Laumann et al v. National Hockey League et al

Filing 346

OPINION AND ORDER re: (339 in 1:12-cv-03704-SAS, 339 in 1:12-cv-03704-SAS) MOTION to Appoint Counsel . MOTION to Certify Class filed by Derek Rasmussen, Vincent Birbiglia, Garrett Traub, Marc Lerner, (266 in 1:12-cv-018 17-SAS, 266 in 1:12-cv-01817-SAS) MOTION to Certify Class . MOTION to Appoint Counsel filed by David Dillon, Robert Silver, Thomas Laumann, Garrett Traub: For the reasons set forth above, plaintiffs' motion is GRANTED in part and DENIED in part. The Clerk of the Court is directed to close this motion, Dkt. No. 266 in 12 Civ. 1817, and Dkt. No. 339 in 12 Civ. 3704. (Signed by Judge Shira A. Scheindlin on 5/14/2015) (tn)

OPINION AND
ORDER

Plaintiffs,
- against -

12-cv-1817 (SAS)

NATIONAL HOCKEY LEAGUE, et al.,
Defendants.
)(

MARC LERNER, DEREK RASMUSSEN, and
GARRETT TRAUB, representing themselves and all
other similarly situated,
Plaintiffs,
- against -

12-cv-3704 (SAS)

OFFICE OF THE COMMISSIONER OF BASEBALL,
et al.,
Defendants.

--------------------------------------------------------------------- )(
SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION
In a companion Opinion issued today, I held that the damages model

1

submitted by plaintiffs’ expert, Dr. Roger Noll, must be excluded as unreliable
under Daubert.1 The purpose of this Opinion (the “Certification Opinion”) is to
address whether the litigation may proceed on a class-wide basis. Plaintiffs have
moved to certify two classes — first, the class of consumers “who purchased []
‘out-of-market package[s]’ . . . online” (the “Internet Class”),2 and second, the
class of consumers “who purchased [] ‘out-of-market packages’ . . . through their
television provider” (the “TV Class”).3 With respect to both classes, plaintiffs seek

1

See Daubert Opinion.

2

Amended Class Action Complaint and Jury Trial Demand
(“Complaint”) ¶ 15. Accord Memorandum of Law in Support of Plaintiffs’ Motion
for Class Certification and Appointment of Class Counsel (“Pl. Mem.”), at 5.
3

Complaint ¶ 15. Accord Pl. Mem. at 5. Originally, plaintiffs
identified a third class of plaintiffs — those who “purchased a cable package that
includes a network that is protected from competition.” Complaint ¶ 15. This
class was dismissed from the case, however, in December 2012, when I held that
“[p]ermitting any plaintiff who simply purchased cable or satellite programming to
sue would create a class of plaintiffs for whom it is merely coincidental that they
purchased [baseball and hockey programming] at all,” and accordingly granted
defendants’ motion to dismiss as to “plaintiffs who merely subscribe to [a basic
cable package], but do not subscribe to an out-of-market package.” Laumann v.
National Hockey League, 907 F. Supp. 2d 465, 484 (S.D.N.Y. 2012).
Nevertheless, to say that consumers who purchased only a cable package are no
longer in the case is not to say that no remaining plaintiffs have standing to
challenge the allegedly elevated price of cable packages that stems from the
complained-of restraints. If territorial exclusivity is responsible for raising the
prices of cable packages in general — in addition to the other harms that plaintiffs
have alleged, which relate to the league-wide bundles, specifically — all of these
harms will be remedied by the same injunctive relief, should plaintiffs prevail on
the merits. In other words, no independent class is necessary to address the
2

certification under Rule 23(b)(2) as well as Rule 23(b)(3). For the reasons set forth
below, plaintiffs’ motion for (b)(2) certification is GRANTED, and their motion
for (b)(3) certification is DENIED.
II.

BACKGROUND
These actions — Garber v. MLB and Laumann v. NHL — are

antitrust challenges to sports broadcasting. Both cases rest on the same legal
theory. Plaintiffs allege that Major League Baseball (“MLB”) and the National
Hockey League (“NHL”), along with the regional sports networks (“RSNs”) that
produce their games, have entered into agreements with multichannel video
programming distributors (“MVPDs”) — DirectTV and Comcast — that limit
options, and increase prices, for baseball and hockey fans who want to watch teams
from outside the home television territory (“HTT”) where the fans live. According
to plaintiffs, defendants’ multilateral agreements impose conditions of “territorial
exclusivity” that restrain individual teams and RSNs — such as the Yankees
Entertainment Sports Network (“YES Network”) — from selling their content
directly to fans outside the HTT (in the Yankees’ case, New York and New

elevated price of cable packages. Rather, the TV Class, by challenging the impact
of territorial restraints on league-wide bundles, will simultaneously challenge the
elevated cost of cable packages, if any, that stems from those same restraints.
3

Jersey).4
According to plaintiffs, the ultimate consequence of this arrangement
is that a Yankees fan living in Iowa who wants full access to a season’s worth of
Yankees games has to buy an “out-of-market package” (“OMP”) — a bundle of all
out-of-market games, from every team — instead of simply buying the YES
Network.5 In plaintiffs’ view, this restraint is unnatural and anticompetitive. In its
absence, RSNs would distribute their content nationwide in a la carte form, and an
Iowa-based Yankees fan (for instance) would be able to choose between (1) buying
the YES Network by itself, or (2) buying an OMP.6 Furthermore, the competition
between these options would also push the price of the OMP down.7 For the
Yankees fan in Iowa, therefore, the “but-for world” (“BFW”) — the world without
the complained-of restraints — would involve two distinct but mutually
reinforcing benefits. First, out-of-market fans would have more options for

4

See Pl. Mem. at 2, 4.

5

See id. at 4 (“Clubs and their RSN partners are prevented from
distributing their games outside [HTTs] to prevent consumers from choosing to
watch their programming instead of the programming of the protected broadcaster
in the consumer’s territory. These restraints limit the choices that would
[otherwise] be available to all class members.”).
6

See id. at 4-5.

7

See id.
4

watching the games of their preferred teams. Second, all fans, whether they
primarily follow their home teams or out-of-market teams, would be able to pay
less for the OMP.
Defendants have a less sanguine vision of the BFW. Although they
concede — as they must — that the complained-of restraints limit consumer
choice, defendants argue that the restraints are what make it profitable for teams
and RSNs to broadcast their games at all. In this sense, plaintiffs’ position
overlooks the “incentives that drive the telecasting of MLB and NHL games in the
actual world.”8 Lift the restraints, defendants argue, and “[t]he end result would be
that the [OMP] either would not be available at all in the BFW, or else [it] would
be priced much higher than [it is] today.”9 The implication here, according to
defendants, is that the BFW would contain “winners and losers.” The winners
would be out-of-market consumers who, given the choice, would prefer to buy an a
la carte RSN (and, in the actual world, are unable to do so). The losers would be
consumers who, even given the choice to buy a la carte, would continue to prefer
the OMP. They would “lose” insofar as the OMP would either cost more or
disappear.
8

Defendants’ Corrected Joint Memorandum of Law in Opposition to
Class Certification (“Def. Mem.”), at 1.
9

Id. at 2.
5

With respect to class certification, defendants make essentially two
arguments.10 First, they argue that the winners and losers hypothesis — the
likelihood that the BFW would be favorable to some consumers and detrimental to
others — makes the putative classes inherently fractious, frustrating certification.
Put simply, “no class can be certified where a substantial number of class members
[would be] worse off” absent the disputed conduct.11 Second, with respect to
certification under Rule 23(b)(2), in particular, defendants argue that many
members of the putative class have no standing to request injunctive or declaratory
relief, because they no longer subscribe to OMPs, and therefore they are no longer
consumers in the relevant market.
A.

Different Forms of Exclusivity
Confusion persists — even this many years into the case — about the

exact practices that plaintiffs are challenging. Therefore, it will be helpful to begin
by carefully distinguishing three different types of “exclusivity.”
10

In addition to these arguments, defendants also argue that plaintiffs’
damages model is not sufficiently related to their theory of liability, making (b)(3)
certification inappropriate under Comcast v. Behrend. See 133 S. Ct. 1426 (2013).
See also Roach v. T.L. Cannon Corp., 778 F.3d 401, 407 (2d Cir. 2015) (“Comcast
held that a model for determining class-wide damages relied upon to certify a class
under Rule 23(b)(3) must actually measure damages that result from the class’s
asserted theory of injury.”). Because I conclude that (b)(3) certification is
inappropriate on other grounds, the Comcast objection is moot.
11

Def. Mem. at 4.
6

1.

Territorial Exclusivity

First, there is “territorial exclusivity,” which refers to the inability of
individual teams and RSNs to sell their content directly to consumers outside of
their HTTs. Territorial exclusivity is a product of multilateral agreements among
the leagues, the RSNs, and the MVPDs. In the absence of such agreements, it
would be in the interest of at least some (and perhaps all) RSNs to sell their content
a la carte, either over the Internet or through the MVPDs. Defendants do not
dispute the existence of territorial exclusivity in the actual world; nor do they
dispute that territorial exclusivity is the product of deliberate cooperation among
actors in the supply chain. Rather, the core dispute in this case — on the merits —
is whether the procompetitive benefits of territorial exclusivity outstrip its
anticompetitive effects, once all of its economic effects are taken into account.
There can be no question, however, that territorial exclusivity is anticompetitive —
it reflects an explicit agreement among competitors, purposely designed to prevent
competition. The question is whether, by doing so, territorial exclusivity enhances
consumer welfare overall.
2.

Content Exclusivity

Second, there is “context exclusivity,” which refers to the ability of an
individual RSN to “make its games available,” if it sees fit, “only to an exclusive

7

producer in its home market.”12 Unlike territorial exclusivity, which constrains
RSNs, content exclusivity empowers RSNs. Content exclusivity stems from the
fact that individual RSNs hold broadcast rights to the games they produce — and
under normal principles of intellectual property (“IP”), they are free to license or
sell those rights as they see fit. There is, in this sense, nothing anticompetitive
about content exclusivity.13
3.

