Mark Cuban’s indie movie theater company, Landmark Theaters, is facing an antitrust lawsuit over a practice it sued a competitor over nearly a year ago.
Four independent community movie theatres, represented by prominent plaintiffs lawyer Michael Hausfeld, filed an antitrust lawsuit Wednesday in federal district court in Washington, D.C., against Landmark and its parent company, 2929 Entertainment. The suit claims Landmark uses dominance in the “specialty film” market to coerce film distributors into exclusive agreements that bar other theaters from showing their films at the same time.
“Landmark’s abuse of its circuit-wide market power to obtain unjustified clearances is not only illegal—it is hypocritical,” the complaint says.
The irony, according to the lawsuit, is Landmark sued Regal Entertainment Group in 2016 over the same practice. That case was settled in August 2016 with Regal agreeing to abandon so-called clearances. The Justice Department is also investigating the use of clearances by major movie theater chains including AMC Entertainment, Cinemark and Regal.
Neither Landmark Theatres nor 2929 Entertainment immediately replied to a request for comment. Cuban co-founded 2929 Entertainment with Todd Wagner, a former attorney with Akin Gump Strauss Hauer & Feld, who is now the company’s CEO.
The plaintiffs include two theaters in D.C.: the Avalon Theatre Project and the now-closed West End Cinema, which claims Landmark’s “anti-competitive clearances forced it out of business” in 2015. Landmark then opened its own theater in the former West End Cinema space, the lawsuit said. The other two plaintiffs are the Denver Film Society’s Sie FilmCenter in Colorado and Cinema Detroit in Michigan.
“Specialty films” include independent films, art films, documentaries and foreign films. According to the lawsuit, Landmark is the dominant theater chain in the specialty film market, with 51 theaters in 22 geographic markets including New York City, San Francisco, Los Angeles and Philadelphia.
The independent theaters claim Landmark’s dominance enables it to compel film distributors, which act as intermediaries between movie theaters and production studios, to agree to exclusive agreements because they know they need Landmark’s business to be successful. In the so-called clearance agreements, the distributor agrees not to license a film to any other theaters or to specific theaters, in the same geographic area.
The lawsuit claims the practice violates the Sherman Act because Landmark’s use of the agreements “reduces output and consumer choice, artificially inflates ticket prices; and facilitates its monopolization of the specialty film exhibition market in the applicable markets and in other geographic markets in which Landmark is already the dominant exhibitor of specialty films.”
The independent theaters want the court to enjoin Landmark from seeking so-called clearance agreements against them, as well as award monetary damages.