# Petition — Hayes v. Solomon

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1980
- **Citation:** 444 U.S. 1078

## Text

In the

Supreme Court of the United States
October Term, 1979

oes 9-931 ©

Lioyp L. Hayes, Hayes, INc.,
ParK PLAZA TWIN THEATRES, INC.
AND Mip-CouNTY ENTERPRISES, INC.,
Petitioners,

Vv.
T. G. SoLoMoN, GuLF STATES THEATRES, INC.,

GuLF STATES THEATRES OF TEXAS, INC.
AND Fuqua INDUSTRIES, INC.,
Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

EDWIN 'TOBOLOWSKY
1900 Southland Center
Dallas, Texas 75201
(214) 742-9205

Attorney for Petitioners

OF COUNSEL:

Lino A. Graglia
3505 Taylor’s Drive
Austin, Texas 78703

Re @O noes
4 Supreme Court, U. &
| FILED
?

DEC 17 4979

aint, 2, CLERR

are

TABLE OF CONTENTS

Table of Authorities 0.0002...
Ri tact calessssancsvecss.
Jurisdiction ....................
Questions Presented . A) Se
Statutory and Constitutional Provisions Involved
Statement of the Case | Ree Ais al

The shopping center-theatre claim

The Mid-County Drive-in claim ..............

The Park Plaza claim ........... ee ;
Reasons for Granting Writ |. ose

I.

Il.

This Court’s decision in Brunswick v. Pueblo
Bowl-O-Mat does not bar an antitrust plain-
tiff from recovering damages for injury to its
business or property caused by violations of
the antitrust laws committed by defendants
for the purpose and with the effect of pre-
—s or limiting competition by the plain-
This Court’s declsiees that the Seventh
Amendment prohibits federal courts from re-
versing jury verdicts supported by probative
facts and reasonable inferences are as fully
applicable to actions under the antitrust laws

as to actions under the Federal —

Liability Act. |

Nene casey seconds
Appendix
Opinion of the Court of Appeals

Opinion of the Court of Appeals on Petition for
Rehearing and Petition for Rehearing
eS Ue

Judgment of the Court of Appeals. ......

Page

Owns nd NY —& EF

11
14
14

15

TABLE OF AUTHORITIES

Cases
Page

American Tobacco Co. v. United States, 147 F.2d 93

(6th Cir. 1944), affm’d., 328 U.S. 781 (1946) ............... 27
Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines,

Be I I oo cies sic civ cose sctssadsnieiesseencs ces a
Beacon Theatres v. Westover, 359 U.S. 500

Rn ath ree ge aa ee aed Os os os dvnaass 24, 25
Boeing Co. v. Shipman, 411 F.2d 369 (5th Cir.

RARER gl oe cas Si err . 4, 21, 22, 23, 24, 25, 27, 28
Brown Shoe Co. v. United States, 370 U.S. 294

RAEI BIR eee ae re ORONO Crd Nester eR ve ae
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,

Ftd t,t ; ; GRnnen ine Somme e 4, 14, 17, 18, 19, 20

Cahill v. New York, New Haven & Hartford R.R. Co.,

294 F.2d 637 (2nd Cir. 1955) oeeeeccccccccccccce ene 23°

Conference of Studio Unions v. Loew’s, Inc.,
193 F.2d 51 (9th Cir. 1951), cert. denied,

a esc Lepiaihicpabessanivosavvnpenens: 19
Continental Can Co. v. Horton, 250 F.2d 637

I 02 irc gee tesre te iv cke th ashi taken ae, 24
Continental Ore Co. v. Union Carbide & Carbon Corp.,

Be nN 5 ino ok cra plaenenakeripercencenenecs 26, 27
Dehydrating Process Co. v. A. O. Smith Corp., 292 F.2d

653, cert. denied, 368 U.S. 931 (1961) ............... ee, 23
Dick v. New York Life Ins. Co., 359 U.S. 437

(RFT 1 I Uno cepa oe ore ae ETS 26

Donovan Construction Co. v. Florida Telephone Corp.
564 F.2d 1191 (5th Cir. 1977), cert. denied,
GE I I I ie secrocescaessecccstsensvende oscicr ase csie 19

Galloway v. United States, 319 U.S. 372 (1948) .............. 21

Table of Authorities — (Continued)

Page
Gibson v. Elgin, Joliet & Eastern Railway Company,
246 F.2d 834 (7th Cir.) , cert denied, 355 U.S. 897
ST lines vaccthainicrta ch Oren Carne caw. 3 23
Gibson v. Phillips Petroleum Co., 352 U.S. 874
RSE ESOS SN a Rc ae ONS | ie ae
Lavender v. Kurn, 327 U.S. 645 (1947) 000000, 25

Lones v. Detroit, Toledo and Ironton Railway Company,
398 F.2d 914 (6th Cir. 1968) , cert. denied,

OP BUI PI OI os oo soasicccsiscciairscccssccccsveevess | 24
Missouri-Kansas-Texas Railway Company v. Hearson,

422 F.2d 1037 (10th Cir. 1970) 0.0.0.0... a
Montague & Co. v. Lowry, 193 U.S. 38 (1904) ........ an ae

Planter’s Manufacturing Co. v. Protection Mutual
Ins. Co., 380 F.2d 869 (5th Cir.), cert. denied,

389 U. S. RI AE ica ea EI, eS iter nae ano ree 22
Swafford v. Atlantic Coast Line R. Co., 350 U.S. 807

ERECT SIS Ce TEASE, 26
Tennant v. Peoria & P.U.R. Co., 321 U.S. 29, 33

ROT e PEER tee enn 21, 26, 27
Union Trust Co. v. Eastern Airlines, Inc., 350 U.S. 907

SANSA Sas rine Seen er 1 Re PoaR FeO .. 26
United States v. Patten, 226 U.S. 525 (1913) .............. 27
Williams v. Carolina Life Ins. Co., 348 U.S. 802

REE NCARA sir oR 2 te fe Roel”, ST SSO aceite on 26
Wratchford v. S. J. Groves & Sons, 405 F.2d 1061

RCE, SOE. cdipuiac ieketeinitascases: ee
Wyandotte Co. v. United States, 389 U.S. 191

Ep PR lee tig ya Ste aan Ro RM Et AY Sa a re 17

Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100
RRR RRR Rp eiey renin MR acl, ves nd GPT ote A eter uer 18

Table of Authorities — (Continued)

Page
Statutory and Constitutional Provisions

) Lit 7 + 5 Rieeeomecmesnnts tls cash iT iar. ac! Res
Be ovidecs cece ao | 3
) be | RAR emcee. uD a
Bie UI BO ance cee 17
S Ue Bees cs eee Ree
USS. SER eee. «......e. 2, 4, 14, 22
6 URC. $60 5.05... eee eee 2, 4, 14, 22
U.S. Const. amend. VII RTE: Dred ie: I hoa 2

Miscellaneous

Bagalay, Directed Verdicts and the Right to Trial by
Jury in Federal Courts, 42 Tex.L. Rev. 1053
(OND ksi : 26

Green Protection of Jury Trial in Diversity Cases
Against State Invasions, 35 Tex.L.Rev. 768

CTY nic ceccniestinsicstinssnjcont etna aa ) —
Wright & Miller, Federal Practice & Procedure: Civil
SR: Bench et .. 15, 23, 28

In the

Supreme Court of the United States
October Term, 1979

No.

Luoyp L. Hayss, Hayes, INc.,
Park PLaza Twin THEATRES, INC.
AND Mip-County ENTERPRISES, INC.,
Petitioners,
v.

T. G. Sotomon, Gur States THEATRES, INC.,
GuLr States THEATRES OF Texas, INc.
AND Fuqua INbusTrIES, INC.,
Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

Petitioners respectfully pray that a writ of certiorari issue
from this Court to review the judgment and opinion of the
United States Court of Appeals for the Fifth Circuit in this
case.

Opinion Below
The opinion of the Court of Appeals for the Fifth Circuit
is reported at 597 F. 2d 958. It is reproduced in the Appendix
hereto. No opinion was rendered by the District Court for
the Eastern District of Texas.

2

Jurisdiction
The judgment of the Court of Appeals was entered on
June 29, 1979. A timely petition for rehearing or rehearing
en banc was denied on September 24, 1979, and this petition
was filed within 90 days of that date. The jurisdiction of
this Court is invoked pursuant to 28 U.S.C. § 1254(1).

Questions Presented

1. Whether the Court of Appeals erred in holding that
injuries to the business and property of an antitrust plaintiff
caused by a competitor’s antitrust violations specifically
directed to eliminating or limiting the competition of the
plaintiff may, nonetheless, be found by a court not to be
“antitrust injuries” for which treble damages are recoverable.

2. Whether the Court of Appeals erred in holding that this
Court’s decisions in actions under the Federal Employers’
Liability Act (45 U.S.C. §51 et seq.) and the Jones Act
(46 U.S.C. § 688) on the meaning of the Seventh Amend-
ment right to a jury trial are inapplicable to actions under
the antitrust laws.

Statutory and Constitutional Provisions Involved

Title 15, United States Code, Section 15:
That any person who shall be injured in his business or
property by reason of anything forbidden in the anti-
trust laws may sue therefor in any district court of the
United States in the district in which the defendant re-
sides or is found or has an agent, without respect to
the amount in controversy, and shall recover threefold
the damages by him sustained, and the cost of suit, in-
cluding a reasonable attorney’s fee.

United States Constitution, Seventh Amendment:
In Suits at common law, where the value in controversy
shall exceed twenty dollars, the right of trial by jury
shall be preserved, and no fact tried by a jury, shall be
otherwise re-examined in any Court of the United
States, than according to the rules of the common law.

3

Statement of the Case

This litigation began as a private antitrust action, filed
in the United States District Court for the Eastern District
of Texas, charging violations of Sections 1 and 2 of the
Sherman Act (15 U.S.C. §§ 1 and 2) by defendants in con-
nection with the acquisition, construction, and operation of
motion picture theaters in greater Port Arthur, Texas, and
seeking treble damages and other relief under Section 4 of
the Clayton Act (15 U.S.C. § 15).

Petitioners (plaintiffs below) are Lloyd L. Hayes, an
entrepreneur with motion picture theater interests in Port
Arthur, elsewhere in the “Golden Triangle” area of Texas
(Beaumont, Port Arthur, and Orange), and elsewhere in
the South; Hayes, Inc., a Texas corporation the stock of
which is owned by the Hayes family; Park Plaza Twin
Theaters, Inc., a Texas corporation that owns the Park
Plaza Twin Theater in Port Arthur and the stock of which
is 50 percent owned by Hayes, Inc.; and Mid-County Enter-
prises, Inc., a Texas corporation mostly owned by the Hayes
family and formed for the purpose of building and operating
a drive-in motion picture theater in the greater Port Arthur
area.

Respondents (defendants below) are T. G. Solomon, an
entrepreneur who owned interests in some 150 motion
picture theaters (screens) in the Golden Triangle area and
elsewhere in the South until August 31, 1972; Fuqua In-
dustries, Inc., a publicly owned Delaware corporation that
owns the stock of many subsidiary corporations engaged in
a variety of businesses, including transportation, recreation,
a chain of more than 200 theaters in the South, and housing;
Gulf States Theaters, Inc. (Gulf States) (later Coastal
Theaters, Inc.) and Gulf States Theaters of Texas, Inc.
(Gulf States Texas) (later Martin Theaters of Texas, Inc.),

4

Delaware corporations wholly owned by Fuqua Industries
and formed to acquire Solomon’s theater interests on
August 31, 1972.

After a nine day trial before a jury, during which 283
exhibits were introduced and twenty-four witnesses testi-
fied, producing a record of over 4,000 pages (App.-1),
the jury reached a verdict in favor of petitioners in all re-
spects. The jury found that respondents violated both Sec-
tion 1 and Section 2 of the Sherman Act by unjustifiably
preventing petitioners from constructing in Port Arthur a
shopping center and theater that would have competed
with respondents’ Port Arthur theaters (the “shopping

ter-theater claim”), by preventing petitioners from con-
structing in the greater Port Arthur area a drive-in theater
that also would have competed with respondents’ theaters
(the “Mid-County claim”), and by destroying or lessening
the competitive potential of a theater owned by petitioners
in Port Arthur (the “Park Plaza claim”). The jury awarded

petitioners damages totalling $3,483,000 plus attorneys’ fees.

The District Court entered judgment accordingly, after the
mandatory trebling of the jury’s damage award.

The United States Court of Appeals for the Fifth Circuit
reversed the District Court’s judgment. The Court of Ap-
peals held that the injuries suffered by petitioners were not
“antitrust injuries” within the meaning of this Court’s de-
cision in Brunswick, Corp. v. Pueblo Bowl-O Mat, Inc., 429
U.S. 477 (1977). (App. - 28). Applying the Fifth Circuit’s
rule of Boeing Co. v. Shipman, 411 F. 2d 369 (5th Cir. 1969)
that this Court’s decisions on sufficiency oi the evidence to
support a jury verdict in Federal Employers’ Liability Act
(45 U.S.C. § 51 et seq.) and Jones Act (46 U.S.C. § 688)
cases are not applicable to other cases, the court also held
that there was not sufficient evidence to support the verdict.

5

The court ordered that the shopping center-theater and Mid-
County claims be dismissed, and remanded the Park Plaza
claim for a new trial.