Game Exclusivity

Third, there is “game exclusivity,” which refers to the monopolization
of broadcast rights of a local team’s games within its HTT. Game exclusivity is
similar to content exclusivity in that it concerns the ability of an RSN to control the
flow of content within its HTT. But game exclusivity is also different from content
exclusivity — and more restrictive — insofar as it requires limiting the ability of
other RSNs from controlling the flow of their content.14

12

Reply Memorandum in Support of Plaintiffs’ Motion for Class
Certification (“Reply Mem.”) at 10.
13

To be clear, there is nothing anitcompetitive about content exclusivity
beyond the inherently anticompetitive nature of the IP rights from which content
exclusivity stems. IP rights operate, conceptually and doctrinally, as an exception
to the antitrust laws. Content exclusivity falls within that exception.
14

See id. at 11 (distinguishing between the maintenance of “control over
the distribution of particular content” — i.e., content exclusivity — and the “right
to constrain distribution of other broadcasts of that sport,” which, in certain forms,
can produce game exclusivity).
8

Practically speaking, this means that in the actual world, RSNs have
both content exclusivity and game exclusivity within their HTT. The YES
Network, for example, enjoys content exclusivity insofar as it can dictate how its
productions of Yankees games are distributed within its HTT. YES is free to veto
certain forms of distribution, or to condition the licensing of its productions on
certain constraints — such as blackouts within the OMP. YES is free to do this
because its productions are its IP, and, as with any IP-owner, it may do with its IP
as it wishes. That would be equally true in the BFW.
In the actual world — unlike the BFW — the YES Network also
enjoys game exclusivity over the broadcast of Yankees games in its HTT.
Pursuant to multilateral agreement among the teams, the RSNs, and the MVPDs,
OMPs currently black out the feeds of both (1) RSNs of the teams within the
viewer’s HTT and (2) RSNs of the teams that are playing against the teams within
the viewer’s HTT. Concretely, a baseball fan in Brooklyn who purchases an OMP
will not be able to watch YES’s content on the OMP; it will be blacked out, forcing
her (if she cares about seeing the Yankees) to subscribe to a local cable package.
In addition to this, however, the OMP will also black out the feed of whatever
team the Yankees are playing. If the Yankees are playing the Red Sox, for
example, the New England Sports Network (“NESN Network”) feed will be

9

unavailable to the Brooklyn subscriber on her OMP. This is what gives the YES
Network not just content exclusivity, but game exclusivity — it is the only RSN
that can broadcast Yankees games within the Yankees’ HTT.
4.

The Nature of Plaintiffs’ Challenge

Of these forms of exclusivity, plaintiffs are challenging territorial
exclusivity, but they are not challenging content exclusivity.15 Furthermore, as a
result of plaintiffs’ challenge to territorial exclusivity, game exclusivity would also
evaporate in the BFW — not because plaintiffs directly challenge it, but because its
existence depends on the existence of territorial exclusivity. In the BFW, all RSNs
would be able to (1) sell a la carte programming to out-of-market consumers, and
(2) distribute their content through the OMP without blackouts. In practice, this
means that RSNs would no longer enjoy game exclusivity with respect to their
home team, because another RSN — the RSN of whichever team happens to be
playing against the home team on a given day — would also be able to broadcast
the same game (albeit with different announcers, and so on).
For example, if the Yankees are playing the Red Sox, in the actual

15

See id. at 10 (“Plaintiffs are not challenging each individual club’s
ability to make its games available only to an exclusive producer in its home
market, and nothing in [plaintiffs’ view of the BFW] assumes that clubs will cease
to maintain an exclusive relationship with a single RSN for each game in its local
territory.”).
10

world a Yankees fan in Brooklyn would have to watch the game on the YES
Network. Even if she subscribed to the OMP, the NESN Network would be
blacked out, so as to preserve the YES Network’s game exclusivity. And of course
the Yankees fan also would not be able to buy the NESN Network a la carte — that
is the point of this lawsuit. In the BFW, by contrast, a Brooklyn resident would be
able to watch the Yankees-Red Sox game on either the YES Network or the NESN
Network (assuming she had access to the latter through an a la carte channel or the
OMP). In this sense, even though the YES Network would still have content
exclusivity — it would be free to do as it pleases with the games it produces — it
would no longer have game exclusivity in the Yankees’ HTT.
B.

The Market for MLB and NHL Broadcasting in the Actual World
With the different forms of exclusivity in mind, this section provides

an overview of the Supply Side in the market for sports broadcasting, as it exists
today.
1.

The Supply Side Overall

RSNs produce baseball and hockey games, which are distributed to
consumers in two different ways. First, an individual RSN’s productions are
included in local television programming. When a consumer purchases a cable
package from an MVPD, that will typically enable her to watch the RSN (or RSNs)

11

operating within her HTT. Second, game productions — from all RSNs — are
bundled together in the OMP, which a consumer can purchase either online or
through her MVPD.
Ultimately, then, three different supply chains operate in parallel in
the actual world.16 In each supply chain, content flows to the right, and payment
flows to the left:

Supply chain one (in-market telecasts)
Individual team –> RSN –> MVPDs –> In-market consumers that purchase cable packages

Supply chain two (out-of-market telecasts)
All teams –> RSNs (bundled together) –> MVPDs –> Consumers that purchase OMPs

Supply chain three (out-of-market Internet streaming)
All teams –> RSNs (bundled together) –> Consumers that purchase OMPs

The question, then, is how these supply chains translate into concrete options for
different classes of consumers. The following pair of examples should help answer

16

In-market Internet distribution is not addressed here. For reasons
explained in previous opinions, in the actual world “there is no authorized method
for viewing local games on the internet.” Laumann, 907 F. Supp. 2d at 475.
12

this question.
2.

Case One — A Yankees Fan in Brooklyn

First, consider a Yankees fan who lives in Brooklyn. In the actual
world, she can enjoy full access to Yankees games, through the YES Network, by
purchasing a local cable package — because she lives within the HTT, that
package will include YES. To watch other teams, however, she will have to
purchase an OMP, either through her MVPD or over the Internet.17 If she does,
some of the OMP’s RSN feeds will be blacked out. Specifically, for the entire
season, she will be unable to watch the YES Network through the OMP; and on
specific nights, she will be unable to watch the RSN of whatever team is playing
against the Yankees. Therefore, if she wants access both to Yankees games and to
the full slate of other teams’ games, she will have buy a cable package in addition
to an OMP.
3.

Case Two — A Yankees Fan in Iowa

Second, consider a Yankees fan who lives in Iowa. In the actual
world, if she wants to watch the Yankees, she will have to buy an OMP.18 There is
17

She will also be able to see games that are carried nationally — as is
true of anyone with a basic cable package. Nationwide broadcasts have no bearing
on these antitrust actions.
18

Of course, if the Iowa-based Yankees fan has a local cable package,
she will be able to watch the Yankees play whenever the opposing teams hails
13

no way for an Iowa-based fan to get access to Yankees broadcasts through the YES
Network — the very same broadcasts that her counterpart in Brooklyn would be
able to access simply by virtue of buying a cable package — unless she purchases
an OMP. Indeed, even if she subscribes to a local cable package, and the package
for some reason includes the YES Network, the actual games played by the
Yankees will be blacked out on that channel.19
C.

The Market for MLB and NHL Broadcasting in the BFW
What is conspicuously lacking in this picture — and what plaintiffs

believe would exist in the absence of league-wide territorial restraints — is direct
distribution from RSNs to out-of-market consumers. In essence, plaintiffs’
position is that two more supply chains should be added (and, in the BFW, would
be added) to the Supply Side. Beyond the three supply chains outlined above, the
BFW would also include:

from the HTT of Iowa. (Even then, she will have to watch that team’s broadcast,
not the YES Network.) The larger point, however, is that out-of-market fans are
forced to buy packages if they want consistent access to the games of their
preferred teams.
19

Both sides appear to agree that this state of affairs, though uncommon,
is possible. See, e.g., 3/19/15 Transcript of Proceedings, Dkt. 343, at 550 (where
plaintiffs’ counsel explains that in the actual world, a small number of fans
subscribe to out-of-market RSNs as part of their local cable packages, with the
games are blacked out, because they “like to watch the shoulder programming”).
14

Supply chain four (a la carte out-of-market telecasts)
Individual team –> RSN –> MVPDs –> Out-of-market consumers that buy a la carte channels

Supply chain five (a la carte out-of-market Internet streaming)
Individual team –> RSN –> Out-of-market consumers that buy a la carte channels

The next question, then, is what would be the result for consumers if these
additional supply chains were, in fact, to emerge. Considering the same pair of
examples as before will help answer this question.
1.

Case One — Yankees Fan in Brooklyn

In the BFW, the Yankees fan in Brooklyn will face similar conditions
to the conditions she faces in the actual world. If she purchases an OMP, the YES
Network will still be blacked out.20 So if she wants access to both Yankees games
and out-of-market games, she will have to buy a cable package in addition to an
OMP. The one thing that will be different about the BFW, however, is that a
Brooklyn-based Yankees fan that does not want to buy a cable package will have
the option (unlike in the actual world) to watch the Yankees by (1) viewing the

20

According to plaintiffs, there are economic grounds for hypothesizing
that in-market blackouts will subside in the BFW. That may be so. For present
purposes, however, the point is that nothing about plaintiffs’ antitrust challenge
requires the disappearance of in-market blackouts, because plaintiffs are not
challenging content exclusivity.
15

RSN of the Yankees’ opposing team (on any given day) through the OMP, or (2)
buying the a la carte RSN of a different team (say, the Red Sox) that frequently
plays against the Yankees. But for the large majority of fans that live in the HTT
of their preferred team, these changes are likely to be marginal — and practically
irrelevant — departures from the status quo.
2.

Case Two — Yankees Fan in Iowa

The same is not true of out-of-market fans. If the Brooklyn-based
Yankees fan is likely to see little difference — and therefore little upside — from
the transition to the BFW, the Iowa-based Yankees fan is likely to see a substantial
upside. For her, the BFW will include an option that is unavailable in the actual
world — a la carte RSNs. She will be able to purchase the YES Network, either
through an MVPD (via her cable package) or directly over the Internet.
Furthermore, if she purchases an OMP, she will be able to watch the YES
Network, through the OMP, even when the Yankees are playing against a team
from her HTT. In the actual word, such broadcasts are blacked out — in order to
preserve game exclusivity for RSNs in the Iowa HTT .
D.

The Class-Wide Challenge
Plaintiffs seek to certify the TV Class and the Internet Class on the

same antitrust theory. According to plaintiffs, every consumer in both classes

16

faced — and continues to face — a market for baseball and hockey broadcasting in
which options are limited, and the prices of existing options are inflated, as a
consequence of defendants’ coordinated maintenance of territorial exclusivity. For
an in-market fan — a Yankees fan in Brooklyn — this injury takes the form of (1)
paying a higher price for the OMP, (2) being subject to black-outs of competing
broadcasts within the OMP (e.g., the blacking out of the NESN network when the
Yankees play the Red Sox), and (3) lacking the option of subscribing to another
team’s a la carte RSN (or multiple teams’ RSNs) in lieu of buying the OMP. For
an out-of-market fan — a Yankees fan in Iowa — the injury takes the form of (1)
paying a higher price for the OMP and (2) lacking the option of subscribing to
another team’s a la carte RSN (or multiple teams’ RSNs) in lieu of buying the
OMP.
III. APPLICABLE LAW
A.

