Landmark Response To Regal's Motion To Dismiss

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 1 of 54
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA
SILVER CINEMAS ACQUISITION CO. DBA
LANDMARK THEATRES,
Plaintiff,
v.
Civil Action No. 1:16-cv-123 (CRC)

ORAL ARGUMENT
REQUESTED
REGAL ENTERTAINMENT GROUP; REGAL

ENTERTAINMENT HOLDINGS, INC.; REGAL
ENTERTAINMENT HOLDINGS II, LLC; REGAL
CINEMAS CORPORATION; REGAL CINEMAS
HOLDINGS, INC.; REGAL CINEMAS, INC.;
REGAL CINEMAS II, LLC and REGAL GALLERY
PLACE LLC,
Defendants.
LANDMARKS MEMORANDUM OF POINTS AND AUTHORITIES
IN OPPOSITION TO REGALS MOTION TO DISMISS
130984953.1
TABLE OF CONTENTS
FACTUAL BACKGROUND AND PROCEDURAL HISTORY ................................................. 2
ARGUMENT .................................................................................................................................. 7
I.
MOTION TO DISMISS STANDARD ................................................................... 8
II.
THE COMPLAINT ADEQUATELY ALLEGES PER SE

ILLEGAL CIRCUIT DEALING ............................................................................ 9
III.
THE COMPLAINT ADEQUATELY ALLEGES NONCIRCUIT DEALING-BASED VIOLATIONS OF THE

SHERMAN ACT .................................................................................................. 13
A.
Regals Blanket Clearance Fails the Paramount

Substantial Competition Test .................................................................... 14
B.
The Complaint Adequately Alleges Sherman Act

Violations Under the Modern Rule of Reason .......................................... 18
C.
IV.
1.
The Complaint Alleges Direct Evidence of

Regals Market Power................................................................... 20
2.
The Complaint Alleges Circumstantial

Evidence of Regals Market Power .............................................. 22
3.
The Complaint Alleges Exclusionary

Conduct by Regal that Has Harmed
Competition and ConsumersNot Just
Landmark ...................................................................................... 30
4.
Regals Blanket Clearance Agreements

Have No Procompetitive Justification .......................................... 35
The Complaint Adequately Alleges Classic

Unlawful Clearance Agreements Between Regal
and the Film Distributors .......................................................................... 39
THE COMPLAINT ADEQUATELY ALLEGES

VIOLATIONS OF D.C. LAW.............................................................................. 42
CONCLUSION ............................................................................................................................. 43
130984953.1
TABLE OF AUTHORITIES
CASES
A.L.B. Theatre Corp. v. Loews, Inc.,
355 F.2d 495 (7th Cir. 1966) .............................................................................................33, 34
Am. Tobacco Co. v. United States,
328 U.S. 781 (1946) .................................................................................................................29
Apani Sw., Inc. v. Coca-Cola Enters., Inc.,
300 F.3d 620 (5th Cir. 2002) ...................................................................................................26
Arnett Physician Grp., P.C. v. Greater LaFayette Health Servs., Inc.,
382 F. Supp. 2d 1092 (N.D. Ind. 2005) ...................................................................................27
Babyage.com, Inc. v. Toys R Us, Inc.,
558 F. Supp. 2d 575 (E.D. Pa. 2008) .................................................................................20, 32
Banneker Ventures, LLC v. Graham,
798 F.3d 1119 (D.C. Cir. 2015) ...............................................................................................43
Baxley-DeLamar Monuments, Inc. v. Am. Cemetery Assn,
843 F.2d 1154 (8th Cir. 1988) .................................................................................................29
Belizan v. Hershon,
434 F.3d 579 (D.C. Cir. 2006) ...................................................................................................9
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) ......................................................................................................... passim
Broadcom Corp. v. Qualcomm Inc.,
501 F.3d 297 (3d Cir. 2007).....................................................................................................19
Brown Shoe Co. v. United States,
370 U.S. 294 (1962) ...........................................................................................................22, 25
Cheeks v. Fort Myer Constr. Corp.,
71 F. Supp. 3d 163 (D.D.C. 2014) ...........................................................................................40
Chi. Ridge Theatre Ltd. Pship v. M & R Amusement Corp.,
732 F. Supp. 1503 (N.D. Ill. 1990) ..........................................................................................17
Chi. Ridge Theatre Ltd. Pship v. M & R Amusement Corp.,
855 F.2d 465 (7th Cir. 1988) ...................................................................................................15
City of Moundridge v. Exxon Mobil Corp.,
250 F.R.D. 1 (D.D.C. 2008).....................................................................................................40
- ii 130984953.1
Cloverleaf Enters., Inc. v. Md. Thoroughbred, Horsemens Assn,

730 F. Supp. 2d 451 (D. Md. 2010) ...........................................................................................9
Cobb Theatres III, LLC v. AMC Entmt Holdings, Inc.,
101 F. Supp. 3d 1319 (N.D. Ga. 2015) ............................................................................ passim
Concord Assocs. L.P. v. Entmt Props. Trust,
817 F.3d 46 (2d Cir. 2016).......................................................................................................26
Cooper v. First Govt Mortg. & Invrs Corp.,
206 F. Supp. 2d 33 (D.D.C. 2002) ...........................................................................................12
E & L Consulting, Ltd. v. Doman Indus. Ltd.,
472 F.3d 23 (2d Cir. 2006).................................................................................................30, 31
E. Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Assn, Inc.,
357 F.3d 1 (1st Cir. 2004) ........................................................................................................26
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc.,
637 F.3d 435 (4th Cir. 2011) ...................................................................................................23
Eastman Kodak Co. v. Image Tech. Servs., Inc.,
504 U.S. 451 (1992) .................................................................................................................32
Elecs. Commcns Corp. v. Toshiba Am. Consumer Prods., Inc.,
129 F.3d 240 (2d Cir. 1997).....................................................................................................30
Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc.,
131 Cal. Rptr. 3d 519 (Cal. Ct. App. 2011) .........................................................................9, 13
FTC v. Ind. Fedn of Dentists,
476 U.S. 447 (1986) .................................................................................................................19
FTC v. Sysco Corp.,
113 F. Supp. 3d 1 (D.D.C. 2015) .......................................................................................23, 26
GTE New Media Servs., Inc. v. Ameritech Corp.,
21 F. Supp. 2d 27 (D.D.C. 1998) .........................................................................................8, 42
Halberstam v. Welch,
705 F.2d 472 (D.C. Cir. 1983) .................................................................................................39
Hosp. Bldg. Co. v. Trs. of Rex Hosp.,
425 U.S. 738 (1976) ...................................................................................................................9
IHS Dialysis Inc. v. Davita, Inc.,
2013 WL 1309737 (S.D.N.Y. Mar. 31, 2013) .........................................................................24
- iii 130984953.1
Image Tech. Servs., Inc. v. Eastman Kodak Co.,

125 F.3d 1195 (9th Cir. 1997) .................................................................................................19
In re High-Tech Employee Antitrust Litig.,
856 F. Supp. 2d 1103 (N.D. Cal. 2012) .......................................................................10, 22, 23
In re Lithium Ion Batteries Antitrust Litig.,
2014 WL 4955377 (N.D. Cal. Oct. 2, 2014)............................................................................42
In re Nexium (Esomeprazole) Antitrust Litig.,
968 F. Supp. 2d 367 (D. Mass. 2013) ................................................................................19, 22
iPic-Gold Class Entmt, LLC v. Regal Entmt Grp.,
No. 2015-68745 (Tex. Dist. Ct. 234th Jan. 21, 2016)..............................................................35
Jung v. Assn of Am. Med. Colls.,
300 F. Supp. 2d 119 (D.D.C. 2004) .............................................................................12, 39, 40
Kramer v. Time Warner Inc.,
937 F.2d 767 (2d Cir. 1991).....................................................................................................12
Kreuzer v. Am. Acad. of Periodontology,
735 F.2d 1479 (D.C. Cir. 1984) ...............................................................................................14
L.A. Draper & Son v. Wheelabrator-Frye, Inc.,
735 F.2d 414 (11th Cir. 1984) .................................................................................................22
Leegin Creative Leather Prods., Inc. v. PSKS, Inc.,
551 U.S. 877 (2007) .....................................................................................................18, 31, 32
Little Rock Cardiology Clinic PA v. Baptist Health,
591 F.3d 591 (8th Cir. 2009) ...................................................................................................26
Loews, Inc. v. Cinema Amusements, Inc.,
210 F.2d 86 (10th Cir. 1954) ...................................................................................................39
Mathias v. Daily News, L.P.,
152 F. Supp. 2d 465 (S.D.N.Y. 2001)......................................................................................26
Mazanderan v. Indep. Taxi Owners Assn,
700 F. Supp. 588 (D.D.C. 1988) ..............................................................................................42
Monsanto Co. v. Spray-Rite Serv. Corp.,
465 U.S. 752 (1984) .................................................................................................................42
Movie 1 & 2 v. United Artists Commcns, Inc.,
909 F.2d 1245 (9th Cir. 1990) .................................................................................................34
- iv 130984953.1
Orbo Theatre Corp. v. Loews Inc.,

156 F. Supp. 770 (D.D.C. 1957) ..................................................................................33, 35, 37
Orson, Inc. v. Miramax Film Corp.,
79 F.3d 1358 (3d Cir. 1996).....................................................................................................37
Osborn v. Visa Inc.,
797 F.3d 1057 (D.C. Cir. 2015) ...............................................................................................39
Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co.,
81 F. Supp. 3d 1 (D.D.C. 2015) ....................................................................................... passim
Paddock Pubs., Inc. v. Chi. Tribune Co.,
103 F.3d 42 (7th Cir. 1996) .....................................................................................................37
Quad Cinema Corp. v. Twentieth Century-Fox Film Corp.,
1983 WL 1822 (S.D.N.Y. May 12, 1983) ....................................................................... passim
Ralph C. Wilson Indus., Inc. v. Am. Broad. Cos.,
598 F. Supp. 694 (N.D. Cal. 1984) ..........................................................................................37
Re/Max Intl v. Realty One, Inc.,
173 F.3d 995 (6th Cir. 1999) ...................................................................................................19
Reading Intl, Inc. v. Oaktree Capital Mgmt. LLC,
2007 WL 39301 (S.D.N.Y. Jan. 8, 2007) ........................................................................ passim
Reading Intl, Inc. v. Oaktree Capital Mgmt. LLC,
317 F. Supp. 2d 301 (S.D.N.Y. 2003).............................................................................. passim
Rebel Oil Co. v. Atl. Richfield Co.,
51 F.3d 1421 (9th Cir. 1995) ...................................................................................................29
Republic Tobacco Co. v. N. Atl. Trading Co.,
381 F.3d 717 (7th Cir. 2004) ...................................................................................................31
S. Pac. Commcns Co. v. Am. Tel. & Tel. Co.,
556 F. Supp. 825 (D.D.C. 1982), affd, 740 F.2d 980 (D.C. Cir. 1984) ..................................29
S. Pac. Commcns Co. v. Am. Tel. & Tel. Co.,
740 F.2d 1011 (D.C. Cir. 1984) ...............................................................................................19
Schine Chain Theatres v. United States,
334 U.S. 110 (1948) ...........................................................................................................13, 41
Scott v. District of Columbia,
101 F.3d 748 (D.C. Cir. 1996) .................................................................................................18
-v130984953.1
Seven Gables Corp. v. Sterling Recreation Org. Co.,

1987 WL 56622 (W.D. Wash. June 25, 1987).......................................................15, 33, 36, 41
Six W. Retail Acquisition, Inc. v. Sony Theatre Mgmt. Corp.,
2004 WL 691680 (S.D.N.Y. Mar. 31, 2004) .....................................................................34, 35
Sky Angel U.S., LLC v. Natl Cable Satellite Corp.,
33 F. Supp. 3d 14 (D.D.C. 2014) .............................................................................................40
Sky Angel U.S., LLC v. Natl Cable Satellite Corp.,
947 F. Supp. 2d 88 (D.D.C. 2013) .....................................................................................26, 30
Spectrum Sports, Inc. v. McQuillan,
506 U.S. 447 (1993) .................................................................................................................14
Starlight Cinemas v. Regal Entmt Grp.,
2014 WL 7781018 (C.D. Cal. Oct. 23, 2014) ....................................................................40, 41
Syufy Enters. v. Am. Multicinema, Inc.,
793 F.2d 990 (9th Cir. 1986) .............................................................................................23, 30
T. Harris Young & Assocs., Inc. v. Marquette Elecs., Inc.,
931 F.2d 816 (11th Cir. 1991) .................................................................................................22
Tampa Elec. Co. v. Nashville Coal Co.,
365 U.S. 320 (1961) .................................................................................................................22
Theee Movies of Tarzana v. Pac. Theatres, Inc.,
828 F.2d 1395 (9th Cir. 1987) ...............................................................................34, 37, 38, 41
Theme Promotions, Inc. v. News Am. Mktg. FSI,
546 F.3d 991 (9th Cir. 2008) ...................................................................................................19
Times-Picayune Publg Co. v. United States,
345 U.S. 594 (1953) .................................................................................................................26
Todd v. Exxon Corp.,
275 F.3d 191 (2d Cir. 2001).....................................................................................................23
Toys R Us, Inc. v. FTC,
221 F.3d 928 (7th Cir. 2000) ...................................................................................................31
United States v. Apple Inc.,
952 F. Supp. 2d 638 (S.D.N.Y. 2013)......................................................................................42
United States v. Conn. Natl Bank,
418 U.S. 656 (1974) ...........................................................................................................23, 26
- vi 130984953.1
United States v. Griffith,