Evidence was introduced at the trial tending to show —
at least when viewed, as it should have been but was not
by the Court of Appeals, in the light most favorable to
petitioners — the following. In 1967 petitioner Park Plaza
Twin Theaters, Inc. owned the Park Plaza Twin Theater, a
deluxe, two-auditorium, first-run theater “soon to become
acknowledged as the finest such facility in the area.” (App.
- 5). In January 1968 respondent Solomon — whose theater
interests at the time included ownership of a theater in
nearby Beaumont (PX 15, p. 3, PX 115) — acquired ex-
clusive control of the Park Plaza Twin Theater by entering
into a contract with Park Plaza Twin Theaters, Inc. making
him the sole operator for a period of fifteen years. (PX 115).
In March 1968 Solomon, Hayes, and another individual,
Bonner Phares, formed a corporation, Golden Triangle
Theaters, Inc., in which Solomon owned 50 percent of the
stock and Hayes and Phares owned 25 percent each. In
July 1968 Golden Triangle Theaters acquired a chain of
theaters constituting all of the remaining theaters in the
greater Port Arthur area. (R. 433-434, PX 129, p. 37; PX 129,
pp. 7-14, 17). Solomon obtained the sole right to operate
these theaters as well as the Park Plaza Twin Theater (PX
129, pp. 17-18), thereby acquiring a complete monoply of
motion picture theaters, both indoor and outdoor, in the
greater Port Arthur area.

Having thus acquired monopoly control of motion picture
exhibition in greater Port Arthur, Solomon undertook a
course of action, individually and with others, the effect of
which was to maintain and preserve this ccztrol by pre-
venting or restricting competitinn which petitioners at-
tempted to offer by means of three separate enterprises.

y 6

The shopping center-theater claim

The first of these enterprises was a project to develop a
shopping center containing a theater on a tract of land
owned by Hayes and Hayes, Inc. in Port Arthur and
uniquely well-suited for such a project. (R. 106-109, PX 6,
6A, 17, 18, 203). In November 1970 Solomon and one Wilbur
Marvin, a business associate experienced in shopping center
development, purchased an undivided one-half interest in
the shopping center tract. By the terms of a Development
Agreement entered into at that time by Solomon, Marvin,
Hayes and Hayes, Inc., Solomon was to provide capital as
the development progressed and Marvin was to use his
best efforts to expedite development. (PX 10, pp. 8-9, 11-12).
In a separate document executed at the same time, Solomon
and Marvin obtained the agreement of Hayes, Inc. not to
develop for the same purpose any other property within a
two-mile radius of the development project. (PX 12).

Marvin thereafter elicited substantial interest in the

project from prospective tenants, including, for example,

J.C. Penney Co. and White House Dry Goods, Co., depart-
ment store operators. (PX 21, 23, 166, 203). In March 1971
Marvin began negotiating with a Dallas-based architectural
firm, Architectonics, to draw a master plot plan, necessary
for rental purposes, for the development. (PX 19, 20). Ata
meeting in May 1971 all parties voted to hire Architectonics.
(R. 162, 179). In June 1971 Architectonics submitted a pro-
posal for master planning services. (PX 24). Hayes and
Hayes, Inc. agreed to accept the proposal, and Marvin trans-
mitted it to Solomon for his approval and signature. Solo-
mon, however, refused to give his approval, and Marvin
refused to proceed further without Solomon’s approval.
(R. 169-171, 632-634, 1779-1781, PX 25, 26). Because tenants
could not be obtained without preparation of an architect-
ural lease and site plan, the result was to bring the project
to a halt.

7

In July 1970, Hayes, upon the death of Bonner Phares,
acquired Phares’ 25 percent stock interest in Golden Triangle
Theaters pursuant to a prior written agreement between
them. Hayes thus acquired an equal ownership interest with
Solomon. Solomon, however, thereupon demanded that
Hayes convey this 25 percent stock interest to the corpo-
ration, the effect of which would have been to give Solomon
a 6624 percent share. (R. 153-157, 590, PX 15, 16; R. 2099,
PX 29). Solomon had his attorney prepare an agreement
to this effect in November 1970, but did not present it to
Hayes until May 1971, some five months after the execution
of the Development Agreement. (R. 179-181, 2099, PX 29).
Upon Hayes’ refusal to agree to transfer the Golden Triangle
Theaters stock, Solomon refused to approve the Architecton-
ics proposal. (R. 169-171, 632-634, 1779-1781, 2040-2041). Un-
der the terms of the Development Agreement, the assent of
only three of the four principals was necessary to permit the
project to proceed, but, as shown by a document from
Marvin’s files, Solomon requested Marvin to “go along
[with Solomon] as a matter of cooperation,” in return for
which Solomon promised to “make Marvin whole” by re-
funding his investment ($150,000) in the project. (R. 177,
1782-1783, PX 10, pp. 15-16, PX 27). Marvin then refused to
give hi. assent, stating, as Hayes testified, “But, Lloyd, I
have got, as you know I have got theater interests and
shopping center interests with Mr. Solomon and I am just
not going to get caught in between, I have got to go along
with what he says,” (R. 171).

In November 1971 Solomon told Hayes that he, Solomon,
would delay the development project indefinitely unless
Hayes agreed to sell Solomon all of his Golden Triangle
Theaters stock, give Solomon options to lease the Park Plaza
Twin Theater for up to thirty years at rental terms favorable
to Solomon, and cancel the Development Agreement and

repurchase the ownership interest of Solomon and Marvin.
(R. 182-186, PX 204). Hayes, faced with pressure from lend-
ers on the development project tract and from prospective
tenants and with the necessity of avoiding protracted litiga-
tion, acquiesced in each of Solomon’s demands. (R. 183-189,
206, 285). In December 1971 two documents were ex-
ecuted by Solomon and Hayes, a Memorandum of Under-
standing, concerning the development project (PX 31),
and a Memorandum of Agreement, concerning the other
theater matters. (PX 32). Under the latter agreement,
Hayes was to convey all his stock in Golden Triangle Thea-
ters to Solomon and sever all connection with that corpora-
tion except that he would be retained as a consultant at a
fee of $500 a month for five years, By the terms of the
Memorandum of Understanding, Solomon was to obtain
Marvin's consent to the transfer of their undivided one-half
ownership interest in the development project to Hayes and
Hayes, Inc. by January 12, 1972. Solomon, however, failed
to do this by that date. (R. 190-192). Hayes nonetheless
agreed with Solomon’s attorney to close the Golden Triangle
Theaters stock transaction on condition that the Memo-
randum of Understanding would become self-operative on
March 1, 1972, and a document to this effect was executed
on January 12, 1972. (R. 191-193, PX 33). Assuming that he
would now be able to proceed with the development theater
project, Hayes met with Architectonics in February 1972
to negotiate an agreement for the preparation of a master
plan. (R. 206, 876-878, PX 40). By March 1, 1972, however,
Solomon had again failed to transfer the Solomon-Marvin
undivided interest in the tract, thereby continuing to fore-
stall development. (R. 673-674, 1785-1786, 1926, PX 38,
39, 81, 83, 84, 85).

In August 1972 Solomon sold his theater interests to
respondent Fuqua Industries, Inc., including the Golden

9

Triangle Theaters chain and some 110 other theater screens
throughout the South. Solomon was also employed by Fuqua
Industries as Chairman of the Board and Chief Executive
Officer of two wholly owned subsidiaries, respondents Gulf
States Theaters, Inc. and Gulf States Theaters of Texas,
Inc., which were formed to operate the theaters. (R. 153,
608, 685-693, 1946-1952, PX 121, 122, 142, 146, 147, 148, 153).
Fuqua Industries thus acquired Solomon’s monopoly posi-
tion in Port Arthur. Hayes, who had recently participated in
the construction of motion picture theaters in Jackson,
Mississippi and Orange, Texas in competition with Solomon
(R. 194) and who was openly moving to construct a multi-
screen theater as part of the development project, was the
preeminent threat to this position. Solomon, acting now
as an agent of Fuqua Industries, took a series of actions that
had the effect of minimizing this threat.

As of August 1, 1972 Solomon ceased paying to Hayes the
$500 per month fee he was to receive as a consultant to
Golden Triangle Theaters pursuant to the December 1971
agreement whereby Solomon acquired all of the Golden
Triangle Theaters stock. Solomon asserted that a conflict
of interest had arisen by reason of Hayes’ participation in
a theater in Orange, Texas, although nothing in the De-
cember 1971 agreement precluded such participation. (R.
118, 208, PX 31, p. 3). In meetings and telephone conversa-
tions with Hayes in late 1972 and early 1973, Solomon took
the position that he was not obligated to sell back to Hayes
the undivided one-half interest he held with Marvin in the
development project. (R. 207, 679, 2050-2051). In effectua-
tion of this position, Solomon had an agent of Gulf States
Theaters and Gulf States Theaters of Texas attempt to pay
taxes on the development project tract in direct contraven-
tion of the terms of the December 1971 Memorandum of
Understanding that all taxes were thereafter to be paid by

10

Hayes. (R. 679-681, PX 31, 41, 43). In June 1973 Solomon
again took the position, in response to an inquiry by Hayes’
attorney, that he was not legally obligated to reconvey
the Solomon-Marvin interest in the tract. (R. 218, 219,
PX 64).

The effect of these actions by Solomon, individually and
in con-7rt with others, was completely to preclude pro-
gress on the shopping center-theater project. Lenders,
developers, and prospective tenants would not proceed
unless and until Hayes could obtain clear title to the land.
In 1973, in an effort to break Solomon’s stranglehold over
the project, Hayes and Hayes, Inc. filed suit in a Texas
state court for declaratory judgment confirming their right
to repurchase the Solomon-Marvin interest. Although he
was duly served with process, Solomon failed to respond,
and a default judgment was finally entered in January,
1974 upholding the Hayes position. (R. 206, 285, 914, 923;
R. 220, PX 46, DX 28). Solomon nonetheless, continued to
assert title to the land by causing checks to be tendered
in payment of taxes on a one-half interest in the land. (R.
230-237, PX 50, 51, 52, 53, 54, 55). At a closing finally set for
January 28, 1975, Hayes tendered full payment for the Solo-
mon-Marvin interest, in accordance with the terms of the
Memorandum of Understanding, but Solomon now refused
to close unless a deed of trust, not called for by the agree-
ment, was also tendered. (R. 190-192, 241-246, PX 56, 57,
58, 59, 60). Hayes and Hayes, Inc. were therefore required to
return to the state court for an order requiring specific per-
formance of the agreement by Solomon. After more than a
year of additional delay, a consent judgment was entered
pursuant to which Solomon agreed to abide by the terms
of the December 1970 agreement. (R. 252-253, 1909-1910,
PX 69). On the new date set for closing, April 15, 1976, how-
ever, Solomon again refused to close, this time demanding
payment of $90,000 in interest, despite the fact that such

11

payment had previously been waived in writing. (R. 253-
254, 1911, PX 37, 72, pp. 11-12). On the further command of
the state court, Solomon finally conveyed the undivided
one-half interest to Hayes and Hayes, Inc. on April 30,
1976, (PX 72, pp. 12-13). By this series of actions, respon-
dents delayed the construction of the shopping center and
competing theater for almost five years, during which period
the cost of construction increased by more than seven million
dollars. (PX 77, 78). :

The Mid-County drive-in claim

In a further and separate effort to meet the need for
additional motion picture theaters in greater Port Arthur,
Hayes obtained the interest of a group of investors in con-
struction of a drive-in theater in the area. They organized
Mid-County Enterprises, Inc. in June 1972 and obtained a
lease on a suitable tract of land located along a major high-
way. (R. 298-299, PX 87, 91). During this period, Hayes and
this same group of investors were also in the process of con-
structing a drive-in theater in Jackson, Mississippi, another
city in which respondents owned the only other drive-in
theater. (R. 299, PX 142, 151). Mid-County obtained a
$50,000 loan, made a $20,000 prepayment of rent on a fifteen-
year lease, and purchased a $6,000 screen tower and $2,000
sign. (R. 300-301, 305-309, PX 91, 112).

Before Mid-County could begin construction, however,
respondents learned of the project and ordered the head of
their real estate department to locate a site close to the
Mid-County site on which they could build or threaten to
build a predatory competing theater (R. 808-819), as they
had in fact already done in Jackson. (R. 110, 210, 227, 319,
1391-1397, 1413). After a site was located, Solomon visited
Hayes in Port Arthur in the Spring of 1973 and, with an-
other Mid-County investor present, warned them that un-

12

less they “stop[ped] building the drive-in in Mid-County”
(R. 1402) he would build a competing theater nearby, pre-
vent them from obtaining films, build a theater near Hayes’
theater in Orange, Texas, and continue to block the shop-
ping center-theater project. (R. 209-212, 1402-1404). Ac-
cording to a witness for petitioners, Solomon stated: “[I]t is
not Teddy Solomon anymore, it is Fuqua. And I sold these
theaters for a hell of a price to Fuqua, and I have to keep
these towns closed and you all are fooling around with
these towns.” (R. 1403). Solomon’s own testimony as to this
matter was as follows:

“Q. Did you ever tell Mr. DeNeve not to build in Mid-

County area?

“A. I don’t know that I told Mr. DeNeve. I will say

this: that I did all I could to discourage him to build

the theater, I didn’t think it was a practical and neces-

sary — and I would rather him not have built the

theatre.

“Q. You did all you could to discourage him?

“A. Well, within reason, [ didn’t put a gun on him or

anything and say they couldn’t build it, I tried to talk

Mr. DeNeve and Mr. Hayes out of it, not building the

theatre.” (R. 616).

This was consistent with the general policy of respondents
concerning competition, which Solomon stated at the trial
as follows:

“Our main concern in motion picture exhibitions today
is to keep a town properly staffed with a number of
deluxe theatres in order to keep competition from other
theatres out of the city.
* * *€

“Our company has taken the position that rather than
have outsiders come in, even though they have a right,
we could profit more and handle film better by having
enough screens ourselves to discourage outsiders from
coming in” (R. 659-660).

13

Despite respondents’ initial threats, Mid-County borrowed
an additional $300,000 in July 1973, began construction in
November 1973, and retained a motion picture booking agent
in January 1974 who notified all motion picture distributors
of the planned opening. (R. 333-335, 1253-1255, PX 88, 93,
94, 95; R. 330-333, PX 103). Respondents, however, intensi-
fied their predatory activities— such as steps to prevent
Hayes from obtaining needed films—in Jackson and
Orange, with the result that Hayes’ Jackson and Orange
theaters became unprofitable. (R. 1396, 1419, 1427-1428).
In June 1974 Hayes met with Solomon at the offices of Gulf
States Theaters in New Orleans, and Solomon handed him
a hand-written note that ended with the warning in bold
letters “DO NOT BUILD AGAINST GULF STATES.”
(R. 225-226, 229, 337-338, PX 49).

