AMC Entertainment Fights Antitrust Claims Secretly Valued at Hundreds of Millions of Dollars

Movie Theater Interior - H 2012
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Movie Theater Interior - H 2012

Cobb Theaters is hoping to score a nine-figure damage verdict against exhibition giant AMC Entertainment in an antitrust lawsuit. The Georgia-based movie theater chain's demand became public in a filing last week, though Cobb is now asking a judge to keep it hush-hush.

The lawsuit was filed in Georgia in 2014 and alleges that AMC has used its worldwide market power to coerce film distributors to deprive competitors of access to studio films. Cobb, an independent exhibitor which owns nearly two dozen theaters in the Southeast region, has reported its CineBistro outlets have missed out on hit films like The Amazing Spider-Man, This Is the End and Zero Dark Thirty. In March 2015, a judge rejected AMC's motion to dismiss.

Now, AMC will again ask U.S. District Court judge Eleanor Ross to find in its favor and avoid a trial it says could last months. In preparation, the defendant asked permission to file summary judgment motions bulkier than usual. Although some studios like 20th Century Fox say they will no longer honor so-called "clearance pacts" that assign geographic exclusivity on hit films, and notwithstanding the fact that other large exhibitors like Regal have come to settlements that give off the appearance that the controversy is fading from the spotlight, AMC told the judge about the huge stakes. 

"By its Complaint, Cobb seeks trebled damages of hundreds of millions of dollars," stated AMC's court papers. "Cobb further seeks punitive damages for its tortious interference claims, as well as a permanent injunction that, if granted, would materially impact AMC’s business throughout the United States."

Later in its brief, AMC says an injunction "would fundamentally alter the way in which AMC's industry works." (The company doesn't appear to have yet alerted its shareholders to the possibility.) 

AMC will fully argue its position in its coming summary judgment motion, but its advance papers signal a pretty complicated case.

"Discovery revealed that Cobb’s lawsuit is actually nine different cases in one," AMC's motion to exceed page limits stated. "First, Cobb alleges that AMC has violated the antitrust laws by licensing films at its Phipps and Fork & Screen theatres in Buckhead pursuant to unreasonable 'clearances' and unlawful 'circuit deals' that effectively precluded Cobb’s Brookhaven theatre from licensing first-run films Second, Cobb alleges that AMC has interfered with Cobb’s ability to open eight other hypothetical theatres around the country, thereby wholly preventing Cobb from entering those separate markets."

AMC is primed to contend that Cobb's failure to properly define geographic markets dooms the "circuit dealing" claim. Additionally, AMC will attempt to show that Cobb doesn't have "congnizable business relationships" with landlords to support a claim that AMC has interfered with a plan to open more theaters.

After Ross granted AMC's request to file two 35-page briefs, Cobb came forward to complain that the hundreds of millions of dollars it is seeking was a secret.

"Cobb disclosed to AMC the total damages it is seeking in this lawsuit in the expert reports of its expert economist, Roy Weinstein," stated the plaintiff in a motion for sealing filed on Tuesday. "Cobb designated the total damages Confidential because it would otherwise be possible to back into the approximate profitability of Cobb’s theaters. This is because Mr. Weinstein uses a benchmark or yardstick approach to damages, under which he calculates the profits Cobb would have earned but for AMC’s conduct based on the profitability of actual Cobb theaters currently in operation."

As of Wednesday morning, the judge hasn't yet ruled on whether "hundreds of millions of dollars" and "nine-figure damages claims" should have to be redacted.