334 U.S. 100 (1948) .......................................................................................................9, 10, 12
United States v. Grinnell Corp.,
384 U.S. 563 (1966) .................................................................................................................35
United States v. Microsoft Corp.,
253 F.3d 34 (D.C. Cir. 2001) ........................................................................................... passim
United States v. Paramount Pictures,
334 U.S. 131 (1948) ......................................................................................................... passim
United States v. Paramount Pictures,
70 F. Supp. 53 (S.D.N.Y. 1946).................................................................................................9
United States v. Phila. Natl Bank,
374 U.S. 321 (1963) ...........................................................................................................23, 26
United States v. Socony-Vacuum Oil Co.,
310 U.S. 150 (1940) .................................................................................................................10
United States v. Visa U.S.A., Inc.,
344 F.3d 229 (2d Cir. 2003).........................................................................................19, 21, 29
W. Duplicating, Inc. v. Riso Kagaku Corp.,
2000 WL 1780288 (E.D. Cal. Nov. 21, 2000) .........................................................................22
Wampler v. Sw. Bell Tel. Co.,
597 F.3d 741 (5th Cir. 2010) ...................................................................................................26
William Goldman Theatres v. Loews, Inc.,
150 F.2d 738 (3d Cir. 1945).....................................................................................................34
York v. McHugh,
698 F. Supp. 2d 101 (D.D.C. 2010) .........................................................................................12
STATUTES
15 U.S.C. 1 .......................................................................................................................... passim
15 U.S.C. 2 .......................................................................................................................... passim
D.C. Code 28-4502 .................................................................................................................6, 42
D.C. Code 28-4503 .................................................................................................................6, 42
RULES
Fed. R. Civ. P. 8(d)(3)....................................................................................................................18
- vii 130984953.1
OTHER AUTHORITIES
Earl W. Kintner, Federal Antitrust Law (2013) .............................................................................22
Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust
Principles and Their Application (3d & 4th eds. 2011-2014) .................................................20
- viii 130984953.1
In October of 2015, Landmark Theatres, an independent film exhibition company,

introduced an upscale, innovative new theater concept in the heart of Washington, D.C. with the
opening of its Atlantic Plumbing theater. Landmarks six-screen theater offers an intimate and
upscale experience, with premium food and alcohol and oversized, plush leather seats.
Consumers who had long stopped going to the movies because of the long lines, dirty bathrooms,
harsh neon lighting, unpleasant crowds, and sold-out shows at Regals tired Gallery Place theater
in Chinatown would now have a choiceor so Landmark thought.
As soon as Landmark sought to license commercial films, it was uniformly told by film
distributors that Regal had requestedand they had grantedclearance over Landmarks
theater. That is, they had agreed to license virtually all of their top commercial filmsmovies
like Star Wars and The Hunger Gamesexclusively to Regals Gallery Place theater and not to
Landmarks Atlantic Plumbing theater. This is despite the fact that, for years prior, Regals
Gallery Place had played films day and date withi.e., had not requested clearance overan
even closer theater in Union Station before that theater closed and left Regal with a monopoly in
the relevant market. As a result of Regals blanket clearance over Landmarks Atlantic
Plumbing, Landmark has largely been licensed the leftovers and has been forced to fill its
screens with films few people want to see. Moviegoers who want to watch the popular, widerelease films on the big screen are forced to see them at Regals Gallery Place or not at all. They
have been deprived of the higher quality and lower prices that Landmark sought to bring to the
District with its innovative new offering.
There is no procompetitive justification for the clearance agreements Regal has entered
into with distributors. Regal argues that it is in the economic interests of distributors to employ a
single exhibitor in the core of Washington, D.C. and that Landmarks and Regals theaters are
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simply competing for single-exhibitor status. But the economics and realities of modern film
distribution and history of this film zonealleged in the complaintsuggest just the opposite.
Today clearances impair, rather than serve, competition among commercial film
distributors. Specifically, clearance agreements do not, as they did during the 1940s and 1950s,
legitimately protect a local exhibitor from free-riding by competitors on an exhibitors
investment in promoting a distributors film: now distributors, not exhibitors, fund promotion.
Nor do clearances promote interbrand competition at the expense of intrabrand competition
or prevent audience splitting: in todays digital age, the costs of distributing films to multiple
theaters is negligible, and interbrand competitionand a distributors own independent
interestsare served by exhibition in as many theaters as possible. In the core of the District, as
elsewhere, clearances serve only the economic interests of an exhibitor large enough to force
distributors to agree to them. Absent Regals demand for preferential treatment and exclusivity,
the distributors would be free to (and would) license their wide-release, commercial films to both
the Gallery Place and Atlantic Plumbing theaters for day-and-date play to maximize their box
office grosses in the zone and reach the widest audience possible.
The only purpose Regals blanket clearance serves is to protect its old, worn-out, lowquality, high-priced theater from competition. Its effects are to stifle innovation, lower quality,
increase prices, run Landmarks theater out of business, and deprive consumers in the core of the
District of the choice of where to see a movie. Regals blanket clearance is anticompetitive and
illegal under the federal and D.C. antitrust and tortious interference laws. Its motion to dismiss
Landmarks complaint should be denied.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Regal is the largest movie theater circuit in the United States, with approximately 575
theaters nationwide and 24 theaters in the greater Washington, D.C. area alone. Amended
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Complaint (ECF No. 12) (Compl.) 16. Since 2004, it has operated the Regal Gallery Place
Stadium 14, a 14-screen, 3,350-seat theater in the heart of densely-populated downtown
Washington, D.C.s Gallery Place/Chinatown district. Id. 39, 44, 52. The Gallery Place was
built over a decade ago and offers a substandard moviegoing experience to patrons: long ticket
and concession lines, large, loud, and unpleasant crowds . . . , a virtually constant police presence,
sold-out shows, exorbitantly priced concessions, bag searches, dirty bathrooms, and standard
(non-plush/oversized) seating. Id. 40.
Seeking to expand the market for moviegoing in the core of Washington, D.C. (District
Core) by offering a substantially different and higher-quality experience, in October of 2015,
Landmark opened its six-screen, 344-seat Atlantic Plumbing theater in the Shaw/Howard
University neighborhood of Washington, D.C. Id. 41. In addition to classic and alternative
concessions, Atlantic Plumbing offers a full bar with premium food and alcoholic beverages,
including specialty cocktails, a wide variety of beer and wine, and unique, upscale food options
such as mini crab cakes and organic crispy chickpeas. Id. 42. Food and drinks purchased in the
bar can be taken into any auditorium to enjoy while watching a movie. Id. The theater also offers
oversized, plush leather seats, advance reserved seating, and automated ticketing kiosks. Id.
Ticket prices are up to 30 percent lower than at Regals Gallery Place. Id. 43.
As a first-run, commercial film theater, Landmarks Atlantic Plumbing sought to license
mainstream films like Star Wars and The Hunger Games from the major film distributors. Id.
66, 68. Landmark expected that distributors would license their wide releases to Landmarks
and Regals theaters day and datethat is, for exhibition on the same dates. This expectation
was based on the fact that distributors had, for years before AMCs and then Phoenix Theatres
Union Station 9 closed in 2009, licensed such films to that theater for day-and-date play with
-3130984953.1
Regals Gallery Place, despite these theaters being only one mile away from each other and
operating substantially similar theaters. Id. 63-65, 82. In addition, Regals Gallery Place sells
out during prime showtimes, and Landmark expected to draw patrons back to the movies with a
substantially different experience. Id. 82-83. As such, there was and remains substantial
unmet demand for another theater showing mainstream films in the population-dense heart of
Washington, D.C. Id. 44, 52, 82-83. Indeed, distributors would maximize their films grossing
potential in this zoneas they used to do before the Union Station 9 closedby licensing films
for day-and-date play, a practice that has become common in the commercial film industry. Id.
65, 73, 82.
Nevertheless, when Landmark contacted each of the major film distributors in an effort to
license their commercial films for exhibition at its Atlantic Plumbing theater, it was told
uniformly that Regal had requested a blanket clearance over Landmarks Atlantic Plumbing
theater. Id. 66. In other words, Regal had requested that the film distributors agree to license
their films exclusively to Regals Gallery Place and not to license them to Landmarks Atlantic
Plumbing theater for the entirety of each films first theatrical run (which today is the entirety of
a films theatrical exhibition life, after which it is released on video on demand). Id. 24-25.
Furthermore, Regal threatened to retaliate against any distributor that nevertheless licensed any
commercial film to Landmark: Regal would refuse to play the film at its Gallery Place theater
and reserved the right to disadvantage that distributors films prospects at any of its 575 theaters
across the country. Id. 67.
In response, the film distributors agreed to grant Regals request for clearance: they
agreed to license their highest-grossing films exclusively to Regals Gallery Place theater and not
to even offer to license those films to Landmarks Atlantic Plumbing theater. Id. 69. For
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example, when Landmark sought to negotiate a license to exhibit Disneys mega-blockbuster

Star Wars: The Force Awakens, Disney informed Landmark that it had already agreed to license
the film exclusively to Regals Gallery Place and not to license the film to Landmark under any
terms. Id. 68-69. The same occurred with respect to Lionsgates blockbuster The Hunger
Games: Mockingjay, Part 2, Sonys blockbuster Spectre, Warner Bros. Our Brand Is Crisis, and
The Weinstein Companys Burnt. Id. Landmark was forced to fill its screens with substantially
lower-grossing, less desirable films and specialty or art films that are not an adequate substitute
for the commercial films licensed to the Gallery Place. Id. 71, 86-87. As a result, the Atlantic
Plumbing theater was unable to serve the patrons it could have attracted had the distributors not
agreed with Regal to license their in-demand movies exclusively to Regals Gallery Place, and it
is threatened with going out of business if this conduct continues. Id. 74, 79, 88.
Regals blanket clearance has crippled competition in the District Core. Landmarks
Atlantic Plumbing theater offers a higher-quality, more innovative, and lower-priced experience
than Regals Gallery Place, but its efforts to compete with Regal on the merits with these
offerings have been neutralized by its inability to access its most essential inputwide-release
commercial films. Id. 88-89. As a result, consumers who prefer Landmarks theater are forced
to see their first-choice film at Regals theater and suffer a lower-quality, higher-priced
moviegoing experienceor, in the case of sold-out shows at the Gallery Place, not to see their
first-choice film at all. Id. 75-77. If the distributors continue to adhere to Regals demands,
Landmarks Atlantic Plumbing theater will be forced to close its doors, resulting in even less
choice and output in the relevant market. Id. 88.
The relevant antitrust markets in which to analyze the anticompetitive effects of Regals
conduct are the markets to license and exhibit films in the District Corea densely populated
-5130984953.1
area roughly bounded to the south by the National Mall, to the east by North Capitol Street, and
to the northwest by Rock Creek/Rock Creek Park. Id. 44. As the complaint alleges, consumers
in the District Core generally do not travel outside this area to attend a theatrical film exhibition,
and vice versa; given a small but substantial, nontransitory increase in the prices charged by
commercial film exhibitors in the District Core, District Core consumers would not travel farther
afield to avoid the price increase. Id. 46, 48. This is due to a variety of fact-intensive market
realities: high population density, heavy traffic congestion, unfamiliarity with areas outside the
District Core, the sheer distance of more distant theaters, the inconvenience and expense of
traveling outside the zone, and the inaccessibility of theaters outside the District Core by Metro,
on which most District Core consumers depend. Id. 47, 49-52. There are high barriers to entry
into this market, and Regal controls over 90% of it. Id. 56-58.
In January 2016, Landmark filed a complaint against Regal seeking relief under the
federal antitrust and D.C. antitrust and tortious interference laws from Regals anticompetitive
conduct and agreements. ECF No. 1.1 Landmark alleges five distinct causes of action: circuit
dealing in violation of Sherman Act Sections 1 and 2 and D.C. Code Sections 28-4502 and 284503 (Count I); contracts in restraint of trade in violation of Sherman Act Section 1 and D.C.
Code Section 28-4502 (Count II); monopolization (Count III) and attempted monopolization
(Count IV) in violation of Sherman Act Section 2 and D.C. Code Section 28-4503; and tortious
interference with business relations (Count V). Compl. 93-131. Regal has moved to dismiss
Landmarks complaint. ECF No. 16.
Landmark slightly amended its complaint as of right in February 2016. ECF No. 12.
-6130984953.1
ARGUMENT
Because Landmarks complaint alleges in sufficient detail plausible antitrust claims under
federal and D.C. law, Regals motion should be denied.
First, Landmark alleges that Regal has engaged in per se illegal circuit dealinga
distinct violation of the antitrust laws arising from the leveraging of Regals circuit power to
coerce film distributors into granting Regal preferential film licensing treatment and excluding
Landmark. Regals arguments for dismissal of Landmarks circuit dealing claim ignore the
complaints allegations and misconstrue the governing case law.
Secondand regardless of whether the complaint plausibly alleges the distinct circuit
dealing claimRegals clearance is unreasonable under United States v. Paramount Pictures,
334 U.S. 131 (1948), and its progeny, without the need to evaluate whether Landmark has
alleged a plausible relevant antitrust market or Regals power in that market. That is because
Landmarks and Regals District Core theaters are not in substantial competition. Rather,
Landmarks theater largely appeals to a different audience and offers a substantially different
moviegoing experience.
Third, Regals conduct is anticompetitive under the modern rule of reason, which
requires proof of Regals market power and harm to competition resulting from Regals
anticompetitive or exclusionary conduct. Here, the precise delineation of a relevant market is not
necessary to establish an antitrust violation because Landmark has alleged direct evidence of
Regals market power. Landmarks complaint also alleges specific facts regarding consumer
preferences and practices and market realities that render the District Core a relevant antitrust
market and support a plausible inference of Regals ability to exercise market power in that
market.
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Landmark also alleges classic exclusionary conduct that has harmed competition. Based
on its false assumption that distributors want to contract with a single exhibitor in the District
Core, Regal speculates that distributors have decided not to license films to Landmark because
Landmark has not made sufficiently attractive offers (Motion 3) to win single-exhibitor status.
Regals arguments (a) ignore both the history of film-licensing in this zone and the economics of
modern commercial film distributionunder which the more theaters that show a distributors
film, the better(b) contradict the allegations in the complaint, and (c) assume the outcome of a
fact-intensive inquiry that is for the jurynot this Court on a motion to dismissto resolve.
Landmark has also plausibly alleged that Regals conduct was not merely unilateral.
Contrary to Regals contention, clearances like those at issue here have been understood in the
case law as Section 1 agreements for decades, and for good reason: implicit (if not explicit) in
every license that a distributor grants to Regals Gallery Place is the distributors agreement not
to license that same film for day-and-date play to Landmarks Atlantic Plumbing theater.
Furthermore, Landmark alleges specific facts supporting the inference that the exclusive licenses
at issue here are coerced agreementsnot just unilateral responses to a unilateral announcement.
Finally, because Regals arguments for dismissing Landmarks D.C. law claims are
derivative of its failing arguments for dismissal of Landmarks Sherman Act claims, the D.C.
law claims survive as well. Regals motion should be denied in its entirety.
I.
MOTION TO DISMISS STANDARD

