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Independent Theater Owners Watch Palm D’or v. Cinemark Case Closely


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According to recent headlines, Independent theater owners across the country feel increasingly squeezed by the top four major theater chains. In a recent California case, Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., (Los Angeles County Super. Ct. No. SC090481) the plaintiff  (Flagship) brought an antitrust action against the owners of a competing theater concerning the distribution and exhibition of motion pictures.

Flagship owns a movie theater called the “Cinemas Palme d‟Or” (the Palme) with 10 screens. Flagship owns no other theaters. Century Theatres, Inc. (Century) owns a nearby movie theater called the “Century 15 at the River” (the River) with 15 screens. Century owns a large theater circuit of over 1,000 screens, and in 2006 Century was acquired by Cinemark USA, Inc. (Cinemark), resulting in a combined circuit of several thousand screens.

The crux of the action involves Flagship’s allegations that Century and two film distributors have used the power deriving from both the size of its theater circuit and its many theaters in noncompetitive markets to undermine the competitive process through which theaters bid for and obtain licenses to exhibit first-run films.

The complaint alleged claims for restraint of trade in violation of the Cartwright Act (Bus. & Prof. Code, § 16700 et seq.), unfair competition in violation of the unfair competition law (id., § 17200 et seq. (hereafter UCL)), and intentional interference with prospective economic advantage. Flagship later filed a first amended complaint and a second amended complaint, alleging similar claims and adding Cinemark as a defendant. Flagship also eventually dismissed the distributor defendants.

According to one of the Plaintiff’s, the basis of the case is rooted in the 1948 Supreme Court ruling against Paramount which decreed that studios could not own theater chains. “It’s all about allowing independent theaters into the marketplace, which means more movies, and more diverse movies, get shown.”

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