Paramount Famous Lasky Corp. v. United States
282 U.S. 30 (1930)

Annotate this Case

U.S. Supreme Court

Paramount Famous Lasky Corp. v. United States, 282 U.S. 30 (1930)

Paramount Famous Lasky Corporation v. United States

No. 83

Argued October 27, 1930

Decided November 24, 1930

282 U.S. 30

Syllabus

Ten corporations, competitors in the business of supplying the film prints used by exhibitors of motion pictures throughout the Union and controlling 60% of that business, agreed amongst themselves to contract with exhibitors for future exhibition of pictures

Page 282 U. S. 31

only by a standard form of contract which, in connection with certain rules, required, among other things: that disputes and claims under the contract be submitted to a board of arbitration; that the award be accepted as conclusive; that, upon failure of the contracting exhibitor to submit to arbitration or to abide by an award, the distributor party to that contract, and all others having like contracts with such exhibitor, must demand security from him on each of their contracts; that those to whom he failed to pay security within a time fixed must suspend service under their contracts until he paid it or complied with the award; that, when service under a contract had been so suspended ten days, the distributor party might cancel it, and that no distributor, having so suspended service, should resume it before the exhibitor furnished the security or obeyed the award.

Held:

1. That the necessary and inevitable tendency of the agreement and combination is to produce material and unreasonable restraint of interstate commerce in violation of the Sherman Act. P. 282 U. S. 41.

2. The fact that the standard exhibition contract and rules of arbitration were evolved after six years of discussion and experimentation does not show that they were either normal or reasonable regulations. The arrangement existing between the parties is unusual, and necessarily and directly tends to destroy the kind of competition to which the public has long looked for protection. P. 282 U. S. 43.

3. The Sherman Act seeks to protect the public against evils commonly incident to the unreasonable destruction of competition, and no length of discussion or experimentation amongst parties to a combination which produces the inhibited result can give validity to their action. Id.

4. It may be that arbitration is well adapted to the needs of the motion picture industry, but when, under the guise of arbitration, parties enter into unusual arrangements which unreasonably suppress normal competition, their action becomes illegal. Id.

5. In order to establish violation of the Sherman Act, it is not necessary to show that the challenged arrangement suppresses all competition between the parties, or that the parties themselves are discontented with the arrangement. The interest of the public in the preservation of competition is the primary consideration. P. 282 U. S. 44.

6. The prohibitions of the statute cannot be evaded by good motives. Id.

34 F.2d 984 affirmed.

Page 282 U. S. 32

Appeal from a decree of the district court condemning an agreement and combination of appellants under the Sherman Act.

Page 282 U. S. 36

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