In analyzing a motion to dismiss, the court must accept the allegations in the complaint
as true and construe them in light most favorable to the plaintiff. . . . The complaint must be
liberally construed in the plaintiffs favor, giving deference to inferences derived from the factual
allegations. GTE New Media Servs., Inc. v. Ameritech Corp., 21 F. Supp. 2d 27, 40 (D.D.C.
1998); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). [A] plaintiff need only
-8130984953.1
make sufficient allegations of fact to raise a reasonable expectation that discovery will reveal
evidence of [the alleged violation]. Accordingly, in antitrust cases, summary procedures should
be used sparingly in complex antitrust litigation where motive and intent play leading roles and
dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very
sparingly. Cloverleaf Enters., Inc. v. Md. Thoroughbred, Horsemens Assn, 730 F. Supp. 2d
451, 460 (D. Md. 2010) (quoting Twombly, 550 U.S. at 556; Hosp. Bldg. Co. v. Trs. of Rex Hosp.,
425 U.S. 738, 746 (1976)) (citation omitted). Even if it is extremely unlikely that a plaintiff will
recover, a complaint may nevertheless survive a motion to dismiss for failure to state a claim,
and a court reviewing such a motion should bear in mind that it is testing the sufficiency of the
complaint and not the merits of the case. Cobb Theatres III, LLC v. AMC Entmt Holdings, Inc.,
101 F. Supp. 3d 1319, 1329 (N.D. Ga. 2015).2
II.
THE COMPLAINT ADEQUATELY ALLEGES PER SE ILLEGAL CIRCUIT

DEALING
As Regal concedes (Motion 2), circuit dealing is the licensing of film on other than a
theatre-by-theatre, film-by-film basis. See Paramount, 334 U.S. at 154; United States v.
Paramount Pictures, 70 F. Supp. 53, 74 (S.D.N.Y. 1946); Flagship Theatres of Palm Desert,
LLC v. Century Theatres, Inc., 131 Cal. Rptr. 3d 519, 524 (Cal. Ct. App. 2011) (reciting the
long-standing antitrust law requirement that films be licensed on a theater by theater, film by
film basis). An exhibitor engages in unlawful circuit dealing when it uses its strategic position
gained by having a monopoly of theatres in any one town to acquire exclusive privileges in a
city where he has competitors. United States v. Griffith, 334 U.S. 100, 107 (1948); see
Were the Court to grant Regals motion, Landmark respectfully requests leave to amend
to cure any deficiencies. See Belizan v. Hershon, 434 F.3d 579, 583 (D.C. Cir. 2006)
([D]ismissal with prejudice is warranted only when a trial court determines that the allegation of
other facts consistent with the challenged pleading could not possibly cure the deficiency.)
(emphasis and quotation marks omitted).
-9130984953.1
Paramount, 334 U.S. at 154-55. Such conduct is a misuse of monopoly power under the
Sherman Act because [t]he consequence of such [conduct] is that films are licensed on a noncompetitive basis in what would otherwise be competitive situations. Griffith, 334 U.S. at 108
(exhibitor may not use the power it derives from its large circuit to stifle competition by
denying competitors less favorably situated access to the market); see Paramount, 334 U.S. at
154 (unlawful to eliminate the opportunity for the small competitor to obtain the choice first
runs, and put a premium on the size of the circuit).
[C]ircuit dealing [is] considered [a] per se violation[] of the Sherman Act. Cobb
Theatres, 101 F. Supp. 3d at 1343; Reading Intl, Inc. v. Oaktree Capital Mgmt. LLC (Reading
II), 2007 WL 39301, at *7 (S.D.N.Y. Jan. 8, 2007). As Regal concedes, under the per se rule,
the plaintiff need not make any showing of market power or [anti]competitive effects. Motion
11 n.3; see United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n.59 (1940).3
Landmark adequately alleges circuit dealing here. First, it alleges that Regal derives
substantial power over distributors from its status as the largest exhibitor circuit in the United
States, its numerous theaters in closed towns across the country where it is the only outlet for
distributors films, and its dominance in the greater Washington, D.C. area. Compl. 16.
Second, Landmark alleges that Regal demanded that distributors deny[] [its] competitor[]
[Landmark] less favorably situated access to the market, Griffith, 334 U.S. at 108, and
eliminate the opportunity for the small competitor [Landmark] to obtain the choice first runs,
3
Regal does not appear to dispute that circuit dealing is per se illegal under Paramount
and its progeny (Motion 11 n.3). Rather, it unremarkably points out (id.) that contracts in
restraint of trade and monopolization in the absence of circuit dealing are evaluated under the
rule of reason. To the extent Regal is contending that the per se rule does not apply, the Court
need not engage in a market analysis until the Court decides whether to apply a per se or rule of
reason analysis, and that decision is more appropriate on a motion for summary judgment. In
re High-Tech Employee Antitrust Litig., 856 F. Supp. 2d 1103, 1122-23 (N.D. Cal. 2012). It is
sufficient at this stage that Landmark has pled a per se claim. See id.
- 10 130984953.1
Paramount, 334 U.S. at 154, by licensing their films exclusively to Regals Gallery Place theater
and not to Landmark. Compl. 67. Third, Landmark alleges that Regal backed this demand to
deprive Landmark of the inputs it needs to compete with the threat that Regal could and would
disadvantage distributors films across Regals circuitincluding in its closed towns and its
numerous theaters throughout Washington, D.C.if the distributors did not comply. Id.; see id.
62. The distributors, fully cognizant of Regals ability to deprive them of substantial grosses on
their films across the country, bowed to Regals demand and, contrary to their own economic
interests, agreed not to license their choice first runs to Landmark. Id. 69, 71-72.4
Ignoring these allegations, Regal argues (Motion 8) that the complaint fails to allege that
Regal threatened to use its national circuit to deny the Atlantic Plumbing a single film. That is
simply not true. Landmark specifically alleges that Regals demand for a blanket clearance over
all films in favor of its Gallery Place theater included the message that [i]f you license a
commercial film to Landmarks Atlantic Plumbing theater, Regal can and will use its monopoly
power in the District Core, its dominance in the greater D.C. DMA, and its national circuit
power, to retaliate against you, including by reserving the right to disadvantage your films
prospects at any of Regals 575 theaters across the country. Compl. 67; see, e.g., Cobb
Theatres, 101 F. Supp. 3d at 1343 (denying motion to dismiss circuit dealing claim where
demand for blanket clearance allegedly operated as a demand that those distributors grant
[defendant] preferential treatment or, alternatively, risk being denied the grossing potential of
4
The complaint also quotes Regals annual report, in which Regal states that the size of
our theatre circuit is a significant competitive advantage for negotiating attractive national
contracts. Compl. 61; see Motion 10. Landmark did not misquote this statement (Motion
10). It quoted the excerpt, ending with negotiating, and indicated as much with a closequotation mark. Compl. 61. It then accurately paraphrased negotiating attractive national
contracts as negotiating with suppliers, including distributors. Id. Regals admission that its
size gives it an advantage in negotiating national contracts is at least circumstantial evidence that
Regal has power over its suppliers, including distributors.
- 11 130984953.1
[defendants competing] theater[] and, implicitly, some or all of the theaters in its entire circuit)
(quoting complaint). A dominant exhibitor need not be [so] crass as to make[] [an explicit]
threat to withhold the business of his closed or monopoly towns unless the distributors give him
the exclusive film rights in the towns where he has competitors to be held to have engaged in
circuit dealing. Griffith, 334 U.S. at 108; see Cobb Theatres, 101 F. Supp. 3d at 1344 (same).
The complaint alleges that Regal has consciously not licensed films on a theater by
theater, film by film basis (Motion 9), has demanded a blanket clearance in the District Core
covering all films from all distributorsand has backed that demand by the power of its circuit.
That is circuit dealing, and it violates the Sherman Act. Without the benefit of discovery, it is
difficult to imagine what additional facts (Motion 8) Landmark could possibly have alleged.5
Next, Regal argues that Landmark has not ruled out the possibility of the distributors
unilateral conduct (Motion 9). But at the Rule 12 dismissal stage, the plaintiff is not required to
eliminate the possibility of independent action . . . even if defendants allegations are also
plausible. Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co., 81 F. Supp. 3d 1, 13 & n.9
(D.D.C. 2015). Rather, the complaint need allege only plausible grounds to infer liability.
Twombly, 550 U.S. at 556. Regals argument is appropriate for the summary judgment (not Rule
12) stage. See Jung v. Assn of Am. Med. Colls., 300 F. Supp. 2d 119, 158-59 (D.D.C. 2004).
5
Regal cites legalese in its annual report to the effect that it supposedly licenses films on a
film-by-film and theatre-by-theatre basis (Motion 10). The Court may not consider this
statement because Regals annual report is not central to Landmarks complaint. Cooper v.
First Govt Mortg. & Invrs Corp., 206 F. Supp. 2d 33, 36 (D.D.C. 2002). At most, the Court can
take judicial notice of the unremarkable and wholly irrelevant fact that Regal self-servingly made
this statement, but not for the truth of the matter asserted. See Kramer v. Time Warner Inc., 937
F.2d 767, 774 (2d Cir. 1991). Regals annual report also admits that the size of our theatre
circuit is a significant competitive advantage for negotiating attractive national contracts,
Motion 10, suggesting negotiation on other than a film-by-film and theater-by-theater basis. At
most, these statements create a genuine dispute of fact as to whether Regal does, in fact, engage
in film-by-film, theater-by-theater licensing, which cannot be resolved at this stage. See York v.
McHugh, 698 F. Supp. 2d 101, 107 (D.D.C. 2010).
- 12 130984953.1
Regals belief that the complaints allegations support an alternative explanation for Regals
conduct does not contradict[] or undermine[] (Motion 9) Landmarks plausible claims.
Finally, Regal implies that a circuit dealing claim requires a showing that the defendant
threatened to forego playing a distributors films at all of [its] theatres nationwide and argues
that such a suggestion that Regal did so here makes no sense (id. at 11). But [n]othing in
the discussion in any of th[e] [Supreme Court circuit dealing] cases suggests that prohibited
circuit dealing is limited to agreements that cover all of the theaters in a circuit. Rather, they
suggest that it is not so limited. Flagship, 131 Cal. Rptr. 3d at 533 (rejecting same
misconstruction of case law that Regal makes here). By Regals logic, no circuit dealing claim
could ever be plausible because it would never make sense for a dominant exhibitor to
threaten to use its large buying power and combin[e] its closed and open towns to force
distributors not to deal with small exhibitors in discrete local markets. Schine Chain Theatres v.
United States, 334 U.S. 110, 115 (1948). Such conduct not only is plausible; it has actually
occurred and led to the creation of an entire body of Supreme Court case law outlawing it.
III.
THE COMPLAINT ADEQUATELY ALLEGES NON-CIRCUIT DEALINGBASED VIOLATIONS OF THE SHERMAN ACT
Contrary to Regals false refrain (Motion 2, 7, 12), Landmarks four distinct antitrust
claims do not all depend on the theory that Regal has engaged in circuit dealing. Only one of
its claimsthe circuit dealing claim (Count I)does. While Count I does in fact properly allege
a plausible circuit dealing claim under well-established precedents, Counts II, III, and IV are
non-circuit dealing claims that Regal has entered into contracts in restraint of trade and has
monopolized and attempted to monopolize the markets for film licensing and exhibition in the
District Core. Unlike the circuit dealing claim, these claims do not require Landmark to establish
that Regal has engaged in non-film-by-film or non-theater-by-theater film licensing, or leveraged
- 13 130984953.1
its power outside of the District Core to gain an unfair advantage in it. Rather, they require only a
showing of unreasonableness and, in the case of Count II, some form of joint action [that]
satisf[ies] the contracts, combinations, or conspiracy requirement of Sherman Act Section 1.
Kreuzer v. Am. Acad. of Periodontology, 735 F.2d 1479, 1485 (D.C. Cir. 1984); see United
States v. Microsoft Corp., 253 F.3d 34, 58 (D.C. Cir. 2001).6
Landmarks complaint meets these requirements. It adequately alleges violations of the
Sherman Act under both the Paramount substantial competition test and the modern rule of
reason, and it alleges specific facts permitting the plausible inference of concerted conduct.
A.
Regals Blanket Clearance Fails the Paramount Substantial Competition Test
In its landmark Paramount decision, the U.S. Supreme Court announced: There should
be no clearance between theatres not in substantial competition. 334 U.S. at 146. The Court
recognized the following factors as bearing on whether two theaters are in substantial
competition and thus whether a clearance is unreasonable.
(1) The admission prices of the theatres involved, as set by the
exhibitors;
(2) The character and location of the theatres involved, including
size, type of entertainment, appointments, transit facilities, etc.;
(3) The policy of operation of the theatres involved, such as the
showing of double features, gift nights, give-aways, premiums,
cut-rate tickets, lotteries, etc.;
(4) The rental terms and license fees paid by the theatres involved
and the revenues derived by the distributor-defendant from such
theatres;
(5) The extent to which the theatres involved compete with each
other for patronage;
(6) The fact that a theatre involved is affiliated with a defendantdistributor or with an independent circuit of theatres should be
6
Landmarks attempted monopolization claim also requires an allegation of Regals intent