Class Certification
1.

Rule 23(a)

Rule 23(a) permits individuals to sue as representatives of an
aggrieved class. To be certified, a putative class must first meet all four
prerequisites set forth in Rule 23(a), generally referred to as numerosity,

17

commonality, typicality, and adequacy.21 District courts have broad discretion in
deciding whether to certify a proposed class under Rule 23.22 Here, numerosity is
not disputed.23
a.

Commonality

Rule 23(a)(2) requires that there be “questions of law or fact common
to the class.” Commonality thus requires plaintiffs “to demonstrate that the class
members ‘have suffered the same injury.’”24 Commonality further requires that the
claims asserted “must depend upon a common contention . . . of such a nature that

21

See Teamsters Local 445 Freight Div. Pension Fund v. Bombardier
Inc., 546 F.3d 196, 201–02 (2d Cir. 2008). In addition to these requirements —
which are explicitly codified in Rule 23 — some courts have also added an
“implied requirement of ascertainability” to the express requirements of Rule
23(a).” In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24, 42 (2d Cir. 2006).
Accord 7A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal
Practice and Procedure § 1764 (3d ed. 2008) (“[T]he requirement that there be a
class will not be deemed satisfied unless the class description is sufficiently
definite so that it is administratively feasible for the court to determine whether a
particular individual is a member.”). Here, however, neither of the proposed
classes presents such problems. Both classes are readily and precisely ascertained.
Their definitions are tethered directly to a specific, easily-traceable economic
decision — i.e., to purchase OMPs.
22

See Parker v. Time Warner Entm’t Co. L.P., 331 F.3d 13, 28 (2d Cir.

2003).
23

See Pl. Mem. at 6 n.4 (“Defendants have indicated that they will not
contest numerosity, which is indisputably satisfied.”).
24

Wal-Mart v. Dukes, 131 S. Ct. 2541, 2551 (2011) (quoting General
Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)).
18

it is capable of classwide resolution — which means that determination of its truth
or falsity will resolve an issue that is central to the validity of each one of the
claims in one stroke.”25
b.

Typicality

“Typicality ‘requires that the claims of the class representatives be
typical of those of the class, and is satisfied when each class member’s claim arises
from the same course of events[] and each class member makes similar legal
arguments to prove the defendant’s liability.’”26 The typicality requirement may be
satisfied where “injuries derive from a unitary course of conduct by a single
system.”27 The purpose of typicality is to ensure that class representatives “have
the incentive to prove all the elements of the cause of action which would be
presented by the individual members of the class were they initiating
individualized actions.”28
c.

Adequacy

“Adequacy is twofold: the proposed class representative must have an

25

Id.

26

Central States, 504 F.3d at 245 (quoting Robinson v. Metro-N.
Commuter R.R. Co., 267 F.3d 147, 155 (2d Cir. 2001)).
27

Marisol A. v. Giuliani, 126 F.3d 372, 377 (2d Cir. 1997).

28

Davis v. City of New York, 296 F.R.D. 158, 164 (S.D.N.Y. 2013).
19

interest in vigorously pursuing the claims of the class, and must have no interests
antagonistic to the interests of other class members.”29 Thus, the question of
adequacy “entails inquiry as to whether: 1) plaintiffs’ interests are antagonistic to
the interest of other members of the class and 2) plaintiffs’ attorneys are qualified,
experienced and able to conduct the litigation.”30 In order to defeat a motion for
certification, any conflicts between the class representative and members of the
putative class must be “fundamental.”31
1.

Rule 23(b)

If the requirements of Rule 23(a) are met, the court “must next
determine whether the class can be maintained under any one of the three
subdivisions of Rule 23(b).”32 Here, plaintiffs have moved for certification under
Rule 23(b)(2) and Rule 23(b)(3). The standards for each will be discussed in turn.
a.

Rule 23(b)(2)

Under Rule 23(b)(2), plaintiffs must show that defendants “acted or

29

Denney v. Deutsche Bank AG, 443 F.3d 253, 268 (2d Cir. 2006).

30

Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 60 (2d

Cir. 2000).
31

In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29, 35 (2d Cir.

2009).
32

McLaughlin v. American Tobacco Co., 522 F.3d 215, 222 (2d Cir.

2008).
20

refused to act on grounds that apply generally to the class, so that final injunctive
relief or corresponding declaratory relief is appropriate respecting the class as a
whole.”33 As the Supreme Court explained in Wal-Mart v. Dukes,34 with respect to
23(b)(2) classes in particular,
When a class seeks an indivisible injunction benefitting all its
members at once, there is no reason to undertake a case-specific
inquiry into whether class issues predominate or whether class
action is a superior method of adjudicating the dispute.
Predominance and superiority are self-evident.35
There are, however, two additional hurdles that plaintiffs must clear in
order to certify a (b)(2) class. First, plaintiffs must demonstrate that the class is
“cohesive.”36 This requirement is similar, conceptually, to the commonality
requirement under Rule 23(a). Second, plaintiffs must demonstrate that class
certification is, in the first instance, necessary. Because the relief available under
Rule 23(b)(2) is injunctive and declaratory — rather than monetary — certification
is not always required to secure the rights in question. As the Second Circuit has
33

Fed. R. Civ. P. 23(b)(2).

34

131 S. Ct. 2541 (2011).

35

Id. at 2558.

36

See Newberg on Class Actions § 4:34. See also Barnes v. American
Tobacco Co., 161 F.3d 127, 143 (3d Cir. 1998) (“While 23(b)(2) class actions have
no predominance or superiority requirements, it is well established that the class
claims must be cohesive.”); In re MTBE Prods. Liab. Litig., 209 F.R.D. 323, 34243 (S.D.N.Y. 2002).
21

explained, certification under Rule 23(b)(2) is unnecessary when “prospective
relief will benefit all members of a proposed class to such an extent that the
certification of a class would not further the implementation of the judgment.”37
This principle is typically reserved, however, to situations where the defendant has
stipulated that, in practice, an injunction granted to one plaintiff will be observed
on a more general basis — thereby defeating the need for formal certification.38
b.

Rule 23(b)(3)

Under Rule 23(b)(3), certification is appropriate where “questions of
law or fact common to the members of the class predominate over any questions
affecting only individual members,” and class litigation “is superior to other
available methods for the fair and efficient adjudication of the controversy.”
The matters pertinent to these findings include the class
members’ interests in individually controlling the
prosecution or defense of separate actions; the extent and
nature of any litigation concerning the controversy already
begun by or against class members; the desirability or
undesirability of concentrating the litigation of the claims
in the particular forum; and the likely difficulties in

37

Berger v. Heckler, 771 F.2d 1556, 1566 (2d Cir. 1985) (citing Galvan
v. Levine, 490 F.2d 1255, 1261 (2d Cir. 1973)).
38

See Daniels v. City of New York, 199 F.R.D. 513 (S.D.N.Y. 2001)
(holding that certification was appropriate even when it was unclear whether a
class-wide injunction would have substantially different effects than an individual
injunction, because, inter alia, defendants continued to “deny that there [was] any
[] policy to withdraw”).
22

managing a class action.39
The predominance inquiry focuses on whether “a proposed class is
‘sufficiently cohesive to warrant adjudication by representation.’”40 It is akin to,
but ultimately “a more demanding criterion than,” the “commonality inquiry under
Rule 23(a).”41 Class-wide issues predominate “if resolution of some of the legal or
factual questions that qualify each class member’s case as a genuine controversy
can be achieved through generalized proof, and if these particular issues are more
substantial than the issues subject only to individualized proof.”42 The Second
Circuit has emphasized that “Rule 23(b)(3) requires that common questions
predominate, not that the action include only common questions.”43 In carrying out
this inquiry, the court may “consider the ‘. . . improbability that large numbers of
class members would possess the initiative to litigate individually.’”44

39

Fed. R. Civ. P. 23(b)(3)(A)-(D).

40

Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, 133 S. Ct. 1184,
1196 (2013) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997)).
41

In re Nassau County Strip Search Cases, 461 F.3d 219, 225 (2d Cir.
2006) (citing Amchem, 521 U.S. at 623-24).
42

In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108, 118 (2d Cir.
2013) (internal citations omitted).
43

Brown v. Kelly, 609 F.3d 467, 484 (2d Cir. 2010).

44

D’Alauro v. GC Servs. L.P., 169 F.R.D. 451, 458 (E.D.N.Y. 1996)
(quoting Haynes v. Logan Furniture Mart, Inc., 503 F.2d 1161, 1165 (7th Cir.
23

B.

Antitrust Injuries
Antitrust injuries come in two basic forms. First, anticompetitive

conduct is injurious if it results in higher prices.45 Second, anticompetitive conduct
is injurious if it limits consumer options.46 Although these injuries often overlap in
practice, they are economically and analytically distinct. Some restraints raise
prices without limiting the qualitative options available to consumers. For
example, price-fixing by oil companies would certainly inflate the price of gas, but
it would be unlikely to diminish the type of products available to consumers (i.e.,
whether or not the restraint existed, everyone would buy the same good — gas).
The converse is also true. Some restraints limit the number of products in
existence without having a significant effect on prices. For example, if banks were
to decide, collusively, to include stringent arbitration clauses in all credit card

1974)).
45

See Port Dock & Stone Corp. v. Oldcastle Northeast Inc., 507 F.3d
117, 123-24 (2d Cir. 2007) (explaining that the “danger” of antitrust violations is
that they “raise prices and restrict output,” and compiling case law to that effect).
46

See Ross v. Bank of America, 524 F.3d 217, 226 (2d Cir. 2008)
(concluding that reductions in “consumer choice” and the “equality of [] services
offered” are antitrust injuries); United States v. Visa USA, 344 F.3d 229, 243 (2d
Cir. 2003) (explaining that restraints that discourage firms from “design[ing] . . .
their products more competitively” can give rise to antitrust injury); Laumann, 907
F. Supp. 2d at 480 (“Reduced consumer choice . . . when [it is] the result of an
anticompetitive practice, constitute[s] antitrust injury.”).
24

contracts, this would be unlikely to affect the price of anything, but it would
certainly diminish consumer choice — and constitute an antitrust injury on that
basis alone.47
C.

