Opinion issued September 29, 2016




                                       In The

                               Court of Appeals
                                      For The

                           First District of Texas
                             ————————————
                               NO. 01-16-00102-CV
                            ———————————
               REGAL ENTERTAINMENT GROUP, Appellant
                                         V.
  IPIC-GOLD CLASS ENTERTAINMENT, LLC AND IPIC TEXAS, LLC
                         Appellees


                    On Appeal from the 234th District Court
                             Harris County, Texas
                       Trial Court Case No. 2015-68745


                                   OPINION

      iPic-Gold Class Entertainment, LLC and iPic Texas, LLC (iPic), a boutique

upscale movie theater chain, sued Regal Entertainment Group and AMC, two large

theater chains, for alleged violations of Texas antitrust law. iPic alleges that Regal

violated the Texas Free Enterprise and Antitrust Act by requesting from major film
distributors a “clearance” for its Greenway Grand Palace 24 theater located near the

iPic Houston theater. In other words, Regal told major film distributors that the 24-

screen, 5,000-seat Greenway would not play first-run films simultaneously, or “day-

and-date”, with the nearby 8-screen, 578-seat iPic Houston. This, according to iPic,

harms competition by preventing the iPic Houston from licensing films shown at the

Greenway to play at the same time at the iPic Houston, thereby diminishing the

quality of the iPic Houston’s product. iPic sought temporary injunctive relief, and

the trial court entered a temporary injunction prohibiting Regal from requesting from

any film distributor the right to exhibit films to the exclusion of iPic Houston.

      On appeal, Regal argues that the trial court abused its discretion by entering

the temporary injunction because iPic did not demonstrate (1) a probable right to

relief on its claims or (2) probable, imminent, and irreparable injury. We affirm.

                                    Background

iPic Houston opens and sues

      In November 2015, iPic opened a new 8-screen, 578-seat theater near River

Oaks, an upscale Houston neighborhood.           According to iPic’s CEO, Hamid

Hashemi, and other iPic witnesses who testified at the temporary injunction hearing,

iPic offers a different product—a “premium experience”—to moviegoers. Hashemi

testified that iPic Houston boasts several amenities that are unavailable at Regal’s

nearby Greenway and other major megaplexes: reserved “pod” seating in leather



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reclining seats, blankets, pillows, free popcorn, and wait service for those who order

from iPic’s full bar or from its food menu designed by a James Beard-award-winning

chef. Hashemi also testified that the iPic experience carries a heftier price tag: iPic

Houston’s top ticket price is $28, while the Greenway’s highest ticket price is in the

range of $11.50.

      iPic sued Regal and AMC during iPic Houston’s opening month, alleging

(1) unlawful restraint of trade under section 15.05(a) of the Texas Free Enterprise

and Antitrust Act, (2) monopolization and attempted monopolization under section

15.05(b), and (3) tortious interference with contracts and business relationships.

According to iPic’s petition, in July 2014, more than a year before iPic Houston

opened, Regal informed six major film distributors that Regal’s Greenway theater,

which is 1.4 miles from iPic Houston, would be “clearing” iPic Houston, meaning

that Regal would not license a film to play at the Greenway if the distributor licensed

the film to play simultaneously, or “day-and-date,” at iPic Houston.

      According to iPic, Regal’s clearance request forces film distributors to choose

between licensing a film to iPic Houston or the nearby Greenway, owned by Regal,

contrary to distributors’ ordinary incentive, which is to license films to play on the

maximum number of screens possible. iPic also alleges that, as the country’s largest

movie exhibitor, Regal has the market power to force distributors to honor its

clearance request. According to iPic’s petition, Regal’s clearance request not only



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harms iPic but also the market for premium exhibition of first-run films by reducing

the number of films that iPic Houston exhibits and thereby diminishing consumer

choice in the premium movie exhibition market. iPic also alleges that iPic Houston

cannot survive without access to the first-run films that form a core part of its

product. iPic’s petition requested temporary and permanent injunctions prohibiting

Regal and AMC from clearing the iPic theaters in their respective areas and from

conspiring with each other to do the same.1

Temporary injunction hearing

      iPic executive Clark Woods testified that he learned about Regal’s clearance

request in July 2014. According to Woods, Regal called six major distributors to

inform them that its Greenway theater would not play films day-and-date with iPic

Houston. The films distributed by these six distributors account for 90% of box

office revenues. Woods testified that these distributors responded in different

ways—three offered their films to both the Greenway and iPic Houston

notwithstanding the request, while the other three effectively honored the request by




1
      iPic’s petition alleges that AMC contacted the same six distributors and informed
      them that AMC’s megaplex in Frisco, Texas would be clearing iPic’s planned
      theater in Frisco. iPic alleges, based on the timing of Regal and AMC’s
      communications with distributors, that Regal and AMC conspired to drive iPic
      theaters out of business. These allegations notwithstanding, the temporary
      injunction does not mention AMC, and AMC is not a party to this appeal.
      Accordingly, we confine our analysis to the claims asserted against Regal.

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“allocating” their films between the Greenway and iPic Houston.2 Woods testified

that the allocating distributors reported that they were allocating to avoid having

Regal “boycott” or refuse to play their films at the Greenway.

      Woods testified that Regal’s clearance harms consumers as well as itself.

According to Woods, iPic had been able to license every film it wanted at its other

12 theaters, but was unable to license some films in Houston due to Regal’s clearance

request. Houston consumers are therefore unable to see certain films in a premium

theater setting.