to monopolize, see Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993), but Regal
does not arguenor could itthat the complaint fails to allege this element. See Compl. 119.
- 14 130984953.1
disregarded[.]
Id. at 145-46; see Quad Cinema Corp. v. Twentieth Century-Fox Film Corp., 1983 WL 1822, at
*6 (S.D.N.Y. May 12, 1983) ([T]he reasonableness of a clearance policy . . . is nothing more
than the converse of the question of what constitutes substantial competition in a given case.);
Seven Gables Corp. v. Sterling Recreation Org. Co., 1987 WL 56622, at *9 (W.D. Wash. June
25, 1987) (A clearance may only be granted against a theater in substantial competition with
the theater obtaining the license.).
Thus, under Paramount and its progeny, clearances between two theaters not in
substantial competition violate the Sherman Act, without the need to define the boundaries of a
relevant market or the defendants power in that market, or otherwise engage in a full-blown
rule-of-reason analysis. For example, in Paramount, the Supreme Court affirmed the district
courts finding that the clearances in that case had no relation to the competitive factors which
alone could justify them and held that that evidence was adequate, on its own, to support
the finding of a conspiracy to restrain trade by imposing unreasonable clearances. 334 U.S. at
146, 147. It upheld an injunction against the granting [of] any clearance between theatres not in
substantial competition. Id. at 147. And in Chicago Ridge Theatre Ltd. Partnership v. M & R
Amusement Corp. (Chicago Ridge II), 855 F.2d 465 (7th Cir. 1988), the Seventh Circuit
specifically distinguished between the substantial competition test and the modern rule-of-reason
test: whereas the former asks only whether the two theaters are in substantial competition, under
the rule of reason, the plaintiff must show the defendants market power. Id. at 471.
Notably, the Chicago Ridge II court explicitly acknowledged that Paramount is the last
word from the Supreme Court directly addressing the antitrust ramifications of clearances in the
distribution and exhibition of motion pictures and thus remains controlling law. Id. at 470-71. In
other words, unless and until the Supreme Court revisits Paramount, a plaintiff can prove that
- 15 130984953.1
clearances violate the Sherman Act by showing that its theater is not in substantial competition
with the defendants, without defining a relevant market, showing the defendants power in that
market, or demonstrating that the anticompetitive effects of the clearances outweigh any
procompetitive benefits proffered by the defendant. See, e.g., Reading II, 2007 WL 39301, at
*10-16 (evaluating clearances (a) as exclusive licenses under modern rule of reason, and
separately, (b) as clearance agreements under Paramounts substantial competition test).
Landmarks complaint alleges with factual specificity that its Atlantic Plumbing theater is
not in substantial competition with Regals Gallery Place. On the first Paramount factor
admission pricesthe complaint alleges that Landmarks ticket prices are up to 30 percent lower
than Regals. Compl. 43. The character and location of the theatres involved, including size,
type of entertainment, appointments, transit facilities, etc., Paramount, 334 U.S. at 145, also
militate against a finding of substantial competition. Landmarks theater has less than half of the
screens and one-tenth of the seats of the Gallery Place. Compl. 39, 41. And unlike the routine
(and shopworn) facilities at Gallery Place, Landmarks Atlantic Plumbing theater offers a fullservice bar and upscale food items; allows patrons to bring alcoholic beverages into the
auditoriums; offers reserved seating; and features oversized, plush leather seats. Id. 40, 42.
Landmark also alleges minimal overlap in the theaters respective patronage, see Paramount,
334 U.S. at 145: while the Gallery Place attracts large, loud, and often unpleasant crowds
(including teens and children), Landmarks Atlantic Plumbing theater caters to a more mature
audience seeking a more refined movie theater experience. Compl. 40, 83. Finally, for years
before it closed, Regal played day and date with an even closer and more similar theater. Id.
63-65. These factual allegations, which must be taken as true, support a plausible inference
- 16 130984953.1
that Regals and Landmarks theaters are not in substantial competition. If they are not, Regals
blanket clearance violates the Sherman Act.
Regal improperly ignores these allegations and misconstrues the complaint in arguing
(Motion 31-32) that the two theaters substantially compete for the same customers. First,
Regal falsely states that the complaint expressly asserts that the Atlantic Plumbing theatre is in
competition with [the Gallery Place] for many of the same patrons. Motion 31 (quoting Compl.
53) (alterations in original). In fact, that paragraph of the complaint alleges only that Regals
pattern of demanding blanket clearances over Landmarks Atlantic Plumbing theater, but not
farther-afield theaters, reflects Regals estimation that only the Atlantic Plumbing theaterand
not the farther-afield theatersare in competition with the Gallery Place at all. Compl. 53
(emphasis added). The complaint alleges substantial differences between the two theaters
customer bases, see id. 40, 83not, as Regal argues, the opposite.
The only other allegations Regal cites for its substantial competition proposition are
allegations in the complaint supporting an inference that there is any competition at all between
Regals and Landmarks theaters. See Motion 31. But Paramount requires the plaintiff[] to
show the absence only of substantial competition, not the absence of all competition. Chi.
Ridge Theatre Ltd. Pship v. M & R Amusement Corp., 732 F. Supp. 1503, 1512 (N.D. Ill. 1990)
(second emphasis added). Indeed, Regals argumentthat an allegation of any competition
between two theaters negates an allegation of no substantial competition and renders a clearance
- 17 130984953.1
presumpti[vely] . . . lawful) (Motion 32)is a twist of logic that would defeat all unlawful
clearance cases and is not the law. Quad Cinema, 1983 WL 1822, at *6 n.6.7
Finally, Regals argument that Landmarks complaint fails the substantial competition
test (Motion 32) cites exclusively summary judgment cases and one bench trial case in which
courts made the substantial-competition determination on a full record. Those cases are
inapposite here, at the motion to dismiss stage. See Reading Intl, Inc. v. Oaktree Capital Mgmt.
LLC (Reading I), 317 F. Supp. 2d 301, 321-22 (S.D.N.Y. 2003). Because Landmark alleges
facts supporting a plausible inference that its Atlantic Plumbing theater is not in substantial
competition with Regals Gallery Place theaterwhich must be taken as trueLandmarks
Sherman Act claims survive Regals motion to dismiss.
B.
The Complaint Adequately Alleges Sherman Act Violations Under the

Modern Rule of Reason
As discussed, Landmarks antitrust claims survive Regals motion to dismiss without the
need to establish a prima facie case under the modern rule of reason. But Landmarks complaint
does this, too. Specifically, Landmark pleads direct and circumstantial evidence of Regals
market power, and that Regal has engaged in exclusionary conduct that has harmed competition.
Under the modern rule of reason, a plaintiff shows a violation of the Sherman Act by (1)
making a threshold showing of the defendants market or monopoly power and (2) establishing
that the defendants conduct was anticompetitive. See Leegin Creative Leather Prods., Inc. v.
PSKS, Inc., 551 U.S. 877, 885-86 (2007); Microsoft, 253 F.3d at 58-59. Market or monopoly
power is the power to control prices or exclude competition and can be proven by either direct
As discussed above, Landmarks allegation of no substantial competition is not

inconsistent with its allegations of some competition between the Gallery Place and Atlantic
Plumbing theaters. In any event, a plaintiff may properly plead alternative theories of liability,
regardless of whether such theories [a]re consistent with one another. Scott v. District of
Columbia, 101 F.3d 748, 753 (D.C. Cir. 1996) (citations omitted); see Fed. R. Civ. P. 8(d)(3).
- 18 130984953.1
or circumstantial evidence. Microsoft, 253 F.3d at 51; Image Tech. Servs., Inc. v. Eastman Kodak
Co., 125 F.3d 1195, 1202 (9th Cir. 1997). Direct proof of market power is evidence that a firm
has profitably reduced output and raised prices above competitive levels or excluded
competitors. Microsoft, 253 F.3d at 51 (citing FTC v. Ind. Fedn of Dentists, 476 U.S. 447, 46061 (1986)); Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F.3d 991, 1001 (9th Cir. 2008);
Re/Max Intl v. Realty One, Inc., 173 F.3d 995, 1018 (6th Cir. 1999). Circumstantial proof of
market power, by contrast, involves an examin[ation] [of] market structure. Microsoft, 253
F.3d at 51. Under this structural approach, monopoly power may be inferred from a firms
possession of a dominant share of a relevant market that is protected by entry barriers. Id.; see
Theme Promotions, 546 F.3d at 1001.
Because market share and barriers to entry are merely surrogates for determining the
existence of monopoly power, . . . direct proof of monopoly power does not require a definition
of the relevant market. Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 307 n.3 (3d Cir.
2007) (collecting cases). As the D.C. Circuit has explained, [t]he definition of the relevant
market has no independent significance under the Sherman Act. It relates only to the
determination of whether a defendant possesses monopoly power. S. Pac. Commcns Co. v. Am.
Tel. & Tel. Co., 740 F.2d 1011, 1020 (D.C. Cir. 1984); see Ind. Fedn of Dentists, 476 U.S. at
460-61. As such, an antitrust plaintiff is not required to rely on indirect evidence of a
defendants monopoly power, such as high market share within a defined market, when there is
direct evidence that the defendant has actually set prices or excluded competition. Re/Max Intl,
173 F.3d at 1018; see United States v. Visa U.S.A., Inc., 344 F.3d 229, 239 (2d Cir. 2003); see,
e.g., In re Nexium (Esomeprazole) Antitrust Litig., 968 F. Supp. 2d 367, 389 (D. Mass. 2013)
- 19 130984953.1
(This Court need not engage in an extensive analysis of circumstantial evidence of market
power because direct evidence of such power is available.).
1.
The Complaint Alleges Direct Evidence of Regals Market Power
Regal argues (Motion 17) that Landmarks non-circuit dealing claims must be dismissed
if Landmark fails to allege a plausible relevant market and that, without a relevant market,
Landmark cannot prove that Regal has market power. As already discussed, Regal is wrong.8
Regals ability to reduce output, raise prices, and exclude competitors is direct evidence
of its market power. Landmark has alleged that its Atlantic Plumbing theater offers a superior
consumer experience than does Regals Gallery Placewith its dirty bathrooms, long lines, old,
traditional theater seats, substantially fewer amenities, and a generally less pleasant environment.
Compl. 40, 42. The Gallery Place nevertheless charges up to 30 percent more for reserved
tickets. Id. 43. This is direct evidence that Regal has market powerthe power to raise prices
above and to reduce output (here quality) below competitive levels. See 11 Phillip E. Areeda &
Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application
(hereinafter Areeda) 1912f (3d ed. 2011) (reduction in quality constitutes reduction in
output); see also Babyage.com, Inc. v. Toys R Us, Inc., 558 F. Supp. 2d 575, 583 (E.D. Pa.
2008) (Hallmarks of . . . actual harm [to competition] include an increase in retail prices above
and beyond what they would be under competitive conditions, a reduction in output below what
it would be under competitive conditions, and a deterioration in quality and service.).
The cases Regal cites for the proposition that [e]stablishing the contours of the
geographic market is the necessary predicate for alleging Landmarks rule-of-reason claims
(Motion 17) stand instead for a much more limited proposition: that when a plaintiff proceeds
only on a market-structural (circumstantial evidence) approach to establishing market power, a
well-defined relevant market is required. When the plaintiff presents direct evidence of market
power, it is not.
- 20 130984953.1
Further direct evidence of Regals market power is its ability to exclude Landmarks
theater from access to desirable first-run commercial films by strong-arming all of the
distributors into licensing almost all such films exclusively to Regals Gallery Place theater,
notwithstanding the distributors contrary business interests in licensing films for day-and-date
play at multiple theaters. Compl. 73. Indeed, Regal concedes in its motion that it has been able
to do so solely because of its sizei.e., power in the marketrelative to Landmark. See Motion
9 (arguing that Regals Gallery Place has secured virtually all of the film product in the District
Core because it offers significantly more seats). This is perhaps the most convincing direct
evidence of Regals market power:
Dealers cannot force an unwilling manufacturer to restrict
intrabrand competition to their advantage unless they possess some
power over it. Of course, there is no better demonstration of power
than its exercise. Suppose, for example, that a manufacturer
explicitly declared that distribution restraints would be inefficient
but nevertheless adopted them after dealers threatened, Restrain
intrabrand competition or we cease handling your product. The
resulting restraint could then be readily attributed to dealer power
and fairly judged unreasonable.
8 Areeda 1604g.9 Because Landmark has alleged direct evidence of Regals market power, its
rule-of-reason claims survive regardless of whether Landmark has alleged a plausible relevant
market.10
See, e.g., Visa, 344 F.3d at 240 ([Plaintiff], despite repeated recent attempts, has been
unable to persuade any issuing banks . . . to utilize its network services because [defendants]
exclusivity rule would require such issuing banks to give up membership in [defendants]
consortiums, and banks are unwilling to do so. In short, [defendants] have demonstrated their
power in the network services market by effectively precluding their largest competitor from
successfully soliciting any bank as a customer.).
- 21 130984953.1
2.
The Complaint Alleges Circumstantial Evidence of Regals Market