Standing
As discussed at length in my December 5, 2012 opinion — and

rehearsed only briefly here — for an antitrust claim to be justiciable, a plaintiff (or
class of plaintiffs) must demonstrate two distinct types of standing.48 First, as in
all federal actions, a plaintiff must satisfy the threshold requirements of Article III.
If those requirements are wanting, the Court lacks jurisdiction to adjudicate the
dispute. Second, a plaintiff must satisfy the requirements of “antitrust standing” —
a more granular set of requirements fashioned by the Supreme Court to ensure that
plaintiffs are well-situated to redress harm that, due to the nature of antitrust
injuries, often impact the economy as a whole.
1.

47

Article III Standing

See Ross, 524 F.3d at 222-25.

48

See Laumann, 907 F. Supp. 2d at 480-85. See also Ross, 524 F.3d at
223-25 (distinguishing between “adequately alleg[ing] antitrust injuries in fact,”
sufficient to trigger constitutional standing, and satisfying the requirements of
antitrust standing, which “demands a much more detailed and focused inquiry into
a plaintiff’s [] claims”); KSW Mechanical Serv., Inc. v. Mechanical Contractors
Ass’n, No. 11 Civ. 5100, 2012 WL 1027354, at *5 (S.D.N.Y. Mar. 27, 2012)
(explaining the difference between constitutional and antitrust standing).
25

Because “Article III, Section 2, of the United States Constitution
limits federal courts’ jurisdiction to ‘Cases’ and ‘Controversies,’” a party “seeking
to bring suit in federal court must establish standing under Article III.”49 To do so,
the party must show, inter alia, that she “ha[s] suffered an ‘injury in fact’— that is,
‘an invasion of a legally protected interest which is (a) concrete and particularized
and (b) actual or imminent, not conjectural or hypothetical.’”50
2.

Antitrust Standing

Not every party that satisfies the requirements of Article III standing
may bring a private antitrust suit. Because anticompetitive conduct, by its nature,
often affects many different actors within a given market, the Supreme Court has
erected two additional criteria to limit who has “antitrust standing.” First, under
Illinois Brick v. Illinois,51 a plaintiff must either (1) be a “direct purchaser” in the
market where the antitrust violation is alleged, or (2) qualify for one of the
recognized exceptions to the “direct purchaser” requirement.52 Second, under
49

E.M. v. New York City Dep’t of Ed., 758 F.3d 442, 449 (2d Cir. 2014).

50

Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992)). In addition to the injury-in-fact requirement, Article III standing also
requires a party to show (1) that the injury was caused by defendant, and (2) that it
can be redressed in court. There is no dispute about these two elements here.
51

431 U.S. 720 (1977).

52

For background on these exceptions, see Laumann, 907 F. Supp. 2d at

480-83.
26

Associated General Contractors of California v. California State Council of
Carpenters, a plaintiff must be “a consumer . . . in the market in which trade was
restrained.”53 Both requirements are designed to ensure that a plaintiff’s injuries
are not “too remote from the alleged conduct” to qualify as antitrust harms.54
IV.

DISCUSSION
As discussed at length in a companion Opinion issued today, I find the

53

459 U.S. 519, 539 (1983).

54

Laumann, 907 F. Supp. 2d at 480. In my December 5, 2012 opinion, I
explained that consumers who subscribe (or who previously subscribed) to
television OMPs — i.e., members of the TV Class — are not direct purchasers of
baseball and hockey broadcasts, because they purchase such broadcasts from
MVPDs. Nevertheless, I held that members of the TV Class have standing to bring
the present challenge, in light of the “co-conspirator” exception to Illinois Brick.
Because the MVPDs are named as co-defendants to this suit, it would be perverse
to conclude that their position in the market — sitting between the RSNs that
produce broadcasts and the consumers who watch them — somehow strips
consumers of antitrust standing. The whole point of plaintiffs’ challenge is that
multiple actors in the supply chain, including the MVPDs, conspired to restrain
trade. Clearly, the “purpose of Illinois Brick was not to prevent the only
non-conspirators in a multi-level distribution chain — consumers no less — from
bringing a private antitrust suit.” Id. at 482. Accord In re DDAVP Direct
Purchaser Antitrust Litig., 585 F.3d 677, 688 (2d Cir. 2009) (“[B]eing forced to
pay supra-competitive prices as a result of the defendants’ anticompetitive conduct
[] . . . plainly is [an injury] ‘of the type the antitrust laws were intended to
prevent.’”) (citing Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc., 429 U.S. 477, 489
(1977)). Accordingly, I held that members of the TV Class satisfied the Illinois
Brick requirement for antitrust standing. This determination comports with Second
Circuit and Supreme Court precedent; and it is also law of the case. Thus, the only
remaining question of antitrust standing — discussed below — is if previous OMP
subscribers still qualify as consumers in the market where trade is restrained.
27

damages model submitted by plaintiffs’ expert, Dr. Noll, to be inadmissible. As a
result, plaintiffs cannot prove their damages case on a class-wide basis. As the
Second Circuit has explained, while the need for individualized inquiry into
damages does not defeat (b)(3) certification,55 plaintiffs must nevertheless “show
that they can prove, through common evidence, that all class members were . . .
injured by the alleged conspiracy.”56 Here, Dr. Noll’s model was the common
evidence — and the model has been excluded.57 Therefore, no (b)(3) class may be

55

See Roach, 778 F.3d at 405 (“[I]t [is] well-established in [the Second]
Circuit that the fact that damages may have to be ascertained on an individual basis
is not sufficient to defeat class certification.”) (internal citations omitted).
56

Sykes v. Mel S. Harris & Assoc., 780 F.3d 70, 82 (2d Cir. 2015)
(internal citations omitted). Accord Comcast, 133 S. Ct. at 1433 (“Without
presenting [a model], respondents cannot show Rule 23(b)(3) predominance:
Questions of individual damage calculations will inevitably overwhelm questions
common to the class.”).
57

See In re Rail Freight Surcharge Antitrust Litig., 725 F.3d 244, 255
(D.C. Cir. 2013) (“[Plaintiffs’ expert’s] models are essential to the plaintiffs’
claim [that] they can offer common evidence of class-wide injury. No damages
model, no predominance, no class certification.”). At the hearing, plaintiffs’
counsel conceded that if the model was stricken on Daubert grounds, the case
would have to proceed exclusively on an injunctive basis — under Rule 23(b)(2).
See 3/17/15 Transcript of Proceedings, Dkt. 339, at 4-5 (“THE COURT: If I struck
[the model] based on the Daubert challenge, could you proceed? COUNSEL:
Could we prcoeed in this case? Absolutely, your Honor. THE COURT: Could
you proceed as a class in this case? COUNSEL: Absolutely, your Honor, because,
remember, we are seeking not only damages but [also] injunctive relief. And our
theory of damages is [an overcharge theory]. If we fail to prove that there is an
overcharge” — which would be impossible with the model — “then the result
would be that the class members as a whole have not shown any calculable
28

certified.
But the issue of (b)(2) certification remains. On that front, defendants
make essentially two arguments. First, they argue that the putative class consists
of winners and losers. In defendants’ view, some purchasers of OMPs actually
benefit from the restraints in dispute, which both defeats the commonality of injury
and frustrates the ability of named plaintiffs to adequately represent the interests of
all class members. Second, defendants argue that because some members of the
class no longer subscribe to OMPs, they have no legal interest in the prospective
relief sought by named plaintiffs — i.e., they are no longer “consumers in the
market where trade is allegedly restrained,”58 so they have no standing to seek
injunctive or declaratory relief going forward. The winners and losers argument is,
according to defendants, germane both to the threshold criteria of Rule 23(a) and to
the cohesion requirement of Rule 23(b)(2). The standing argument, by contrast,
bears exclusively on the cohesion requirement of Rule 23(b)(2).
A.

Winners and Losers

damages. THE COURT: Then would only have a (b)(2) class? COUNSEL: Well,
we would have a (b)(2) class certainly. THE COURT: Without damages?
COUNSEL: Without damages.”).
58

Daniel v. American Bd. of Emergency Medicine, 428 F.3d 408, 451
(2d Cir. 2001). Accord Associated Gen. Contractors, 459 U.S. at 539 (the
question, for standing purposes, is whether a given plaintiff was “a consumer []or a
competitor in the market in which trade was restrained”).
29

According to defendants, putting an end to territorial exclusivity
would likely result in either (1) consumers having to pay more for OMPs, or (2)
the disappearance of OMPs entirely. From this premise, defendants conclude that
certain consumers are better off in the actual world than they would be in the BFW
— specifically, those consumers that would prefer to buy an OMP, even assuming
the availability of a la carte channels. Given this ostensible conflict of interest
among the class members, defendants argue that the relief sought by lead plaintiffs
is “likely [to] harm a great many absent class members.”59 Therefore, certification
is inappropriate.
In response, plaintiffs offer two counterarguments — the first
questioning defendants’ premise, the second, attacking defendants’ conclusion.
First, plaintiffs disagree with defendants’ portrait of the BFW. According to
plaintiffs, beyond the “self-serving affidavits of party witnesses,” such as league
executives, there is little reason to think that OMPs would be more expensive or
non-existent in the BFW.60 Indeed, plaintiffs believe that copious evidence exists

59

Def. Mem. at 43.

60

Reply Mem. at 19. See also, e.g., Declaration of Gary B. Bettman,
Commissioner of the National Hockey League, Exhibit (“Ex.”) 10 to Joint
Appendix in Support of Defendants’ Daubert Motion and in Opposition to
Plaintiffs’ Motion for Class Certification (“Joint App’x”), ¶¶ 7-15 (arguing that the
disappearance of territorial exclusivity would diminish the number of options
available to consumers in the BFW).
30

to the contrary. Second, plaintiffs argue that even assuming, arguendo, that
defendants are right about the composition of the BFW, class certification is still
appropriate because “the supposed conflicts [defendants] identify are not
fundamental [] and have never been accepted by any court.”61
Because I agree with plaintiffs’ second argument — that defendants’
theory of intra-class conflict, even if true, is no basis for denying certification —
there is no need to address which side has painted a more accurate portrait of the
BFW. In effect, defendants’ position is that certain class members would prefer
the status quo to persist, antitrust violation or no. Put more bluntly, defendants
believe that some class members, even if they are currently suffering an antitrust
injury, would prefer to be injured than for the injury to be redressed — because the
injury carries collateral benefits.62
Defendants’ claim fails three times over. First, it confuses the
question of whether a common injury unites the class with the distinct question of
whether all class members agree about how best to respond to the injury. It is the

61

Reply Mem. at 23 (internal citations omitted).