Believing that respondents had already spent approxi-
mately one million dollars on two drive-in theaters in Jack-
son, which Solomon admitted would not have been built
except to deter competition by Hayes (R. 2094, PX 217, pp.
5, 6), that respondents stood ready to make good Solomon’s
threat to build a new drive-in theater close to the Mid-
County site and to double the size of their existing Port
Arthur drive-in theater (by expanding from two screens to
four), to build a new theater in Orange in order to injure
Hayes’ theater there, and to continue to block the shopping
center-theater project (R. 318-321, 809-814, 1396-1398, 1401-
1404, PX 136, 215), Hayes concluded that he did not have
the means for a struggle of this magnitude. (R. 1166-1167,
1415-1416). Respondents’ policy regarding competition was
successfully implemented in Port Arthur; a Mid-County
drive-in theater that would have broken respondents’ drive-
in (and indoor) theater monopoly in the area was never
built.

14

The Park Plaza claim

The essence of the Park Plaza Twin Theater claim is that
respondents, as part of their acts and conspiracies of monop-
olization and restraint of trade, acted to diminish or destroy
the long-term competitive ability of the Park Plaza Twin
Theater by denying it “best box office” films — in breach
of a lease agreement, as was found by a state court — by
acting to injure its reputation, and by an expansion of com-
petitive motion picture facilities in Port Arthur not justified
by legitimate business considerations. (R. 364-365, PX 116).
The Court of Appeals did not order that this claim be dis-
missed, apparently finding that it alone constitutes a valid
antitrust claim and may be supported by evidence sufficient
to sustain the jury verdict. Instead, the court remanded this
claim for a new trial disentangled from the other claims.
(App. - 53). Because the validity of this action by the court
depends on the validity of its dismissal of the other claims,
further separate discussion of the Park Plaza claim is not
now required.

Reasons for Granting the Writ

This case presents two issues of public importance. The
first is whether this Court’s holding in Brunswick Corp. v.
Pueblo Bowl-O Mat, Inc., 429 U.S. 477 (1977), that an anti-
trust plaintiff can only recover for an antitrust injury, an
“injury of the type the antitrust laws were intended to
prevent,” was correctly interpreted by the Court of Appeals
as precluding a plaintiff’s antitrust recovery for injuries
caused by a competitor’s antitrust violations committed for
the specific purpose and with the effect of precluding or
limiting competition by the plaintiff. It would seem that
there can be no doubt that the Court of Appeals’ interpre-
tation of Brunswick is not correct. If allowed to stand and
followed by other courts, that interpretation would seriously
undermine enforcement of the antitrust laws by private

Re nrmne ene owner st etetes

een se es

15

treble damage actions; it would, at the very least, contribute
an element of enormous confusion and uncertainty to such
actions. |

The second issue of general importance presented by the
Court of Appeals’ decision is, stated most simply, whether
the Seventh Amendment’s guarantee of a jury trial in fed-
eral courts means one thing in one class of cases and some-
thing else in all others. More specifically, the issue is whether
this Court’s interpretation of the Seventh Amendment as
precluding federal courts from reversing jury verdicts sup-
ported by probative facts and reasonable inferences is ap-
plicable, as the Fifth Circuit holds, only to actions brought
under the Federal Employers’ Liability Act (45 U.S.C.
§ 51 et seq.) or the Jones Act (46 U.S.C. § 688) and not
to actions brought under the antitrust laws. This holding,
too, would seem to be clearly incorrect. Further, it is an issue
as to which there is a nationwide conflict among the deci-
sions of the courts of appeals. As leading authorities on the
federal courts have stated, it is “extremely important” that
this Court settle this issue and provide “helpful guidance to
the lower federal courts.” Wright & Miller, Federal Practice
and Procedure: Civil § 2526, pp. 556-59 (1971).

Grant of this petition for certiorari is, therefore, strongly
supported by the considerations referred to in Rule 19 of
the Rules of this Court.

I. This Court’s Decision in Brunswick v. Pueblo Bowl-O-
Mat Does Not Bar an Antitrust Plaintiff from Recovering
Damages for Injury to Its Business or Property Caused by
Violations of the Antitrust Laws Committed by Defendants
for the Purpose and With the Effect of Preventing or
Limiting Competition by the Plaintiff.

The Court of Appeals panel below apparently approached
this case with a view of private treble damage actions under

16

the antitrust laws indicating extreme disfavor, if not scorn.
The first sentence of the court’s opinion states that this
case is “typical of quests for the golden fleece of treble
damages” (App. - 1). Later in its opinion, it again so charac-
terizes private treble damage actions by deprecating peti-
tioner Hayes as having “himself acknowledged the lure of
the golden fleece of treble damages” (App. -20, n4), de
spite the fact that the allegations of the complaint, if found
to be true, as they were by the jury, undoubtedly establish
antitrust violations directed against and injuring Hayes
as a competitor. It would seem appropriate for this court
to grant this petition — even if for no other reason — to
make clear to the court below and other courts that disfavor
approaching hostility is not the proper judicial attitude to-
ward the private treble damage actions provided for by
Congress as an essential means of enforcing the antitrust
laws.

The court below was undoubtedly correct that “The anti-
trust laws were never meant as a panacea for all wrongs”
(App. - 27). It is equally clear, however, that the court was
incorrect in proceeding to the conclusion that those laws
do not provide a remedy for the wrongs suffered by peti-
tioners here. The court held that the injuries suffered by pe-
titioners are “not the type of injury that the federal anti-
trust laws were intended to forestall’ and that “the injuries
for which damages were awarded were not antitrust in-
juries” (App. - 28). The injuries suffered by petitioners, how-
ever, are competitive injuries caused by acts of respondents
in violation of the antitrust laws and that are violations
for the very reason that they necessarily and unjustifiably
cause such injuries, and the damages awarded to petitioners
were awarded for these injuries. Petitioners’ injuries, there-

17

fore, are the paradigm of “the type of injury that the federal
antitrust laws were intended to forestall,” the clearest pos-
sible example of “antitrust injuries.”

The Court of Appeals’ error on this issue derives from a
complete misunderstanding of this Court’s decision in Bruns-
wick Corp. v. Pueblo Bowl-O Mat, Inc., 429 U.S. 477 (1977).
In Brunswick, operators of bowling centers alleged that
Brunswick, one of the nation’s two largest manufacturers
of bowling equipment, violated Section 7 of the Clayton
Act (15 U.S.C. § 18) by acquiring and operating bowling
centers that competed with plaintiffs’ centers and that would
otherwise have been unable to continue in business because
of an inability to pay their debts. The basis for the alleged
antitrust violation was that the acquisitions by defendant
introduced a large firm with very substantial resources into
markets of small firms with very limited resources. The in-
jury complained of by plaintiffs, however, was in no way
dependent on this alleged ground of antitrust illegality, but
was simply a claim for loss of the profits plaintiffs would
have made had the competing bowling centers been allowed
to fail. As this Court put it (429 U.S. 487-89) :

If the acquisitions here were unlawful, it is because
they brought a “deep pocket” parent into a market of
“pygmies.” Yet respondents’ injury — the loss of in-
come that would have accrued had the acquired centers
gone bankrupt — bears no relationship to the size
of either the acquiring company or its competitors. Re-
spondents would have suffered the identical “loss” —
but no compensable injury — had the acquired centers
instead obtained refinancing or been purchased by
“shallow pocket” parents, .. .. Thus, respondents’
injury was not of “the type that the statute was in-
tended to forestall,” Wyandotte Co. v. United States,
389 U.S. 191, 202 (1967).

18

To allow recovery for the injury complained of in
Brunswick would be to “divorce antitrust recovery frum the
purposes of the antitrust laws,” to “make § 4 recovery en-
tirely fortuitous,” and to “authorize damages for losses which
are of no concern to the antitrust laws.” 429 U.S. 487. Indeed,
this Court stated (429 U.S. 488) :

But the antitrust laws are not merely indifferent to
the injury claimed here. At base, respondents complain
that by acquiring the failing centers petitioner pre-
served competition, thereby depriving respondents of
the benefits of increased concentration. The damages
respondents obtained are designed to provide them
with the profits they would have realized had competi-
tion been reduced. The antitrust laws, however, were
enacted for “the protection of competition, not com-
petitors,” Brown Shoe Co. v. United States, 370 U.S.,
at 320. It is inimical to the purposes of these laws to
award damages for the type of injury claimed here.

This Court concluded its discussion of this issue in
Brunswick with the following paragraph (429 U.S. 489),
all but the first sentence of which was quoted by the court
below (App. - 28):

We therefore hold that for plaintiffs to recover treble
damages on account of § 7 violations, they must prove
more than injury causally linked to an illegal presence
in the market. Plaintiffs must prove antitrust injury,
which is to say injury of the type the antitrust laws
were intended to prevent and that flows from that
which makes defendants’ acts unlawful. The injury
should reflect the anticompetitive effect either of the
violation or of anticompetitive acts made possible by the
violation. It should, in short, be “the type of loss that
the claimed violations . . . would be likely to cause.”
Zenith Radio Corp. v. Hazeltine Research, 395 U.S.,
100, 125 (1969).

It is obvious that Brunswick’s analysis of antitrust private
treble damage recovery supports rather than, as the Court

19

of Appeals held, precludes the recovery sought and obtained
by petitioners here. Petitioners do not complain, like the
plaintiffs in Brunswick, that respondents preserved compe-
tition; petitioners complain, on the contrary, that respond-
ents undertook to prevent and destroy competition. Peti-
tioners’ complaint, therefore, is, not inimical to, but in fur-
therance of the purposes of the antitrust laws. Petitioners’ in-
juries were not caused by acts of respondents prohibited by
the antitrust laws for some reason unrelated to such injuries,
but were caused by acts prohibited by those laws for the
very reason that they unjustifiably cause such injuries. In
this Court’s words, petitioners’ injuries are not merely
“causally linked” to an antitrust violation, but are precisely
injuries “of the type the antitrust laws were intended to .
prevent and that flow from that which makes defendants’
acts unlawful.” 429 U.S. at 489.

The Court of Appeals’ confusion on this issue is further

. illustrated by its reliance (App. - 28) on Conference of Studio

Unions v. Loew’s Inc., 193 F. 2d 51 (9th Cir. 1951), cert.
denied, 342 U.S. 919 (1952) and Donovan Construction, Co.
v. Florida Telephone Corp., 564 F. 2d 1191 (5th Cir. 1977),
cert. denied, 435 U.S. 1007 (1978), neither of which is of any
relevance here. In each case recovery was denied on the
ground that the plaintiffs were simply not competitors in the
industry in which the alleged antitrust violations took place.
As the court put it in Donovan, plaintiffs were not “within
the target area,” that is, “within the sector of the economy
threatened by a break down in competitive conditions.”
564 F. 2d at 1192. In the present case petitioners were not
only competitors of respondents but were the specific victims
of respondents’ anticompetitive acts. Petitioners, that is,
were not merely within the target area, but were in fact the

target.

TE AT EET eR ER Oto NSPE eee nT ETN tear aa ere EN Sas

20

If injuries to an actual or potential competitor caused by
the acts and conspiracies of a monopolist or would-be mon-
opolist specifically directed to causing such injuries and
preventing such competition are not “antitrust injuries,”
as the Court of Appeals held, it is difficult indeed to under-
stand what an antitrust injury might be. That holding is so
clearly incorrect as to be difficult to explain except on the
basis of a deep-seated antagonism to private treble damage
antitrust actions, As this Court noted in Brunswick, however,
the very decision relied upon by the Court of Appeals,
private treble damage actions “play an important role in
penalizing wrongdoers and deterring wrongdoing.” 429 U.S.
at 485.

Unless the Court of Appeals’ misinterpretation of Bruns-

wick is corrected by this Court, the effect of its decision will
be to add an additional element of complexity, confusion,
and dispute to virtually every private antitrust action. Un-
less corrected, that decision may so increase the uncertainty,
expense, and delay of private treble damage actions as to
impede significantly attainment of the congressional ob-
jectives in creating such actions.
Il, This Court’s Decisions that the Seventh Amendment
Prohibits Federal Courts from Reversing Jury Verdicts
Supported by Probative Facts and Reasonable Inferences
are as Fully Applicable to Actions Under the Antitrust
Laws as to Actions Under the Federal Employers’ Liability
Act.

In addition to an important question of antitrust law,
this case presents an important question of constitutional
law and federal procedure, namely, the extent to which the
Seventh Amendment’s guarantee of a jury trial in civil
cases limits the power of federal judges to reject determina-
tions of issues of fact made by a jury.

21

A court of appeals, this Court has stated, cannot “rede-
termine facts found by the jury any more than the District
Court can predetermine them. For the Seventh Amend-
ment says that ‘no fact tried by a jury shall be otherwise
re-examined in any Court of the United States, than accord-
ing to the rules of the common law’.” Atlantic & Gulf Steve-
dores, Inc. v. Ellerman Lines, 369 U.S. 355, 358-59 (1962).
“[T}he essential requirement” for an irreversible jury ver-
dict “is that mere speculation be not allowed to do duty for
probative facts after making due allowance for all reason-
ably possible inferences favoring the party whose case is
attacked.” Galloway v. United States, 319 U.S. 372, 395
(1943). Once that requirement is met, “No court is then
justified in substituting its conclusions for those of the
twelve jurors.” Tennant v. Peoria & P.U.R. Co., 321 U.S.
29, 33 (1944).

