Keller v. Electronic Arts Inc. et al

Filing 455


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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 6 7 IN RE NCAA STUDENT-ATHLETE NAME & LIKENESS LICENSING LITIGATION. No. C 09-1967 CW ORDER DENYING ELECTRONIC ARTS INC.’S MOTION FOR JUDGMENT ON THE PLEADINGS (Docket No. 366) ________________________________/ 8 9 Defendant Electronic Arts Inc. (EA) moves for judgment on the United States District Court For the Northern District of California 10 pleadings for the claims asserted against it in the Second 11 Consolidated Amended Complaint (2CAC). 12 O’Bannon, Jr., Harry Flournoy, Alex Gilbert, Sam Jacobson, Thad 13 Jaracz, David Lattin, Patrick Maynor, Tyrone Prothro, Damien 14 Rhodes, Eric Riley, Bob Tallent, and Danny Wimprine (collectively, 15 Antitrust Plaintiffs) oppose the motion. 16 parties’ papers and their arguments at the hearing on the motion, 17 the Court DENIES EA’s motion. 18 19 Plaintiffs Edward C. Having considered the BACKGROUND Because the Court’s Orders of May 2, 2011 and July 28, 2011 20 describe the factual allegations and procedural history of the 21 case in detail, the Court does not repeat them here in their 22 entirety. 23 Antitrust Plaintiffs in these consolidated cases bring claims 24 based on an alleged conspiracy among EA, Defendants Collegiate 25 Licensing Company (CLC) and National Collegiate Athletic 26 Association (NCAA) to restrain trade in violation of section one 27 of the Sherman Act. 28 Lamarr Watkins, and Bryon Bishop (collectively, Publicity Plaintiffs Samuel Keller, Bryan Cummings, 1 Plaintiffs) bring claims based on Defendants’ alleged violations 2 of their statutory and common law rights of publicity. 3 Plaintiffs’ claims are not at issue here, nor are any of the 4 claims against CLC or the NCAA. 5 Publicity In its May 2, 2011 Order, the Court granted EA’s motion to 6 dismiss Antitrust Plaintiffs’ Sherman Act and related common law 7 claims for failure to state a claim for which relief can be 8 granted. 9 Complaint (CAC) had not sufficiently alleged a factual basis for The Court found that Plaintiffs’ Consolidated Amended United States District Court For the Northern District of California 10 either of two Sherman Act claims asserted against EA. 11 granted Plaintiffs leave to amend to plead facts demonstrating 12 EA’s agreement to engage in the alleged conspiracies. The Court 13 On May 16, 2011, Plaintiffs filed the 2CAC, adding 14 allegations regarding EA’s involvement in the purported 15 conspiracy, many of which are summarized in the Court’s July 28, 16 2011 Order, including that EA is the only NCAA licensee which uses 17 images of current or former players, and that, in its licensing 18 agreements with CLC, EA has expressly agreed to abide by the 19 NCAA’s rules prohibiting student-athlete compensation, and has 20 “agreed to extend its agreement with the NCAA, prohibiting 21 compensation to student-athletes, to former student-athletes.” 22 2CAC ¶¶ 373, 400. 23 24 25 On May 31, 2011, EA filed a motion to dismiss the antitrust claims asserted against it in the 2CAC. On July 28, 2011, the Court denied EA’s motion to dismiss. 26 The Court stated that “many of Plaintiffs’ new allegations do not 27 suggest anything more than EA’s commercial efforts to obtain new 28 rights and use its existing rights,” but that “Plaintiffs have 2 1 added a significant additional allegation: that in addition to 2 agreeing to abide by NCAA’s rules prohibiting compensation of 3 current student-athletes, EA also agreed not to offer compensation 4 to former student-athletes.” 5 at 6. 6 compensate former student-athletes for use of their images, 7 likenesses and names, going beyond the requirements of NCAA’s 8 rules and policies, satisfies the requirement that Antitrust 9 Plaintiffs plead the existence of a price-fixing agreement Order Denying EA’s Motion to Dismiss The Court found that this “allegation that EA agreed not to United States District Court For the Northern District of California 10 involving EA,” because it shows that “EA was not merely doing 11 business in the context of the NCAA’s amateurism policies” and 12 instead “suggests that EA was actively participating to ensure 13 that former student-athletes would not receive any compensation 14 for use of their images, likenesses and names.” 15 (internal quotations and citations omitted). 16 found, “This allegation sufficiently suggests EA’s agreement to 17 participate in the claimed group boycott conspiracy.” 18 As a result, the Court found that Antitrust Plaintiffs had 19 sufficiently alleged that EA agreed to participate in the alleged 20 antitrust conspiracies with NCAA and CLC for both Sherman Act 21 claims. 22 Id. at 7 The Court similarly With the instant motion, EA has requested that the Court take 23 judicial notice of its license agreements with CLC. 24 not oppose judicial notice. 