Power
As discussed, Landmark has alleged direct evidence of Regals market power, thus
obviating the need to allege Regals market power through a market-structural approach. But
Landmark has alleged that too.
The relevant market is defined generally as the area of effective competition, Brown
Shoe Co. v. United States, 370 U.S. 294, 324 (1962), to which the purchaser can practicably
turn for supplies, Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961). [S]uch
economic and physical barriers to expansion as transportation costs, delivery limitations and
customer convenience and preference and [t]he location and facilities of other producers and
distributors are essential in determining the relevant geographic market. L.A. Draper & Son v.
Wheelabrator-Frye, Inc., 735 F.2d 414, 423 (11th Cir. 1984). [M]arkets involving services that
can only be offered from a particular location, like movie theaters, will often be defined by
how far consumers are willing to travel. Cobb Theatres, 101 F. Supp. 3d at 1336 (quoting Earl
W. Kintner, Federal Antitrust Law 10.15 (2013)); see T. Harris Young & Assocs., Inc. v.
Marquette Elecs., Inc., 931 F.2d 816, 823 (11th Cir. 1991) (customer convenience and
preference . . . must be considered in determining whether consumers within the geographic
area cannot realistically turn to outside sellers should prices rise within the defined area). But
unlike [b]usiness firms [that] maximize profits, which depend on the cost and value of such
inputs as fuel, wages, and the like[,] . . . consumers . . . place different subjective values on their
10
See, e.g., W. Duplicating, Inc. v. Riso Kagaku Corp., 2000 WL 1780288, at *5 (E.D. Cal.
Nov. 21, 2000) (denying defendants motion to dismiss because it was directed solely at
[plaintiffs] circumstantial proof of market power but plaintiff had alleged direct proof of
market power, which was sufficient); High-Tech Employee, 856 F. Supp. 2d at 1122 (denying
motion to dismiss for failure to allege plausible relevant market because defendants market
power was established with allegations that they succeeded in lowering the compensation and
mobility of their employees below what would have prevailed in a lawful and properly
functioning labor market); Nexium, 968 F. Supp. 2d at 389.
- 22 130984953.1
time and willingness to travel. These differing values cannot readily be captured by
transportation costs or other objective factors. 2B Areeda 553a.
Thus it is not surprising that [t]he Supreme Court has recognized that an element of
fuzziness would seem inherent in any attempt to delineate the relevant geographical market, and
therefore such markets need notindeed cannotbe defined with scientific precision. FTC v.
Sysco Corp., 113 F. Supp. 3d 1, 48 (D.D.C. 2015) (quoting United States v. Conn. Natl Bank,
418 U.S. 656, 669 (1974) (quoting United States v. Phila. Natl Bank, 374 U.S. 321, 360 n.37
(1963))); id. at 51-52 (defining relevant market is thorny task). For this reason, dismissal at the
Rule 12 stage for failure to allege a relevant geographic market is disfavored. Todd v. Exxon
Corp., 275 F.3d 191, 199-200 (2d Cir. 2001).11
Moreover, [t]here is no requirement that the market definition elements of the antitrust
claim be pled with specificity. High-Tech Employee, 856 F. Supp. 2d at 1122 (alteration
omitted). An antitrust complaint therefore survives a Rule 12(b)(6) motion unless it is apparent
from the face of the complaint that the alleged market suffers a fatal legal defect or the alleged
market definition is facially unsustainable. Id.
The complaint here alleges that the relevant geographic market is the District Corethe
densely populated area of Northwest Washington, D.C. roughly bounded to the northwest by
Rock Creek/Rock Creek Park. Compl. 44. Consumers desiring to see a movie and already
present in the District Core (whether for work, shopping, or some other reason, or because they
live there) generally do not travel outside of this area to attend a theatrical film exhibition, and
11
See E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 442 (4th Cir.
2011) (determining the relevant geographic market is a fact-intensive exercise centered on the
commercial realities of the market and competition); Syufy Enters. v. Am. Multicinema, Inc.,
793 F.2d 990, 994 (9th Cir. 1986) (Relevant market is a factual issue which is decided by the
jury.).
- 23 130984953.1
would not do so even if prices increased a small but substantial amount. Id. 45-46. This
reluctance to travel outside the Core once in it to see a movie is driven by a variety of factors that
differ from consumer to consumer, including the time and expense of traveling farther afield,
the discomfort and uncertainty associated with visiting unfamiliar neighborhoods, the Metroinaccessibility of some theaters outside the zone, and high population density and heavy traffic
congestion in the District Core. Id. 47, 51-52.
These allegations are sufficient to establish the relevant market at this stage of the case.
See, e.g., Cobb Theatres, 101 F. Supp. 3d at 1336 (plaintiff adequately demonstrated why the
market should . . . exclude . . . theatres farther afield from the relevant market but within the
same metropolitan area by alleging that moviegoers in the [alleged relevant market] are not
willing to travel outside of the area to watch movies because of significant population density
and heavy traffic congestion); IHS Dialysis Inc. v. Davita, Inc., 2013 WL 1309737, at *5
(S.D.N.Y. Mar. 31, 2013) (plaintiffs sufficiently pled relevant geographic markets comprised of
distinct subregions of metropolitan areas where plaintiffs alleged consumers were unwilling or
unable to travel long distances to obtain relevant services).
None of Regals arguments supports dismissal. First, Landmark does not admit
(Motion 18) that many other first-run commercial theatres are located right outside the District
Core. To the contrary, the complaint alleges with factual particularity why AMCs Loews
Georgetown 14, AMCs Courthouse Plaza 8 near Arlington, AMCs Uptown 1 in Cleveland Park,
AMCs Mazza Gallerie in Friendship Heights, ArcLights North Bethesda theater, and Regals
Bethesda theater are generally not reasonable alternatives for the theaters in the District Core.
For example, AMCs Georgetown theater has no Metro stop, Compl. 51, and the same is true
for ArcLights North Bethesda theater. The Gallery Place and Atlantic Plumbing theaters are
- 24 130984953.1
within walking distance of vast swaths of the District Core and are also familiar to consumers
therein; neither can be assumed true of theaters in Arlington, Friendship Heights, and Bethesda.
Id. 47. And driving times to theaters outside the District Coreparticularly given heavy traffic
congestionsubstantially exceed the time required to get to theaters within it. Id. 52. Moreover,
that Regal has demanded clearance over Landmarks theaterbut not the other theaters it argues
should be included in the market, see id. 53is further circumstantial evidence that Regal
views Landmarkbut not these other theatersas its competition. See Brown Shoe, 370 U.S. at
325 (boundaries of . . . []market may be determined by examining such practical indicia as
industry or public recognition of the []market as a separate economic entity) (contra Motion 24
n.8). Although a defendants trade area does not by definition constitute a relevant market, here
Regals internal view of competition in the District Core is at least a factor relevant to the
analysis. For Rule 12 purposes, Landmarks detailed factual allegations are sufficient to establish
the plausibility of the District Core as the relevant market.
Next, cherry-picking specific routes, Regal quibbles (Motion 19-21, 23 n.6) that
consumers at the extreme southwest periphery of the relevant market are physically closer to
AMCs Georgetown theater, and have a shorter Metro ride to AMCs Courthouse Plaza theater
in Arlington, than to Regals Gallery Place and Landmarks Atlantic Plumbing; and that
consumers at the extreme northwest periphery are closer to a single-screen theater in Cleveland
Park that shows one movie at a time (AMCs Uptown 1) than they are to Regals Gallery Place.
But relevant market analysis turns on the options available to a substantial number of inmarket consumers, not whether any consumer in the relevant market would have sources outside
the market to turn to in response to an intra-market price increase. A relevant market may
exclude any other [source] to which, within reasonable variations in price, only a limited
- 25 130984953.1
number of buyers will turn. Sysco, 113 F. Supp. 3d at 26-27 (emphasis added) (quoting TimesPicayune Publg Co. v. United States, 345 U.S. 594, 612 n.31 (1953)). In other words, there will
always be fuzziness such as Regal identifies at the periphery of a relevant geographic market.
Conn. Natl Bank, 418 U.S. at 669.12 That a limited number of buyers at the periphery of the
relevant market may consider a few other theaters to be reasonable alternatives does not render
Landmarks relevant market implausible. See Conn. Natl Bank, 418 U.S. at 669-70 (plaintiff
need only delineat[e] the rough approximation of [the relevant] market[]).13 Were it otherwise,
no plaintiff could ever establish a defendants market power through a structural proof.
Regal next points out (Motion 21) that many people live inside the District Core but work
outside it, or vice versa. But Landmark defines the market not as people who live inside the
District Core, but as consumers who already are, or will be, in the District Core when they
want to see a movie. Compl. 46; see, e.g., Quad Cinema, 1983 WL 1822, at *5 (asking what
percentage of patrons of theaters in proposed relevant market lived, worked, or came from some
12
See 2B Areeda 530d (Whatever the market urged . . . , the other party can usually
contend plausibly that something relevant was left out, that too much was included, or that
dividing lines between inclusion and exclusion were arbitrary. The Supreme Court has wisely
recognized there is some artificiality in any boundaries, but that such fuzziness is inherent in
bounding any market.) (footnote omitted) (quoting Phila. Natl Bank, 374 U.S. at 360 n.37).
13
In the cases Regal cites, by contrast, the plaintiff included only a bare allegation of the
relevant geographic market with no supporting facts, Sky Angel U.S., LLC v. Natl Cable
Satellite Corp. (Sky Angel I), 947 F. Supp. 2d 88, 104 (D.D.C. 2013); egregiously
gerrymandered the market to include, for example, only vending machines on a single college
campus, E. Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Assn, Inc., 357 F.3d 1, 7 (1st Cir.
2004); or affirmatively alleged facts that contradicted its proposed relevant market, see Little
Rock Cardiology Clinic PA v. Baptist Health, 591 F.3d 591, 600-01 (8th Cir. 2009); see also, e.g.,
Wampler v. Sw. Bell Tel. Co., 597 F.3d 741, 744-46 (5th Cir. 2010) (alleging that a single
apartment building constituted a relevant geographic market); Concord Assocs. L.P. v. Entmt
Props. Trust, 817 F.3d 46, 53 (2d Cir. 2016) (failing to allege any facts establishing why
Catskills gambling market was local); Apani Sw., Inc. v. Coca-Cola Enters., Inc., 300 F.3d 620,
627 (5th Cir. 2002) (inexplicably excluding non-city-owned facilities from relevant market);
Mathias v. Daily News, L.P., 152 F. Supp. 2d 465, 483 (S.D.N.Y. 2001) (vague and
contradictory allegations of relevant market lacking any facts).
- 26 130984953.1
activity [therein]). This is based on the commonsense assumption, reinforced by decades of