62

Here, unlike most class certification disputes, the parties’ papers do
not follow the typical element-based analysis of Rule 23. Rather, because
defendants’ winners and losers theory reaches multiple components of Rule 23(a)
simultaneously, the parties have — understandably — addressed the viability of
that theory in general, instead of trying to limit it to particular sub-parts of Rule 23.
This Opinion follows suit.
31

former, not the latter, that drives the Rule 23 analysis — and there is no question
that here, a common injury exists in the form of diminished consumer choice.
Second, at a policy level, defendants’ argument threatens the integrity of the
antitrust laws. If the fact that illegal restraints operate to the economic advantage
of certain class members were enough to defeat certification, the efficacy of classwide antitrust suits — and the deterrence function they serve — would wither.
Third, defendants’ argument subverts the purpose of Rule 23(b)(2). When the
remedy sought is injunctive rather than monetary, divergent interests within the
class militate in favor of certification — because certification gives affected parties
a greater voice in the litigation.
1.

Class Certification Versus Merits Analysis

Defendants point to a number of antitrust cases where courts have
embraced a winners and losers argument against class certification. For example,
defendants refer a number of times to Valley Drug Company v. Geneva
Pharmaceuticals,63 in which the Eleventh Circuit reversed the district court’s
certification of a class of drug distributors, who brought an antitrust challenge to a
pharmaceutical company’s alleged effort to stymie the development of generic
alternatives to one of its patented drugs. According to the plaintiff-distributors, the

63

350 F.3d 1181 (11th Cir. 2003).
32

absence of generic alternatives allowed defendant to command super-competitive
prices, resulting in losses for the plaintiffs downstream. In response, defendant
argued that some class members actually saw an economic upside from the absence
of generic alternatives — because they were able to pass on the super-competitive
prices to their customers, and in some cases, even to charge further premiums on
top of the super-competitive input costs. According to defendant, this created a
schism within the class — winners and losers — sufficient to render certification
inappropriate. The court agreed.64
Further examples abound in defendants’ papers.65 What all of them

64

See id. at 1191 (“[Because some] class members appear to benefit
from the effects of the conduct alleged to be wrongful by the named plaintiffs
because their net economic situation is better off when branded drugs dominate the
market [] . . . certification under these circumstances would be inappropriate.”).
65

See, e.g., Duchardt v. Midland Nat’l Life Ins. Co., 265 F.R.D. 436,
(S.D. Iowa 2009) (holding that a challenge to a specific method of calculating
insurance claims was not amenable to class-wide adjudication, because certain
plan-holders benefitted financially from the method); Allied Orthopedic
Appliances, Inc. v. Tyco Healthcare Grp., 247 F.R.D. 156, 168-69 (C.D. Cal. 2007)
(declining to certify a class-wide challenge to a medical device company’s
allegedly super-competitive prices, on the grounds that “many individual class
members may have benefitted from discounts and deals on [defendant’s] products”
that were the result of anticompetitive conduct, and therefore “would be
unavailable to [class members] in the but-for world”) (emphasis in original); Auto
Ventures, Inc. v. Moran, No. 92 Civ. 426, 1997 WL 306895, at *5 (S.D. Fla. Apr.
3, 1997) (holding that class certification was inappropriate in light of the allegation
that defendants — a group of car dealerships — had perpetuated their coercive
market position “through a rewards and punishment system, by which cooperating
[entities] were befriended and rewarded, while resisting [entities] were penalized,”
33

have in common — and what sets them apart from this case — is the presence of
class members who, in the actual world, suffered no injury. In every case cited by
defendants, the upshot of the court’s analysis is that as a result of the disputed
conduct, some class members either (1) saw no effect or (2) received a benefit
without any downside. Thus, some class members — because they were not
injured — did not belong in the case. They would have lacked standing to advance
on their own behalf the very claim that was purportedly being advanced on their
behalf by others. For obvious reasons, this frustrated class certification — it would
have required the named plaintiffs to represent the “interests” of unnamed parties
who had no cognizable interests to begin with.66
The same is not true in this case. Here, every class member has
suffered an injury, because every class member, as a consumer in the market for
baseball or hockey broadcasting, has been deprived of an option — a la carte
channels — that would have been available absent the territorial restraints (“Injury
One”). On top of this general injury, certain class members have also suffered the
additional injury of having to pay too much for the content they wanted (“Injury

giving rise to a clear divergence of interests among class members). For further
examples, see Def. Mem. at 42-34; id. at 43 n.46.
66

See Kohen v. Pacific Invest. Mgmt. Co., 571 F.3d 672, 678 (7th Cir.
2009) (“[A] class should not be certified if it is apparent that it contains a great
many persons who have suffered no injury at the hands of the defendant[s].”).
34

Two”). Plaintiffs and defendants disagree about how many class members fall into
the latter category. In plaintiffs’ view, every class member does — Injury Two is
universal, because all prices would go down in the BFW. In defendants’ view, by
contrast, only some class members suffered Injury Two. Other class members —
those who are interested in watching many teams and would therefore be likely to
buy the OMP, even in the BFW (“league-wide fans”) — suffered no price-based
injury. In fact, according to defendants, league-wide fans derived a price-based
benefit from the restraints. That is the point of their winners and losers argument.
Regardless of which side is ultimately correct about the scope of
Injury Two — a question that depends not only on economic analysis, but also on
speculation about consumer psychology — Injury One unites the class.67 The
67

Plaintiffs would draw the distinction (between this case and other
cases where defendants successfully invoked the winners and losers logic)
somewhat differently. In plaintiffs’ view, the key issue is that in the instant case,
“all class members were treated equally in the real world,” whereas in “in every
one of [defendants’] cases, [] some class members received a direct and concrete
benefit from the challenged conduct that others did not.” Reply Mem. at 23-24. In
other words, plaintiffs would focus on the equality (or lack thereof) of class
members’ treatment by entities allegedly engaged in an antitrust violation. Here,
all class members received the same treatment — paying a uniform subscription
fee for the OMP — whereas in defendants’ examples, different class members
received disparate treatment. For example, in Allied Orthopedic Appliances, some
class members were afforded “discounts and deals” that other class members were
not. 247 F.R.D. at 169. And this meant that the identification of disparities within
the class was not merely a hypothesis about how, in the BFW, the market might
operate — it was a reflection of how, in the actual world, the market did operate.
There are two problems with this formulation — the first is factual,
35

restriction of consumer options is an ipso facto antitrust harm, and conversely, the
creation of new options is a benefit to the market as a whole. This is true for all
consumers — even consumers, like league-wide fans, who are not interested in
new options. The mere existence of new options increases the dynamism of the
marketplace, spurring innovation and maintaining downward pressure on prices.
Put simply, Injury One is universal.
Against this backdrop, there are two ways to understand defendants’
position. First, defendants might be arguing that Injury One is outweighed, on

the second, conceptual. First, it is unclear (and seemingly disputed) to what extent
all class members here actually receive the same treatment in the actual world.
Defendants have repeatedly suggested that different consumers pay different prices
for the OMP — a fact that casts doubt on plaintiffs’ claim that here, unlike other
winners and losers cases, every class member faces the same treatment from
defendants. See, e.g., Declaration of Daniel L. McFadden (Dkt. No. 358), ¶ 38.
Second, even if all class members here did receive the same treatment — or
effectively the same treatment — from defendants, it is unclear if the “equal
treatment” principle can shoulder its analytic burden. In some cases, even if all
class members were treated the same way, no injury unites the class. Indeed,
Valley Drug Co. v. Geneva Pharmaceuticals — defendants’ prime example — may
well be that kind of case. There, the court declined to certify the class on the basis
that certain distributors saw no economic downside (and some possibly saw an
upside) from defendant’s anticompetitive conduct. This was so in spite of the fact
that all distributors were treated the same way. All of them were forced to pay the
same (allegedly super-competitive) input costs for brand-name drugs. But there
was nevertheless a schism within the class, because some distributors were able to
pass on the super-competitive costs to consumers, or even to hike up the label price
further, while other distributors were not. In this sense, the holding in Valley Drug
is difficult to square with the proposition that equal treatment, rather than unity of
injury, is the wedge separating defendants’ use of the winners and losers logic here
from its application in earlier cases.
36

balance, by the procompetitive benefits of the territorial restraints for league-wide
fans — i.e., that the absence of a la carte options, despite constituting an antitrust
injury, is justified by the availability and (comparatively) low price of OMPs. If
this is true, it would make the territorial restraints lawful under the Rule of
Reason.68 Second, defendants might be arguing that even if the complained-of
restraints are illegal — even if the anticompetitive harm of the complained-of
restraints is not outweighed by their procompetitive benefits — league-wide fans
would nonetheless prefer for Injury One to persist unremedied, in light of the
collateral benefits they derive from defendants’ injurious conduct.
One or both of these arguments may be correct, but neither is an
argument against class certification. The first is a merits argument. Defendants
believe that the complained-of restraints, though anticompetitive to the extent that
they preclude the existence of a la carte channels, are also procompetitive to the
extent that they facilitate the existence of a well-priced OMP. If defendants can
convince the trier-of-fact of this point, they will have a strong defense against
68

See Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877,
885 (2007) (“The rule of reason is the accepted standard for testing whether a
practice restrains trade in violation of § 1 [of the Sherman Act]. . . . ‘Under this
rule, the factfinder weighs all of the circumstances of a case in deciding whether a
restrictive practice should be prohibited as imposing an unreasonable restraint on
competition.’”) (citing Continental T. V., Inc. v. GTE Sylvania, 433 U.S. 36, 49
(1977)). See also Laumann, 907 F. Supp. 2d at 478-79 (providing further
background on the Rule of Reason standard).
37

antitrust liability — a strong argument for why the restraints satisfy the Rule of
Reason and may continue to exist. If this is true, it is true across the class. Indeed,
far from creating intra-class conflict, the question of whether the restraints are
more procompetitive than anticompetitive is exactly the question of whether a
class-wide antitrust injury exists.
Defendants’ effort to cast the balance of economic effects as an issue
of adequacy under Rule 23(a), rather than a merits issue, is unavailing. In
Freeland v. AT&T,69 Judge Denise Cote of this District considered — and rejected
— an analogous argument against class certification. There, the allegation was that
AT&T had unlawfully tied the sale of telephones to the sale of wireless service. At
the certification stage, AT&T argued, inter alia, that “many, [] perhaps most, class
members actually benefit from the subsidization that accompanies the [tying] that
the named plaintiffs claim is illegal,” and that certain class members “benefit from
the deployment of newer, more efficient [phones], which is encouraged by
defendants’ . . . tying practices.”70 In light of this, AT&T argued that “the
interest[s] of the named plaintiffs [were] antagonistic to the interests of other class

69

238 F.R.D. 130 (S.D.N.Y. 2006).

70

Id. at 141.
38

members.”71 Judge Cote rejected this logic in Freeland for the same reason that I
reject defendants’ logic here. Ultimately, the argument “reduce[s] to a claim that
most plaintiffs actually benefit from the defendants’ [] practices,” which is not
properly addressed to the adequacy of the named plaintiffs to represent the class.72
Rather, it is “a repackaging of the defendants’ claim that their . . . practices have
not caused an antitrust injury on a class-wide basis.”73

71

Id.