25 26 27 28 Id. at 8. Plaintiffs do The agreements state in part, Licensee recognizes that any person who has collegiate athletic eligibility cannot have his or her name and/or likeness utilized on any commercial product without the express written permission of the Institution. Therefore, in conducting licensed activity under this Agreement, Licensee shall not encourage or participate in any activity that would cause an athlete or an 3 3 Institution to violate any rule of the National Collegiate Athletic Association (NCAA) or other governing body. Moreover, Licensee acknowledges and agrees that no license or right is being granted hereunder to utilize the name, face or likeness of any past or current athlete of any Institution. 4 Request for Judicial Notice (RJN), Exs. A at 6-7, B at 7, C at 6, 5 D at 6. 1 2 6 LEGAL STANDARD 7 A motion for judgment on the pleadings, like a motion to 8 dismiss for failure to state a claim, addresses the sufficiency of 9 a pleading. Judgment on the pleadings may be granted when the United States District Court For the Northern District of California 10 moving party clearly establishes on the face of the pleadings that 11 no material issue of fact remains to be resolved and that the 12 moving party is entitled to judgment as a matter of law. 13 Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 14 (9th Cir. 1989). 15 of the pleadings, exhibits attached to the pleadings, Durning v. 16 First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987), and facts 17 which may be judicially noticed, Heliotrope Gen., Inc. v. Ford 18 Motor Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999). 19 motion to dismiss, the Court may consider documents “whose 20 contents are alleged in a complaint and whose authenticity no 21 party questions, but which are not physically attached to the 22 pleading.” 23 overruled on other grounds by Galbraith v. County of Santa Clara, 24 307 F.3d 1119 (9th Cir. 2002) (motion to dismiss); Dent v. Cox 25 Commc’n Las Vegas, Inc., 502 F.3d 1141, 1143 (9th Cir. 2007) 26 (motion for judgment on the pleadings). 27 28 Hal The court may consider, in addition to the face As with a Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), In testing the sufficiency of a pleading, the well-plead allegations of the non-moving party are accepted as true, while 4 1 any allegations of the moving party which have been denied are 2 assumed to be false. 3 However, the court need not accept conclusory allegations. W. 4 Mining Counsel v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). The 5 court must view the facts presented in the pleadings in the light 6 most favorable to the non-moving party, drawing all reasonable 7 inferences in that party’s favor, General Conference Corp. of 8 Seventh Day Adventists v. Seventh-Day Adventist Congregational 9 Church, 887 F.2d 228, 230 (9th Cir. 1989), but need not accept or Hal Roach Studios, 896 F.2d at 1550. United States District Court For the Northern District of California 10 make unreasonable inferences or unwarranted deductions of fact, 11 McKinney v. De Bord, 507 F.2d 501, 504 (9th Cir. 1974). 12 13 DISCUSSION Plaintiffs challenge whether Defendants may properly bring a 14 motion for judgment on the pleadings and argue that the instant 15 motion is in fact for reconsideration of the Court’s July 28, 2011 16 Order. 17 facts in order to move for judgment on the pleadings after having 18 brought a motion to dismiss. 19 and distinct arguments that were not before the Court at the time 20 it ruled on EA’s earlier motions. 21 considered the text of the licensing agreements between EA and CLC 22 in conjunction with CLC’s motion to dismiss in the May 2, 2011 23 Order, these contracts were not submitted or discussed by either 24 party in connection with EA’s motion addressed in the May 2, 2011 25 Order. 26 Court will consider the merits of the motion. 27 28 Defendants need not provide intervening case law or new In the instant motion, EA makes new While it is true that the Court Thus, EA’s motion is not procedurally improper, and the Plaintiffs allege two § 1 claims that rest on conspiracies purportedly joined by EA: (1) a price-fixing conspiracy to set at 5 1 zero dollars the price paid to Antitrust Plaintiffs and putative 2 class members for use of their images, likenesses and names; and 3 (2) a “group boycott/refusal to deal” conspiracy for use of their 4 images, likenesses and names. 5 In this motion, EA contends that the Court found previously 6 that Antitrust Plaintiffs sufficiently alleged that EA had joined 7 in these conspiracies, based solely on their assertion that, in 8 its licensing agreements with CLC, EA expressly agreed not to 9 compensate former student-athletes for the use of their images, United States District Court For the Northern District of California 10 likenesses and names. 11 conclusively refuted by the actual terms of the licensing 12 agreements. 