consumer experience, that people do not generally time when they see a movie around their
commutes to and from work and therefore do not consider all theaters near where they work and
live, and in between, when they decide which theater to patronize (contra Motion 21-22). Rather,
whether people spontaneously decide to see a movie, or plan to see one at a certain date and time
(overwhelmingly on Friday nights or the weekend, not when they are going to or from work),
they generally choose from theaters that they are near, or will be near, at the time. This is
common sense. Regals strained theory of consumer decision-making about when and where to
see a movie is at most a factual question that cannot be decided at this stage, especially when
discovery from Regals own marketing files will likely prove just the opposite.14
Finally, Regal essentially argues (Motion 22-23) that all Metro-accessible theaters in the
greater Washington, D.C. area should be included in the relevant market, using cherry-picked
14
This case is nothing like Reading II, on which Regal heavily relies. As an initial matter,
that case was decided on summary judgment. In any event, in that case, the plaintiff admitted
that the zone in which the plaintiffs and defendants theaters were locatedUnion Square in
New York Citywas a destination location for moviegoingthat people commonly traveled
into the zone to see a movie. 2007 WL 39301, at *11-12. Given this admission, the court
reasoned, the defendants theater could not have market power because, [w]ere [it] to raise
prices above market level, these individuals would simply get off the subway a few stops before
or after Union Square and patronize a theater located at one of those stops. Id. Landmark makes
no such admission here.
Moreover, in Reading II, there were numerous other theatres within a short walking
distance from the [zone] in which the plaintiffs and defendants theaters were located,
including one theater literally across the street. Id. at *12. Other than its market-periphery
argument, which fails for the reasons set forth above, Regal does notbecause it cannotargue
that the same is true here. And Landmark has notunlike the plaintiff in Arnett Physician
Group, P.C. v. Greater LaFayette Health Services, Inc., 382 F. Supp. 2d 1092 (N.D. Ind.
2005)failed to refer to the rule of reasonable interchangeability and cross-elasticity of
demand, ignore[d] the commercial realities of the [region], omit[ted] allegations regarding
. . . draw areas or [consumer] flows, or improperly reli[ed] on square mile calculations or
federally recognized [metropolitan statistical areas]. Id. at 1094-95; see Compl. 46-52.
- 27 130984953.1
and self-serving examples that ignore both the allegations in the complaint and common sense.15
Here, Regal posits falsely that the complaint has alleged that cost on the Metro is the only factor
that influences consumers moviegoing choices (Motion 23-24 & n.7). But the complaint clearly
alleges several factors, including time, convenience, and the need to take transportation at all.
See Compl. 46-52. As the leading treatise explains, The number of [firm] A customers who
will shift to firm B depends not only on the objective cost of round-trip transportation (whether
by car, taxi, or bus), but also on their subjective values of time and inconvenience in traveling to
[firm B]. 2B Areeda 553a. The extent to which District Core consumers value convenience
over time, expense, or both are factual issues for exploration through discovery, not
determination as a matter of law at the Rule 12 stage.
In any event, even if the relevant market were expanded to include more remote theaters
on the Metroas Regal suggestsRegal would still have market power. Specifically, even if the
two Arlington theaters on the MetroAMCs Courthouse Plaza 8 and Regals Ballston Common
Stadium 12were included in the relevant market, Regals share would be 65% by screen count.
If AMCs Uptown 1 were added, Regals share would still be 63%. And if Metro-accessible,
first-run commercial theaters in Friendship Heights, Silver Spring, and Bethesda (AMCs Mazza
Gallerie 7, Regals Majestic Stadium 20 & IMAX, and Regals Bethesda 10) were included,
15
For example, Regal speculates, Why would a consumer at Metro Center accept a small
but significant price increase from Regals Gallery Place when she could get to AMCs
Courthouse Plaza 8 in Arlington on the Metro for only $0.15 more than it would cost her to get
to the Gallery Place on the Metro? The answer would appear obvious: most consumers would
likely not take the Metro one stop from Metro Center to Gallery Place; they would walk the halfmile distance and save themselves the full $1.90 Metro fare and the time and hassle of waiting
for and riding trains all the way to Arlington and back. Indeed, few consumers in the District
Core need to take the Metro (or any form of transportation) at all to get to one of the two theaters
in the relevant market (they can walk), whereas most do to get to the theaters in Arlington,
Georgetown, Cleveland Park, Friendship Heights, and Bethesda. Thus, the relative cost of Metro
travel to theaters inside versus outside the District Core (see Motion 23 & n.6) does not
determinatively establish that theaters located outside it must be included in the relevant market.
- 28 130984953.1
Regals share would be 72% by screen count. No matter how narrowly or widely the market is
defined, Regals monopoly power may be inferred from [its] possession of a dominant share of
[the] relevant market. Microsoft, 253 F.3d at 51.16 For purposes of Rule 12, Landmark has
properly alleged both a relevant geographic market and Regals market power within it.
Finally, in a footnote (Motion 17-18 n.4), Regal half-heartedly suggests that Landmark
has not plausibly alleged a relevant product market because it has defined the relevant product as
desirable, commercial, first run, feature-length motion pictures. Compl. 2. The reference in
this allegation to desirable simply distinguishes the product at issuemainstream, widerelease commercial filmsfrom art or specialty films that are not distributed on a wide-release
basis. See id. 31. Wide release is a term well understood in the film industry. As the
complaint alleges, wide-release films are produced to appeal to a wider and more general
audience than audiences for specialty films like art films. Id. These allegations of lack of
16
See S. Pac. Commcns Co. v. Am. Tel. & Tel. Co., 556 F. Supp. 825, 878 n.48 (D.D.C.
1982) (something more than 50% of the market is a prerequisite to a finding of monopoly
through circumstantial evidence), affd, 740 F.2d 980 (D.C. Cir. 1984); see, e.g., Am. Tobacco
Co. v. United States, 328 U.S. 781, 797 (1946) (defendants share of over two-thirds of the
entire [relevant market] sufficient to establish monopoly power); Baxley-DeLamar Monuments,
Inc. v. Am. Cemetery Assn, 843 F.2d 1154, 1156-57 (8th Cir. 1988) (57% market share
sufficient in light of other indicia of market power).
Regals monopoly share of the relevant market necessarily satisfies the lower shares
required to establish the dangerous probability of success element of Landmarks Section 2
attempted monopolization claim and the market power element of Landmarks Section 1
claim. See Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1438 (9th Cir. 1995); Visa, 344 F.3d
at 239-40 (26% share was large enough share of the relevant market to establish market power
required for Section 1 claim).
- 29 130984953.1
interchangeability between commercial and specialty films render the relevant product market
plausible.17
3.
The Complaint Alleges Exclusionary Conduct by Regal that Has

Harmed Competition and ConsumersNot Just Landmark
The rule-of-reason test is a complex burden-shifting framework . . . that does not lend
itself to resolution on a motion to dismiss. Reading I, 317 F. Supp. 2d at 321. Under this
framework, the plaintiff must first demonstrate that the defendants conduct harmed competition.
Microsoft, 253 F.3d at 58-59. If it does, then the monopolist may proffer a procompetitive
justification for its conduct. Id. at 59. If it does, then the burden shifts back to the plaintiff to
rebut that claim or to demonstrate that the anticompetitive harm of the conduct outweighs the
procompetitive benefit. Id.
Regals arguments that Landmark has failed to allege exclusionary conduct or harm to
competition ignores the allegations themselves. First, Regal argues, its clearance agreements
with distributors are at most, a form of exclusive distributorship, which agreements are
treated as presumptively legal under the antitrust laws. Motion 29 (quoting E & L Consulting,
Ltd. v. Doman Indus. Ltd., 472 F.3d 23, 30 (2d Cir. 2006) (quoting Elecs. Commcns Corp. v.
Toshiba Am. Consumer Prods., Inc., 129 F.3d 240, 245 (2d Cir. 1997))). But no presumption of
legality applies to cases like this in which [t]he facts . . . [a]re quite different from the claim in
a typical exclusive distribution case [such as E & L]. Id. at 31; see Republic Tobacco Co. v. N.
Atl. Trading Co., 381 F.3d 717, 736-37 (7th Cir. 2004) (distinguishing between typical story of
17
See, e.g., Syufy, 793 F.2d at 994-95 (sufficient record evidence supported jury conclusion
that industry anticipated top-grossing films constitute a distinct product market); Quad
Cinema, 1983 WL 1822, at *8 (upholding jury finding that the appropriate market for purposes
of analyzing the reasonableness of the Loews policy is that of feature first run films with a high
grossing potential, and not the entire universe of films produced for general exhibition). Contra,
e.g., Sky Angel I, 947 F. Supp. 2d at 102-03 (complaint completely failed to allege lack of
interchangeability between products within and outside alleged relevant market).
- 30 130984953.1
a legitimate vertical transaction in which the manufacturer sought exclusivity in exchange for
what it hoped would be more effective promotion of its goods and vertical restraints
implemented by a number of manufacturers at the behest of a dominant retailer to insulate the
retailer from competition from other retailers) (quoting Toys R Us, Inc. v. FTC, 221 F.3d 928,
936 (7th Cir. 2000)); see Toys R Us, 221 F.3d at 930. Here, a dominant film exhibitor has
coerced all of the major distributorscontrary to their own economic interests in day-and-date
play, see Compl. 82to deal only with it for film exhibition in the relevant market. This case
is simply not a plain-vanilla exclusive distributorship case, and Regals case law is therefore
inapposite.
Indeed, the U.S. Supreme Court has explicitly identified numerous ways that vertical
intrabrand restraints such as the clearances at issue herefar from being presumptively
legalmay have anticompetitive effects. Leegin, 551 U.S. at 892. They might be used to
organize cartels at the retailer level, id. at 893, oras hereabused by a powerful . . . retailer
. . . to forestall innovation in distribution . . . . A manufacturer might consider it has little choice
but to accommodate the retailers demands for vertical [intrabrand] restraints if the manufacturer
believes it needs access to the retailers distribution network. Id. at 893-94. As the Leegin Court
explained, [i]f there is evidence retailers were the impetus for a vertical [intrabrand] restraint,
there is a greater likelihood that the restraint . . . supports a dominant, inefficient retailer and
thus harms competition. Id. at 897-98; see Toys R Us, 221 F.3d at 938 (where manufacturers
want[] a business strategy under which they distribute[] their [products] to as many different
kinds of outlets as w[ill] accept them, then the typical rationale for finding exclusive
distributorship agreements harmless does not apply); Babyage.com, 558 F. Supp. 2d at 583.
- 31 130984953.1
That is precisely what Landmark alleges here. Regal and Landmark are essentially
retailers of first-run, commercial film, and film distributors are akin to manufacturers. Regal
has demanded that all of the film distributors grant it exclusive licenses to their product, to the
exclusion of Landmark, in order to forestall [Landmarks] innovation in film exhibition
namely, the higher quality, lower prices, and new moviegoing experience Landmark has
introduced into the market. Leegin, 551 U.S. at 892-93. In responseand despite their contrary
economic interest in licensing films to both Regal and Landmarkthe distributors have
overwhelmingly complied, licensing the vast majority of their commercial product to Regal and
refusing to license it to Landmark. This has cut Landmark off from the vital inputs it needs to
stay in business and to make its higher-quality, lower-priced, more innovative product available
to consumers. Free of competitive pressure from Landmark, Regal can complacently force on
consumers its old, worn-out theater and high prices and avoid the costs of innovating and cutting
pricesi.e., the costs of competitionthat it would otherwise incur in a competitive market.18
18
See Quad Cinema, 1983 WL 1822, at *8 (web of clearance agreements such as Regal has
orchestrated here has the potential to foreclos[e] a significant portion of the first multiple run
feature market, thereby restraining the ability of independent exhibitors to enter and compete in
the first run exhibition market); see, e.g., Reading I, 317 F. Supp. 2d at 320 (rejecting Regals
argument that, because clearance agreements are analogous to [exclusive distributorship]
agreements, they should be considered per se permissible; [t]he policy of granting exclusive
clearances to Regal . . . is . . . simply not one that appears always or almost always to enhance
competition, and therefore to warrant a legal presumption without any evidence of its actual
economic impact) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 479
(1992)).
- 32 130984953.1
Regal insists (Motion at 26-28 & n.11) that what is really going on here is that the
distributors have decided to put their films out to competitive bidding between Regal and
Landmark for exclusive exhibition rightsas was common fifty or sixty years ago and described
in A.L.B. Theatre Corp. v. Loews, Inc., 355 F.2d 495, 501 (7th Cir. 1966), and Orbo Theatre
Corp. v. Loews Inc., 156 F. Supp. 770, 772 (D.D.C. 1957)and thus increased competition for
films. Here, Regal ignores the factual allegations in the complaint: Landmark was not even given
an opportunity to negotiate with Disney for Star Wars, or Lionsgate for Hunger Games, for
example. Compl. 68-69. Landmark expressed its interest in licensing these films, and the
distributors flat-out denied Landmark a licensewithout engaging in any discussions or
allowing Landmark to try to outbid Regal (Motion 27)on the sole ground that they had
already agreed to license the films exclusively to Regal. Compl. 68-69; see id. 72.19 That is
not competition for films or competition to obtain the exclusive contract (Motion at 27 (citing
inapposite cases in which the plaintiff was given the opportunity to compete for the exclusive
contract)). It is the leveraging of Regals power over distributors to deny Landmark access to the
inputs it needs to compete, and the distributors reluctant agreement to Regals demands. [I]t is
Regal appears to argue (Motion 26) that, because some distributors have licensed some B
and C product to Landmark, Landmark has not been excluded from the market or prevented from
competing with Regal for patrons. This argument is without merit. Defendants cannot seriously
contend dismissal is warranted by pointing out that [plaintiff] was given crumbs when the
Complaint alleges [defendant] was given the rest of the pie. Cobb Theatres, 101 F. Supp. 3d at
1331 n.4; see 3 Areeda 651b5 (Of course, the law has never required complete market
exclusion as a prerequisite to suit.); Seven Gables, 1987 WL 56622, at *4 (denying summary
judgment where material dispute of fact existed as to whether plaintiff was deprived . . . of a
fair opportunity to rent the films which consistently generated 80%-90% of all exhibition
revenues).
19
In its Summary of Argument (Motion 3), Regal improperly counter-alleges that
Landmark often has not made sufficiently attractive offers to convince distributors to license
their films to the Atlantic Plumbing rather than to the Gallery Place. This allegation is found
nowhere in the complaint and is contradicted by the complaints allegations that Landmark was
not even given the opportunity to negotiate for the films distributors agreed to license exclusively
to Regals Gallery Place.
- 33 130984953.1
difficult to see how a blanket refusal by distributors to consider plaintiffs venue could possibly
be considered procompetitive. Reading I, 317 F. Supp. 2d at 321.20
Nor is this a situation where consumers are merely unable to buy the same product from
a different seller (Motion 26; see id. at 33). Regals theater sells out at prime showtimes.
Compl. 77. In those cases, the product consumers want is not available at all in the market.
Regals only response (Motion 33) is that consumers in the District Core can go to any of the
theaters in greater Washington, D.C. to see the film of their choice. But that is just a recycling of
Regals relevant market argument, and it ignores the bedrock antitrust law that forcing
consumers to travel well outside their marketat considerable inconvenience and expenseto
get access to the product they desire does harm their welfare.
Nor is Regals blanket clearance particularly limited (Motion 30). True, it covers only
first runs (id.), but as the complaint alleges, a films first run typically is its only theatrical run.
Compl. 25 (emphasis added). As such, [a]n exhibitor [like Landmark] who cannot obtain
license rights to a film for first run likely will never have access to the film, or will have access
to it only after its theatrical exhibition value has been virtually exhausted. Id. 26. Regal also
maintains (Motion 30) that the clearance at issue is limited because it purportedly applies
only to a single film and covers a limited geographic area. But the clearance at issue here
20
See Six W. Retail Acquisition, Inc. v. Sony Theatre Mgmt. Corp., 2004 WL 691680, at *89 (S.D.N.Y. Mar. 31, 2004) (exhibitor and distributor relationships might violate Section 1 if
they involve . . . rejection out-of-hand of competing exhibitors offers without any on-themerits determination); see, e.g., Movie 1 & 2 v. United Artists Commcns, Inc., 909 F.2d 1245,
1251 (9th Cir. 1990) (refusal by distributors to receive bids from independent film exhibitor
raised inference of anticompetitive conduct); William Goldman Theatres v. Loews, Inc., 150
F.2d 738, 745 (3d Cir. 1945); A.L.B., 355 F.2d at 502 (reversing judgment for defendant
exhibitor where the distributors had contracted all licenses for first run pictures to a single
exhibitor and denied the plaintiff the right to compete for the product at all). Compare, e.g.,
Theee Movies of Tarzana v. Pac. Theatres, Inc., 828 F.2d 1395, 1400 (9th Cir. 1987) ([plaintiff]
acknowledged its movie bids were lower than the [defendants] and it did not make the
changes in its theater facility or equipment necessary to compete in the market).
- 34 130984953.1
applies to each and every film distributed in the District CoreRegal has refused to play all
movies day and date with Landmark. That is not an exclusive license on a specific film; it is a
blanket clearance. Finally, as discussed in Subsection III.B.2, supra, the clearance covers an
entire relevant antitrust market.21
Finally, Regal makes the preposterous suggestion (Motion 28) that Landmark should
have built a bigger theater so that it could have exerted the same leverage over distributors that
Regal can, and that its failure to do so somehow constitutes an unwillingness to compete. But
bullying ones suppliers and threatening to deprive them of resources it can offer solely by virtue
of its sheer sizein order to drive its competitor out of businessis not competition; it is
monopolization. See United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).
4.
Regals Blanket Clearance Agreements Have No Procompetitive