72

Id. In defendants’ opposition papers, they argue that “[i]n Freeland,
Judge Cote, denied [(b)(2)] certification . . . because some proposed class members
may have benefitted from the allegedly anticompetitive bundling of products.”
Def. Mem. at 44. This interpretation strains the limits of good faith. In fact, it is
crystal clear from Judge Cote’s opinion that intra-class conflict had nothing to do
with the disposition of the (b)(2) issue. Rather, the problem was that plaintiffs had
failed to establish a necessary element of their tying claim — coercion — on a
class-wide basis. Because coercion would have to be proven in an individualized
manner, “even if the named plaintiffs succeed on the merits of their claims, only
they would be entitled to injunctive relief.” Freeland, 238 F.R.D. at 157. This
outcome flowed from the absence of proof as to an element of the claim, not from
the fact that “some [] class members may have benefitted from the [complained-of
conduct].” Def. Mem. at 44.
73

Freeland, 238 F.R.D. at 142. Judge Cote’s reasoning also
underscores why the Second Circuit’s holding in In re Literary Works in
Electronic Databases Copyright Litigation does not control — indeed, does not
even bear on — this case. There, the question was whether a class-wide settlement
of copyright claims, brought by freelance authors whose works had been
reproduced without their permission, was adequately protective of the class as a
whole. The central issue concerned copyright holdings whose infringement only
gave rise to damages, as a matter of law, insofar as the underlying copyrights were
registered with the Copyright Office. Although these subordinate holdings
comprised the vast majority of the total claims, they were, by a significant
39

The second way to parse defendants’ argument is not that the
territorial restraints are lawful on the merits, but rather, that even if they are
unlawful, “some class members have an interest in preserving the status quo,
antitrust violation or no.”74 So formulated, defendants’ position is not about what
the fate of the restraints will be, but rather what their fate should be. The
argument, in other words, is that even if the restraints are illegal, some class
members would nonetheless prefer for the restraints to exist — i.e., they would

measure, the least valuable holding in the case. After much negotiation, a classwide settlement was formulated, which treated the subordinate holdings as nearly
valueless — triggering objections from class members with predominately
subordinate holdings. The Second Circuit ultimately agreed with the objectors,
determining that “the interests of class members who hold only [subordinate
holdings] fundamentally conflict with those of class members who hold [lucrative]
claims.” 654 F.3d 242, 254 (2d Cir. 2011). In light of this, the Court was not
satisfied that “[n]amed plaintiffs,” to the extent they held lucrative copyrights, “had
[an] incentive to maximize the recovery for [] plaintiffs [with subordinate
holdings].” Id. On that basis, the settlement was vacated, and the case was
remanded with instructions to delineate subclasses based on category of holding.
See id. at 257-58.
In re Literary Works is inapplicable to the instant case. There, unlike
here, it was undisputed that every class member’s rights had been violated. The
question was how to divide the recovery — and whether the process for doing so
safeguarded the interests of the class as a whole. In this sense, In re Literary
Works raised an issue distinctive to (b)(3) actions, and in particular, to the
settlements of (b)(3) actions — when the named plaintiffs negotiated settlement
terms, did they allocate too large a share of damages to themselves? This question
has no analogue with respect to (b)(2) classes. In that setting, it is nonsensical to
speak of some class members getting a greater or lesser “share” of injunctive or
declaratory relief. By its nature, the relief is uniform across the class.
74

Reply Mem. at 23.
40

prefer for the restraints not to be illegal, much as that result might clash with
existing antitrust doctrine.
Needless to say, the role of this Court is to apply the antitrust laws,
not to rewrite them. It is possible, as defendants suggest, that many baseball and
hockey fans would prefer for the complained-of restraints to be deemed lawful
rather than unlawful. Indeed, it is even possible that many such fans would have
preferred that the instant lawsuit not be brought. But the fundamental point
remains. The restraints are either illegal or they are not — and whether they are is
a merits question. To properly analyze that question, the preferences of class
members — including class members who would prefer for the restraints to remain
in place — will certainly be relevant. Those preferences are one consideration for
the jury (or, in the case of a (b)(2) class, the Court) as it assesses the restraints’
procompetitive benefits. But if the trier-of-fact decides that the restraints’
procompetitive benefits are insufficient to overcome their anticompetitive effects,
that will be the end of the matter. An arrangement that unlawfully restrains the
market as a whole cannot be salvaged by the preferences, however fervent, of a
subset of class members.
2.

Enforcing the Antitrust Laws

Furthermore, even if this case were indistinguishable from others

41

where courts have embraced the winners and losers logic, there is still good reason
to reject that logic. Defendants’ argument sweeps much too broadly. If it prevails,
all anticompetitive conduct — regardless of the particular market in which it
occurs — would be immunized from class-wide scrutiny on the basis that certain
members of the class derive benefits from the conduct. For example, consider the
argument championed by defendants’ class certification expert — Dr. Janusz
Ordover — that territorial restraints generate super-competitive profits for the
teams and RSNs, which in turn provides them with the “incentive[] to produce
live-game content.”75 Lift the territorial restraints, in other words, and defendants
believe that fewer broadcasts will be produced.
This argument suffers the fatal defect of universal applicability. A
monopolist could always argue that being forced to operate at competitive rather
than super-competitive margins — i.e., being forced to comply with the antitrust
laws — would staunch the creation of capital-intensive goods. Operating
competitively diminishes profits; diminished profit generates less disposable
capital; less disposable capital means that fewer projects get funded. The problem
with this reasoning is that it applies to all industries, at all times. Because it is in
the nature of anticompetitive conduct to afford beneficiaries greater stores of
75

Declaration of Dr. Janusz Ordover (“Ordover Decl.”), Ex. 3 to Joint

App’x, ¶ 32.
42

capital, it is also in the nature of anticompetitive conduct to produce the sort of
“conflicts” that defendants identify here. If such “conflicts” were to preclude class
certification, it would become all but impossible to adjudicate antitrust actions on a
class-wide basis — meaning, in practice, that it would become all but impossible to
adjudicate antitrust actions, period.76
This result is unacceptable. Moreover, although the result may be
especially clear in antitrust cases, it is by no means unique to that setting. It is
likely to be true in many cases where defendants’ conduct, despite being unlawful,
works to the economic benefit of some class members. An analogy to employment

76

Dr. Ordover’s argument — that the OMP might not exist at all in the
BFW — is but one variant of the idea that antitrust violations are in the consumer
interest. Another example (also set forth by defendants, and bolstered by Dr.
Ordover’s analysis) is that the OMP, if it did exist in the BFW, would include
fewer broadcasts, because some RSNs rely on the protection conferred by
territorial exclusivity to maintain profitability. If the territorial restraints are lifted,
defendants argue that “RSNs for less popular clubs . . . would have [] difficulty
obtaining carriage, both nationally and even on MVPDs within their local market.”
Def. Mem. at 26. In that case, out-of-market fans of less popular clubs might find
themselves in the doubly-unfortunate situation of being unable to purchase an
OMP that includes their favorite team’s broadcasts, but also unable to watch their
favorite team’s broadcasts on an individual RSN — because the broadcasts would
not exist. This is a similar but distinct sense in which, according to defendants, the
BFW might create winners and losers. This theory falls prey to the same problem
as the theory that OMPs might not exist in the BFW — at bottom, both are
arguments about the economic virtues of defendants’ conduct. Ultimately, of
course, it may be that defendants’ conduct does have economic virtues — but that
is a merits issue. Incorporating it into the Rule 23 analysis would hobble the
ability of federal courts to effectively enforce the antitrust laws.
43

law underscores the point. Imagine that workers bring a class action against their
employer — Company X — for failure to pay adequate wages. The allegation is
very simple. Company X flouted state and federal labor laws by paying all hourly
workers two dollars less, per hour, than the minimum wage. At the class
certification stage, Company X makes the following argument. If it loses the
lawsuit — if its workers were not, in fact, receiving minimum wage — the
outcome will be (among other things) that Company X will lay off twenty-five
percent of its workforce. This result, the company argues, is one that many
workers would prefer to avoid — even if the only way to avoid it is to avoid
exercising their legal rights. In light of this, the company maintains that
certification is inappropriate, because some class members would prefer that the
lawsuit not be brought.
Indulging this argument would stand Rule 23 on its head. Instead of
serving as an “efficient means of compensating victims” by permitting the redress
of common injuries,77 Rule 23 would become an efficient means of immunizing
wrongdoing — by allowing defendants to invoke the positive effects of their illegal
conduct to fend off liability. But even if it has positive effects, illegal conduct
remains illegal. When Company X paid its workers, it either complied with the

77

Amchem, 521 U.S. at 628.
44

minimum wage laws or it did not. If Company X was non-compliant, then all class
members were injured in the same way — they all were paid less than what they
were owed. And if Company X was compliant, then no injury occurred. Either
way, certification is warranted.
This example, while hypothetical, has plenty of real-world analogues.
For instance, the Central District of California recently rejected a nearly identical
argument in the context of a fraud suit against an insurance company.78 Plaintiffs
alleged that the company had misrepresented the actual benefits of certain life
insurance policies by failing to disclose hidden fees. At the class certification
stage, defendant argued that charging hidden fees allowed them to keep policy
prices low (by making up the difference in fees), which is something that at least
some class members likely preferred. Therefore, defendant argued that “intra-class
conflict” — born of the fact that certain class members would prefer to maintain
the status quo, irrespective of the fraud — precluded certification.
The court flatly rejected this argument. Even if defendant was right
that its assessment of (fraudulent) fees was “altering the economic fundamentals of
the annuities group-wide” in a way that worked to the benefit of certain class

78

See Vaccinaro v. Midland Nat’l Life Ins. Co., No. 11 Civ. 5858, 2013
WL 3200500 (C.D. Cal. June 17, 2013).
45

members, that was “irrelevant” to the legal question.79 “An unlawful charge,” the
court wrote, “is an unlawful charge.”80 And being unlawful, it “could not
[possibly] give rise to intra-class conflicts.”81 Other courts have also rejected the
winners and losers argument in the context of employment disputes,82 law
enforcement searches,83 and the regulation of public unions.84

79

Id. at *9.

