AN ACT Relating to fair competition in motion pictures; amending RCW 19.58.010, 19.58.020, and 19.58.040; and adding new sections to chapter 19.58 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 1, chapter 29, Laws of 1979 ex. sess. and RCw 19.58.010 are each amended to read as follows:

The purpose of this chapter is to establish fair and open procedures for bidding and negotiation for the right to exhibit first run motion pictures in the state in order to prevent unfair and deceptive acts or practices and unreasonable restraints of trade in the business of motion picture distribution and exhibition within the state; to promote fair and effective competition in that business; and to insure that exhibitors have the opportunity to view a motion picture and know its contents before committing themselves to exhibiting the motion picture in their communities.

Sec. 2. Section 2, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.020 are each amended to read as follows:

The definitions contained in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Bid" means a written ((~~or oral~~)) offer or proposal to buy made by an exhibitor to a distributor in response to an invitation to bid for the license or right to exhibit a motion picture, the license stating the terms under which the exhibitor agrees to exhibit the motion picture.

(2) "Blind bidding" means the exhibitor's bidding or negotiating for, or the exhibitor's offering or agreeing to, terms for the license or right to exhibit a feature motion picture at any time either before the feature motion picture has been trade screened within the state or before the feature motion picture has been otherwise made available for viewing within the state by all exhibitors.

(3) "Blind selling" means the practice whereby a distributor licenses a feature motion picture before the exhibitor is afforded an opportunity to view the feature motion picture by trade screening.

(4) "Buying" or "selling" of the right to exhibit a feature motion picture means the licensing of a theater to show the feature motion picture for a certain number of days for a certain price.

(5) "Distributor" means a person engaged in the business of distributing or supplying more than one feature motion picture per year to exhibitors by rental, sale, licensing, or other agreement.

(6) "Exhibit" or "exhibition" means playing or showing a feature motion picture to the public for an admission charge.

(7) "Exhibitor" means a person in the business of operating one or more theaters in which motion pictures are exhibited to the public.

(8) "Feature motion picture" means a motion picture exceeding sixty minutes in duration.

(9) "Independent distributor" means a distributor whose total film rental earned in the preceding calendar year was less than twenty-five million dollars.

(10) "Invitation to bid" means a written ((~~or oral~~)) solicitation or invitation by a distributor to one or more exhibitors to bid or negotiate for the license or right to exhibit a feature motion picture.

((~~(10)~~)) (11) "Licensing agreement" means a contract((,)) or agreement((~~, understanding, or condition~~)) between a distributor and an exhibitor relating to the licensing or exhibition of a feature motion picture by the exhibitor.

((~~(11)~~)) (12) "Local exhibitor" means an exhibitor that operates only one theater, which theater has no more than two screens, and which theater is not in whole or in part owned or operated by or affiliated with any other exhibitors or any other person that in whole or in part owns, operates, or is affiliated with another theater.

(13) "Person" means one or more individuals, firms, partnerships, associations, societies, trusts, organizations, or corporations.

((~~(12)~~)) (14) "Run" means the continuous exhibition of a feature motion picture in a defined geographic area for a specified period of time. A "first run" is the first exhibition of the feature motion picture in the defined area; a "second run" is the second exhibition; and "subsequent runs" are subsequent exhibitions after the second run. "Exclusive run" is a run limited to a single theater in a defined geographic area and a "nonexclusive run" is a run in more than one theater in a defined geographic area.

((~~(13)~~)) (15) "Theater" means an establishment in which feature motion pictures are regularly exhibited to the public for an admission charge.

((~~(14)~~)) (16) "Trade screening" means the exhibition of a feature motion picture, prior to its release for public exhibition by a distributor, in the largest city within the state, which is open to all exhibitors from whom the distributor intends to solicit bids or with whom the distributor intends to negotiate for the license or right to exhibit the feature motion picture.

(17) "Best bid" means the best bid as determined by the distributor, considering the location, quality, seating capacity, financial responsibility of the exhibitor, proposed length of run, rent or percentage terms, guarantees, quality of projection, and any other relevant factor.

Sec. 3. Section 4, chapter 29, Laws of 1979 ex. sess. and RCW 19.58.040 are each amended to read as follows:

((~~If bids are solicited from exhibitors for the licensing of a feature motion picture within the state, then:~~

~~(1) The invitation to bid shall specify: (a) Whether the run for which the bid is being solicited is a first, second, or subsequent run;~~)) (1) When an exhibitor notifies a distributor that it wishes to bid for feature motion pictures to be released by the distributor in this state, then the distributor shall solicit bids from the exhibitor and competing exhibitors for the first runs of all motion pictures to be released by the distributor in each city, town, or community, in which the exhibitor requests bidding.

(2) When a distributor solicits bids from exhibitors under this chapter, it shall require bids to be sealed and in addition shall comply with the following requirements and procedures:

(a) The distributor shall notify each exhibitor solicited of the following information: (i) Whether the run is an exclusive or nonexclusive run((;)) and((,)) the geographic area for the run; ((~~(b)~~)) (ii) the names of all exhibitors who are being solicited; ((~~(c)~~)) (iii) the date and hour the invitation to bid expires; and ((~~(d)~~)) (iv) the time, date, and location, including the address, where the bids will be opened, which shall be in the largest city within the state.

