The high-profile owners of an independent movie theater in the Southern California community of Palm Desert have won a key appeal in their long-running anti-trust battle against the much larger Cinemark chain.
This lawsuit threatens to expose the theatrical distribution practice of "circuit dealing," in which larger cinema chains use their market power to deprive smaller outlets access to big, commerically viable movies.
Late last month, the California Court of Appeals ruled that the owners of Palm Desert's Palme d'Or Cinemas — which include ESPN radio host Steve Mason and Emmy-winning actor Bryan Cranston — can procede to trial with their anti-trust suit against the larger Cinemark USA exhibition chain.
The Palme d'Or owners filed their suit against Cinemark several years ago, alleging that Cinemark's nearby 15-screen outlet, The River, is using its market power to deprive their small indie location from top new titles.
"Instead of receiving a proportion of available film product, we got nothing meaningful with any commercial upside — absolutely nothing except for very small releases," said Mason, who, along with his ownership group, purchased the Palme d'Or in 2003. "[Cinemark] used its circuit power to shut us out of all titles. They used a predatory booking policy known as circuit dealing."
With the appeals judge over-turning earlier rulings favorable to Cinemark that called for a summary judgement, the Palme d'Or group can now dipose and subpeona a broad spectrum of witnesses from within the motion picture distribution business.
“We now get a trial against exhibition behemoth Cinemark, and we will soon be embarking on discovery," Mason said. "It is possible that some of the most powerful people in the industry will be noticed for deposition, and this case has the chance to change the way the distribution business is conducted forever," he added.
In a written statement, Cinemark said the company "respectfully but strongly" disagrees with the appellate court's ruling.
"The Court of Appeal's holding is legally flawed and flies in the face of established modern antitrust law," the company wrote. "We intend to seek all available relief, including a petition for rehearing and, if necessary, California Supreme Court review to reverse the Court of Appeal's flawed decision."
The dispute goes all goes back to 2003, when Mason, Cranston, movie producer Alise Benjamin-Mauritzson ("Ray") and long-time theater operator Brian Tabor opened the Palme d’Or.
Mason said he opened the movie theater because there weren’t many places in the Coachella Valley to see art films.
But once the location opened its doors, The River — which was purchased by Cinemark in 2006 when it acquired the Century Theaters chain — started showing art films, too.
“They began to monopolize all of the art films and all of the commercial films,” Mason said, explaining that if movies went to The River, they couldn’t go to his theater.
Mason (right) said he couldn’t compete with The River because the larger, chain-affiliated outlet used its muscle to take every good movie.
He explained that Century owned movie theaters at 80 locations in 12 states – more than 1,800 screens.
“When we go through our discovery process and we’re able to depose who we want to depose, we’re going to potentially change the way business is done,” he said. “And that’s really what we wanted to do from the start.”