and exhibition of those films."). A group
boycott involves "concerted action among other firms
aimed at keeping the victim firms from competing."
Id. at 492 n.6 (quoting L. Sullivan, Handbook of the
Law of Antitrust 231 (1977)). "'Group boycotts'
are often listed among the classes of economic activity that
merit per se invalidation under § 1" of
the Sherman Act. Nw. Wholesale Stationers, Inc. v. Pac.
Stationery & Printing Co., 472 U.S. 284, 293 (1985).
Although "not all group boycotts are predominantly
anticompetitive," when "firms with market power
boycott suppliers or customers for the purpose of
discouraging them from doing business with a
competitor," courts apply a rule of per se
illegality under antitrust laws. Marlin v.
Robertson, 307 S.W.3d 418, 428 (Tex. App.-San Antonio
2009, no pet.) (citing Nw. Wholesale Stationers, 472
U.S. at 293, then F.T.C. v. Ind. Fed'n of
Dentists, 476 U.S. 447, 458 (1986)).
other antitrust claims arising from the film industry involve
allegations of "a practice known as 'circuit
dealing, '" which "occurs when a defendant
pools the purchasing power of an entire circuit" to
prevent small exhibitors from bidding for film licenses on a
theater-by-theater basis. Cobb Theatres, 101
F.Supp.3d at 1342; see also Cinetopia, LLC v. AMC
Entm't Holdings, Inc., 18-2222-CM-KGG, 2018 WL
6804776, at *1 (D. Kan. Dec. 27, 2018) (denying motion to
dismiss movie theater's case that alleged AMC used
dominant market position to obtain exclusive licenses in
violation of federal antitrust law). This practice has been
found unlawful as a misuse of monopoly power. Cobb
Theatres, 101 F.Supp.3d at 1342.
case involves elements of each of the aforementioned types of
antitrust cases. iPic's allegations submit that two major
exhibitors, Regal and AMC, used their combined dominant
market positions-along with their simultaneous communication
of refusals to deal-to influence distributors to grant
clearances in their favor, thus restricting the licensing of
movies to two startup iPic locations in Texas. This case
comes to us as an appeal from a final take-nothing summary
judgment. Because of this procedural posture, we express no
opinion on the merits of using this type of theory to allege
antitrust violations in the film industry. Our task here is
limited by the motions filed in the trial court and limited
to determining whether the summary-judgment evidence raised a
triable issue of fact on the challenged elements of
operated a theater in Houston (Regal Greenway), and AMC
operated a theater in Frisco (AMC Stonebriar). Regal and AMC
learned that iPic planned to build theaters in Houston and
Frisco within about three miles of each exhibitor's
existing theater. In July 2014, before either iPic Houston or
iPic Frisco opened, both Regal and AMC requested clearances
of the proposed nearby iPic theaters. Both Regal and AMC
informed the major distributors that they would not license
first-run movies that were also licensed to the nearby iPic
November 2015, iPic opened a theater in Houston within three
miles of Regal Greenway theater. Several distributors
declined Regal's request for clearances, but they
allocated movies between Regal Greenway and iPic Houston.
From November 2015 through January 2016, iPic Houston was
limited in its ability to license films to show at its
theater. iPic contends that it lost money due to this lost
opportunity during the first few months of its operation in
January 2016, iPic brought the underlying antitrust suit
against Regal and AMC. iPic alleged that Regal and AMC had
worked together to exclude it from the market in Houston and
Frisco. iPic relied on the nearly simultaneous timing of the
statements from representatives of both Regal and AMC
informing distributors that they would not show movies that
were also licensed to the nearby iPic theaters. Notably,
these communications occurred long before either iPic theater
Regal settled with iPic, AMC sought summary judgment on
iPic's claims on no-evidence and traditional grounds. AMC
challenged the evidence to support the existence of a
conspiracy and its causation of damages alleged by iPic. AMC
contended that it acted independently of Regal, and it could
not be held liable for monetary damages sought by iPic
Houston because it only sought clearances in Frisco.
AMC's summary-judgment evidence included deposition
transcripts from employees and officers of both AMC and
Regal, all of whom denied having conspired with or
coordinated efforts regarding clearances of iPic theaters.
AMC also provided deposition transcripts from several
distributors denying that either request influenced any
clearance decision as to the other city.
response, iPic presented circumstantial evidence that AMC and
Regal engaged in parallel behavior and had the motive and
opportunity to conspire, including their involvement in
"Open Road," a joint-venture film distribution
company. iPic's evidence included business documents,
emails, and transcripts of testimony from depositions and