Justification
Regal argues that its blanket clearance agreements are presumptively and generally
procompetitive because they promote interbrand competition (competition between different
21
Orbo Theatre is inapposite. In that case, the plaintiffa second-run, neighborhood

theater in Rockville, Marylandessentially sought clearance or exclusivity over other secondrun theaters in its vicinity by demanding that it be granted first-run licenses while all other
neighborhood theaters continue not to be licensed films until 14 to 21 days after they had played
on first run in the city. 156 F. Supp. at 772-74. The plaintiff sought this preferential treatment
because it wanted protection over the [nearby Rockville] Drive-In Theaternamely, the
ability to play films exclusively at its theater for weeks prior to the drive-in. Id. at 774. After a
trial on the merits, the court denied the plaintiffs request. The relief the plaintiff sought posed a
problem for the distributors because it was essentially a request to discriminate against the
Drive-In Theater and would have created pressure on the part of theaters in Bethesda, Silver
Spring and Wheaton for similar treatment and, [i]n turn, . . . repercussion from neighborhood
houses in Washington. Id. In contrast, here, Landmark is not seeking exclusivity, clearance, or
preferential treatment. Regal is.
Moreover, the Orbo Theatre court was concerned about ordering distributors to license
films to the plaintiff when they had determined, in their own independent judgment, not to. See
id. at 779; see also, e.g., Six W. Retail, 2004 WL 691680, at *10 (same). Those concerns do not
apply here, where Landmark is requesting only that Regal be enjoined from forcing clearance
agreements on distributors. See, e.g., iPic-Gold Class Entmt, LLC v. Regal Entmt Grp., No.
2015-68745 (Tex. Dist. Ct. 234th Jan. 21, 2016) (attached hereto as Ex. A) (granting the same
injunctive relief against Regal in favor of another independent theater as Landmark seeks here).
- 35 130984953.1
films) at the expense of intrabrand competition (competition between two theaters to show the
same films) and have a number of other purported procompetitive effects. This ipse dixit
assumes precisely what the fact-intensive, burden-shifting rule-of-reason framework is designed
to determine at much later stages of the case: whether the obvious restraint on competition
between Regal and Landmark occasioned by Regals clearances (which Regal concedes) is
outweighed by Regals proffered procompetitive justification[s]. Microsoft, 253 F.3d at 59. It
is for the jurynot this Court on a motion to dismissto decide whether Regals proffered
justifications for its clearances are a []pretext[], or whether the anticompetitive harm of the
conduct outweighs the procompetitive benefit. Id.22
The complaints allegations raise a more-than-plausible inference that Regals blanket
clearance agreements serve no procompetitive purpose. They cannot be justified by a need to
prevent Landmark from free-riding off of Regals film-specific promotional investments.
Today, there are none. [S]ubstantial promotional expenditures by exhibitors are rare;
distributors take substantially all responsibility for, and incur virtually all costs associated with,
22
See, e.g., Reading I, 317 F. Supp. 2d at 320-21 (rejecting the same argument Regal makes
here because it is a contestable question of fact whether the exclusive agreements in question
have actually increased competition between different [top commercial films]especially given
the allegation that plaintiffs are denied access to [top commercial films] altogether); Seven
Gables, 1987 WL 56622, at *4-5 (denying summary judgment and rejecting argument that
exclusivity agreements, although reducing intrabrand competition (i.e., competition between
exhibitors), promoted interbrand competition (i.e., competition between distributors) because
plaintiff has presented evidence which indicates that the defendant exhibitors intentionally used
their [agreements with distributors] to gain preferential treatment and to put [plaintiff] at a
competitive disadvantage and defendants presented no evidence that interbrand competition
was promoted).
- 36 130984953.1
advertising their films. Compl. 33; see id. 84.23 Nor, todayand contrary to the facts in
Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1362-63 (3d Cir. 1996), Theee Movies, 828
F.2d at 1399-1400, and Reading II, 2007 WL 39301, at *10does limiting the number of prints
delivered to exhibitors in a given city meaningfully reduce a film distributors costs. To the
contrary, [d]igital distribution of film has substantially lowered the marginal cost to a distributor
of distributing films and has thus obviated this justification for clearances that existed at the
time these cases were decided. Compl. 34; see id. 85.
Similarly, [g]uaranteed minimum[s] the theater will pay the distributor regardless of the
movies success, Theee Movies, 828 F.2d at 1397, and house allowances, Orson, 79 F.3d at
1362; Reading II, 2007 WL 39301, at *10two idiosyncrasies of film distribution that at one
time bore on the reasonableness of clearanceshave also been phased out. And unlike the
limited-release art films at issue in Orson, see 79 F.3d at 1362, or films generally in the 1950s,
see Orbo Theatre, 156 F. Supp. at 772, today, most distributors have adopted a wide release
strategy for the majority of their commercial filmsthe product at issue here. Compl. 35; see
id. 31. [W]e may reasonably doubt a dealer[s] claim that intrabrand competition must be
restrained in order to achieve effective distribution. If that were so, the manufacturer would
presumably impose the restraint itself. 8 Areeda 1604c2.
Regal also errs in contending that clearances are necessary to ensure that [Regal]s
income from a film will not be greatly diminished because the film is also being shown at
[Landmarks] theater (Motion 30 (quoting Reading II, 2007 WL 39301, at *14, and citing Theee
23
By contrast, Paddock Publications, Inc. v. Chicago Tribune Co., 103 F.3d 42, 47 (7th
Cir. 1996), Theee Movies, 828 F.2d at 1399, and Ralph C. Wilson Industries, Inc. v. American
Broadcasting Cos., 598 F. Supp. 694, 706 (N.D. Cal. 1984)in which the courts acknowledged
the anti-free-rider justificationwere decided on full factual record 20 to 30 years ago. They do
not constitute a judicial finding about the economics of modern film distribution.
- 37 130984953.1
Movies, 828 F.2d at 1399)). First, this justification (I need to restrict all of my suppliers and
competitors freedom of action to ensure that I make as much money as I can) is not a
cognizable defense under the antitrust laws, which are in place to encourage competition, not
protect behemoths like Regal. Second, Regals concerns about diverted income are overstated.
Landmark has added a mere 344 seats to the 3,350 seats Regal already had in the zone; Regal
sells out of showtimes anyway; and Regal played day and date with an even larger, closer, and
more similar competitorthe Union Station 9for five years before that theater closed. Compl.
39, 41, 65, 77. And as discussed in Section III.A, supra, Landmarks and Regals theaters are
not in substantial competition. Regals theater thus does not need protection from attendance
loss. The limited circumstances under which this justification could conceivably applywhere a
small new entrant, introducing new competition into the market, needs the guarantee of
exclusivity in order to recoup its initial investmentis inapplicable here, where Regal has been
dominating the relevant market for years. Contra, e.g., Theee Movies, 828 F.2d at 1399
(clearance justified in part to enable defendant to recoup its investment).
Nor does forcing Landmark to play movies other than those playing at Regals theater
promote competition by increasing variety or diversity. First, the clearance is running
Landmarks theater out of business. Compl. 62, 88. Any hypothetical increased variety of
films offered in the District Core is thus a short-term effect that will be eliminated when
Landmark is forced to close its doors. Second, while Landmark has managed to license a few B
and C commercial films, it has been largely forced to play [s]ub run, specialty, and other noncommercial films that are not an adequate substitute for first run commercial films from a
consumers perspective. Compl. 86; see id. 31, 87. Stocking the shelves with brands that
few consumers want does not enhance consumer welfare in any sense meaningful to the antitrust
- 38 130984953.1
laws. See Reading I, 317 F. Supp. 2d at 321. Third, the marketnot dominant exhibitors like
Regalcan and should decide how much variety or diversity is required to serve the
antitrust laws goal of maximizing consumer welfare.
In sum, the complaints allegationswhich must be taken as true at this stagesupport a
plausible inference that Regals proffered procompetitive justifications are a sham and that any
theoretical benefit from its blanket clearance are dwarfed by its anticompetitive effects. See
Microsoft, 253 F.3d at 59.
C.
The Complaint Adequately Alleges Classic Unlawful Clearance Agreements

