Interstate Circuit, Inc. v. United States Case Brief Summary | Law Case Explained

Interstate Circuit, Inc. v. United States | 306 U.S. 208 (1939)

Conspiracies are meant to be secret. Consequently, the prosecution can’t often rely on direct evidence when it brings criminal-conspiracy charges. In Interstate Circuit versus United States, the United States Supreme Court considered whether the government had met its burden to establish a conspiracy in violation of antitrust laws.

Interstate Circuit and Texas Consolidated Theaters, whom we’ll collectively call Interstate, were affiliated motion-picture exhibitors who together owned multiple first-run and second-run theaters in cities throughout Texas. Interstate dominated the motion-picture business in the areas where it operated. Interstate’s theaters showed films supplied by eight movie distributors, who collectively distributed about 75 percent of the top feature films exhibited in the country. Interstate faced competition from subsequent-run theaters that charged lower admission prices.

R.J. O’Donnell, Interstate’s general manager, sent a letter to each of the eight distributors asking them to comply with two demands as a condition of Interstate continuing to show the distributors’ films in its first-run theaters. O’Donnell’s letter named all of the distributors as addressees. The letter demanded that the distributors agree that the first-run films that Interstate showed would never be distributed for subsequent runs to any theater that charged less than twenty-five cents admission, or exhibited as part of a double feature. At the time, most independent subsequent-run theaters charged less than twenty-five cents for admission, and showing double features was standard practice on certain days of the week. But the distributors agreed to O’Donnell’s demands and imposed these restrictions on the subsequent-run theaters they licensed their films to.

Interstate and the eight distributors were charged with violating section one of the Sherman Anti-Trust Act, which prohibits engaging in a combination or conspiracy in restraint of interstate commerce. The trial court found that the distributors had agreed and conspired with each other and with Interstate to take concerted action by imposing Interstate’s demands on subsequent-run theaters. Further, the trial court concluded as a matter of law that entering into and carrying out these agreements constituted a combination and conspiracy in restraint of interstate commerce in violation of the Sherman Act. The trial court issued an injunction restraining the distributors from continuing to enforce the restrictions or their distribution agreements with Interstate. The distributors and Interstate appealed to the United States Supreme Court, arguing that the evidence didn’t support the trial court’s findings.

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