That the Seventh Amendment prohibits federal judges
from overturning jury verdicts supported by probative facts
and reasonable inferences from those facts has been affirmed
and reaffirmed by this Court in many other cases. In the
view of the court below, however, this Court’s interpretation
of the Seventh Amendment in Tennant, supra, and these
other cases is inapplicable here. Although petitioners believe
that the evidence in the record of this case supports the jury
verdict in their favor regardless of the standard of review ap-
plied, they are not now asking for a review of that evidence
by this Court; the question as to which review is sought is,
instead, simply whether this Court’s consistent and repeated
interpretation of the Seventh Amendment is as fully ap-
plicable to actions brought under the antitrust laws as it is
to actions under other laws.

In Boeing Company v. Shipman, 411 F.2d 365 (1969),
the Court of Appeals for the Fifth Circuit, sitting en banc,

reached the conclusion that the Seventh Amendment’s
guarantee of a jury trial is applicable, in the full vigor and
strength given it by this Court, only to actions brought
under the Federal Employers’ Liability Act, 45 U.S.C. § 51
et seq., or the Jones Act, 46 U.S.C. § 688, and is applicable
only in a weaker or watered-down form to other civil actions
in the federal courts. The Fifth Circuit reached this con-
clusion despite the fact that this Court has never so limited
its Seventh Amendment decisions, despite the Fifth Circuit’s
own then recent contrary conclusion in Planters Manufac-
turing Co. v. Protection Mutual Ins. Co., 380 F.2d 869
(5th Cir. 1967), which it explicitly overruled, and despite
a vigorous and cogent dissenting opinion by Judge Rives
to which the majority made no attempt to respond.

As Judge Rives pointed out in his Boeing dissent, that de-
cision, despite its great importance, was as a practical matter
not subject to review by this Court because, although the
decision weakened the right of jury trial for plaintiffs gen-
erally, the court nonetheless upheld the jury verdict for the
particular plaintiff in that case (411 F.2d at 378, n.2):

Of course the appellee [plaintiff] will not seek certior-
ari in this case, for the judgment in his favor is affirmed.
It may or may not be to the financial interest of the
appellant to seek certiorari. While it loses the small
judgment, it wins the important opinion; on the other
hand, if upon certiorari it can secure approval of that
opinion by the Supreme Court, its position will be
strengthened in other circuits. Hopefully, less selfish
motives looking toward settling the jurisprudence may
actuate the appellant’s counsel and the appellant it-
self. In any event, the question is one so frequently
presented that a petition for certiorari in some case can
hardly be far distant.

In Judge Rives’ view, the Boeing majority, by rejecting
this Court’s Seventh Amendment standard, committed “an

23

error of constitutional proportions” and one, he predicted,
that “will continue to plague this Court and the district
courts of this Circuit until the Supreme Court grants cer-
tiorari in this or some future case, and corrects the error.”
411 F.2d at 378. The petition for certiorari that Judge Rives
hoped for in Boeing was, for the reasons he gave, never
filed, and because this Court “rarely has occasion to pass
on the sufficiency of the evidence to create a jury issue in
ordinary civil litigation” (Wright and Miller, Federal Prac-
tice and Procedure: Civil § 2526, p. 554 (1971)), the issue
has still not been settled. Because the present case exempli-
fies and turns upon the Fifth Circuit’s application of the
Boeing rule on review of jury verdicts, it provides an excel-
lent vehicle for the review of that rule by this Court that
Judge Rives so strongly urged.

The Courts of Appeals for the First, Seventh, and Tenth
Circuits have apparently adopted the view of the Fifth
Circuit in Boeing that this Court’s interpretation of the
Seventh Amendment as requiring a very high degree of
respect for jury verdicts is applicable only in F.E.L.A. (and
perhaps Jones Act) cases, Dehydrating Process Co. v. A.O.
Smith Corp., 292 F.2d 653, 656, n. 6, cert. denied, 368 U.S.
931 (1961) ; Gibson v. Elgin, Joliet & Eastern Railway Com-
pany, 246 F.2d 834, 840 (7th Cir.), cert. denied, 355 U.S.
897 (1957); Missouri-Kansas-Texas Railway Company uv.
Hearson, 422 F.2d 1087, 1040 (10th Cir. 1970); see also
Cahill v. New York, New Haven & Hartford R. R. Co., 224
F.2d 637, 640 (2d Cir. 1955) (dissenting opinion of Judge
Frank: “[R]ecent Supreme Court decisions make it clear
that, under that Act [F.E.L.A.], the jury’s power to draw
inferences is greater than in commonlaw actions.”) The
Courts of Appeals for the Fourth, Sixth, and Eighth Circuits,
on the other hand, apparently adhere to the view that the

24

Seventh Amendment jury trial guarantee cannot mean one
thing in one class of cases and something else in another,
Wratchford v. S. J. Gorves & Sons, 405 F.2d 1061, 1066,
n.14 (4th Cir. 1969); Lones v. Detroit, Toledo and Ironton
Railway Company, 398 F.2d 914, 919 (6th Cir. 1968), cert.
denied, 393 U.S. 1063 (1969) ; Continental Can Co. v. Horton,
250 F.2d 637, 643 (8th Cir. 1957). This very severe split
among the courts of appeals on this important constitutional
issue is of itself, of course, sufficient, indeed compelling,
reason for grant of this petition.

A further ground for granting this petition is that the
view announced by the Fifth Circuit in Boeing and actually
applied in this case to deprive petitioners of the benefit of
a jury verdict would appear to be clearly incorrect. In sup-
port of its holding that this Court’s rulings in F.i.L.A.
cases on the sufficiency of the evidence to support a jury
verdict are applicable only to F.E.L.A. cases, the majority
in Boeing noted that “FELA cases, however, are statutory
negligence actions” in which, as this Court stated in Atlan-
tic & Gulf Stevedores, Inc. v. Ellerman Lines, supra, 369
U.S. at 360, “trial by jury is part of the remedy.” This,
however, totally fails to distinguish F.E.L.A. actions from
other actions in general and, most certainly, from antitrust
actions in particular.

As Judge Rives noted in his dissenting opinion in Boeing,
the fact that an action is based on a statute does not make
the Seventh Amendment inapplicable, and although differ-
ent statutes of course create different substantive rights
and make different facts relevant, this does not change the
Seventh Amendment procedural requirement that deter-
mination of issues of fact are for the jury. Further, antitrust
actions are, no less than F.E.L.A. actions, statutory actions
in which “trial by jury is part of the remedy.” “[T]he
right to trial by jury applies to treble damage suits under

25

the antitrust laws, and is, in fact, an essential part of the
congressional plan for making competition rather than mo-
nopoly the rule of trade .. .” Beacon Theatres v. West-
over, 359 U.S. 500, 504 (1959). The fact is that the F.E.L.A.
does not contain an explicit reference to the right of jury
trial; such reference was deliberately omitted because of
Congress’ belief that it would be surplusage and that the
same Seventh Amendment right would be applicable in
F.E.L.A. actions as in other “common-law” (i.e., other than
equity or admiralty) actions in federal courts. See the full
discussion of this matter, including quotation of the rele
vant legislative materials, in Judge Rives’ dissenting opinion
in Boeing, 411 F.2d at 398-404.

The court in Boeing also attempted to support its holding
that different jury trial requirements apply in F.E.L.A.
cases than in other cases by stating, “the Seventh Amend-
ment of the United States Constitution providing for trial
by jury does not require, either expressly or impliedly,
that the test of sufficiency of evidence to create a jury
question in a non-FELA federal case be the same as in an
FELA case.” 411 F.2d at 373. The Seventh Amendment in-
deed makes no distinction between F.E.L.A. and other
cases — and it would be most peculiar if it did — but that
fact, of course, negates rather than supports the Fifth Cir-
cuit’s argument; it shows that the jury trial guarantee is
the same in F.E.L.A. as in other cases.

This Court, too, has made no distinction between F.E.L.A.
cases and other cases in this regard. It has, on the con-
trary, based its F.E.L.A. decisions regarding the sufficiency
of evidence to support a jury verdict squarely on “the jury’s
historic function,” Lavender v. Kurn, 327 U.S. 645, 652
(1947); it has cited non-F.E.L.A. cases in support of its
F.E.L.A. decisions; and it has cited F.E.L.A. decisions in

26

non-F.E.L.A. cases as simply establishing the “federal test
of sufficiency of the evidence to support a jury verdict,”
Dick v. New York Life Ins. Co., 359 U.S. 487, 445, n.8
(1959). See also Gibson v. Phillips Petroleum Co., 352 U.S.
874 (1976) ; Swafford v. Atlantic Coast Line R. Co., 350 U.S.
807 (1955); Union Trust Co. v. Eastern Airlines, Inc. 350
U.S. 907 (1955); Williams v. Carolina Life Ins. Co., 348
U.S. 802 (1954) as examples of non-F.E.L.A. cases in which
this Court has reversed, per curiam, lower court judgments
that overturned jury verdicts as insufficiently supported by
the evidence. See also Bagalay, Directed Verdicts and the
Right to Trial by Jury in Federal Courts, 42 Tex.L.Rev.
1053, 1064-71 (1964); Green Protection of Jury Trial in
Diversity Cases Against State Invasions, 35 Tex.L.Rev.
768 (1957).

That the Seventh Amendment’s limitation of federal court
power to reject jury verdicts as insufficiently supported by
evidence is no less or different in private treble damage anti-
trust cases than in F.E.L.A. cases is specifically shown by
this Court’s decision in Continental Ore Co. v. Union Car-
bide & Carbon, Corp., 370 U.S. 690 (1962). Reversing a
court of appeals decision that there was insufficient evi-
dence to support a jury verdict for the private antitrust
plaintiff, this Court stated: “The Court of Appeals was, of
course, bound to view the evidence in the light most favor-
able to [plaintiff] and to give it the benefit of all inferences
which the evidence fairly supports, even though contrary
inferences might reasonably be drawn.” 370 U.S. at 696. In
support of this proposition this Court cited, inter alia,
Tennant v. Peoria & P.U.R. Co., supra, an F.E.L.A. case.
Tennant was again cited and quoted later by this Court in
Continental Ore as follows (370 U.S. at 700-01):

Undoubtedly, all of the evidence during [the rele-
vant] period does not point in one direction and differ-

27

ent inferences might reasonably be drawn from it. There
was, however, sufficient evidence to go to the jury and
it is the jury which “weighs the contradictory evidence
and inferences” and draws “the ultimate conclusion as
to the facts.” Tennant v. Peoria & P.U.R. Co., 321
US. 29, 35.

Also directly in point here is this Court’s holding in
Continental Ore that it is improper for a court of appeals
to approach a plaintiff's various claims in an antitrust action
“As if they were . . . completely separate and unrelated
lawsuits.” 370 U.S. at 698. On the contrary, antitrust plain-
tiffs

should be given the full benefit of their proof without
tightly compartmentalizing the various factual com-
ponents and wiping the slate clean after scrutiny of
each. “. .. [T]he character and effect of a conspiracy
are not to be judged by dismembering it and viewing
its separate parts, but only by looking at it as a whole.
United States v. Patten, 226 U.S. 525, 544 ...; and in
a case like the one before us, the duty of the jury was
to look at the whole picture and not merely at the indi-
vidual figures in it.” American Tobacco Co. v. United
States, 147 F.2d 93, 106 (C. A. 6th Cir.). See Montague
& Co. v. Lowry, 193 U.S. 38, 45-46.

370 U.S. at 699. As even a cursory reading of the opinion
below will make clear, a tight compartmentalizing of peti-
tioners’ various claims was a major factor in the process by
which the court reached its conclusion that the jury’s ver-
dict for petitioners lacked sufficient evidentiary support.

As Judge Rives stated in his Boeing dissent, “It seems an
unwarranted affront to suggest that the Supreme Court,
by mere fiat, has invented for FELA cases a kind of jury
trial found neither in the Constitution nor in the Act.” 411
F.2d at 386. Further, it is at least doubtful that Congress or
this Court could constitutionally give the jury a broader or

28

different role in F.E.L.A. cases than the role guaranteed by
the Seventh Amendment. See the dissenting opinion of
Judge Rives in Boeing, 411 F.2d at 386, and Wright and
Miller, Federal Practice and Procedure: Civil § 2526, p. 559
(1971).

It seems clear, therefore, that the court below erred in
holding that the Seventh Amendment standards stated and
applied by this Court in F.E.L.A. cases are inapplicable in
this antitrust case. The effect of this holding is both sub-
stantially to infringe a basic constitutional right and to
limit the effectiveness of private antitrust actions.

Conclusion

For the reasons set forth above, this petition for a writ
of certiorari should be granted.

Respectfully submitted,

EDWIN TOBOLOWSKY
1900 Southland Center
Dallas, Texas 75201

Attorney for Petitioners

OF COUNSEL:

Lino A. Graglia
3505 Taylor’s Drive
Austin, Texas 78703

TS amg eon Case

TT eee ae

APPENDIX

App. - 1

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 77-1062.

Luioyp L. Haygs, Hayss, INC., ET AL.,
Plaintiffs-Appellees,
v.

T. G. SoLomon, GuLF STATES THEATRES, INC., ET AL.,
Defendants-A ppellants.

Appeal from the United States District Court for the
Eastern District of Texas

June 29, 1979

Before THORNBERRY, RONEY and HILL, Circuit
Judges.

JAMES C. HILL, Circuit Judge:

Although this appeal presents a Brobdingnagian record
which is typical of quests for the golden fleece of treble
damages, this is not a typical antitrust case. Indeed, this
is not even an atypical antitrust case; for, despite plain-
tiffs’ herculean efforts, we conclude that this is not an anti-
trust case at all. We write at some length to explain why
we conclude that the evidence was insufficient to support the
judgment, entered on the jury’s verdict, of $10,449,900 and
the attorney’s fees award of $625,000 after considering: 2449
pages of trial transcript; 1911 pages of record on appeal:
several cartons of depositions; scores of charts, photographs
and exhibits; 201 pages of briefs; and extensive oral argu-
ment. Though there is an abundance of evidence, there is

2On our own travels through the record and the applicable law,
we have been greatly aided by the efforts of counsel. '

App. - 2

simply not enough evidence of an antitrust violation.? We
reverse and remand.

