## Facts

- Theatre Enterprises, Inc. operated a suburban motion-picture theater in the Baltimore, Maryland area and sought licenses to exhibit “first-run” films.
- Major film distributors licensed first-run films to established downtown Baltimore theaters and uniformly refused to license first-run films to Theatre Enterprises’ suburban theater.
- As a result, the suburban theater received only later runs subject to “clearances” that delayed exhibition in favor of downtown theaters.
- Theatre Enterprises brought a private antitrust action for treble damages and injunctive relief, alleging that competing distributors conspired to confine first-run films to downtown theaters and to impose unreasonable clearances.
- Theatre Enterprises relied primarily on circumstantial evidence, including the distributors’ parallel refusals to license first-run films and prior federal antitrust decrees involving these companies.
- The distributors presented evidence that each acted for independent business reasons, including revenue expectations and perceived advantages of downtown first-run locations.
- A jury returned a general verdict for the distributors; the trial court denied Theatre Enterprises’ request for a directed verdict, and the court of appeals affirmed.

## Issues

1. Whether the evidence of parallel refusals to license first-run films, combined with prior federal antitrust decrees, required a directed verdict that the distributors conspired in violation of the Sherman Act.
2. Whether the jury instructions improperly limited the evidentiary effect of the prior antitrust decrees under § 5 of the Clayton Act.

## Decision

- The Supreme Court affirmed the judgment for the distributors.
- The Court held that a directed verdict for Theatre Enterprises was not required because the evidence did not compel a finding of conspiracy.
- The Court held that the jury instructions properly treated the prior antitrust decrees as prima facie evidence and did not deprive Theatre Enterprises of the benefit of § 5 of the Clayton Act.

## Legal Principles

- Proof of parallel business behavior does not, by itself, conclusively establish an agreement and does not itself constitute a Sherman Act offense.
- Where parallel conduct is consistent with lawful independent business judgment, whether to infer an unlawful agreement is generally a question for the trier of fact.
- A directed verdict is improper if reasonable jurors could differ on whether a conspiracy existed based on the evidence.
- Prior government antitrust judgments may be used as prima facie evidence in a private action under § 5 of the Clayton Act, but they are not conclusive.
- The evidentiary effect of prior decrees is limited to the conspiracy, area, and time period adjudicated; a private plaintiff must present additional proof connecting the earlier wrongdoing to the plaintiff’s locale, relevant period, and alleged injury.

## Conclusion

The Court held that uniform refusals by competing distributors to grant first-run licenses, even when coupled with prior antitrust decrees against those distributors, did not compel a finding of conspiracy as a matter of law; the jury could reasonably credit independent business explanations, and the prior decrees operated only as prima facie, not dispositive, proof requiring connecting evidence to the challenged conduct and time and place at issue.


Theatre Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537 (1954)