      Woods and iPic’s CEO, Hamid Hashemi, who also testified at the hearing,

emphasized that iPic Houston and the Greenway are different types of theaters with

different markets.    In addition to highlighting iPic’s upscale amenities, both

compared the theaters’ ticket prices: Woods testified that the average price of an

iPic ticket is $21 to $28, while the average ticket price at a mainstream megaplex is

$9. They also testified that iPic attracts older consumers, who do not patronize

mainstream theaters and can more easily absorb the higher cost of iPic tickets. The

upshot of these differences is that the Greenway and iPic Houston offer different

products and do not substantially compete with each another. iPic’s consultant on

clearances, Paul Springer, echoed these themes, testifying that the two theaters do



2
      Allocation is the process by which distributors choose, in the context of a clearance,
      to license some films to one theater and other films to the other.

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not substantially compete.      iPic’s antitrust expert, Frederick Warren-Bolton,

likewise testified that the percentage of people who view the Greenway and the iPic

Houston as interchangeable is “de minimis” and “the crossover is very, very small.”

Warren-Boulton also testified about other factors to be considered under the rule of

reason. He testified that Regal has market power in the relevant geographic market

sufficient to harm competition and that Regal’s clearance has, in fact, harmed

competition. Warren-Boulton testified that Regal’s clearance reduced distributors’

revenue. In particular, he pointed to an email in which Regal told distributors that

allocating certain films to iPic Houston “resulted in significant revenue loss for both

distribution and Regal.” Warren-Boulton also testified that consumers are harmed

if they cannot see a film at iPic Houston, because the moviegoing experience at the

Greenway is not a “close substitute[].”

      With respect to iPic Houston’s damages, iPic presented the testimony of

Hashemi to the effect that there is “no way . . . to measure what [iPic’s] losses are,”

because there is no way to know how many customers would have seen movies that

iPic Houston was unable to show, and no way to measure how many customers iPic

would not be able to “bring . . . back” once its reputation has been damaged.

      Regal also presented evidence at the hearing. Amy Miles, its CEO, testified

that the Greenway/iPic Houston clearance is consistent with Regal’s nationwide

policy, which is to clear any competing theaters within three miles of a Regal theater,



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even if it is another Regal-owned theater. Miles testified that there are 70 Regal

theater clearance zones nationwide, although the others are mutually agreed. Miles

testified that clearances yield pro-competitive benefits: they increase film supply

and ensure that different films get played.

      Michael Viane, Regal’s senior vice-president and head film-buyer, likewise

testified that clearance zones result in the exhibition of a greater diversity of films

and the exhibition of films for longer periods of time. Viane discounted the notion

that iPic Houston had been harmed by the Greenway/iPic Houston clearance: he

testified that iPic Houston licensed several high-performing films that were not

licensed to the Greenway in the two months iPic Houston was open before the

temporary injunction was entered. Viane cited Star Wars: The Force Awakens and

Spectre, two box office hits, as examples of films that played at iPic Houston and

not the Greenway.

      Regal presented two expert witnesses. Mark Israel, a competition economist,

opined that Regal’s conduct was not anticompetitive and does not render iPic

Houston incapable of competing for films or customers. His analysis showed that

the Greenway lacks sufficient market power to exclude iPic Houston from the

market for film licenses, as evidenced by the fact that the iPic Houston has licensed

multiple sought-after box office hits and become one of the top performing iPic

theaters in the country despite the clearance.



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      Rajiv Gokhale addressed harm, echoing Viane’s testimony that iPic Houston

had not suffered any harm from Regal’s clearance request. Gokhale pointed out that

iPic Houston was performing above iPic expectations and ranked second among all

iPic theaters in dollar amount of box office gross per theater, third in gross per

screen, and fourth in gross per seat. Gokhale also testified that harm to iPic, if any,

could be quantified through the use of financial models, particularly with the

additional financial data that would become available before trial.

      At the close of the hearing, the trial court orally granted the temporary

injunction. The trial court’s written temporary injunction order, among other things,

prohibited Regal from:

      directly or indirectly, demanding or requesting exclusive film licenses
      or the right to exhibit films from any studio to the exclusion of [iPic’s]
      Houston theater; indicating to a studio that such defendant will refuse
      to play a film at any of its theaters if the studio licenses the film for
      exhibition at the iPic Houston, or carrying out such refusal[.]

Regal appealed.

                                Standard of Review

      To obtain a temporary injunction, the applicant must plead and prove: (1) a

cause of action against the defendant; (2) a probable right to the relief sought; and

(3) a probable, imminent, and irreparable injury in the interim. Butnaru v. Ford

Motor Co., 84 S.W.3d 198, 204 (Tex. 2002); TMC Worldwide, L.P. v. Gray, 178

S.W.3d 29, 36 (Tex. App.—Houston [1st Dist.] 2005, no pet.). The decision to grant



                                           8
or deny a temporary injunction lies in the sound discretion of the trial court, and the

court’s ruling is subject to reversal only for a clear abuse of discretion. Butnaru, 84

S.W.3d at 204. “Our review of the trial court’s decision is limited to the validity of

its temporary injunction order; we do not consider the merits of the underlying case.”

Intercontinental Terminals v. Vopak N. Am., Inc., 354 S.W.3d 887, 892 (Tex. App.—

Houston [1st Dist.] 2011, no pet.).

       “Probable right to relief” is a term of art in the injunction context. Id. at 897.

“To show a probable right to recover, an applicant need not show that it will prevail

at trial. Nor does a finding of probable right of recovery indicate a trial court’s

evaluation of the probability that the applicant will prevail at trial.” Id. (citing

Butnaru, 84 S.W.3d at 211 (demonstrating probable right to relief does not require

establishing that applicant will prevail on final trial)); see DeSantis v. Wackenhut

Corp., 793 S.W.2d 670, 686 (Tex. 1990) (injunction plaintiff “need not establish the

correctness of his claim to obtain temporary relief”).