I. PROCEDURAL BACKGROUND

This is an appeal from a judgment rendered on a jury
verdict in a private antitrust action charging violations of
both Section 1 and Section 2 of the Sherman Act, 15 U.S.C.A.
§§1 and 2, with respect to alleged restraints upon the
motion picture exhibition business in Port Arthur, Texas.
The action was instituted by three separate groups of plain-
tiffs against each of several defendants, seeking treble dam-
ages under Section 4 of the Clayton Act, 15 U.S.C.A. § 15.
The case was tried before a jury in the United States Dis-
trict Court for the Eastern District of Texas. Although
brought as a single action, this case resulted in three sep-
arate damage awards by the jury, each in favor of a differ-
ent plaintiff or plaintiffs.

A. The Parties

Though brought as a single action, this case involves sev-
eral actors.

Plaintiff Lloyd L. Hayes (Hayes), an ex-mayor of Port
Arthur, is a former employee, business associate and family
friend of defendant T. G. Solomon (Solomon), an entrepre-
neur who had theatre interests in that area of Texas up to
August 31, 1972, and later became an officer in the corpora-
tion which purchased such interests. This case revolves
around Hayes and Solomon.

Plaintiff Hayes, Inc. is a Texas corporation, all the stock
of which was owned at the time of trial by Hayes and his
family. Plaintiff Park Plaza Twin Theatres, Inc. is a Texas
corporation which owns the Park Plaza Twin Theatre in
Port Arthur and whose stock at the time of trial was owned
by Hayes, Inc. and by a trustee for the widow of Hayes’s
former partner. Plaintiff Mid-County Enterprises, Inc. is a

2 “Enough is abundance to the wise.” Euripides: The Phoenissae.

App. -3

Texas corporation wholly owned at the time of the trial
by Hayes, Hayes’s father, and Gillis Jim deNeve, another
former employee of Solomon who subsequently went into
business with Hayes.

Defendant Fuqua Industries, Inc., is a publicly held Dela-
ware corporation engaged in various businesses involving
recreation, transportation, and shelter. Defendant Gulf State
Theatres, Inc. is a Delaware corporation wholly owned at
the time of trial by Fuqua Industries, Inc.; subsequent to
the institution of this action, its name was changed to
Coastal Theatres, Inc. Defendant Gulf States Theatres of
Texas, Inc. is a Delaware corporation whose stock at the
time of trial was wholly owned by Fuqua Industries, Inc.;
subsequent to the institution of this action its name was
changed to Martin Theatres of Texas, Inc. Both Gulf States
Theatres, Inc. and Gulf States Theatres of Texas, Inc. were
formed to acquire Solomon’s theatre interests on August 31,
1972.

B. The Claims

Following a nine day trial in September of 1976, during
which 283 exhibits were introduced and 24 witnesses testi-
fied, the jury found that the defendants had entered into
an illegal contract, combination or conspiracy to unreason-
ably restrain the trade or commerce of motion picture exhibi-
tion in the greater Port Arthur, Texas area. The jury fur-
ther found that the defendants had monopolized, attempted
to monopolize or conspired to monopolize the motion picture
exhibition business in the greater Port Arthur, Texas area.
The various legal relationships among these actors resulted
in three separate damage awards by the jury.

Of the three awards, the largest was on a “shopping cen-
ter claim” brought by plaintiffs Hayes and Hayes, Inc. That
claim grew out of an aborted venture to develop a shopping
center in Port Arthur. The jury awarded damages of
$3,000,000, before statutory trebling, against all four de-
fendants, based on the increased costs since 1972 of con-
structing a $14,000,000 shopping center, despite the facts

App. - 4

that the only alleged antitrust violation was the prevention
of the construction of a theatre which would have been
merely one tenant of the proposed shopping center, and no
actual construction costs were ever incurred.

A second award was based on the “Mid-County claim.”
Plaintiff Mid-County Enterprises, Inc., a corporation partly
owned by Hayes, alleged that the “threats” of the defend-
ants kept that plaintiff from building and operating a
drive-in theatre in Port Arthur. The jury awarded dam-
ages of $258,300, before statutory trebling, against all four
defendants.

The remaining award related to the “Park Plaza claim.”
Plaintiff Park Plaza Twin Theatres, Inc., a corporation
partly owned by Hayes, Inc., charged that a motion picture
theatre owned by it was unfairly treated during the period
its theatre was operated, under a lease, by one of the cor-
porate defendants which renovated two other theatres it
owned in the same area and allocated some of the best
films to one of the renovated theatres. The jury awarded
damages of $225,000, before trebling, against all four
defendants.

The judgment entered on the jury verdict totaled
$10,449,900 trebled damages plus $625,000 attorneys’ fees.

II. FACTUAL BACKGROUND

On appeal, defendants raise fifteen separate issues. Be-
fore deciding those issues necessary to our result, we shall
endeavor to detail the facts.

A. Hayes and Solomon: the Initial Business Relationship

Hayes and Solomon first crossed paths in 1967. At that
time, Hayes was mayor of Port Arthur, Texas, a position
he held from May 1963 to April 1969. In 1967 Hayes and
W. Bonner Phares, a local investor, organized Park Plaza
Twin Theatres, Inc. to construct the Park Plaza Theatre in
Port Arthur. Designed as a deluxe two-auditorium first-run

App. - 5

theatre, the Park Plaza Twin Theatres were soon to be-
come acknowledged as the finest such facility in the area.

Hayes and Phares set about to find an experienced theatre
operator to assist them. They were introduced to Solomon’s
then employee, Gillis Jim deNeve. deNeve reported to Solo-
mon that Hayes and Phares had begun building the Park
Plaza Twin Theatres and were seeking connections with an
operating company; he wrote that the two “. . . have investi-
gated us fully and would like very much for us to take over
and give us the opportunity to buy in and give them the op-
portunity to buy in with us and go anywhere in Texas with
their participation.” deNeve also reported that Hayes and
Phares had already held discussions with representatives of
the Gordon family which had other theatre holdings in
the area.

Hayes, Phares and Solomon met in late 1967 and discussed
the possibility of combining their theatre interests in Port
Arthur and Beaumont and purchasing the Gordon family’s
theatre holdings, Solomon agreed with Hayes and Phares
to become the sole operator of the Park Plaza Twin The-
atres along with a theatre he owned in Beaumont. Later, the
three formed a corporation which they named after the
“Golden Triangle” (Beaumont, Orange and Port Arthur,
Texas) and which acquired the Gordon family’s theatres in
July of 1968. The stock in this corporation, Golden Triangle
Theatres, Inc., was owned 25% by Hayes, 25% by Phares
and 50% by Solomon. Solomon also undertook to operate
the theatres owned by Golden Triangle Theatres, Inc. Solo-
mon, Hayes and Phares also agreed not to sell Golden Tri-
angle Theatres, Inc. stock to outside interests without giv-
ing the corporation a right of first refusal. Upon the death
of either Hayes or Phares the survivor was to have a 30-day
right to acquire the decedent’s stock before the corporation’s
right of first refusal came into being.

During this period, the personal and business relationships
between Hayes and Solomon became extremely close. After
Hayes completed his last term as mayor of Port Arthur in
April of 1969, he left town and went to New Orleans, where

App. - 6

Solomon had established his own home office. Hayes soon
became Solomon’s assistant, with the title of vice-president
and a salary of $50,000 a year. His office was next to that of
Solomon. Solomon was grooming Hayes to succeed him and
named Hayes executor of his will and trustee of a trust for
his children. Solomon lent Hayes $60,000 and agreed to lend
him another $60,000 to assist Hayes and Hayes, Inc. in
meeting their financial obligations under bank loans obtained
to purchase land in Port Arthur.

Phares died on July 2, 1970. After some maneuvering,
Hayes purchased Phares’s stock in Golden Triangle Thea-
tres, Inc. for a $70,000 promissory note payable over 7 years.
Solomon’s belief that Hayes had deceived him in connec-
tion with this purchase eventually caused Hayes and Solo-
mon to part company in May of 1971.

Hayes knew that his opportunity to buy Phares’s’ stock |

in Golden Triangle Theatres, Inc. free of the corporation’s
first refusal right lasted only 30 days after Phares’s death.
He first broached the subject of purchasing the Phares’
stock from Mrs. Phares on the very day Phares died. At

first, Mrs. Phares was somewhat reluctant to sell. She asked |

to see the stockholders’ agreement, and, when approached
the day after her husband’s death, told Hayes that she did
not want to sell but wished to hold the stock for her chil-
dren, if it were at all possible. She also told Hayes that,
if she had to sell the stock, she would sell it to Hayes per-
sonally and not to Hayes, Inc. or Solomon. Hayes and Mrs.
Phares testified that they eventually reached an oral agree-
ment of purchase around the middle of July 1970.

Hayes did not tell Solomon of this agreement until No-
vember of 1970, however, when the agreement was embodied
in a written instrument which Hayes asked Solomon to
sign. The instrument acknowledged Hayes’s right to acquire
Phares’s stock. Solomon testified that he was not then aware
that Hayes’s right to preempt the corporation’s right of first
refusal lasted only 30 days from Phares’s death, and that
signing the instrument would waive any right to dispute

App. - 7

the timeliness of the preemption. Still, Solomon was some-
what reluctant to sign the instrument. Solomon knew that
Phares’s estate was in poor financial condition and Hayes
himself was deeply in debt and that Solomon’s own credit
had become the major financial prop for Golden Triangle
Theatres, Inc. For these reasons, Solomon thought it would
be fairer to divide the Phares stock between himself and
Hayes according to their proportionate interest in the cor-
poration; then, Solomon would hold a majority interest.
Nevertheless, after some disagreement, Solomon. eventually
signed the instrument. ©

B. The Shopping Center Venture

Before the disagreement over the Phares stock, Hayes and
Solomon had begun another business venture. This venture
ultimately gave rise to the “shopping center claim.”

While Hayes was mayor of Port Arthur, his family had
assembled a tract of land in Port Arthur of approximately
1,400 acres. The purpose of assembling the tract was to build
a large-scale residential development for some 13,000 resi-
dents with ancillary commercial facilities. Hayes started
talking with Solomon about developing the 1,400 acres in
the Spring and Summer of 1970. He showed Solomon a pro-
posed letter to potential investors extolling the quality of
the 1,400 acres for development, and Solomon expressed his
interest. The banks from which Hayes and Hayes, Inc. had
previously borrowed funds to finance the land purchase were
pressuring Hayes to return to Port Arthur and personally
tend to the development, if he could not convince Solomon
to make a heavy commitment to the project. Partly in
order to keep Hayes working for Gulf States Theatre, Inc.
in New Orleans, Solomon agreed to help Hayes try to de-
velop a regional shopping center on 90 acres of the tract.
At Solomon’s own suggestion, he and Hayes sought out
Wilbur Marvin, an experienced shopping center developer
with whom Solomon had developed other shopping centers,
to join the venture. Solomon offered his financial backing
and the expertise of Marvin as a perfect combination to

App. - 8

make the regional shopping center a success. On Septem-
ber 8, 1977, Marvin wrote Solomon that he would partici-
pate in return for a development fee of $25,000 per annum.
Later in September, however, Marvin developed some
qualms. He had found significant discrepancies between
the actual condition of the land and its description as orig-
inally provided by Hayes. Part of the incentive for Marvin
and Solomon to become involved in the deal was Hayes’s
offer to allow them to purchase an interest in the land at a
substantial discount from its true value. Marvin telegraphed.
Solomon in New York that an independent survey failed to
substantiate the $15,000 to $18,000 per acre evaluation; a
range of $7,500 to $10,000 was more accurate. He added:

Ten year Port Arthur population growth negative.

Shopping Center development at this location defi-
nitely long term and directly related to development
of large desolate looking area adjacent. Residential de-
velopment in these areas are dependent upon long range
expensive drainage, sewage and flood control programs.

Feel that we are in effect making an all cash purchase
of 90 acres at top appraised value today’s market.

Sears taking 10,000 sq. ft. in existing Nederland
Shopping Center.

This was much different than what had been represented,
especially concerning the value of the land. In concluding
his telegram to Solomon, Marvin suggested the entire deal
be shelved for six months, but added that if Solomon wished
to go forward for other reasons, Marvin would join, if he
had Solomon’s personal assurance that Solomon would “take
him out” in six months on request. Two days later, Marvin
wrote his attorney in a similar vein, adding that in response
to Marvin’s telegram Solomon had expressed the view that
“there was no deliberate overrepresentation by Hayes.”
Marvin also wrote that his “personal evaluation of the
situation at this point would be that in all probability a
deal will proceed, with the same principals, for a smaller
amount of acreage, and perhaps at an adjusted price.”

App. - 9

Marvin’s evaluation was correct. A memorandum which
he wrote for his file in November of 1970 records that the
parties agreed to reduce the size of the development from
90 to 60 acres and that the Hayes interests would receive
$300,000 from Solomon and Marvin for a half interest in
the 60 acres. The memorandum also stated that Marvin
was to have an option to terminate and be made whole after
the first year. Finally, the memorandum emphasized: “the
point was made abundantly clear that the progress of devel-
opment of this project was dependent in large measure on
the rapidity of development of the property adjacent by the
Hayes group.”

C. The Development Agreement

On November 27, 1970, Hayes, Hayes, Inc., Solomon and
Marvin executed a Development Agreement creating a joint
venture among the four to develop a regional shopping cen-
ter® on the 60-acre tract. Hayes signed as a guarantor of
the obligations of Hayes, Inc. Hayes, Inc. agreed to transfer
an individual one-quarter interest in the 60 acres to each
of the other co-venturers. Solomon and Marvin shortly
thereafter each paid $150,000 in return for deeds conveying
an undivided one-half interest in the land. Though the
Development Agreement did not assign specific responsi-
bilities to Hayes and Hayes, Inc., Marvin and Solomon were
assigned specific roles. Marvin was to use his best efforts
to develop the shopping center. Solomon was to make peri-
odic infusions of capital as the development progressed; he
agreed to use his credit to borrow $500,000 for the venture
and was to lend $100,000 for initial expenses. During 1972,

8 Expert testimony at trial defined a “regional shopping center”
as one containing two or more national retailers, i. e., anchor tenants,
each operating stores of 100,000 square feet or more and numerous
other small retail stores, which serves a community of 200,000 or
more people. Expert testimony also disclosed that of the various
types of shopping centers a regional center is the largest and most
difficult to develop and, as a rule, developing one is an onerous time-
consuming, long-range project.