((~~(2) All bids shall be submitted in writing and~~)) (b) The distributor shall ((~~be opened~~)) open the submitted bids at the same time and in the presence of those exhibitors, or their agents, who submitted bids and who attend the bid opening.

((~~(3)~~)) (c) Immediately upon being opened, the bids shall be subject to examination by the exhibitors, or their agents, who submitted bids, and who are present at the opening. Within ten business days after the bids are opened, the distributor shall notify each exhibitor who submitted a bid either the name of the winning bidder or the fact that none of the bids were acceptable.

((~~(4)~~)) (d) Once bids are solicited, the distributor shall license the feature motion picture only by bidding and ((~~may~~)) shall solicit rebids only if ((~~none~~)) each of the submitted bids ((~~are acceptable~~)) is an unacceptable bid: PROVIDED, That if no bids are received in response to a bid or rebid solicitation, the distributor may thereafter license the feature motion picture by a method other than bidding.

(e) Unless the distributor rejects all bids, the license or right to play a feature motion picture for which bids are solicited shall be awarded to the exhibitor submitting the best bid for that license or right.

(f) When a distributor licenses a feature motion picture by bidding and the parties modify the licensing agreement, the distributor shall notify all persons who submitted bids for the motion picture of the terms of the modification.

(g) If a local exhibitor requests an independent distributor to award a license for a specific film by a method other than bidding, the independent distributor may award the license in question by any method.

NEW SECTION. Sec. 4. A new section is added to chapter 19.58 RCW to read as follows:

(1) An aggrieved person alleging that a feature motion picture was licensed in violation of this chapter may elect to have the dispute submitted to an arbitration panel as provided in this section.

(2) The grievant shall give written notice of the intent to arbitrate to all parties: (a) Within twenty-four hours of the bid opening, if an opening occurred and the distributor notified the aggrieved person of the opening; or (b) within twenty-four hours of discovery of the facts giving the grievant cause to believe this chapter was violated. The notice shall state the basis for the alleged violation of this chapter and the relief requested.

(3) Except as provided in subsection (4) of this section, the arbitration panel shall consist of three persons selected as follows: The grievant shall name one arbitrator in the notice of intent to arbitrate. Within twenty-four hours of receipt of the notice, the party alleged to have violated this chapter shall name a second arbitrator. The two arbitrators shall select a third arbitrator within twenty-four hours of the naming of the second arbitrator.

(4) If two persons claim to have been injured by the same act and both seek arbitration, the number of arbitrators shall be increased to five as follows: Each grievant shall name one arbitrator, the party alleged to have violated this chapter shall name one arbitrator, and the arbitrators named by all of the parties shall select two additional arbitrators.

(5) The panel shall choose a chair, and the chair shall promptly establish a date, time, and place for a hearing and shall provide reasonable notice thereof to the parties to the dispute. Within seventy-two hours after the naming of the arbitration panel, an informal hearing shall be held and a decision rendered on whether this chapter has been violated. Each party shall have the opportunity to present evidence and make argument. No member of the arbitration panel may act as a witness or present the case for a party to the proceedings. The rules of evidence prevailing in judicial proceedings may be considered but are not binding. Any oral testimony or documentary evidence or other data deemed relevant by the chair may be received in evidence. A recording of the proceedings shall be taken.

(6) The chair may administer oaths, require the attendance of witnesses, and require the production of such books, papers, contracts, agreements, and documents as may be deemed to be material to a just determination of the issues in dispute. If any person refuses to obey a subpoena issued by the chair, or any person refuses to be sworn or to make an affirmation to testify, or any witness, party, or attorney for a party is guilty of any contempt while in attendance at any hearing held under this section, the chair or any party may invoke the jurisdiction of the superior court and such court shall have jurisdiction to issue an appropriate order. Any failure to obey such order may be punished by the court as a contempt thereof.

(7) If a party refuses to submit to the procedures set forth in this section, the other party, or the panel, may invoke the jurisdiction of the superior court and such court shall have jurisdiction to issue an appropriate order. A failure to obey such order may be punished by the court as a contempt thereof.

(8) The arbitration panel may order, deny, or grant the relief requested. The panel may grant any relief, except damages, which will rectify the violation, and shall take into consideration the status of the picture at the time of award and whether it is most equitable to order relief respecting future pictures. The decision and award, signed by a majority of the arbitrators, shall be delivered to the parties. The burden of proof shall be on the grievant.

(9) Within three days following receipt of the panel's award, any party may file with the clerk of the superior court a written notice of appeal and request for a trial de novo in the superior court on all issues of law and fact. If no appeal is filed, the panel shall file the decision and award with the court and judgment shall be entered and may be presented by any party, on notice. Such judgment when entered shall have the same force and effect as judgments in civil actions. If the appealing party fails to improve the party's position on the trial de novo, the court shall award to the other party costs and reasonable attorney's fees for the appeal.

NEW SECTION. Sec. 5. A new section is added to chapter 19.58 RCW to read as follows:

This chapter does not apply to sneak previews, film festivals, or other occasional, isolated, nonconsecutive exhibition.