80

Id.

81

Id.

82

See In re FedEx Ground Package Sys., Inc., Employment Practices
Litig., 273 F.R.D. 424, 438 (N. D. Ind. 2008) (permitting a class-wide challenge to
FedEx’s practice of selectively categorizing employees as “contractors,” despite
the fact that some employees categorized as contractors might prefer that
categorization due to the “favorable relationship” it allows them to cultivate with
the company).
83

See Horton v. Goose Creek Ind. School Dist., 677 F.2d 471, 487-88
(5th Cir. 1982) (rejecting the government’s argument that because some students
might want canine “sniff” searches to be used at a school, whether or not the
searches were lawful, the action should not adjudicated on a class-wide basis). The
Horton court offered a helpful analogy — along the same lines as the minimum
wage analogy — to emphasize the point. One familiar setting in which the winners
and losers issue arises, the court argued, are “suit[s] [] in which one or more
taxpayers of a community, suing on behalf of all, challenge the validity of a
proposed public expenditure.” Id. at 490. Under such circumstances, it is very
likely that “a good many taxpayers would not [] prefer[] to have their rights
enforced, because of their interest in having the expenditure made,” but “no one
has ever doubted the propriety of bringing such a suit as a class action.” Id.
84

See Stolz et al. v. United Brotherhood of Carpenters and Joiners, 620
F. Supp. 396, 405 (D. Nev. 1985) (holding that plaintiffs could bring a class-wide
challenge to the propriety of voting procedures used to enact wage increases,
46

These results are not surprising. In a legal system where most
individuals lack either the means or the will (or both) to enforce their rights, class
actions serve important deterrence goals. They rein in bad behavior. This function
is especially pressing in the context of antitrust claims brought by consumers, as
opposed to antitrust claims brought by competitors. The former typically involve
two dynamics that frustrate individual adjudication. First, from the consumer’s
perspective, antitrust injuries often have wide but slight economic effects, which
means that individual class members might suffer few tangible damages. This
does not mean, however, that antitrust violations generate correspondingly little
benefit for the entities that perpetrate them. To the contrary, anticompetitive
conduct can be highly lucrative. And it is this asymmetry — that the very same
conduct can reap enormous gain for the perpetrators, while simultaneously causing
every individual consumer a small amount of harm — that makes class actions
such an important enforcement device.85

despite the fact that many class members would favor implementation of the wage
increase, regardless of whether the proper procedures were followed).
85

See, e.g., In re Currency Conversion Fee Antitrust Litig., 264 F.R.D.
100 (S.D.N.Y. 2010) (certifying a nationwide class of credit card users on the
theory that card companies conspired to charge a uniform “currency conversion
fee” for transactions outside the United States — the monetary harm of which was
in the single digits and for many consumers). See also Newberg on Class Actions
§ 4:66 (noting that “class actions are the primary vehicle in modern jurisprudence
for the effective enforcement of the antitrust, securities laws, discrimination, and
47

Second, antitrust actions are very expensive to litigate. To make out a
plausible antitrust claim — much less to convince a trier-of-fact that illegal
conduct occurred — it is often necessary to retain an expert whose fees resemble,
and might even dwarf, those of counsel.86 In many circumstances, this makes it
practically impossible for individual plaintiffs to pursue antitrust suits.87 It is one
thing if no common injury has occurred. In that case, class certification is
inappropriate regardless of the underlying claim. But it is quite another thing to
allow antitrust defendants to shut down class actions — even if a class-wide injury
has occurred — because of speculation about what certain consumers might
hypothetically prefer.
If this became the default rule, the consequences are not hard to
imagine. Fewer antitrust suits would be brought, because would-be plaintiffs (and
their attorneys) would have less incentive to initiate them. Litigants would be
afraid of being told, many years and millions of dollars into a case, that the class

other key bodies of law”).
86

See Italian Colors v. American Express, 133 S. Ct. 2304, 2316 (2013)
(J. Kagan, dissenting) (explaining that an expert report for a garden variety tying
case can easily “cost between several hundred thousand and one million dollars”).
87

See id. (“No rational actor would bring a claim worth tens of
thousands of dollars if doing so meant incurring costs in the hundreds of
thousands.”).
48

could not be certified because it failed the all-important winners and losers test.
Meanwhile, firms — appreciating this reconfiguration of incentives — would feel
less compunction, due to diminished risk, about engaging in anticompetitive
conduct in the first place. This is not an acceptable outcome.
3.

The Purpose of Rule 23(b)(2)

The final counterpoint to defendants’ winners and losers logic is more
specifically tethered to Rule 23(b)(2), and more overtly practical. Given the
prospective relief contemplated by Rule 23(b)(2) — as opposed to the retrospective
redress contemplated by Rule 23(b)(3) — divergent interests among the class
members is a reason to certify the class, not to avoid certification. It is only by
allowing an injunctive action to proceed class-wide that consumers whose interests
differ in some respects from those of the named plaintiffs will have an opportunity
to steer the course of the litigation. Absent certification, “losing” class members
would likely be worse off — they would be at the mercy of individual plaintiffs
seeking declaratory and injunctive relief that is likely to have sweeping effects on
the market as a whole.
In this respect, injunctive classes are fundamentally different than
damages classes. With regard to the latter, Rule 23 provides safeguards to protect
against coercion. Specifically, Rule 23(c) erects stringent notice and opt-out

49

requirements that must be satisfied as a condition of certification under Rule
(b)(3).88 In the absence of such requirements, (b)(3) certification would run the
risk of usurping the rights of class members who would prefer (1) to pursue their
own claims for damages, or (2) to maintain standing to bring future challenges.
With regard to injunctive classes, by contrast, coercion is harder to
avoid. Indeed, in many settings the pursuit of structural remedies is inherently
coercive — insofar as the outcome of the litigation often bears on the interests of
many unnamed parties, whether or not the suit has been formally designated as a
class action. When it comes to certain kinds of prospective relief — relief that
aims to change policy, or, as here, to transform the dynamics of an entire market —
“[t]here is no realistic sense of [class members] ‘opting out.’”89 Indeed, this is why
certification operates to the advantage, not the detriment, of class members with
divergent interests from the named plaintiffs. As a leading treatise puts it, “[i]n
(b)(2) situations, an individual litigant’s case is likely to have an impact on

88

See Fed. R. Civ. P. 23(c)(2)(b). See also The American Law Institute
Principles of the Law of Aggregate Litigation § 3.10 (outlining the notice
requirements, codified in Rule 23(c)(2), that must be satisfied as a prerequisite of
certification under Rule 23(b)(3)); id. § 3.11 (outlining the procedure for “second
opt-out” rights in the event of a (b)(3) settlement).
89

Newberg on Class Actions § 4:36.
50

similarly situated parties,”90 which means that “certification [likely] helps the
absent parties,” because it “guarantee[s] that their interests will be adequately
represented.”91
B.

Cohesion and Standing
Putting the winners and losers issue to one side, defendants also argue

that plaintiffs cannot satisfy the “cohesion” requirement of Rule 23(b)(2), because
certain class members — indeed, even some named plaintiffs — are previous
subscribers, but not current subscribers, to the OMP. According to defendants,
previous subscribers lack standing to challenge the complained-of restraints on
prospective grounds. Because they are no longer “consumer[s] . . . in the market in
which trade was restrained,”92 their injuries are speculative,93 and they are not
“efficient enforcers” of the antitrust laws.94
In other words, defendants argue that even assuming, arguendo, that
all class members were injured by the complained-of restraints, it does not follow

90

Id. § 4:34.

91

Id.

92

Associated Gen. Contractors, 459 U.S. at 539.

93

See Def. Mem. at 44-46.

94

For background on the “efficient enforcer” standard, see Laumann,
907 F. Supp. 2d at 480-85.
51

that all class members will continue to be so injured. The continuity of injury
depends on whether “each former subscriber among the absent class members
intends to purchase an OMP in the future,” a question that defendants believe
“impossible to ascertain . . . [using] objective criteria.”95 On that basis, defendants
conclude that “many putative class members . . . would not benefit from an
injunction,”96 rendering the class non-cohesive.97
This argument rests on a mistaken view of the injuries alleged in this
case. Defendants are correct, of course, that a plaintiff who can only claim past
injuries — who faces neither an ongoing injury nor a realistic chance of future
injury — lacks standing to seek prospective relief. The problem with defendants’
argument does not lie with this unremarkable proposition. It lies with the implicit
premise that past subscribers to OMPs, because they no longer subscribe, are no
longer injured. That is false. Short of death, cognitive illness, or a complete loss
of interest in baseball and hockey, previous subscribers to OMPs are still

95

Def. Mem. at 46.

96

Id. at 45.

97

It has already been established — in my December 5, 2012 opinion —
that previous subscribers to the OMP satisfy the “direct purchaser” requirement of
Illinois Brick. See Laumann, 907 F. Supp. 2d at 480. See also supra note 54.
Defendants do not question that holding here. Instead, they focus exclusively on
the “efficient enforcer” issue.
52

“consumer[s] . . . in the market in which trade [is] restrained” — here, the market
for hockey and baseball broadcasting.
Put simply, if a consumer in the market for baseball and hockey
broadcasting discontinues her subscription to an OMP, that decision does not
remove her from the market for baseball and hockey broadcasting. Rather, it is
precisely as a consumer in the market for baseball and hockey broadcasting that
she chooses to discontinue her subscription. After all, one of the choices that
consumers make is declining to buy products. There are various reasons that might
happen. A product might be too expensive — as David Dillon, one of the named
plaintiffs here, concluded of the OMP.98 Or a product might fail to meet a
consumer’s specific needs — as the OMP did for Marc Lerner, another of the
named plaintiffs.99
But regardless of what motivates a consumer to decide not to purchase
a particular product, the point is that on the basis of that decision alone, there is no
reason to infer — as defendants ask the Court to infer here — that the consumer is
not in the market for such goods. Indeed, on the face of it, an explanation like the
one offered by Plaintiff Dillon — that he chose not to renew his OMP subscription

98

See Def. Mem. at 46.