App. - 10

Marvin had the option to terminate his participation in the
development and sell his interest to Solomon for $150,000.
As a further condition, Solomon and Marvin required Hayes,
Inc. to execute a written agreement prohibiting it from
developing any other property within a 2 mile radius for
a similar purpose.

D. Marvin’s Efforts

Beginning in January of 1971, Marvin set out to interest
prospective tenants in the proposed shopping center. Not-
withstanding Hayes’s own conclusional testimony that Mar-
vin’s efforts produced “a lot of results” in terms of interest
on the part of prospective tenants, the specifics of Marvin’s
testimony and the documentary evidence indicate that only
one actual expression of interest was obtained — from White
House Dry Goods Co.—and the amount of space which
was involved, 40,000 square feet, was too small for that
company to qualify as an anchor tenant.

Marvin met with a representative of the J.C. Penney
Company who furnished him with printed, standard proto-
types of a store plan and a layout. But the representative
told Marvin that his company already had a store in Port
Arthur, had no present plans to relocate or expand, would
not require further space for three or four years and even
then would require that the developers also obtain another
major tenant. As the plaintiffs themselves point out in their
brief, Marvin himself minimized the significance of this
contact, during his trial testimony. Marvin was unable to
generate any other expressions of interest of any kind.
W.T. Grant Company had already committed itself to a
nearby area, and, although Marvin thought he perceived
some interest on the part of a discount division of the Wal-
green Company, the J.C. Penney Company indicated that it
would not be interested in being a co-tenant with that
division. Marvin contacted a representative of Sears, Roe-
buck & Company who offered no encouragement at all and
pointed out that his company had recently made a commit-
ment to new space a short distance away. Marvin also con-

App. - 11

tacted Federated Department Stores and two or three other
prospective users of large space, but was unable to generate
any interest.

During the same period, Marvin made initial contacts
with a number of Dallas-based architectural firms about the
design of the proposed shopping center. One of these firms,
Architectonics, Inc., which had many years of regional shop-
ping center design experience, sent a letter in April of 1971
outlining a general approach to the project and followed up
with a general proposal, limited in extent to the develop-
ment of preliminary plans, in June. No definitive plans were
ever drawn. After Hayes and Marvin had met with a repre-
sentative of Architectonics, Inc., Marvin transmitted the
general proposal to Solomon for his consideration. Solomon
never approved the proposal, and Marvin would not proceed
without it. Marvin’s efforts at development had reached an
impasse because of a falling-out between Hayes and Solomon.

E. Hayes and Solomon: the Falling-out

During the period of Marvin’s preliminary development
efforts, differences between Solomon and Hayes over Hayes’s
acquisition of the Phares stock, already discussed above, be-
came greatly intensified. In May of 1971, Solomon proposed
that the Phares stock be transferred to Golden Triangle
Theatres, Inc. and that the corporation assume Hayes’s lia-
bility to the Phares Estate. This proposed reconveyance
would have given Solomon 66%4% ownership of Golden Tri-
angle Theatres, Inc. Hayes refused and Solomon became con-
vinced that he had been deceived by Hayes concerning the
Phares stock. The differences between Hayes and Solomon
could not be resolved and they parted company; Hayes left
New Orleans and Solomon’s employ.

In a file memorandum dated June 4, 1971, Marvin referred
to the “very strong falling-out” which had occurred between
Solomon and Hayes over the Phares stock. The memoran-
dum noted that Solomon had informed Marvin that he
“wanted out” of the shopping center project, but was agree-

App. - 12

able to Marvin’s continuing in the project with Hayes. At
this juncture, Solomon withheld his own further support
for the development. Consistent with his desire to take
himself out of the deal, Solomon did not approve the com-
mitment to Architectonics, Inc. Hayes himself confirmed to
Marvin that the falling-out had occurred and indicated he
wanted to continue with the project.

Marvin was still hopeful in August of 1971 that the Solo-
mon-Hayes dispute would be resolved, but his enthusiasm
for the shopping center venture was diminished by the lack
of any real interest on the part of the prospective tenants
and the failure of Hayes to move forward with the residen-
tial development of the remainder of the 1,400-acre tract. As
has already been discussed, Marvin had some fruitless dis-
cussions with prospective tenants which had been initiated
earlier, but undertook no further work on the project after
September of 1971. During September, Marvin heard that
Hayes was making an effort to buy Solomon out and he
asked if Hayes still wished him to continue. Hayes made
no response. In November, Marvin asked Solomon to take
him out of the joint venture in accordance with the Develop-
ment Agreement.

As we shall detail later, in the last part of 1971 and in
the early part of 1972, Solomon, Hayes and Hayes, Inc.
were unraveling their respective obligations and responsibili-
ties under the Development Agreement. By February of
1972, Hayes and Hayes, Inc. were the only parties still
interested in the shopping center development, and nothing
in the record suggests that Solomon or any of the other
defendants had any knowledge of their plans. During that
same month, Hayes attended a shopping center convention
where he spoke with a friend-advisor, Bob Ort, about going
ahead with a shopping center. Ort advised Hayes that he
should have a plan to present to prospective tenants, as
Marvin had suggested one year before. Architectonics, Inc.
was then asked to submit another proposal for Hayes and
Hayes, Inc. similar to the one submitted to Marvin, Solo-
mon, Hayes and Hayes, Inc. when the development Agree-

_

App. - 13

ment was still in effect. The March 23, 1972, proposal of
Architectonics, Inc. followed; it was virtually word-for-word
the same proposal that had been sent to Marvin on June 23,
1971. The second proposal was never acted upon.

There is some testimony that Hayes looked for another
partner to replace Solomon in the shopping center venture,
but there is no evidence that one was ever found. There is
no evidence that he ever located any prospective major
tenants, although their participation was essential to a suc-
cessful shopping center. Nor was there any evidence that he
ever arranged financing for a shopping center — which would
hardly have been forthcoming without such prospective
tenants.

Hayes apparently put the shopping center venture to one
side while he pursued other business ventures. These ven-
tures included his large scale residential development, com-
plete with a shopping center, for which he had been seeking
federal financing for several years without success. The pro-
posed regional shopping center, however, was never built.
The property looked substantially the same at the time of
trial as it did in 1970. The adjacent desolate 1,400-acre area,
the development of which Marvin deemed essential prepara-
tion for getting the shopping center out of the ground, re-
mained mostly undeveloped at the time of trial. Neverthe-
less, plaintiffs introduced evidence of what the 60-acre tract
might have been like if Hayes and Hayes, Inc. had built a
shopping center in 1972. This evidence included plans, a table
model of a complete shopping center and a hypothetical
list of tenants, all prepared in 1975 and 1976 for use at
trial.

F. Hayes and Solomon: Efforts at Disentanglement
In order to understand fully the three claims made by
plaintiffs, it is necessary to review briefly the parties’ efforts
to unravel their various business arrangements.

After the 1971 break-up with Hayes, Solomon negotiated
to sell his theatre properties to the Holiday Inn Corporation.

App. - 14

Solomon was informed that he had too many partners in his
various theatre projects, but prospects for their purchase
would be improved if he converted his theatre interests into
wholly owned interests by buying out his partners or, if
necessary, selling out his interests. Solomon then began to
restructure and consolidate his interests, including the out-
standing business arrangements with Hayes. These efforts
were joined in by Hayes, who also wanted to dissolve their
various business arrangements. In particular, Hayes became
very dissatisfied with the Golden Triangle Theatres, Inc.
arrangement, since Solomon exercised complete control de-
spite Hayes 50% interest. Further, he was anxious to resolve
the impasse reached on the shopping center development. A
meeting was held on November 29, 1971. According to
Hayes’s own testimony, Solomon told him that he wanted
to buy out Hayes’s interests but not for personal reasons.
Solomon told him that he was treating Hayes like the
rest of his partners; he just needed to consolidate his theatre
ownership to make the sale. Regarding their falling-out over
the Phares stock, Solomon said he was sorry it had hap-

pended and admitted that it was as much his fault as .

anyone else’s.

After considerable hard negotiations, Solomon and Hayes
reached some accord, though later Hayes would claim that
the leverage Solomon exerted violated the antitrust laws. On
December 10, 1971, the parties entered into two agreements
to separate their business arrangements. The first was en-
titled “Memorandum of Agreement”; the second was en-
titled “Memorandum of Understanding.”

The Memorandurn of Agreement dealt with matters other
than the shopping center venture. In January of 1972, to
implement this Memorandum: (1) Hayes was paid $750,000
for his 50% interest in Golden Triangle Theatres, Inc. which
included the 25% that Hayes had bought for $70,000 from
Phares’s widow the year before; (2) the balance of the
$175,000 Hayes and Phares had loaned Golden Triangle
Theatres, Inc. was paid, and Solomon indemnified Hayes
against any liability as coguarantor of the corporation’s

App. - 15

$1,000,000 in notes; (3) Park Plaza Twin Theatres, Inc.
leased its theatre to Golden Triangle Theatres, Inc. for a
renewable 10-year term on a percentage lease with a $72,000
annual minimum; (4) the joint operating arrangement cov-
ering the Park Plaza Twin Theatres, Inc. and Solomon’s
Beaumont Theatres, Inc. was ended; (5) Solomon agreed
to pay Hayes $500 per month for five years to serve Golden

i Theatres, Inc. as a consultant and representative
who would “not be required to render any specific duties,
but recommend action beneficial to said theatres.”

The Memorandum of Understanding dealt with the
shopping center venture. It was executed by Solomon, act-
ing for himself and for Marvin, and by Hayes, acting for
himself and for Hayes, Inc. Their expressed intent was to
cancel the Development Agreement, “releasing each other
from all the terms and conditions and holding each other free
and harmless in connection therewith.” Solomon gave Hayes
and Hayes, Inc. the right to repurchase at the original
purchase price, $300,000, the undivided one-half interest
in the 60 acres which Solomon and Marvin had acquired
pursuant to the Development Agreement. Hayes and Hayes,
Inc. undertook to make such purchase within three years.
The $300,000 purchase price could be paid either in cash
at purchase or $100,000 down and $200,000 in interest-bear-
ing notes payable over four years.

On January 13, 1972, the parties entered into three other
agreements to implement the Memorandum of Understand-
ing: (1) “Amendment to Memorandum of Understanding”;
(2) “Agreement of Cancellation”; (3) “Option and Agree-
ment to Purchase.” The Amendment to Memorandum of
Understanding declared that the Memorandum of Under-
standing would become effective and self-operating on
March 1, 1972. The Agreement of Cancellation provided that
the Development Agreement was “cancelled and annulled
and of no further force and effect and that each of the
parties hereto hereby are released from all the terms and
conditions of said Contract.” The Option and Agreement to
Purchase obligated Solomon to sell his and Marvin’s undi-

App. - 16

vided one-half interest in the 60 acres to Hayes and Hayes,
Inc. and required them to buy within three years.

These agreements were designed to make it possible for
Hayes and Hayes. Inc. to proceed on their own in the de-
velopment of the proposed shopping center. As it turned out,
a dispute arose over the effect of this second series of three
agreements, due, in large part, to Solomon’s failure to obtain
Marvin’s prompt concurrence with the arrangements. Hayes
and his lawyer, however, had no doubt about what they had
accomplished, i.e., that the Amendment to Memorandum
of Understanding, setting the effective date on March 1,
1972, bound Solomon to the three-year option himself
whether or not Marvin ever signed the Agreement of Can-
cellation or the Option and Agreement to Purchase.

G. The Shopping Center Claim

In their complaint, plaintiffs alleged that, but for de-
fendants’ conduct, Hayes and Hayes, Inc. “would have suc-
ceeded in developing a substantial regional shopping center”
which would have included a “deluxe first-run motion picture
theatre.” As provided in the District Court’s special inter-
rogatory to the jury, the claim was that defendants entered
into an illegal contract, combination or conspiracy to mo-
nopolize or unreasonably restrain trade or commerce “by
preventing the entry of a competitive theatre in the pro-
posed shopping center.” The means allegedly used to pre-
vent the entry of this theatre was to delay reconveyance
of the undivided one-half interest in the 60 acres purchased
by Solomon and Marvin at the outset of the venture. Hayes
testified that the property was tied-up from November of
1970 until April of 1976. These contentions require a review
of Solomon’s efforts to take-out Marvin, as he had agreed.

1. Marvin's role

Before Solomon entered the Memorandum of Understand-
ing and agreed to acquire Marvin’s interest and convey it to
Hayes and Hayes, Inc., Marvin wrote Solomon a letter
confirming a November 24, 1971 meeting during which

App. - 17

Solomon agreed to honor Marvin’s request to take him out
of the Port Arthur shopping center transaction in January
of 1972, in accordance with the Development Agreement. By
December 30, 1971, Marvin apparently was having some
second thoughts. In a memorandum for his own files de-
scribing a meeting with Solomon the day before, he wrote:

The thought occurs, if there is any problems in con-
nection with the transaction, Marvin could take the
position that he is entitled to participate on a con-
tinuing basis and thereby acquire a 50% interest in
the overall settlement from the theatres, and ride with
that particularly in connection with any transaction
made on those theatres with the Holiday Inn people.

