Bryan Cranston-Owned Movie Theater's Lawsuit Against Cinemark Revived on Appeal

Bryan Cranston - GETTY - H 2016
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It might be too late to save the Cinemas Palme d'Or in Palm Desert, Calif., which is scheduled to cease operations on June 30, but a California appeals court has revived a decade-old lawsuit by its owners over film clearances from Hollywood studios.

One of the owners of that theater happens to be Breaking Bad star Bryan Cranston. He was part of an investment group that included Brian Tabor and ESPN radio personality Steve Mason that founded Flagship Theatres in 2002. But according to a lawsuit that would follow in 2006, Flagship had trouble competing in the market because two miles away from the Cinemas Palme d'Or, there existed another theater called Century at the River. The latter multiplex was acquired by exhibition giant Cinemark. The lawsuit alleged that the bigger theater used its leverage in the broader market to deny its smaller competitor access to desirable movies. 

These days, so-called clearance pacts are the subject of ongoing investigations by the Justice Department and various state attorneys throughout the nation. There are also several antitrust lawsuits pending against AMC and Regal for allegedly coercing major studios like Sony, Lionsgate and Disney into holding back blockbuster movies from independents in certain geographic regions. In Texas, there's even a trial scheduled for October.

The Flagship lawsuit could have been path-breaking but for terminating sanctions ordered by a Los Angeles Superior Court judge. Until today's decision, the lawsuit against Cinemark was stopped from moving forward thanks to Tabor having deleted a large number of emails during the pendency of the case.

"Tabor deleted the e-mails deliberately, but he did not do so with the intent of destroying evidence in the case," explains California appeals court justice Frances Rothschild in the opinion. "Rather, the account was failing to deliver mail to him properly, and tech support personnel for his email provider advised him to clear storage space in the account in order to restore its functionality."

Cinemark argued that the loss of emails from 2007 to 2009 impaired its ability to defend itself and so termination of the case was appropriate, but Rothschild rules that prohibiting Flagship from offering evidence or claiming damages from this specific period is a more appropriate sanction. Cinemark also believed that the end of the case was merited from other instances where the plaintiff had failed to produce sufficient evidence in the face of discovery demands, but Rothschild rejects those arguments.

For example, the appeals court justice writes that Tabor might have deleted an email to Sony three years before the lawsuit was filed — an email that requested a license to Big Fish and Mona Lisa Smile, where he wrote, "I will not be asking for, nor expecting, most Sony product, as this is not a typical mainstream venue" — because Tabor might not have believed he needed to preserve it.

The justice also doesn't agree with Cinemark's contention that loss of emails make it impossible to defend against claims of damages nor is it being deprived by Cranston's own materials gone missing. According to the opinion (read here in full), "Cranston acknowledged that he failed to preserve handwritten notes that he took during conversations with studio executives. These notes were so sporadic that their loss could not significantly prejudice Cinemark."

The case moves back to the trial court where it will explore all but three years of time.