      “Instead, to show a probable right of recovery, the applicant must plead a

cause of action and present some evidence that tends to sustain it,” meaning that

“[t]he evidence must be sufficient to raise a bona fide issue as to the applicant’s right

to ultimate relief.” Intercontinental Terminals, 354 S.W.3d at 897 (first citing Camp

v. Shannon, 348 S.W.2d 517, 519 (Tex. 1961), then citing T–N–T Motorsports, Inc.

v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 23–24 (Tex. App.—Houston [1st



                                           9
Dist.] 1998, pet. dism’d), then citing 183/620 Group Joint Venture v. SPF Joint

Venture, 765 S.W.2d 901, 904 (Tex. App.—Austin 1989, writ dism’d w.o.j.))

(internal quotations omitted). Because the entry of a temporary injunction does not

indicate that the applicant will prevail at trial, the applicant who obtains one must

post a bond “to protect the defendant from the harm he may sustain as a result of

temporary relief granted upon the reduced showing required of the injunction

plaintiff, pending full consideration of all issues.” DeSantis, 793 S.W.2d at 686; see

TEX. R. CIV. P. 684 (temporary injunction applicant must file bond payable to

adverse party in event injunction dissolved).

      In reviewing an order granting or denying a temporary injunction, we draw all

legitimate inferences from the evidence in a manner most favorable to the trial

court’s order. See Butnaru, 84 S.W.3d at 204; Gray, 178 S.W.3d at 36 (citing CRC–

Evans Pipeline Int’l v. Myers, 927 S.W.2d 259, 262 (Tex. App.—Houston [1st Dist.]

1996, no writ)). A trial court does not abuse its discretion if it heard conflicting

evidence, and evidence appears in the record that reasonably supports the trial

court’s decision. Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978); see Unifund

CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009).

      When reviewing a temporary injunction where findings of fact were not

requested or filed, we imply all findings that would support the trial court’s order

unless there is no evidence to support such a finding and affirm if the order can be



                                         10
upheld on any legal theory that finds support in the evidence. See BMC Software

Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). If the judgment can be

upheld on any legal theory supported by the evidence, “[w]e must uphold the

judgment regardless of whether the trial court articulates the correct legal reason for

the judgment.” Conseco Fin. Servicing Corp. v. J & J Mobile Homes, Inc., 120

S.W.3d 878, 880–81 (Tex. App.—Fort Worth 2003, pet. denied).

                                  Applicable Law

      The Texas Free Enterprise and Antitrust Act of 1983 provides that “[e]very

contract, combination, or conspiracy in restraint of trade or commerce is unlawful.”

TEX. BUS. & COM. CODE § 15.05(a). The purpose of the Act is to maintain and

promote competition in trade and commerce within Texas and to provide the benefits

of that competition to Texas consumers. Id. § 15.04. We construe the Act “in

harmony with federal judicial interpretations of comparable federal antitrust statutes

to the extent consistent with this purpose.” Id.; see also Coca-Cola Co. v. Harmar

Bottling Co., 218 S.W.3d 671, 688–89 (Tex. 2006). Texas caselaw applying the Act

is limited, and, accordingly, we rely heavily on the jurisprudence of the federal

courts applying the Sherman Antitrust Act. Harmar Bottling, 218 S.W.3d at 688–

89; see DeSantis, 793 S.W.2d at 687 (Texas courts do not write on a clean slate but

rather look to federal judicial interpretations of section 1 of Sherman Act in applying

section 15.05(a) of our state antitrust law); see also 15 U.S.C. § 1 (declaring



                                          11
illegal“[e]very contract, combination in the form of trust or otherwise, or conspiracy,

in restraint of trade or commerce among the several States. . . .”).

      The Texas Free Enterprise and Antitrust Act does not prohibit all restraints of

trade; it prohibits only unreasonable restraints of trade that have an adverse effect on

competition in the relevant market. Winston v. Am. Med. Int’l, 930 S.W.2d 945,

951–52 (Tex. App.—Houston [1st Dist.] 1996, writ denied); see also Business Elecs.

Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723, 108 S. Ct. 1515, 1519 (1988). When

the allegedly anticompetitive conduct is a vertical nonprice restraint, such as a

clearance, we evaluate it under the rule of reason. Business Elecs. Corp., 485 U.S.

at 723; see also Red Wing Shoe Co., Inc. v. Shearer’s, Inc., 769 S.W.2d 339, 343

(Tex. App.—Houston [1st Dist.] 1989, no pet.) (vertical nonprice restraints are

evaluated under rule of reason); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358,

1371 (3rd Cir. 1996) (clearances are vertical, nonprice restraints evaluated under rule

of reason); Cobb Theatres III, LLC v. AMC Entmt. Holdings, Inc., 101 F. Supp. 3d

1319, 1332 (N.D. Ga. 2015) (alleged clearance agreement between premium theater

and distributor is vertical agreement scrutinized under rule of reason).

      To establish a violation of section 15.05(a) of the Act under the rule of reason,

a plaintiff must show (1) a contract, combination, or conspiracy (2) that had an

adverse effect on competition (3) in a relevant market. See Business Elecs., 485 U.S.

at 723, 108 S. Ct. at 1518–19; DeSantis, 793 S.W.2d at 687. To prove a contract,



                                          12
combination, or conspiracy in restraint of trade, the plaintiff must show some kind

of “common design and understanding, or a meeting of minds in an unlawful

arrangement.” Abraham & Veneklasen Joint Venture v. Am. Quarter Horse Assn.,

776 F.3d 321, 330 (5th Cir. 2015) (citing Am. Tobacco Co. v. United States, 328

U.S. 781, 810, 66 S. Ct. 1125, 1139 (1946)); see also Monsanto Co. v. Spray–Rite

Serv. Corp., 465 U.S. 752, 761, 104 S. Ct. 1464, 1469 (1984). And a plaintiff may

demonstrate the existence of a conspiracy with evidence that a party took action

based upon the antitrust defendant’s economic threat. See Abraham & Veneklasen,

776 F.3d at 330; Spectators’ Commc’n Network Inc. v. Colonial Country Club, 253

F.3d 215, 221 (5th Cir. 2001) (antitrust law “implicitly recognizes that an integral

part of a boycott is often bringing pressure to bear (‘persuading or coercing’) on

other participants who have no direct motive to restrain trade”).