As the extensive correspondence between Marvin and
Solomon and their lawyers reflects, the two men were then
engaged in a series of business ventures which Marvin
wished to end. Marvin used his power to withhold con-
veyance of his interest in the 60 acres to Solomon as an
effective instrument to obtain a resolution satisfactory to
him of all other issues involved in severing their business
relations, much like Solomon later used his interest in the
shopping center development as leverage in dealing with
Hayes. The negotiations were heated and intense. A long
series of letters passed between counsel for Solomon and
Marvin referring to meetings, requests for meetings, requests
for information, and submissions of information, which were
seasoned with mentions of confrontations at bargaining
sessions. The evidence of these negotiations directly refutes
plaintiffs’ characterization of Marvin as a coconspirator who
was acting jointly with Solomon to delay Hayes’s develop-
ment. Marvin was concerned with advancing his own inter-
ests. In December of 1972, when the matters between Mar-
vin and Solomon unrelated to the shopping center were
ultimately resolved to Marvin’s satisfaction, he conveyed to
Solomon his interest in the 60 acres.

During the negotiations between Solomon and Marvin,
the dealings between Solomon and Hayes became confused.

App. - 18

Pending the ultimate resolution of the matters unrelated
to the shopping center venture, Marvin did not sign the
Agreement of Cancellation and by letter dated March 7,
1972, Hayes’s attorney declared both the Agreement of
Cancellation and the Option and Agreement to Purchase
“of no further force and binding effect.” From this reaction
Solomon’s attorney concluded that plaintiffs no longer
wished to be obliged to purchase the Solomon-Marvin un-
divided one-half interest in the 60 acres and had given up
any right to purchase it ,and so advised Solomon. Solomon’s
attorney acknowledged the March 7, 1972, letter stating that
nothing could be effectuated until Solomon and Marvin
settled “all their co-matters.” Following his attorney’s ad-
vice, Solomon would later assert that he was free to retain
his property interest. Hayes and his attorney responded that
the March 7, 1972, letter related only to the Agreement of
Cancellation and the Option and Agreement to Purchase,
which were specifically mentioned, and did not affect the
Memorandum of Understanding and the Amendment to
Memorandum of Understanding, which became effective on
March 1, 1972, and imposed an absolute obligation on Solo-
mon to transfer the property interest on demand. Plaintiffs
considered the effect of this obligation was to absolutely
bind Solomon to obtain Marvin’s interest for reconveyance
along with his own.

2. Litigation

Sometime in late 1972 or early 1973, Hayes and Solomon
met at the Plimsoll Club in New Orleans, Solomon told
Hayes what Solomon’s attorney had said about the letter of
March 7, 1972, and suggested that, if Hayes had some differ-
ent view, he should get his attorney together with Solomon’s
attorney “to get it straight.” No such meeting was ever
arranged.

On March 11, 1973, Solomon met with Hayes and deNeve
at Hayes’s home to discuss matters unrelated to the property
interest. During that meeting, the property interest came
up, and, according to Hayes, tempers flared: “On the land,

—

App. - 19

we went into—our voices—he and I got hot at each other,
and he said that he did not have to sell me the land, his
attorney had so advised him...” The breakdown in relations
was virtually complete. As of August 1, 1972, Solomon ceased
making the $500 per month payments due Hayes under the
Memorandum of Agreement because Hayes was “competing”
with Golden Triangle Theatres, Inc. as one of the owners of
a theatre then under construction in Orange, Texas, even
though there was not an anti-competition clause in any of
the agreements. Solomon attempted to pay the shopping
center tract property taxes for 1971, and to have all further
assessments on his undivided one-fourth interest in the tract
billed directly to him. This was directly contrary to the
Memorandum of Agreement which required Hayes to pay
all taxes. Hayes interpreted this as a further manifestation
by Solomon of his intention not to abide their agreement.
Hayes contacted Solomon about Hayes’s option to repur-
chase the Marvin-Solomon undivided one-half interest and
Solomon responded that the courts would have to settle the
matter.

In November of 1973, Hayes and Hayes, Inc. filed a
declaratory judgment action in state court about the land
issue. Solomon sent the summons to his lawyer who testified
at this trial concerning some confusion surrounding a request
for an extension in the state court proceedings. In January
of 1974, plaintiffs took a default judgment which declared:
the Memorandum of Understanding was in full force and
effect; the Development Agreement was null and void and
of no effect; the option of Hayes and Hayes, Inc. to repur-
chase the outstanding, undivided one-half interest in the
60-acre tract was viable for three years from March 1, 1972.
There was no motion to set the default judgment aside, and

no appeal was taken.

Hayes and Hayes, Inc., however, were not yet ready to
exercise the option. On October 1, 1974, Hayes wrote his
atiorney to ask when exercise was required. Almost four
months later, more than a year after the judgment, Hayes
notified Solomon that the option would be exercised on

App. - 20

February 28, 1975, just before expiration. At the closing,
Selomon’s attorney had instructions to deliver Solomon’s
deed on receipt of a check for $100,000, a promissory note for
$200,000, and a deed of trust executed by Hayes and Hayes,
Inc. to secure the promissory note. However, no deed of
trust was tendered, and the transaction did not close, though
the Memorandum of Understanding did not address the
question of security for the promissory note, a plaintiffs’
witness opined that a deed of trust would be customary in
such circumstances.

When the transaction did not close, Hayes and Hayes,
Inc. filed a second law suit in state court, seeking specific
performance of the option and damages of $500,000 for Sol-
omon’s alleged failure to perform under the Development
Agreement, damages of $400,000 for Solomon’s alleged fail-
ure to secure Marvin’s signature on the Agreement of Can-
cellation and his failure to deliver the deed at the March 15,
1975, closing, and punitive damages of $1,000,000. Shortly
thereafter, in August of 1975, plaintiffs went into federal

court and filed the action appealed here, seeking treble dam- -

ages for the same alleged wrongs. After defendants moved in

this action for dismissal of the shopping center claim on the |

ground the state court pleadings showed it to be a simple
breach of contract action, plaintiffs dismissed their damage
claims in the state court action in early April of 1976. When
the damage claims were dismissed, a consent decree was en-
tered in the second state court action under which Solomon
was to convey his undivided one-half interest on or before
April 15, 1976. Solomon thereupon tendered the deed with a
letter stating his position that Hayes and Hayes, Inc. were
obligated to pay interest expressly due him under the Memo-
randum of Understanding. Plaintiffs refused to pay and
accept the deed with the letter and moved again in the state
court for execution. The state court ordered Solomon to

* Hayes himself acknowledged the lure of the golden fleece of
treble damages; “I dismissed it because I was advised that the dam-
ages were more —- would be better in Federal Court,”

ee eee eee

App. - 21

convey the property without ruling on his claims for interest,
and he did so on that same day. The interest was still unpaid
at the time of this trial. The net result at that point was
that Hayes and Hayes, Inc. had obtained, for $100,000 in
cash and an unsecured $200,000 note, the undivided one-half
interest which they had sold in 1970 for $300,000 cash. They
had the interest-free use of the $300,000 for almost six years,
and had established the right to a $200,000 unsecured loan
for four years.

Although plaintiffs then had clear title to the 60 acres,
they still did not commence construction of the hypothetical
shopping center. Instead, the 60-acre tract was promptly
mortgaged to obtain money for a venture not related to the
theatre business. Basically, plaintiffs claim here that the de-
fendants managed to delay the shopping center for almost
five years. During this time, the cost to construct the shop-
ping center with its theatre greatly increased. At trial, plain-
tiffs successfully argued that having “burned down the barn
to kill the horse,” defendants were liable to pay for the in-
creased costs which would have been incurred were the barn
built later. The jury awarded damages of $3,000,000 before
statutory trebling, against all four defendants based on the
increased costs since 1972 of constructing a $14,000,000 shop-
ping center.

H. Role of the Corporate Defendants

The three corporate defendants have been mentioned only
briefly in the foregoing recital, despite its length, because
none of them played any role in the proposed shopping
center development or in the dispute over the 60-acre tract.
They became embroiled in this litigation as a result of their
acquisition of Solomon’s theatre interests, on August 31,
1972, after Solomon’s negotiations with Holiday Inn proved
unfruitful.

For the purpose of acquiring Solomon’s theatre interests,
Fuqua Industries, Inc. created two wholly owned subsidi-
aries: Gulf States Theatres, Inc. and Gulf States Theatres
of Texas, Inc. On August 31, 1972, Golden Triangle Theatres,

App. - 22

Inc., which was by then wholly owned by Solomon, was
merged into Gulf States Theatres of Texas, Inc.; Solomon
received Fuqua Industries, Inc. stock in exchange for his
stock in Golden Triangle Theatres, Inc. Also on August 31,
1972, Solomon’s stock in various other corporations owning
and operating theatres elsewhere was acquired by Gulf
States Theatres, Inc. in exchange for cash and notes. As part
of these transactions, Solomon sold all his theatre interests
in Texas and became president and chairman of the board of
both subsidiaries. Fuqua Industries, Inc. does not provide
management for any of its subsidiaries, and for this reason
could not otherwise have purchased Solomon’s companies.
Solomon’s employment agreements with Gulf States The-
atres, Inc. and Gulf States Theatres of Texas, Inc. charged
him with general supervision of their business, but permitted
him to devote time to “his personal business activities, in-
vestments, development of real estate and other interests.”

None of the corporate defendants engages in shopping
center development. When Gulf States Theatres of Texas,
Inc. and Gulf States Theatres, Inc. acquired Solomon’s the-
atre interests, they acquired no interest in his land dealings
with Hayes. C. L. Patrick, who as president of Fuqua Indus-
tries, Inc. negotiated the deals, had no knowledge at that
time of the 1970 Development Agreement or its termination.
Indeed, he did not become aware of the land dealings until
early in 1976, when Hayes told him about them.

I. The Mid-County Claim

By January of 1972, deNeve, like Hayes, was no longer
working for Solomon. Hayes and deNeve then joined to-
gether to engage in other theatre operations with Hayes’
father, their lawyer and Leroy Mitchell, a Texas film exhibi-
tor. In June of 1972, Hayes, deNeve and their three partners
formed Mid-County Enterprises, Inc. for the avowed pur-
pose of building a triple-screen first-run drive-in theatre in
Port Arthur, just south of the airport.

Mid-County Enterprises, Inc. never built the drive-in, and
it successfully contended at trial that threats of defendants

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App. - 23

kept it from doing so. Hayes and deNeve testified that Solo-
mon made these threats to them in March of 1973. Solomon
dispatched an agent to locate a site near the proposed site
for the Mid-County Theatres, Inc. theatre. He also threat-
ened Hayes that, if the proposed Port Arthur theatre was
built, Solomon would build against Hayes at another loca-
tion and would delay the shopping center venture. At a
meeting on June 1, 1974, Solomon handed Hayes a hand-
written demand, which read in block letters: DO NOT
BUILD AGAINST GULF STATES. The jury was autho-
rized to have found that Solomon made the threats. How-
ever, from the evidence it appears that it was not the threats
that prevented Mid-County Enterprises, Inc. from proceed-
ing with construction.

Plaintiffs pleadings alleged that the threats were made
after extensive site work had begun, equipment had been
ordered, and monies had been expended on the drive-in. As
we shall detail below, the corporation’s own financial records
indicate that after the meeting at which the threats were
made, it spent $94,987.10 in connection with building the
drive-in and borrowed considerably more.

deNeve, who was president of Mid-County Enterprises,
Inc., admitted on cross-examination that the alleged threats
by Solomon really did not stop the corporation from pro-
ceeding with the drive-in project. After deNeve was con-
fronted with the figures showing that most of the corpora-
tion’s spending in connection with the theatre occurred after
the March 1973 meeting with Solomon, he then testified:

Q. If you spent that kind of money after March 11,
1973, when there has been testimony about a meeting
at Mr. Hayes’s house, whatever was said at that
meeting —

A. Yes, sir.

Q. — didn’t keep you folks from going on with your
efforts to building the drive-in, did it?

A. No, sir, it wouldn’t.

App. - 24

Leroy Mitchell, a shareholder who testified by deposition,
admitted that the drive-in construction was abandoned be-
cause of a lack of funds.°

Nonetheless, Mid-County Enterprises, Inc. successfully
contended at trial that it the requisite intent and
preparedness to construct the threatre but was prevented
from doing so by the defendants’ illegal threats and conduct.
The jury awarded Mid-County Enterprises, Inc. $258,300
damages, before statutory trebling, against the four de-
fendants on the claim that the construction and operation
of the drive-in were blocked as a result of Solomon’s threats.

J. The Park Plaza Claim

The facts involved in the claim of plaintiff Park Plaza
Twin Theatres, Inc. are relatively simple. As already stated.
Hayes and Solomon decided in December of 1971 to separate
their business interests but agreed that Solomon would con-
tinue to operate the Park Plaza Theatre. For this purpose,
the theatre was leased to Golden Triangle Theatres, Inc. on
January 19, 1972.

The Park Plaza Theatre was a modern twin-screen theatre,
and at that time Golden Triangle Theatres, Inc. owned two
other older single-screen theatres in Port Arthur. When
Golden Triangle Theatres, Inc. was merged into Gulf States
Theatres of Texas, Inc. in August of 1972, the lease and
operation of the Park Plaza Theatre were taken over. There-
after, Gulf States Theatres of Texas, Inc., following the
prevailing trend among motion picture exhibitors, renovated

* When confronted with the deposition statement by Leroy
Mitchell admitting that the drive-in was not built because of a lack
of funds, deNeve hedged somewhat and said the lack of funds was
“not altogether” the reason.

Over defendants’ hearsay objection, deNeve. was permitted to
testify at trial that Mitchell had informed him of a line of $1,000,000
for their corporation to furnish the theatre.

App. - 25

its other two older theatres by converting each to a triple-
screen theatre.’

