Cinema Village Cinemart, Inc. v. Regal Entertainment Group

16-3484
Cinema Village Cinemart, Inc. v. Regal Entertainment Group

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 21st day of September, two thousand seventeen.

PRESENT:
ROBERT A. KATZMANN,
Chief Judge,
ROBERT D. SACK,
PETER W. HALL,
Circuit Judges.

CINEMA VILLAGE CINEMART, INC.,

Plaintiff-Appellant,

v. No. 16-3484

REGAL ENTERTAINMENT GROUP, DOES, 2 THROUGH 50,

Defendants-Appellees.

For Plaintiff-Appellant: MAXWELL M. BLECHER (Howard K.
Alperin, on the brief), Blecher Collins &
Pepperman, P.C., Los Angeles, CA.

For Defendants-Appellees: LEON B. GREENFIELD (David Sapir Lesser,
Perry A. Lange, David M. Lehn, and Adam
R. Prescott, on the brief), Wilmer Cutler
Pickering Hale and Dorr LLP, Washington,
D.C., and New York, NY.
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 Consolidated appeals from final judgment of the United States District Court for the

Southern District of New York (Sullivan, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

Plaintiff-appellant appeals from a judgment dismissing its complaint with prejudice

entered on September 30, 2016, by the United States District Court for the Southern District of

New York (Sullivan, J.). We assume the parties’ familiarity with the underlying facts, procedural

history, and issues on appeal.

Plaintiff-appellant Cinema Village Cinemart, Inc., (“Cinemart”) operates a five-screen

movie theater complex in the Forest Hills neighborhood of Queens, New York, while defendant-

appellee Regal Entertainment Group (“Regal”), as of the time of the filing of the amended

complaint, operates approximately 575 theaters with 7,600 screens across the country, including

the Midway Stadium 9 Theater (“Midway”) in Forest Hills. Cinemart filed suit against Regal

alleging that Regal had engaged in anti-competitive conduct by entering into a series of

exclusive-dealing contracts or arrangements with six major film distributors — Warner Bros.,

Fox, Lionsgate, Paramount, Universal, and Disney — that collectively covered the

overwhelming majority of first-run films in the Forest Hills area. Cinemart contends that Regal

has used its significant market power as the largest theater circuit in the United States, and as the

only major theater operator in many parts of the country, to coerce from the film distributors the

exclusive first-run agreements at its Midway theater, which has effectively shut Cinemart out of

the market for first-run films. Cinemart claims that such coercion constitutes an anti-competitive

combination in restraint of trade in violation of the Sherman Act, 15 U.S.C. § 1, New York

State’s Donnelly Act, N.Y. Gen. Bus. Law §§ 340 et seq., and constitutes tortious or intentional

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interference with a prospective economic advantage in violation of New York State common

law.

We review de novo a district court’s dismissal of a complaint for failure to state a claim

under Fed. R. Civ. P. 12(b)(6), “accepting as true all factual claims in the complaint and drawing

all reasonable inferences in the plaintiff’s favor.” Fink v. Time Warner Cable., 714 F.3d 739,

740-41 (2d Cir. 2013). To withstand a motion to dismiss, “a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007)). Moreover, “a Sherman Act claim must . . . define the relevant geographic market” and

assert sufficient facts “to allege plausibly the existence of . . . [that] geographic market.”

Concord Assocs., L.P. v. Entm’t Props. Trust, 817 F.3d 46, 52–53 (2d Cir. 2016) (internal

quotation marks and citation omitted). In assessing the alleged geographic market, a court

examines “the precise geographic boundaries of effective competition in order to reach a more

informed conclusion on potential harm to the market,” id. (internal quotation marks omitted),

considering “the areas in which the seller operates and where consumers can turn, as a practical

matter, for supply of the relevant product,” including “transportation costs to a particular

location . . . as well as the relative preferences of consumers with respect to travel and price,”

Heerwagen v. Clear Channel Commc’ns, 435 F.3d 219, 227–28 (2d Cir. 2006) (internal

quotation marks and citation omitted).