        To prove that competition in the relevant market was adversely affected, a

plaintiff must define the relevant market—which has both geographic and product

components—and prove that a defendant has market power in that market. See

Business Elecs., 485 U.S. at 725, 108 S. Ct. at 1520; Jacobs v. Tempur–Pedic Int’l,

Inc., 626 F.3d 1327, 1336 (11th Cir. 2010); Apani Sw., Inc. v. Coca-Cola Enters.,

Inc., 300 F.3d 620, 625–26 (5th Cir. 2002); Cobb Theatres, 101 F. Supp. 3d at 1335;

DeSantis, 793 S.W.2d at 688. The relevant product market is “determined by the

availability of substitutes to which consumers can turn in response to price increases



                                         13
and other existing or potential producer’s ability to expand output.” Cobb Theatres,

101 F. Supp. 3d at 1336 (citing L.A. Draper & Son v. Wheelabrator–Frye, Inc., 735

F.2d 414, 423 (11th Cir. 1984)). The relevant geographic market is defined as the

area in which consumers may obtain a given product. Apani, 300 F.3d at 625; Cobb

Theatres, 101 F. Supp. 3d at 1336 (citing L.A. Draper, 735 F.2d at 423). The

parameters of the geographic and product markets are questions of fact. Cobb

Theatres, 101 F. Supp. 3d at 1335 (citing Thompson v. Metro. Multi–List, Inc., 934

F.2d 1566, 1573 (11th Cir. 1991)).

      When determining whether two products are in the same product market, the

factfinder should consider cross-elasticity on both the demand side—the degree to

which consumers consider the products to be substitutes—and the supply side—how

easily and costlessly a party can sell the same product as the other. See Rebel Oil

Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1436 (9th Cir. 1995); see also IIB Phillip

E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 561, at 378 (4th ed. 2014) (“Two

products . . . are in the same relevant market if substitutability at the competitive

price is very high as measured from either the demand side or the supply side.”).

The factfinder considers “the uses to which the product is put by consumers in

general,” Jacobs, 626 F.3d at 1337, and gives “special consideration ‘to evidence of

the cross-elasticity of demand and reasonable substitutability of the products . . . .”

Cobb Theatres, 101 F. Supp. 3d at 1336 (quoting Jacobs, 626 F.3d at 1337–38); see



                                          14
Apani, 300 F.3d at 626 (in ascertaining relevant product market, factfinder considers

extent to which seller’s product is interchangeable in use and degree of cross-

elasticity of demand between product and substitutes).

      To satisfy the rule of reason, “[t]here must be evidence of ‘demonstrable

economic effect,’ not just an inference of possible effect.” Harmar Bottling, 218

S.W.3d at 689 (quoting Business Elecs., 485 U.S. at 724, 108 S. Ct. at 1519). And

the rule of reason condemns only those restraints that actually have an adverse effect

on competition in a market, as opposed to merely hurting a competitor. National

Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 688, 98 S. Ct. 1355, 1363

(1978). In other words, a plaintiff cannot demonstrate the unreasonableness of a

restraint merely by showing that it caused him an economic injury. Oksanen v. Page

Mem’l Hosp., 945 F.2d 696, 709 (4th Cir. 1991); see Marlin v. Robertson, 307

S.W.3d 418, 425 (Tex. App.—San Antonio 2009, no pet.). But an antitrust plaintiff

may satisfy his burden to show an adverse effect on competition “by proving the

existence of actual anticompetitive effects, such as reduction of output, increase in

price, or deterioration in quality of goods and services.” Orson, 79 F.3d at 1367.

                                      Analysis

A.    “Substantial competition” does not displace rule of reason

      We address first Regal’s contention that the trial court erroneously

disregarded the rule of reason and granted injunctive relief solely on the basis of its



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oral finding that the Greenway and the iPic Houston are not in “substantial

competition.” In United States v. Paramount Pictures, 334 U.S. 131, 68 S. Ct. 915

(1948), the United States Supreme Court recognized that a clearance could be a

lawful means to protect an exhibitor’s investment in a film license if the clearance

was not “unduly extended as to area or duration,” and affirmed the injunction of a

clearance between two theaters that were not in “substantial competition” where the

clearance lacked relation to competitive factors which could justify it. 334 U.S. at

146–47, 68 S. Ct. at 924. Since Paramount, courts evaluating clearances have

considered whether theaters are in “substantial competition” as part of the rule of

reason analysis. See, e.g., Orson, 79 F.3d at 1371–72 (first determining that theaters

were in “substantial competition” and then analyzing competitive effects of

clearance); Theee Movies v. Pacific Theatres, Inc., 828 F.2d 1395, 1399 (9th Cir.

1987) (analyzing clearance under rule of reason and noting “[c]ourts have found

clearances in particular to be reasonable restraints of trade . . . when the theaters are

in substantial competition”); Cobb Theatres, 101 F. Supp. 3d at 1333 (courts

evaluating clearances consider whether theaters are in “substantial competition” and

clearance’s positive and negative effects on competition).

      Whether theaters are in substantial competition turns on whether they sell a

reasonably interchangeable product in the same geographic area. See Theee Movies,

828 F.2d at 1399 (noting district court properly found two theaters to be in



                                           16
substantial competition where they were “located on the same major thoroughfare

only a short distance apart,” and drew patrons from the same area); Orson, 79 F.3d

at 1365 (two “art house” theaters located in Center City Philadelphia were in

“substantial competition”). Thus, although a “substantial competition” inquiry

cannot displace a rule of reason analysis, the factors that determine whether

substantial competition exists are necessarily considered in evaluating a clearance

under the rule of reason. See Orson, 79 F.3d at 1372; Theee Movies, 828 F.2d at

1399; Cobb Theatres, 101 F. Supp. 3d at 1334. Accordingly, the trial court did not

err in considering, as part of its rule of reason analysis, whether iPic Houston and

the Greenway are in substantial competition.

