INTERSTATE CIRCUIT, INC. V. UNITED STATES
306 U.S. 208 (1939)
NATURE OF THE CASE: This was an appeal from a decree of the District Court awarding an
injunction in a suit brought by the Government under the Sherman Anti-Trust Act.
FACTS: Interstate Circuit, Inc., (D) and Texas Consolidated Theaters, Inc., (D1) are
movie theater chains. D has forty-three first-run and second-run motion picture theaters,
located in six Texas cities. D has a complete monopoly of first-run theaters in most cities,
except for Houston. The admission price for adults for the better seats at night is 40 cents
or more. D1 operates sixty-six theaters, some first- and some subsequent-run houses, in
various cities and towns in the Rio Grande Valley and elsewhere in Texas and in New Mexico.
In some of these cities, there are no competing theaters, and in six leading cities, there
are no competing first-run theaters. It has no theaters in the six Texas cities in which D
operates. Ds each contributed more than 74 percent. of all the license fees paid by the
motion picture theaters in their respective territories to the distributor. Ds entered into
contractual agreements with eight film distributor such that A product films would never be
exhibited at any time in any theater at a smaller admission price than $0.25 for adults in
the evening. Further they agreed that A pictures which are exhibited at a night, admission
of 40 or more, shall never be exhibited in conjunction with another feature picture under
the so-called policy of double features. D's manager mailed a letter to each distributor
that identified all eight distributors as being addressed on the initial proposal.
Conferences followed and, each distributor was represented by its local branch manager and
by one or more superior officials from outside the state of Texas. In the course of them,
each distributor agreed with D for the 1934-35 season to impose both the demanded
restrictions upon their subsequent-run licensees in the six Texas cities served by D, except
Austin and Galveston. The agreements for the restrictions were carried into effect by each
of the distributors' imposing them on their subsequent-run licensees in the four Texas
cities during the 1934-35 season. None of the distributors yielded to the demand that
subsequent runs in towns in the Rio Grande Valley served by D1 should be restricted. Ds were
charged with violations of the Sherman Antitrust Act. The trial court found that the
distributor appellants agreed and conspired among themselves to take uniform action upon the
proposals made by D, and that they agreed and conspired with each other and with D to impose
the demanded restrictions upon all subsequent-run exhibitors in Dallas, Fort Worth, Houston,
and San Antonio; that they carried out the agreement by imposing the restrictions upon their
subsequent-run licensees in those cities, causing some of them to increase their admission
price to 25 cents. The court found this to be a combination and conspiracy in restraint of
interstate commerce in violation of the Sherman Act. It also concluded that each separate
agreement between D and a distributor that D should subject itself to the restrictions in
its subsequent-run theaters and that the distributors should impose the restrictions on all
subsequent-run theaters in the Texas cities as a condition of supplying them with its
feature pictures, was likewise a violation of the Act. The Court enjoined the conspiracy and
restrained the distributors from enforcing the restrictions in their license agreements with
subsequent-run exhibitors and from enforcing the contracts or any of them. Ds appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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