Between Regal and the Film Distributors
Landmarks Section 2 claims survive regardless of whether it has plausibly alleged

concerted action between Regal and the distributors. But Landmark has pled concerted action
and thus stated a Section 1 violation too.
A Section 1 claim requires an allegation of an agreement, tacit or express. Osborn v.
Visa Inc., 797 F.3d 1057, 1066 (D.C. Cir. 2015) (citation omitted) (reversing district courts
order dismissing complaint); Halberstam v. Welch, 705 F.2d 472, 477 (D.C. Cir. 1983) (same).
Courts therefore have . . . allowed inferences [to be] fairly drawn from the behavior of the
alleged conspirators to prove conspiracy. Jung, 300 F. Supp. 2d at 158 (quotation marks
omitted); see Loews, Inc. v. Cinema Amusements, Inc., 210 F.2d 86, 93 (10th Cir. 1954) (same).
The complaint need allege only plausible grounds to infer an agreementnot a
probability that there was one. Twombly, 550 U.S. at 556. Nor is the plaintiff required to
eliminate the possibility of independent action to survive defendants motions to dismiss, even
if defendants allegations are also plausible. Oxbow Carbon, 81 F. Supp. 3d at 13 & n.9
(denying motion to dismiss; defendants argument that their conduct was entirely consistent
with and fully explained by natural market forces did not render inference of agreement
- 39 130984953.1
implausible); see Jung, 300 F. Supp. 2d at 158-59. The complaint also need not identify a
specific time, place, or person involved in the alleged conspirac[y] or when and where the
illicit agreement took place. Oxbow Carbon, 81 F. Supp. 3d at 12 (citing Twombly, 550 U.S. at
565 n.10).24
Landmarks complaint satisfies these standards. It alleges that Regal, in response to
Landmarks opening the Atlantic Plumbing theater, asked each distributor to agree to license its
commercial films exclusively to Regals Gallery Place theater and not to license them to
Landmarks theater. Compl. 66. Regal threatened to retaliate against any distributor that did not
agree to the proposed exclusive licensing scheme by refusing to play the distributors films at the
Gallery Place. Id. In response, distributorscontrary to their own economic interests
overwhelmingly agreed to Regals request for clearance by agreeing to license virtually all of
their top commercial films exclusively to Regal, without even permitting Landmark to bid for the
licenses. See id. 68-69 (detailing specific examples of films that distributors refused to
license . . . to Landmarks Atlantic Plumbing theater, and agreed to license . . . exclusively to
Regals Gallery Place).25
These are not vague and conclusory allegations that unnamed Does authorized or
ratified Regals conduct or that Regal vaguely acted in concert with film distributors. Cheeks
v. Fort Myer Constr. Corp., 71 F. Supp. 3d 163, 172 (D.D.C. 2014); Sky Angel U.S., LLC v. Natl
24
See City of Moundridge v. Exxon Mobil Corp., 250 F.R.D. 1, 3 (D.D.C. 2008) (Twombly
did not purport to require a heightened fact pleading of specifics.) (citations and quotation
marks omitted). Contra Starlight Cinemas v. Regal Entmt Grp., 2014 WL 7781018, at *1-2
(C.D. Cal. Oct. 23, 2014) (applying California state pleading standards, which demand[] a high
degree of particularity) (cited at Motion 13), on appeal, No. 15-55217 (9th Cir. 2015); Motion
13 (incorrectly arguing that Landmark must plead facts . . . such as the time, place, or manner of
the alleged agreements).
25
Regal thus mischaracterizes the complaint when it asserts (Motion 14) that there is not a
single factual allegation regarding any purported agreement that a distributor would not license a
film to the Atlantic Plumbing if that film was licensed to the Gallery Place.
- 40 130984953.1
Cable Satellite Corp., 33 F. Supp. 3d 14, 20-21 (D.D.C. 2014). Nor are they mere legal
conclusions that Defendant demand[ed], and distributors agree[d] to exclusivity provisions.
Starlight Cinemas, 2014 WL 7781018, at *1. They are detailed facts that plausibly suggest
concerted action. See, e.g., Reading II, 2007 WL 39301, at *15 (holding that [a] reasonable jury
could infer from evidence . . . that films playing at [Regals theater] d[id] not play
simultaneously at [plaintiffs], and have not since [Regals theater] opened for business that
distributors have agreed with Regal not to license movies day and date to [plaintiffs
theater]).26 Indeed, [i]t is difficult . . . to surmise what more [Landmark] could offer before
discovery has commenced. Oxbow Carbon, 81 F. Supp. 3d at 11-12.
Roughly seventy years of movie industry case law has recognized that requests for
clearance such as Regal made here, when honored by distributors (as here), are agreements.
See, e.g., Schine, 334 U.S. at 121 (Clearance is an agreement by distributor not to exhibit a film
nor to license others to do so within a given area and for a stated period after the last date of the
showing of the film by the licensee with whom the agreement is made.); Paramount, 334 U.S.
at 145 (clearances are assurance[s] . . . give[n] the exhibitor that the distributor will not license a
competitor to show the film either at the same time or so soon thereafter that the exhibitors
expected income from the run will be greatly diminished); Theee Movies, 828 F.2d at 1399
(clearances are agreements between [the requesting theater] and each distributor); Seven
Gables, 1987 WL 56622, at *9 (explaining that clearances are arrangements whereby
26
See also, e.g., Cobb Theatres, 101 F. Supp. 3d at 1327, 1331 (plaintiff plausibly alleged
clearance agreements by alleging that defendant sent letter to distributors announcing no-dayand-date policy, and in response and as a result, distributors began allocating [to plaintiffs
theater] fewer high-grossing, popular films); Quad Cinema, 1983 WL 1822, at *1, *7 (denying
motion for summary judgment in case challenging defendants announced no-day-and-date
policy; jury could reasonably infer, at the least, an implicit contract or agreement between
Loews and the various distributor defendants with respect to the Loews clearance policy).
- 41 130984953.1
distributors agree not to license a film to play at the same time (day-and-date) in theaters
operated by exhibitors other than the exhibitor to whom the film is licensed). These cases
recognize clearances as agreements for good reason: implicit in each distributors grant of an
exclusive film license to Regal is its agreement not to license that same film to Landmark.
To prevail on its motion to dismiss, it is not enough for Regal to advance an alternative
(self-serving) interpretation of the alleged conductwhich is all that it has done.27 This court has
made clear that at the Rule 12 stage, Landmarkunlike the plaintiff at trial in Monsanto Co. v.
Spray-Rite Serv. Corp., 465 U.S. 752 (1984)need not rule out independent action at this
stage; indeed, even if an inference of unilateral conduct is more probable than an inference of
agreement, Landmarks complaint still survives. Oxbow, 81 F. Supp. 3d at 13.28 Landmark need
only allege facts from which an inference of agreement is plausible. Oxbow, 81 F. Supp. 3d at 13.
Nothing more is required.
IV.
THE COMPLAINT ADEQUATELY ALLEGES VIOLATIONS OF D.C. LAW

Regal concedes that Landmarks claims under D.C. Code Sections 28-4502 and 28-4503
rise or fall with Landmarks Sherman Act claims. See Mazanderan v. Indep. Taxi Owners Assn,
700 F. Supp. 588, 591 n.9 (D.D.C. 1988). Because the complaint adequately alleges violations of
Sherman Act Sections 1 and 2, its claims under D.C. antitrust law also survive. See, e.g., GTE
27
See Motion 2 (suggesting that the alleged conduct can be explained as a unilateral
decision by Regal about how to exhibit films at the Gallery Place and unilateral decisions by
distributors about whether to license a given film to the Atlantic Plumbing or the Gallery Place in
reaction to Regals position); id. at 14-16 (arguing that the alleged facts are at least as
consistent with unilateral conduct).
28
See Quad Cinema, 1983 WL 1822, at *2 (Special caution should be exercised in a
complex antitrust action such as this, where motive and intent are so difficult to prove, and where
the line between legitimate, independent business behavior and an unlawful contract or
conspiracy in restraint of trade is often thin and wavering.); see, e.g., United States v. Apple Inc.,
952 F. Supp. 2d 638, 690 (S.D.N.Y. 2013) (denying motion to dismiss; existence of a conspiracy
need not be the sole inference to be drawn from the evidence); In re Lithium Ion Batteries
Antitrust Litig., 2014 WL 4955377, at *39 (N.D. Cal. Oct. 2, 2014) (denying motion to dismiss;
allegations need not disprove possibility of innocuous conduct).
- 42 130984953.1
New Media Servs., 21 F. Supp. 2d at 45 (denying motion to dismiss D.C. Code claims because
plaintiff properly alleged Sherman Act Section 1 and 2 claims).
Landmark also adequately pleads a claim for tortious interference with business relations.
The only argument Regal makes for dismissing this claim is that Landmark has failed
successfully to allege any federal or state antitrust claim and therefore has failed to allege the
intentional interference element of tortious interference (Motion 35). Because Landmarks
antitrust claims survive Regals motion to dismiss, its tortious interference claim does too.29
CONCLUSION
For the foregoing reasons, Regals motion to dismiss should be denied. In the alternative,
Landmark respectfully requests that this Court grant Landmark leave to amend.
29
Regal incorrectly states (Motion 35) that Landmark must allege wrongful or
improper conduct to state a tortious interference claim. Last year, the D.C. Circuit abrogated
the cases on which Regal relies and clarified that a plaintiff may allege inducement by any
conduct conveying to the third person the [defendant]s desire to influence him not to deal with
the [plaintiff]. Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1136 (D.C. Cir. 2015).
Landmark without question alleges that here.
- 43 130984953.1
Dated: May 19, 2016
Respectfully submitted,
PERKINS COIE LLP
By:/s/ Barry J. Reingold
Barry J. Reingold
D.C. Bar No. 942086
BReingold@perkinscoie.com
700 Thirteenth Street, N.W., Suite 600
Washington, D.C. 20005-3960
Telephone: 202.654.6200
Facsimile: 202.654.6211
Thomas L. Boeder
Admitted Pro Hac Vice
TBoeder@perkinscoie.com
1201 Third Avenue, Suite 4900
Seattle, WA 98101-3099
Telephone: 206.359.8000
Facsimile: 206.359.9000
Catherine S. Simonsen
Admitted Pro Hac Vice
CSimonsen@perkinscoie.com
1888 Century Park East, Suite 1700
Los Angeles, CA 90067-1721
Telephone: 310.788.3332
Facsimile: 310.788.3399
Attorneys for Plaintiff Silver Cinemas
Acquisition Co. dba Landmark Theatres
- 44 130984953.1
CERTIFICATE OF SERVICE
I certify that on May 19, 2016, I caused the foregoing document to be electronically filed
with the Clerk of the Court using the CM/ECF system, which will automatically send email
notification of such filing to all attorneys of record.
By:
- 45 130984953.1
/s/ Barry J. Reingold

Barry J. Reingold
Case 1:16-cv-00123-CRC Document 17-1 Filed 05/19/16 Page 1 of 4
EXHIBIT A
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA
SILVER CINEMAS ACQUISITION CO. DBA
LANDMARK THEATRES,
Plaintiff,
Civil Action No. 1:16-cv-123 (CRC)
v.
REGAL ENTERTAINMENT GROUP; REGAL
ENTERTAINMENT HOLDINGS, INC.; REGAL
ENTERTAINMENT HOLDINGS II, LLC; REGAL
CINEMAS CORPORATION; REGAL CINEMAS
HOLDINGS, INC.; REGAL CINEMAS, INC.;
REGAL CINEMAS II, LLC and REGAL GALLERY
PLACE LLC,
Defendants.
[PROPOSED] ORDER
Upon consideration of the Regal Defendants Motion to Dismiss the Amended Complaint
and the contemporaneously filed Memorandum of Law in support thereof; Landmarks
Memorandum of Points and Authorities in Opposition to Regals Motion to Dismiss; and any
reply, it is hereby ORDERED that the motion is DENIED.
SO ORDERED.
Dated: __________________
_____________________________
Honorable Christopher R. Cooper
United States District Judge

Landmark Response To Regal's Motion To Dismiss

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Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 1 of 54

UNITED STATES DISTRICT COURT

Civil Action No. 1:16-cv-123 (CRC)

REGAL ENTERTAINMENT GROUP; REGAL

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 2 of 54

MOTION TO DISMISS STANDARD ................................................................... 8

THE COMPLAINT ADEQUATELY ALLEGES PER SE

THE COMPLAINT ADEQUATELY ALLEGES NONCIRCUIT DEALING-BASED VIOLATIONS OF THE

Regals Blanket Clearance Fails the Paramount

The Complaint Adequately Alleges Sherman Act

The Complaint Alleges Direct Evidence of

The Complaint Alleges Circumstantial

The Complaint Alleges Exclusionary

Regals Blanket Clearance Agreements

The Complaint Adequately Alleges Classic

THE COMPLAINT ADEQUATELY ALLEGES

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 3 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 4 of 54

Cloverleaf Enters., Inc. v. Md. Thoroughbred, Horsemens Assn,

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 5 of 54

Image Tech. Servs., Inc. v. Eastman Kodak Co.,

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 6 of 54

Orbo Theatre Corp. v. Loews Inc.,

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 7 of 54

Seven Gables Corp. v. Sterling Recreation Org. Co.,

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 8 of 54

United States v. Griffith,

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 9 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 10 of 54

In October of 2015, Landmark Theatres, an independent film exhibition company,

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 11 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 12 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 13 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 14 of 54

example, when Landmark sought to negotiate a license to exhibit Disneys mega-blockbuster

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 15 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 16 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 17 of 54

MOTION TO DISMISS STANDARD

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 18 of 54

THE COMPLAINT ADEQUATELY ALLEGES PER SE ILLEGAL CIRCUIT

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 19 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 20 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 21 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 22 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 23 of 54

Regals Blanket Clearance Fails the Paramount Substantial Competition Test

Landmarks attempted monopolization claim also requires an allegation of Regals intent

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 24 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 25 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 26 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 27 of 54

The Complaint Adequately Alleges Sherman Act Violations Under the

As discussed above, Landmarks allegation of no substantial competition is not

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 28 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 29 of 54

The Complaint Alleges Direct Evidence of Regals Market Power

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 30 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 31 of 54

The Complaint Alleges Circumstantial Evidence of Regals Market

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 32 of 54

Case 1:16-cv-00123-CRC Document 17 Filed 05/19/16 Page 33 of 54