      Additionally, even if, as Regal argues, the trial court applied an incorrect

standard or misplaced the burden of proof, the applicable standard of review requires

us to uphold the trial court’s order if the record supports upholding it under the

correct legal theory. See BMC Software, 83 S.W.3d at 795. We therefore turn to

whether the trial court could have found iPic had a probable right to relief on each

element of its restraint-of-trade claim under the proper legal standard, the rule of

reason.

B.    Probable right to relief on restraint-of-trade claim under rule of reason

      In its first issue, Regal contends that the trial court erred in entering the

temporary injunction because iPic did not demonstrate a probable right to relief on



                                         17
its unlawful restraint-of-trade claim under the correct legal standard, the rule of

reason. In particular, Regal argues that iPic did not adduce sufficient evidence to

support findings of (1) a contract, combination, or conspiracy (2) having an adverse

effect on competition (3) in a relevant market. We address each of these elements

in turn.

       1.    Contract, combination, or conspiracy

       The evidence at the temporary injunction hearing showed that, before iPic

Houston opened, Regal contacted six major film distributors to request a

Greenway/iPic Houston clearance. Three responded by allocating films between the

two theaters, licensing some films only to the iPic Houston and others only to the

Greenway. iPic executives, Hashemi and Woods, testified that these allocating

distributors told iPic they would have licensed films to the iPic Houston but for

Regal’s clearance request.

       Although the other three distributors did not allocate, and instead offered to

license films to both theaters, Regal declined to have the Greenway exhibit any film

these distributors licensed to the iPic Houston. And there was evidence that Regal

pointed out to these distributors that licensing films to the iPic Houston and not the

Greenway was costing the distributors revenue.

       Regal contends that this evidence is “as consistent with permissible

competition as with illegal conspiracy” and thus, does not constitute evidence from



                                         18
which a conspiracy as opposed to independent conduct may be inferred. See

Abraham & Veneklasen, 776 F.3d at 330. In particular, Regal argues that the record

shows merely that it unilaterally requested a clearance and each distributor exercised

its own independent business judgment in determining whether to honor the request.

But antitrust law “implicitly recognizes that an integral part of a boycott is often

bringing pressure to bear (‘persuading or coercing’) on other participants who have

no direct motive to restrain trade.” Spectators’ Commc’n, 253 F.3d at 221.

      Here, the evidence showed that film distributors were incentivized against

allocation, yet three allocated against their self-interest and reported to iPic that they

did so because of Regal’s request. Likewise, Regal’s costly decision not to have the

Greenway play Star Wars: The Force Awakens, because it was offered to iPic

Houston, was inconsistent with Regal’s self-interest. The evidence that Regal and

half of the major film distributors acted contrary to their self-interest is what permits

a rational inference of conspiracy or coercion as opposed to permissible independent

conduct. See Admiral Theater Corp. v. Douglas Theater Co., 585 F.2d 877, 884 (8th

Cir. 1978) (when conduct is inconsistent with self-interest of actors, were they acting

alone, agreement may be inferred solely from action); cf. Abraham & Veneklasen,

776 F.3d at 330 (reversing judgment based on jury verdict where evidence showed

that actors’ independent financial incentives and ethical concerns could have

motivated defendants’ conduct); see also Cobb Theatres, 101 F. Supp. 3d at 1331



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(noting that most conspiracies are inferred from behavior of alleged conspirators and

denying motion to dismiss restraint-of-trade claim where premium theater alleged

that megaplex requested clearance, implicitly threatening economic harm if

distributors did not accede, and premium theater subsequently received fewer films).

      Accordingly, we conclude that iPic adduced some evidence from which the

trial court could have inferred the existence of a conspiracy or coercion.        See

Admiral Theater Corp., 585 F.2d at 884; Spectators’ Commc’n, 253 F.3d at 221;

Cobb Theatres, 101 F. Supp. 3d at 1331. Therefore, the trial court did not abuse its

discretion in impliedly finding that iPic raised a bona fide issue with respect to the

first element of its restraint-of-trade claim. Intercontinental Terminals, 354 S.W.3d

at 897 (to show probable right to relief, applicant must adduce evidence sufficient to

raise a bona fide issue as to applicant’s right to ultimate relief); Davis, 571 S.W.2d

at 862 (in reviewing temporary injunction, appellate court views evidence in light

most favorable to trial court’s resolution of conflicting evidence).

      2.     Relevant markets

             a.     The product markets

      The parties agree that there is more than one relevant product market. They

also agree that they both participate in the first of these product markets—the market

for film licenses. In this market, both the Greenway and iPic Houston compete to

purchase film licenses from film distributors.



                                          20
      The parties disagree and presented conflicting evidence about a second

relevant product market in which iPic Houston and Regal are sellers: the market for

film exhibition in which moviegoers are the buyers. Regal argues that the Greenway

and iPic Houston both operate in the same market—the market for first-run film

exhibition. For its part, iPic contends that it participates in a distinct first-run film

exhibition market—the market for premium exhibition of first-run films—to the

exclusion of the Greenway and megaplexes generally.