In August of 1973, unhappy with the improvements of the
other two theatres and with the type of films being shown
at the Park Plaza Theatre, Hayes and Park Plaza Twin
Theatres, Inc. sued Gulf States Theatres of Texas, Inc.
and Solomon in state court, charging a breach of contract in
that the defendants had wrongfully increased the number of
screens in their own theatres and had not played all the best
films at the Park Plaza Theatre, as required by the lease.
Plaintiffs contended that the defendants set about to en-
hance their wholly owned theatres at the expense of the
leased theatre. A state court judgment against Gulf States
Theatres, Inc., voiding the lease was entered on June 30,
1975. The state court found that exhibition of X-rated films
at the Park Plaza Twin Theatres had “cheapenec\ its repu-
tation and damaged its good will and standing in the com-
munity and reduced its value” in addition to several con-
tinuous and intentional violations of various lease provisions.
Park Plaza Twin Theatres, Inc. was awarded $2,150 “which
represent(ed]| damages for exhibiting the best motion pic-
tures available for licensing in... Port Arthur... [at its
own theatres] instead of the Park Plaza Twin Theatre.”
The judgment imposed no liability on Solomon. Apparently,
no claim for separate damages for injury to good will was
raised. See Gulf States Theatres of Texas v. Hayes, 534
S.W. 2d 406, 407-08 (Tex. Civ. App. 1976) (writ refused
n.r.e.). Park Plaza Twin Theatres, Inc. seemingly now seeks
to remedy its omission in the state court by claiming
such damages under the guise of antitrust relief. The jury
assessed damages of $225,000, before statutory trebling.

* Solomon explained that his policy was to keep a town properly
staffed with a number of deluxe theatres “in order to keep compe-
tition from other theatres out of the city . . .. Our company has taken
the position that rather than have outsiders come in, even though
they have a right, we could profit and handle film better having
enough screens ourselves to discourage outsiders from coming in.”

App. - 26

As necessary, we will develop the facts more fully when
discussing particular issues.

III. DISCUSSION

Defendants present fifteen separate issues dealing primar-
ily with factual matters. As a preface to our discussion of
the contentions we found controlling, we emphasize the
narrow confines of our reviewing authority when dealing,
as we are here, with an appeal from a jury verdict.

A jury trial is an integral part of the federal antitrust
statutory scheme. This Court said as much in Cherokee
Laboratories, Inc. v. Rotary Drilling Services, Inc., 383 F.2d
97, 103 (5th Cir. 1967). cert. denied, 390 U.S. 904, 88 S.Ct.
816. 19 L. Ed. 2d 870 (1968), quoting Beacon Theatres v.
Westover, 359 U.S. 500, 504, 79 S.Ct. 948, 953, 3 L. Ed. 2d
988 (1959):

The right to trial by jury applies to treble damage
suits under the antitrust laws, and is, in fact, an es-
sential part of the congressional plan for making com-
petition rather than monopoly the rule of trade.

See also Fleitmann v. Walsbach Street Lighting Co., 240 U.S.
27, 29, 36 S. Ct. 233, 60 L.Ed. 505 (1915). This Court
established the standard of review which is applicable to the
present case in Boeing Co. v. Shipman, 411 F.2d 365, 374-75
(5th Cir. 1969) (en banc) (note omitted) :

On motions for directed verdict and for judgment not-
withstanding the verdict the Court should consider all
of the evidence — not just that evidence which sup-
ports the nonmover’s case — but in the light and with
all reasonable inferences most favorable to the party
opposed to the motion. If the facts and inferences
point so strongly and overwhelming in favor of one
party that the Court believes that reasonable men could
not arrive at a contrary verdict, granting of the mo-
tions is proper. On the other hand, if there is sub-
stantial evidence opposed to the motions, that is, evi-
dence of such quality and weight that reasonable and

Drweten: | + hewiies Rowan de

App. - 27

fair-minded men in the exercise of impartial judgment
might reach different conclusions, the motions should
be denied, and the case submitted to the jury. A mere
scintilla of evidence is insufficient to present a question
for the jury. The motions for directed verdict and
judgment n.o.v. should not be decided by which side
has the better of the case, nor should they be granted
only when there is complete absence of probative facts
to support a jury verdict. There must be a conflict in
substantial evidence to create a jury question. How-
ever, it is the function of the jury as the traditional
finder of the facts, and not the Court, to weigh con-
flicting evidence and inferences, and determine the
credibility of witnesses.

See Kestenbaum v. Falstaff Brewing Corp., 575 F.2d 564
(5th Cir. 1978) ; Spectrofuge Corp. v. Beckman Instruments,
Inc., 575 F.2d 256 (5th Cir. 1978). Applying this standard
to the evidence here, we reverse the judgment entered on
the jury’s verdict.

A. Shopping Center Claim

[1] Plaintiff's Hayes and Hayes, Inc.’s shopping center
claim is something of a Procrustean effort to apply the
rubric of antitrust laws to an acrimonious falling-out be-
tween two close business associates. As such, plaintiff’s re-
covery on the shopping center claim is beyond the stretch
of the antitrust laws. “The antitrust laws were never meant
as a panacea for all wrongs.” Parmelee Transportation Co. v.
Keeshin, 292 F.2d 794, 804 (7th Cir.) cert. denied, 368
U.S. 944, 82 S.Ct. 376, 7 L.Ed.2d 340 (1961), cited in,
Harrison v. Prather, 435 F.2d 1168, 1176 (5th Cir. 1970),
cert. denied, 404 U.S. 829, 92 S.Ct. 67, 30 L.Ed.2d 58 (1971).
This case “concerns nothing more than a state law con-
struction contract dispute over which the federal court
had no jurisdiction.” Morgan v. Odem, 552 F.2d 147, 148
(5th Cir. 1977); Harrison v. Prather, 435 F.2d at 1176-77.
We do not mean to suggest that a state contract law dis-
pute cannot also give rise to a federal antitrust claim. See
Mulvey v. Samuel Goldwyn Productions, 433 F.2d 1073,

App. - 28

1075 (9th Cir. 1970), cert. denied, 402 U.S. 923, 91 S.Ct.
1377, 28 L.Ed.2d 662 (1971). We simply conclude that the
underlying claim which plaintiffs established is not the
type of injury that the federal antitrust laws were intended
to forestall. See Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429 U.S. 477, 487-88, 97 S.Ct. 690, 50 L.Ed.2d 701
(1977); Conference of Studio Unions v. Loew’s Inc., 193
F.2d 51, 54 (9th Cir. 1951), cert. denied, 342 U.S. 919, 72
S.Ct. 367, 96 L.Ed. 687 (1952). The basic reason for which
the shopping center claim fails as an antitrust claim is that
the injuries for which damages were awarded were not
antitrust injuries. In Brunswick Corp. v. Pueblo Bowl-O-
Mat, Inc. 429 U.S. at 489, 97 S.Ct. at 697 (citation and note
omitted), the Supreme Court emphasized:

Plaintiffs must prove antitrust injury, which is to say
injury of the type the antitrust laws were intended
to prevent and that flows from that which makes de-
fendants’ acts unlawful. The injury should reflect the

anticompetitive effect of either the violation or of anti- ~

competitive acts made possible by the violation. It
should, in short, be “the type of loss that the claimed
violations . . . would be likely to cause.”

Cf. Donovan Construction Company v. Florida Telephone
Corp., 564 F.2d 1191 (5th Cir. 1977), cert. denied, 435 U.S.
1007, 98 S.Ct. 1878, 56 L.Ed.2d 389 (1978).

[2-4] Of course, one need not have an actual going busi-
ness to establish a private antitrust injury under 15 U.S.
C.A. § 15. Recovery can be had for a wrongfully frustrated
attempt to enter a business. This was plaintiff’s theory of
the case: defendants wrongfully prevented plaintiffs’ entry
into the motion picture exhibition business by sabotaging
the shopping center which would have had a theatre tenant.
There are “two significant requirements” for establishing
such an entitlement to recovery: (1) an intention to enter
the business, and (2) a showing of preparedness to enter
the business. Martin v. Phillips Petroleum Company, 365
F.2d 629 (5th Cir.) , cert. denied, 385 U.S. 991, 87 S.Ct. 600,

awa tien de saiiralil alla

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App. - 29

17 L.Ed.2d 451 (1966); North Texas Producers Association
v. Young, 308 F.2d 235 (5th Cir. 1962), cert. denied, 372
U.S. 929, 83 S.Ct. 874, 9 L.Ed.2d 733 (1963). We believe
that the plaintiffs failed to establish sufficient preparedness
to enter the business of motion picture exhibition.

In Martin v. Phillips Petroleum Company, 365 F.2d at
633-34, this Court listed four elements of preparedness: (1)
“the ability of plaintiff to finance the business and to pur-
chase the necessary facilities and equipment”;. (2) “the
consummation of contracts by the plaintiff”; (3) “affirmative
action by plaintiff to enter the business”; (4) “the back-
ground and experience of plaintiff in the prospective busi-
ness.” See also Zenith Radio Corp. v. Hazeltine Research,
Inc., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969);
Heatransfer Corp. v. Volkswagenwerk, A. G., 553 F.2d 964
(5th Cir. 1977); Buckley Towers Condominium v. Buch-
wald, 533 F.2d 934 (5th Cir. 1976), cert. denied, 429 US.
1121, 97 S.Ct. 1157, 51 L.Ed.2d 571 (1977); E. A. McQuade
Tours, Inc. v. Consolidated Air Tour Manual Committee,
467 F.2d 178 (5th Cir. 1972), cert. denied, 409 U.S. 1109,
93 S.Ct. 912, 34 L.Ed.2d 690 (1973); Woods Exploration &
Packing Co., Inc. v. Aluminum Company of America, 438
F.2d 1286 (5th Cir. 1971), cert. denied, 404 U.S. 1047, 92
S.Ct. 701, 30 L.Ed.2d 736 (1972). See generally Note, Pri-
vate Treble Damages Antitrust Suits: Measure of Damages
of All or Part of a Business 80 Harv.L.Rev. 1566 (1967).

Plaintiffs’ damage theory is based on the premise that
they were prevented from starting construction of a shop-
ping center in September of 1972. This beginning point is
critical. Plaintiffs seemingly have tried to bolster their case
by implying that the failure of the joint venture in July
of 1971 was itself an antitrust violation and not mere back-
ground. We focus only on the question of plaintiffs’ own
preparedness to construct a shopping center however, be-
cause they sought damages not for the failure of the joint
venture but only for their own failure to proceed in Sep-
tember of 1972.’ At plaintiffs request, the District Court

App. - 30

charged the jury that it was to calculate any damages for
the shopping center claim as follows:

Now in regard to the damage issue on the shopping
center, the Court would instruct you in determining
the damages, if any, to the business and property of
the plaintiffs, Hayes and Hayes, Incorporated, you
should take into consideration the increased cost of
constructing a regional shopping center beginning at
the present time over the cost of constructing the same
center if constructed —if construction had begun in
September, 1972.

The parties are agreed that development of a regional
shopping center is a very difficult undertaking. It involves,
among a myriad of lesser undertakings, procuring tenants,
arranging financing, and hiring an architect and a con-
struction engineer. The lead time for such a project is
measured in years, not in weeks or months.’ After the shop-
ping center joint venture fell apart in 1971, plaintiffs made
no significant effort to develop a shopping center on their
own. In February of 1972, Hayes solicited a proposal from
Architectonics, Inc. and received virtually the same initial
proposal the firm had provided the joint venture. The initial
proposal went unanswered for several years. Plaintiffs did
not order plans drawn up until, months after instituting
this action, they retained the architectural firm to draw
the plans for use at trial which might have been drawn for
use in construction. From these drawings, an experienced

" Apart from Hayes’s own testimonial concession that plaintiffs
sought no damages for failure of the joint venture, the fact is that
any antitrust claim for failure of the joint venture would likely be
barred by the four year statute of limitations and was subject to
the release, together with all other claims growing out of the failed
venture, by the provisions of the Memorandum of Understanding.

Our written attention is intentionally narrowed to plaintiffs’ pre-
paredness. Since the shopping center claim must fail on that ques-
tion, we need not discuss in detail the other thrusts and parries of
the parties surrounding that claim. :

* See note 3, supra.

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mee ee ee >

App. - 31

shopping center contractor provided plaintiffs with con-
struction costs figures for use in their case.

Neither in 1972 nor at any other time did plaintiffs have
commitments from prospective tenants, although tenant
commitments were essential if any shopping center was ever
to be built. Plaintiffs offered no evidence, except for Mar-
vin’s unsuccessful nascient efforts during the joint venture,
that they or anyone on their behalf ever contacted poten-
tial shopping center tenants before trial. Plaintiffs. did noth-
ing to borrow shopping center construction funds and cer-
tainly expended none.

The testimony of plaintiffs’ own witnesses shows how
far the proposed shopping center was from realization. The
representative of Architectronics, Inc. testified that the joint
venture was in a “very preliminary state” in 1971 and that
his firm could not have guaranteed anything would actually
be built. A retired vice-president of Homart Development
Company, a shopping center development subsidiary of
Sears, Roebuck & Company, testified that, although “people
do a lot of talking,” “only one out of twenty” contemplated
shopping centers are ever built. He also testified that, to
start construction in 1972, it would have been necessary to
sign up tenants in 1970 and 1971. The representative from
Architectonics, Inc. provided one reason for the high mort-
ality rate of shopping center projects when he testified, “you
can’t build these without the department stores, they are
very strong in their opinions.” The Homart Development
Company vice-president also stated that in 1972 “depart-
ment stores started to pull in their horns” because of the
poor economy. When asked whether new environmental re-
quirements also had an adverse impact on shopping center
development, plaintiffs’ own construction expert testified
that “everything slowed up here a couple of years ago.” The
elder Hayes also conceded that Hayes, Inc. had never sub-
mitted a shopping center site plan to the Port Arthur City
Council despite a city ordinance and zoning change adopted
in 1973.

App. - 32

Hayes and Hayes, Inc. failed also to offer substantial
evidence that they were capable of securing the money that
would have been needed to build a shopping center, a sum
their own experts said would exceed $14,000,000. Without
commitments from 70% of the needed tenants — including
at least two anchor tenants — loans would not have been
available for a shopping center, even to a credit-worthy
borrower.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1396%3A1. Public record. Not legal advice.