United States v. Syufy Enterprises

The United States District Court for the Northern District of California found in favor of Syufy,[2] holding that "Syufy's actions did not injure competition because there are no barriers to entry—others could and did enter the market—and that Syufy therefore did not have the power to control prices or exclude the competition."[3]

The Court of Appeals affirmed the district court's ruling in a decision written by Judge Alex Kozinski which became notable[4] both for its commentary on business competition in a free enterprise system[5] and for Kozinski's incorporation of over 200 movie titles into his opinion,[6][7][8] including statements such as "Roberts/UA's newly opened theatres evolved from absolute beginners, barely staying alive, into a big business."

The Ninth Circuit's decision against the government and in favor of Syufy emphasized that there were no barriers to entry in the Las Vegas cinema business. In fact, competition arose almost immediately after Syufy achieved his monopoly. Within a week after becoming the sole first-run exhibitor in Las Vegas, Syufy attempted to renounce the guarantee he had previously offered Orion Pictures Corporation for the movie The Cotton Club. Rather than release Syufy from his guarantee, Orion sued Syufy for breach of contract and chose to license The Cotton Club to Roberts instead. Orion also stopped licensing its other movies to Syufy not only in Las Vegas, but anywhere.

Roberts Company then began opening new multiplexes of its own, increasing its screen count to 28 in Las Vegas by December 1986, compared to 23 for Syufy. In 1987, Roberts sold its theaters to United Artists Theaters, then the largest exhibition circuit in the United States.