      When determining whether two products are in the same market, the factfinder

should consider cross-elasticity on both the demand side and the supply side. See

Rebel Oil, 51 F3.d at 1436. In other words, the factfinder considers the extent to

which the products are interchangeable from the perspective of consumers. Id. It

also considers interchangeability from the supply side, asking how easily and

costlessly one party could sell the same product as the other. Id.; see also Apani,

300 F.3d at 626.

      In support of its contention that the Greenway and iPic Houston compete in

the same first-run film exhibition market, Regal adduced evidence that an internal

iPic report prepared in advance of iPic Houston’s opening referenced the Greenway

and other Houston megaplexes as competitors. Regal also adduced evidence that

iPic parked a van advertising the iPic Houston in front of the Greenway to lure

Greenway patrons to the iPic Houston. Regal argues that the trial court should have



                                           21
credited this evidence as demonstrating cross-elasticity in both supply and demand

between the Greenway and the iPic Houston and concluded that both theaters

participate in the same film exhibition market—the market for display of first-run

films. See Apani, 300 F.3d at 626; see also Rebel Oil, 51 F.3d at 1435 (“If consumers

view the products as substitutes, the products are part of the same market.”).

      iPic’s witnesses testified that the iPic Houston offers a different product to

consumers than the Greenway—a luxury film-watching experience in which iPic’s

unique amenities are integral. iPic presented evidence that iPic Houston was the

only theater of its kind in Houston, targeting a different demographic, and charging

twice or more the price of the average ticket at the Greenway for its premium plus

seats, which comprise 60% of the total number of seats at iPic Houston.

      With respect to cross-elasticity of demand, Warren-Boulton acknowledged

that some moviegoers might choose to go to either the Greenway or the iPic, but he

opined that they “are not close substitutes,” and the amount of consumers who treat

the two as interchangeable is “de minimis” because of the difference in both price

and quality of experience. See Apani, 300 F.3d at 626; Rebel Oil, 51 F.3d at 1435.

Regarding the supply side, Hashemi testified that iPic invested over $10 million in

the build-out of iPic Houston, which included the construction of the pod seating

and a full kitchen and bar. iPic also invested a significant sum in the training of over

200 employees to operate the theater and its bar and food service. And Miles



                                          22
acknowledged that converting a mainstream theater to one with VIP amenities was

costly. See Rebel Oil, 51 F.3d at 1436 (cross-elasticity of supply is shown when

sellers can readily, with ease and low cost, switch to selling what other is selling).

      Thus, although the parties adduced conflicting evidence, there was some

evidence that the trial court could have credited to conclude that the two theaters

offer consumers distinct products that are not reasonably interchangeable from

consumers’ perspective. See FTC v. Whole Foods Market, Inc., 548 F.3d 1028, 1039

(D.C. Cir. 2008) (“premium natural and organic supermarkets” operate in distinct

product market where they target distinct customers paying distinct prices for a

particular shopping experience they found “uniquely attractive”); Hanover 3201

Realty, LLC v. Village Supermarkets, Inc., 806 F.3d 162, 183 (3d Cir. 2015) (full-

service supermarkets plausibly in distinct product market from traditional grocery

suppliers where they provide one-stop shopping experience including prepared

foods, on-site dining, wine and liquor, and specialty products not sold in traditional

grocery suppliers), cert. denied, 2016 WL 1046885 (2016)).

      Likewise, there was some evidence that the trial court could have credited to

conclude that the theaters were not cross-elastic on the supply side. See Rebel Oil,

51 F.3d at 1436. Although the trial court could have credited either side’s evidence,

having found some evidence supporting the trial court’s implied fact-finding that the

Greenway and the iPic Houston participate in distinct first-run film exhibition



                                          23
markets, i.e., that iPic Houston participates in the market for premium exhibition of

first-run films to the exclusion of the Greenway, we must defer to that finding on

appeal. See Davis, 571 S.W.2d at 862 (appellate court defers to trial court’s

credibility judgments and resolution of conflicting evidence when reviewing

temporary injunction order); Cobb Theatres, 101 F. Supp. 3d at 1335 (citing

Thompson, 934 F.2d at 1573) (parameters of relevant product market is question of

fact).

               b.    The geographic market

         Because we have concluded that iPic adduced some evidence to support a

finding that the two theaters operate in distinct first-run film exhibition product

markets, we next consider the geographic scope of the product market in which the

two theaters do compete and in which Regal allegedly used its power to harm

competition—the market for first-run film licenses.

         Regal asserts that the geographic market for first-run film licensing is

coextensive with the first-run film exhibition market and far broader than the

Greenway zone, which is the area within a 3-mile radius of the Greenway.

Specifically, Regal points to its expert’s opinion that the geographic market for first-

run film exhibition spans 10 miles from the Greenway, as evidenced by proof that a

substantial percentage of moviegoers divert to theaters outside the Greenway zone

if the Greenway does not play a particular film. It argues that the trial court



                                          24
disregarded its proof of eight other commercial first-run theaters within this larger

area. Regal asserts that when all theaters in this broader geographic market are

considered, the Greenway’s market share is only 12–16%, which is insufficient to

show market power.

      For its part, iPic contends that a detailed inquiry into the geographic market

for film licenses is unnecessary because it demonstrated actual harm to competition.

See Toys “R” Us, Inc. v. F.T.C., 221 F.3d 928, 937 (7th Cir. 2000) (“The Supreme

Court has made it clear that there are two ways of proving market power. One is

through direct evidence of anticompetitive effects.”). Alternatively, iPic asserts that

it adduced sufficient evidence of a geographic market coextensive with the

Greenway zone, in which Greenway has only one competitor—iPic Houston—for

the purchase of film licenses.

      iPic’s expert, Warren-Boulton, testified that the relevant market for film

licenses was “a very, very narrow small market” approximating the 3-mile

Greenway zone, although he acknowledged that the Greenway draws customers

from up to five to seven miles away. iPic also relies, in support of its proposed

geographic market, on the proof that Regal and AMC’s clearance policies extend

only to theaters in close proximity, within 3 miles. Finally, iPic points out that the

Greenway does not clear any theater other than the iPic Houston, and that no other

theater clears the Greenway or the iPic Houston. According to iPic, this evidence is



                                          25
sufficient to show that no other theater impacts the Greenway’s or the iPic Houston’s

film licensing.

