Antitrust Lawsuit Accuses AMC Entertainment of Hurting Hispanic Community via Studio Pacts

AMC Fresh Meadows - H
Courtesy AMC Theaters

AMC Entertainment, the theater exhibitor giant, has been hit with a new antitrust lawsuit alleging it threatened Hollywood studios, and consequently, a Houston-based theater owner was denied access to popular new releases and went out of business. The twist in this lawsuit is that Viva Cinemas Theaters, the plaintiff, specialized in serving the Hispanic community. Thus, the alleged consumer harm of AMC's practices is to leave Houston with fewer first-run films dubbed or subtitled into Spanish.

The lawsuit comes as the Justice Department is reportedly investigating distributor-exhibitor "clearance" pacts that carve out exclusivity on first-run films in certain geographical regions. In March, over in Georgia, a federal judge refused to dismiss a similar lawsuit against AMC brought by Cobb Theaters, an independent theater owner in the Southeast.

In the latest lawsuit, brought on Monday in Texas federal court, Viva says it developed a business plan to address an "unserved market," and once AMC "learned of Viva Cinema's plans, AMC reacted by threatening the distribution of seven Hollywood studios."

None of the studios are named as defendants, but those studios are said to have acquiesced to AMC's alleged demand that they not license to Viva such films as Iron Man 3 (Disney), RED 2 (Lionsgate), World War Z (Paramount), Captain Phillips (Sony), Fast & Furious 6 (Universal) and Gravity (Warner Bros) because the studios didn't wish to risk retaliation from the nation's second-biggest theater owner, says the plaintiff.

Viva says it operated its business in 2013.

According to the complaint, "During the period of Viva Cinema’s operations, AMC infrequently showed some films in Spanish or with Spanish subtitles (during matinee and not evening showings), and then, once Viva Cinema went out of business, AMC went back to its prior practices of exhibiting no, or virtually no, Spanish language films, and — if exhibiting them at all — only on an extremely limited basis."

The result, continues the lawsuit, is "severe damage to Viva Cinema, to competition, and to the Spanish-speaking Houston film-going public."

Besides alleging that AMC has violated the Sherman Act, Viva also claims that it had valid contracts with the studios and that AMC committed tortious interference. Viva, represented by Michael Hawash, is seeking trebled actual damages and the disgorgement of profits.

AMC spokesperson Ryan Noonan responds, "Allocated film zones are a long-standing, well-known and legal practice within the movie exhibition industry, and are determined on a case-by-case, zone-by-zone basis by individual studios, without consideration of the size of the exhibition companies. Viva Cinema clearly, and we assume knowingly, entered into an allocated film zone by opening a first-run location in close proximity to AMC Studio 30."