13 EA argues now that these allegations are Contrary to EA’s characterization, the Court’s prior orders 14 did not reduce the antitrust claims against it to “a single 15 allegation.” 16 for a violation of § 1 of the Sherman Act, a plaintiff must plead, 17 among other things, facts suggesting the existence of “a contract, 18 combination or conspiracy among two or more persons or distinct 19 business entities” that was intended to impose an unreasonable 20 restraint of trade. 21 1047 (9th Cir. 2008) (citing Les Shockley Racing Inc. v. Nat’l Hot 22 Rod Ass’n, 884 F.2d 504, 507 (9th Cir. 1989)). 23 of parallel commercial activities “gets the complaint close to 24 stating a claim,” the allegations must include some “further 25 circumstance pointing toward a meeting of the minds” with regard 26 to concerted, anticompetitive conduct to be sufficient. 27 518 F.3d at 1048 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 28 544, 557 (2007)); see also Kline v. Coldwell, Banker & Co., 508 As the Court has previously noted, to state a claim Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 6 While a statement Kendall, 1 F.2d 226, 232 (9th Cir. 1974) (“Nor will proof of parallel 2 business behavior alone conclusively establish agreement.”). 3 While the Court previously found that Antitrust Plaintiffs’ 4 allegations regarding the licensing agreements provided the 5 crucial additional circumstance that demonstrated that Defendants’ 6 parallel conduct was the result of a “meeting of the minds,” this 7 does not mean that the allegations of parallel business conduct 8 between EA and the other Defendants are not also among the facts 9 suggesting the existence of a conspiracy. United States District Court For the Northern District of California 10 Reading Antitrust Plaintiffs’ allegations about the 11 agreements in the context of their overall complaint, rather than 12 in isolation, the Court finds, drawing all reasonable inferences 13 in favor of Antitrust Plaintiffs, as the non-movants, that the 14 actual terms of the licensing agreements do not refute Antitrust 15 Plaintiffs’ allegations. 16 allege that Defendants required student-athletes to sign NCAA Form 17 08-3a, or a form similar to it, each year prior to participating 18 in intercollegiate athletics events, in accordance with NCAA 19 bylaws, and that in this form, student-athletes were required to 20 give NCAA and third parties acting on its behalf the right to use 21 their name or image. 22 Defendants have interpreted these forms as existing in perpetuity 23 and allowing them to enter licensing agreements to distribute 24 products containing student-athletes’ images, likenesses and names 25 without payment to the student-athletes, even after the student- 26 athletes have ended their collegiate athletic careers. 27 28 In their complaint, Antitrust Plaintiffs Antitrust Plaintiffs further allege In the licensing agreements, EA agrees that it will “not encourage or participate in any activity that would cause an 7 1 athlete or an Institution to violate” the NCAA’s rules. 2 term, the agreement does not distinguish between former and 3 current student-athletes, even though, in the next sentence, it 4 acknowledges that both may be encompassed within the word 5 “athlete.” 6 allegations, on a motion for judgment on the pleadings, these 7 terms can fairly be read to evidence a “meeting of the minds” 8 between EA and the other Defendants not to compensate former 9 student-athletes, where such a contract would interfere with the In this In the context of Antitrust Plaintiffs’ other United States District Court For the Northern District of California 10 student-athletes’ existing agreements with the NCAA. 11 meeting of the minds is further supported by the other terms in 12 the licensing agreements. 13 written approval from CLC and, through it, the NCAA of all 14 licensed products, which would include the video games that are 15 alleged to contain former student-athletes’ likenesses. 16 the agreements give broad authority to the CLC and NCAA to inspect 17 EA’s financial records related to the products, allowing them to 18 see that payments were almost never made to former student- 19 athletes. 20 Such a For example, the agreements require Further, EA argues that Antitrust Plaintiffs’ allegations that some 21 former student-athletes have licensed their collegiate likenesses 22 are inconsistent with their theories of anticompetitive conduct. 23 The Court has previously rejected this argument. 24 Granting EA’s Mot. to Dismiss and Denying CLC’s and NCAA’s Mots. 25 to Dismiss, Docket No. 325, at 14. 26 this ruling. 27 28 8 See, e.g., Order EA offers no reason to alter 1 2 3 4 CONCLUSION For the reasons set forth above, the Court DENIES EA’s motion for judgment on the pleadings (Docket No. 366). IT IS SO ORDERED. 5 6 7 Dated: 5/16/2012 CLAUDIA WILKEN United States District Judge 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9

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