      When determining the geographic market, the factfinder may consider

economic and physical barriers to expansion such as customer convenience and

preference. Cobb Theatres, 101 F. Supp. 3d at 1336. Markets involving services

that can only be offered from a particular location, such as theaters, are often defined

by how far consumers are willing to travel. Id. Regal proved that moviegoers

diverted to other megaplexes in substantial numbers when the Greenway did not

exhibit a film, but did not adduce evidence that such diversion indicates the existence

of competition between the Greenway and those megaplexes in the film licensing

market. iPic offered expert and other evidence to support a narrower geographic

market for film licenses than Regal posits. In short, although the parties offered

conflicting evidence, the trial court could have concluded that the geographic market

spans, roughly, an area contiguous with the 3-mile range iPic posited, with Regal’s

resulting market share being sufficient to bespeak market power. See id. (allegation

of geographic market consisting of “Buckhead-Brookhaven film licensing zone”

comprised of moviegoers who reside in or around Buckhead and Brookhaven

sufficient to withstand motion to dismiss despite defendants’ claim that market

should not be so narrowly drawn as to exclude various nearby theaters). Although

reasonable minds could reach different conclusions, because the record supports the



                                          26
trial court’s implied finding of a properly defined geographic market, we do not

disturb the finding on appeal. Davis, 571 S.W.2d at 862 (appellate court defers to

trial court’s credibility judgments and resolution of conflicting evidence when

reviewing temporary injunction order); see also Butnaru, 84 S.W.3d at 204.

             c.    Market power

      Regal argues that the trial court’s implied finding that Regal has market power

sufficient to harm competition is unsupported by the record because Regal held only

12–16% of the market share in the market for film licenses, and therefore lacked

power to inflict competitive harm. This assumes the trial court adopted Regal’s

definition of the relevant geographic market. iPic asserts that the decision by some

distributors to allocate films between the theaters is itself proof of Regal’s market

power sufficient to support the temporary injunction.

      Market power may be shown in different ways, including by proof of power

to exclude competition. See Cohlmia v. St. John Med. Ctr., 693 F.3d 1269, 1282

(10th Cir. 2012) (proof of market power requires evidence of either power to control

prices or to exclude competition). Here, the evidence showed that the Greenway has

over 5,000 seats, outnumbering the iPic Houston’s seats by almost ten times. It is

undisputed that the Greenway’s relative size gives it the capacity to generate more

total revenue for distributors than the iPic. Viane, Regal’s head film-buyer, told the




                                         27
distributors as much, emphasizing that distributors who licensed films to iPic

Houston instead of the Greenway lost revenue.

       There was also evidence from which the trial court could conclude that

Regal’s clearance request was the but-for cause of the allocating distributors’

decisions not to license films to iPic Houston—iPic witnesses testified that those

distributors said as much. And Warren-Boulton testified that Regal’s ability to

convince distributors to allocate films between the two theaters demonstrated that

Regal had market power. See Cohlmia, 693 F.3d at 1282 (market power requires

“evidence of either power to control prices or the power to exclude competition”).

       Regal argues that the record contains conflicting evidence negating market

power. It emphasizes that three of the major film distributors denied its clearance

request and that iPic Houston was able to secure desirable films from the allocating

distributors. This evidence demonstrates only that Regal’s market power is not

unfettered. Because some evidence supports the trial court’s resolution of the

conflicting evidence to find that Regal has sufficient market power to restrain, in

part, iPic’s ability to obtain film licenses, we cannot disturb its implied finding on

appeal. See Davis, 571 S.W.2d at 862; Butnaru, 84 S.W.3d at 204; see also

Intercontinental Terminals, 354 S.W.3d at 897 (stating that “[t]he evidence must be

sufficient to raise ‘a bona fide issue [ ] as to [the applicant’s] right to ultimate

relief.’”).



                                         28
      3.     Harm to competition

      Regal contends that iPic was required but failed to show substantial harm to

competition market-wide. Relying on Coca-Cola Company v. Harmar Bottling

Company, 218 S.W.3d 671 (Tex. 2006), Regal asserts that iPic, at most, showed that

it occasionally failed to secure licenses for particular films, which is insufficient.

218 S.W.3d at 688 (isolated instances that impacted consumers through reduced

choices insufficient absent showing of market-wide harm to competition). iPic

counters that it met its burden to show harm by demonstrating a reduction in output

in both product markets. See Orson, 79 F.3d at 1367 (antitrust plaintiff satisfies his

burden to show anticompetitive effects with evidence of reduction of output or

deterioration in quality of goods and services).

      iPic adduced some evidence that Regal’s clearance request reduced the

number of films that iPic Houston was able to exhibit. Woods testified that Regal’s

clearance request resulted in the iPic Houston showing fewer films than it wanted to

show—only 12 during the period in which every other iPic theater exhibited 21 to

30. Hashemi testified that this constraint on iPic Houston’s ability to obtain film

licenses, in turn, reduced the quality of the product available to Houston consumers

in the market for premium exhibition of first-run films. This is sufficient under

Orson. Id.




                                         29
      Regal contends that Paddock Publications, Inc. v. Chicago Tribune Co., 103

F.3d 42 (7th Cir. 1996), and Harmar Bottling compel a different conclusion. But

neither of these cases involved distinct secondary product markets. See Paddock

Publ’n, 103 F.3d at 44 (plaintiff and defendants all participated in general-interest

newspaper market); Harmar Bottling, 218 S.W.3d at 675 (relevant product market

was market for carbonated soft drinks). Here, the trial court implicitly found that

iPic Houston participates in the premium film exhibition market to the exclusion of

the Greenway, and the evidence is sufficient to support the trial court’s implied

finding that Regal’s clearance request reduced the number of first-run films available

to consumers in that market. See Orson, 79 F.3d at 1367 (antitrust plaintiff satisfies

burden to show anticompetitive effects with evidence of reduction of output or

deterioration in quality of goods and services); Harmar Bottling, 218 S.W.3d at 688

(adverse impact on output or choice in market is evidence of market-wide harm); see

also Cobb Theatres, 101 F. Supp. 3d at 1335 (allegation that clearance of premium

movie theater by megaplex forced consumers to purchase product that was less

desirable and of inferior quality adequately alleged harm to competition).