We share the district court’s conclusion that Cinemart’s amended complaint fails to

define a plausible relevant geographic market as required by the Sherman Act. In its amended

complaint, Cinemart defines the relevant geographic market as the Forest Hills neighborhood of

Queens, which it states is “easily accessible by subway, rail, bus and car.” Am. Compl. ¶ 23.

However, elsewhere in its amended complaint, it seems to emphasize the borough of Queens as

the relevant market; for example, in that same paragraph Cinemart alleges that “[i]t is not
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reasonably practicable for the overwhelming majority of Queens residents to leave Queens to see

movies on a regular basis, even if prices in Queens increased significantly.” Id. The amended

complaint also shifts the scope of the market, for example claiming that “residents from other

cities or municipalities do not often come to Queens to see films,” and that “Regal has threatened

and coerced the Film Distributors into granting Regal exclusive clearances in Queens,” rather

than Forest Hills. Am. Compl. ¶¶ 23, 44. However, the Court takes judicial notice of the fact that

a number of other theaters operate in the Queens neighborhoods surrounding Forest Hills, see

United States v. Hernandez-Fundora, 58 F.3d 802, 811 (2d Cir. 1995), rendering Cinemart’s

conclusory claims implausible. Moreover, if Forest Hills is easily accessible by subway, rail, bus,

and car from surrounding neighborhoods (as per Cinemart’s own allegation), then presumably

the reverse must be true as well, and many (if not all) individuals in Forest Hills can “easily

access” other neighborhoods and their theaters. Given these deficiencies and its repeated

assertions, even on appeal, that Forest Hills – and not Queens – is the relevant geographic

market, Cinemart’s amended complaint does not plausibly allege that Forest Hills is a relevant

geographic market susceptible to antitrust analysis under the Sherman Act.

Turning to Cinemart’s state law claims, as under the Sherman Act, a plaintiff stating a

claim under New York’s Donnelly Act “must allege a plausible relevant market in which

competition will be impaired.” City of New York v. Grp. Health Inc., 649 F.3d 151, 155 (2d Cir.

2011); see also Benjamin of Forest Hills Realty, Inc. v. Austin Sheppard Realty, Inc., 823 N.Y.S.

2d 79, 82 (2d Dep’t 2006). For the same reasons as explained above, we conclude that

Cinemart’s amended complaint also fails to allege a plausible relevant geographic market for the

purposes of its Donnelly Act claim.

Cinemart’s New York intentional interference with a prospective economic advantage

claim also fails, for related reasons. To succeed on such a claim, a plaintiff must allege, among

other things, that “the defendant acted solely out of malice, or used dishonest, unfair, or improper
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means.” Kirch v. Liberty Media Corp., 449 F.3d 388, 400 (2d Cir. 2006) (quoting Carvel Corp.

v. Noonan, 350 F.3d 6, 17 (2d Cir.2003)). At best, the amended complaint can be understood to

allege unfair or improper means, specifically “Regal’s intentional anticompetitive conduct as

alleged herein.” Am. Compl. ¶ 73. As explained above, however, Cinemart has not made out a

plausible claim of anticompetitive conduct under either the Sherman Act or Donnelly Act, and

Cinemart has alleged no other intentional conduct on Regal’s part.

Finally, we need not address whether the district court improperly dismissed Cinemart’s

claim with prejudice because it has not shown how further amendments to its complaint could

cure the deficiencies with respect to its assertion of the relevant geographic market. Cinemart’s

reply brief does not propose reclassifying the relevant geographic market, and its contemplated

amendments do nothing to establish Forest Hills as the plausible scope of a geographic market

for the purposes of its antitrust claim. As a result, “granting leave to file a second amended

complaint would have been futile.” Concord Assocs., 817 F.3d at 55.

We have considered all of plaintiff’s contentions on appeal and have found in them no

basis for reversal. For the reasons stated herein, the judgment of the district court is

AFFIRMED.1

FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk

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Pursuant to this summary order, Cinemart’s motion to take judicial notice of certain documents,
dated December 29, 2016, is hereby granted.
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