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United States Court of Appeals for the Second Circuit
April 1, 1960, Argued ; May 13, 1960, Decided
No. 257, Docket 25966
[*799] In 1939 the government instituted a civil antitrust suit in the Western District of New York against the present defendants J. Myer Schine, Louis W. Schine, John A. May, and various corporations controlled by them (hereinafter collectively called Schine or the Schine defendants). The government alleged that the Schine defendants had imposed unlawful restrains on competition in the exhibition of motion pictures throughout the area, primarily Western New York and Ohio, where their theatre chain operated. After a Supreme [**2] Court decision, Schine Chain Theatres v. United States, 1948, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245, sustaining the charge of antitrust violation and remanding the case to the District Court for findings on the extent to which divestiture should be decreed, the parties agreed upon a consent decree. Among the terms of this decree was a requirement that Schine sell the Capitol Theatre in Oswego, New York, and the Pontiac Theatre in Ogdensburg, New York. In 1950 the two theatres were sold to the plaintiff in the present action, hereinafter called Martina.
Plaintiff's operation of the two houses not being successful, it instituted in the District Court for the Western District of New York, in September, 1951, a treble-damage action under the antitrust laws against the Schine defendants and the major distributors of motion pictures. [*800] Plaintiff alleged that defendants had conspired to prevent Martina from obtaining first-run films on terms comparable to those afforded Schine and that Schine had engaged in various other predatory practices in the operation of the first-run houses it had retained in Oswego and Ogdensburg.
On January 22, 1952, on a stipulation [**3] of the parties, the district judge entered a judgment of dismissal with prejudice in the treble-damage action. Plaintiff executed a release and a covenant not to sue, and its shareholders executed a consent to settlement of the claim against the defendants, for $ 23,000. A short time prior to the dismissal, Martina had leased the Oswego and Ogdensburg theatres to Oswog Corporation for ten years at a rental of $ 18,000 per year. In an affidavit executed at the time of settlement, plaintiff's president, Charles V. Martina, stated that he had earlier suggested to Schine that it leases the two theatres but had been informed that the necessary Department of Justice approval would not be obtainable; that he had thereafter approached Elmer Lux, an officer of Darnell Theatres, Inc. and carried on negotiations that ultimately resulted in the lease to the Oswog Corporation; that this lease was entirely 'separate and distinct' from the settlement; and that 'none of the defendants influenced or attempted to influence, nor were they or any of them instrumental in any way in the negotiations leading to or the actual leasing of said theatres at Oswego and Ogdensburg, N.Y.'
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278 F.2d 798 *; 1960 U.S. App. LEXIS 4566 **; 1960 Trade Cas. (CCH) P69,723; 3 Fed. R. Serv. 2d (Callaghan) 1047
MARTINA THEATRE CORPORATION, Plaintiff-Appellant, v. SCHINE CHAIN THEATRES, INC., et al., Defendants-Appellees
settlement, theatres, lease, antitrust, district court, parties, consent decree, duress
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