Accordingly, we hold that iPic adduced some evidence that Regal’s conduct harmed

the market for premium exhibition of first-run films, and we therefore must defer to




                                         30
the trial court’s implied finding.3 See Butnaru, 84 S.W.3d at 204; Intercontinental

Terminals, 354 S.W.3d at 897.

      We overrule Regal’s first issue.

C.    Probable, imminent, and irreparable injury

      In its second issue, Regal contends that the trial court erred in granting

temporary injunctive relief because iPic did not adduce sufficient evidence that it

would suffer probable, imminent, and irreparable injury without it. In particular,

Regal contends that iPic failed to show an imminent, actual injury or that any injury

was irreparable.

      1.     Threat of imminent, actual injury
      Woods and Hashemi testified that iPic Houston was unsuccessful in licensing

several films due to Regal’s clearance request. Hashemi also testified that customers

in the premium first-run film exhibition market expect that a premium first-run film

exhibitor would play those movies, that the iPic Houston’s reputation and goodwill

is dependent upon being able to offer these movies, and that the clearance therefore

negatively affected the iPic’s reputation and ability to deliver the experience

consumers expected. Woods testified along the same lines, adding that Regal’s


3
      Because we have concluded that the trial court did not abuse its discretion in
      concluding that iPic demonstrated a probable right to relief on its unlawful restraint-
      of-trade claim, and that claim is sufficient to support the temporary injunction, we
      do not address Pic’s three other claims—monopolization, attempted
      monopolization, and tortious interference with contracts and prospective business
      relationships.

                                            31
clearance was having a “direct impact [on] our long-term viability.” This evidence

would permit the trial court to conclude that iPic would suffer imminent harm if

Regal’s conduct was not enjoined. See Intercontinental Terminals, 354 S.W.3d at

895 (evidence that defendant’s actions were causing loss of goodwill and reputation

was evidence of imminent actual injury).

        Regal contends it demonstrated that the clearance did not threaten imminent

harm.        For example, Regal emphasizes that iPic Houston was exceeding

performance projections and outperforming other iPic theaters. Regal points out

that, far from leaving only leftovers for iPic Houston, it was the Greenway that

played several films only after iPic passed.

        Although the record contains conflicting evidence regarding whether iPic

Houston would suffer imminent harm absent an injunction, we may not disturb the

trial court’s resolution of conflicting evidence. The trial court was free to choose

which evidence to credit and discredit, and we must view the evidence in the light

most favorable to its ruling. See Butnaru, 84 S.W.3d at 204; Davis, 571 S.W.2d at

862. Accordingly, we hold that the trial court did not abuse its discretion in

concluding that Regal’s clearance threatened imminent injury to iPic.

        2.     Irreparable injury

        Regal also contends that iPic did not demonstrate that any harm threatened

would be irreparable. As discussed above, some evidence adduced by iPic pertained



                                         32
to harm to iPic Houston’s goodwill and reputation.           “While [goodwill and

reputational injuries] are not categorically irreparable, the irreparable injury

requirement is satisfied when injuries of this nature are difficult to calculate or

monetize.” Intercontinental Terminals, 354 S.W.3d at 895; see also Butnaru, 84

S.W.3d at 204.

      Hashemi testified that there was “no way . . . to measure what [iPic’s] losses

are,” because there was no way to know how many customers would have been

drawn to particular movies that the iPic was unable to show, and no way to measure

how many customers the iPic would not be able to “bring . . . back” once it earned a

reputation for showing lesser-quality films.

      Regal contends that the trial court could not have concluded that any imminent

harm to iPic would be irreparable because Regal’s expert, Gokhale, testified that the

harm to iPic, if any, could be calculated with a reasonable degree of certainty using

iPic’s internal performance benchmarks. While the parties adduced conflicting

evidence, the trial court was not required to accept Gokhale’s testimony. It could

have concluded that at least some of the harm that iPic would suffer was

reputational—an injury to its goodwill—and irreparable. See, e.g., Frequent Flyer

Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215, 228 (Tex. App.—Fort Worth

2009, pet. ref’d) (“Disruption to a business can be irreparable harm. Moreover,

assigning a dollar amount to such intangibles as a company’s loss of clientele,



                                         33
goodwill, marketing techniques, and office stability, among others, is not easy.”)

(internal citations omitted)); T–N–T Motorsports, 965 S.W.2d at 24 (affirming

temporary injunction based on testimony that lost goodwill would be

“immeasurable”); Intercontinental Terminals, 354 S.W.3d at 896 (trial court was

free to credit testimony of plaintiff’s general manager that it would be “extremely

difficult” to calculate harm to plaintiff’s business reputation and discredit

defendant’s damage expert’s testimony that the harm was quantifiable). Viewing

the evidence in the light most favorable to the trial court’s ruling, we hold that the

trial court did not abuse its discretion in finding that the imminent harm with which

iPic was threatened would be irreparable.

      In sum, we hold that the trial court did not abuse its discretion in concluding

that iPic demonstrated a probable, imminent, and irreparable injury.

      We overrule Regal’s second issue.

                                    Conclusion

      We affirm the trial court’s temporary injunction order.




                                              Rebeca Huddle
                                              Justice

Panel consists of Justices Keyes, Brown, and Huddle.




                                         34