99

See id.
53

because it “wasn’t worth the money” — suggests that if the antitrust injury in this
case were redressed, and Dillon had the option (1) to subscribe to a more
affordable OMP or (2) to buy an a la carte RSN, he might well make a different
choice. If he did so, he would be making that choice as a consumer in the market
for hockey broadcasting.
Ultimately, defendants’ argument depends on the proposition that
discontinuing one’s subscription to an OMP bespeaks a lack of interest in baseball
and hockey broadcasting. There is little reason to think so. For support,
defendants point to deposition testimony from named plaintiffs (such as Dillon),
indicating that such plaintiffs “do not currently subscribe to an OMP [and] do not
[] plan to purchase such a package.”100 But all this demonstrates is that some
consumers, in the face of constrained options and artificially high prices, choose
not to buy goods. That is not surprising. It is just what common sense — and
economic theory — would predict.101 For the purpose of determining which class
members have standing to seek prospective relief, the relevant question is not how

100

Def. Mem. at 46 (emphasis added).

101

It is axiomatic that one result of anticompetitive conduct is that output
diminishes within the relevant market. See, e.g., Business Elec. Corp. v. Sharp
Elec. Corp., 485 U.S. 717, 723 (1988) (explaining that monopolization — and
other per se antitrust violations — “always or almost always tend to restrict
competition and decrease output”).
54

consumers respond to a market infected by anticompetitive restraints. It is how
consumers would behave if those restraints were lifted — i.e., what choices they
would make in the BFW.
With respect to that question, defendants have offered no reason to
think, much less any evidence to show, that previous subscribers are less interested
than current subscribers in seeing the restraints lifted. Both groups have the same
interest — they want the market for baseball and hockey broadcasting to be as
competitive as possible.102 And both groups, likewise, suffer the same ongoing
injury — a market for baseball and hockey broadcasting in which choice is
diminished, and prices elevated, by territorial restraints.
The same reasoning also disposes of any concern about Article III.
According to defendants, even if previous subscribers qualify as consumers in the
102

In fact, it is not just previous subscribers and current subscribers that
share this interest. Everyone that watches hockey and baseball — all fans that
have some appetite for viewing baseball and hockey broadcasts remotely — are
consumers in the market for baseball and hockey broadcasting, with interests
adversely affect by the complained-of restraints. In this respect, the class of
individuals interested in the outcome of this litigation include a large swath of
baseball and hockey fans who have never subscribed to OMPs, but who
nevertheless enjoy watching baseball and hockey through currently-available
channels and, in the BFW, might consider subscribing to an OMP (if it were
cheaper) or might be interested in purchasing a la carte RSNs. If anything, the
sheer size of the population whose interests are at stake in this litigation makes
class-wide adjudication all the more appropriate. For the reasons set forth above,
one of the purposes of (b)(2) certification is to expand the number of parties that
have an opportunity to steer the course of litigation.
55

market for baseball and hockey broadcasting, they have suffered no injury that is
amenable to prospective relief, rendering them constitutionally unqualified to bring
a claim — and frustrating class certification.103 In support of this argument,
defendants point to two recent Supreme Court cases — Walmart v. Dukes,104 and
Clapper v. Amnesty International.105 In Dukes, current and former female
employees of Walmart brought a class action under Title VII, alleging that the
company had engaged in systematic sex-based discrimination in their hiring and
promotional decisions. After holding that the class lacked commonality — thus
precluding certification under Rule 23(a) — the Court went on to note that (b)(2)
certification was inappropriate on other grounds. Namely, former employees of
Walmart “lack[ed] standing” — by which the Court meant Article III standing —
“to seek injunctive or declaratory relief against [Wal-Mart’s] employment
practices,” because they were no longer affected by those practices. Thus, they
could not properly be included in a (b)(2) class.106
The Clapper Court echoed this reasoning two terms later, when it held

103

See Denney, 443 F.3d at 263-64 (“[N]o class may be certified that
contains members lacking Article III standing”).
104

See 131 S. Ct. 2541 (2011).

105

See 133 S. Ct. 1138 (2013).

106

See 131 S. Ct. at 2560.
56

that Amnesty International lacked standing to bring a constitutional challenge to
section 702 of the Foreign Intelligence Surveillance Act (“FISA”). According to
Amnesty International, because it tends to interact with individuals who are subject
to overseas telephonic surveillance (as authorized by FISA), the organization faced
“an objectively reasonable likelihood that [its] communications will be acquired . .
. at some point in the future” — conferring standing on the organization to bring a
constitutional claim.107 The Court disagreed, maintaining that a “future injury is
too speculative to satisfy the well-established requirement that threatened injury
must be certainly impending.”108 Therefore, the organization was not in a position
to secure the prospective relief that it sought.
A common principle underlies Dukes and Clapper. It is the same
principle that motivated City of Los Angeles v. Lyons109 — an older case that is not
cited in defendants’ papers, but that nevertheless bolsters its position. There, the
Court held that the plaintiff, who had been subject to a choke-hold by an officer of
the Los Angeles Police Department, lacked standing to enjoin the general practice
of using choke-holds, because he was unlikely to suffer a similar injury in the

107

Clapper, 133 S. Ct. at 1143.

108

Id. (emphasis in original).

109

461 U.S. 95 (1983).
57

future. Therefore — the Lyons Court reasoned — the plaintiff could not seek
prospective relief.110
The principle uniting these cases is that, for purposes of Article III,
neither a previously-inflicted injury nor a hypothetical future injury is sufficient to
confer standing to pursue forward-looking remedies. To enjoy such standing, a
plaintiff must show either that she currently is injured, or that a future injury is
“certainly impending.”111
Here, for the reasons set forth above, all class members — including
previous subscribers to the OMPs — are consumers in the market for baseball and
hockey broadcasting. All class members, therefore, suffer an ongoing injury in
connection with the complained-of restraints — a dearth of choice in the market
for baseball and hockey broadcasting. Accordingly, all class members have Article

110

See id. at 104-10.

111

Clapper, 133 S. Ct. at 1143. Accord Susan B. Anthony List v.
Driehaus 134 S. Ct. 2334, 2341 (2014); Whitmore v. Arkansas, 495 U.S. 149, 158
(1990). For an example of what constitutes an impending injury, see, for example,
Deshawn E. v. Safir, 156 F.3d 340, 344-45 (2d Cir. 1998) (holding that plaintiffs
had standing to seek an injunction against the involuntary coercion of statements
by police officers because there was evidence of a department-wide policy in favor
of coerced statements in all cases, whereas in Lyons, the City’s policy afforded
individual officers discretion in the use of choke-holds); Aguilar v. Department of
Homeland Sec., 811 F. Supp. 2d 802, 826-27 (S.D.N.Y. 2011) (holding that
plaintiffs had standing to seek prospective relief from searches by Immigration and
Customs Enforcement [‘ICE’] officials, because those officials, having searched
plaintiffs’ property once, threatened to return).
58

III standing.
C.

The Necessity of Certification
Having disposed of all affirmative obstacles to certification under

(b)(2), the final question the Court must address is whether such certification is
necessary. Under Second Circuit law, there is no need for (b)(2) certification when
a defendant is willing to “represent[]” that it “ha[s] no intention of reinstating” a
challenged policy, even if the policy has only been challenged on an individual
basis.112 In other words, if the right in question can be secured on a class-wide
basis through individual adjudication — if all class members’ interests will be
protected whether or not the class is certified — certification should be denied.
Assuming, arguendo, that this principle generally applies in cases
where defendants are private corporations rather than state officials,113 it is

112

Daniels, 198 F.R.D. at 420. Accord Davis v. Smith, 607 F.2d 535, 540
(2d Cir. 1978) (“[When] the prospective benefits of declaratory and injunctive
relief will benefit all members of a proposed class to such an extent that []
certification . . . would not further the implementation of the judgment, a district
court may decline certification.”); Galvan v. Levine, 490 F.2d 1255, 1261 (2d Cir.
1973) (holding that (b)(2) certification would be “largely a formality” when
defendant “has made clear that it understands the judgment [as to one claimant] to
bind it with respect to all claimants [and that] even before entry of the judgment,
[defendant] withdrew the challenged policy . . . and stated it did not intend to
reinstate the policy”).
113

The Second Circuit has indicated that the reasoning of Galvan might
be exclusive to civil rights actions, due to the “assum[ption],” in those cases, that it
would be “unthinkable” for “public officials, mindful of their responsibilities,” not
59

inapposite here. Defendants have made no representation that if the territorial
restraints are declared unlawful as applied to the named plaintiffs, defendants will
implement that holding across the board. In practice, of course, it is probable that
defendants would do so; that their response to a merits verdict in plaintiffs’ favor
will be to abolish territorial restraints universally, across the United States. But
taking the momentous step of concluding that certification is unnecessary requires
more than probability. The case law makes clear that a defendant’s representations
must be “express,”114 or otherwise “explicit,”115 before it is appropriate to forgo
certification. Here, no such representation has been made. And although it may
not be likely, it is nonetheless possible that defendants could respond to an adverse
merits verdict by lifting some, but not all, territorial restraints — in a manner that

to “apply [an adverse] determination . . . equally to all persons similarly situated.”
Berger v. Heckler, 771 F.2d 1556, 1566-67 (2d Cir. 1985). Accord Hurley v.
Ward, 584 F.2d 609, 611-12 (2d Cir. 1978) (“Since it is ordinarily assumed that
state officials will abide by the court’s judgment, where the State has admitted the
identity of issues as to all potential class litigants class certification is indeed
unnecessary.”). Because it is unclear from these precedents how widely Galvan
applies, I assume for present purposes that it applies here.
114

Cutler v. Perales, 128 F.R.D. 39, 46-47 (S.D.N.Y. 1989) (expounding
on the importance of a defendant’s “express [] commitment to apply the judgment
of the court in the single action to all similarly situated persons,” and noting that in
Galvan, “the defendant had withdrawn the challenged policy prior to class
certification”) (emphasis added).
115

Dajour B. ex rel. L.S. v. City of New York, No. 00 Civ. 2044, 2001
WL 1173504, at *10 (S.D.N.Y. Oct. 3, 2001).
60

resolves the named plaintiffs' injuries but does not reconfigure the market for
baseball and hockey broadcasting. However slight that risk may be, it is one I
decline to take. 116 The legality of the territorial restraints should be adjudicated on
a class-wide basis pursuant to Rule 23(b )(2).
VI.

CONCLUSION

For the reasons set forth above, plaintiffs' motion is GRANTED in
part and DENIED in part. The Clerk of the Court is directed to close this motion,
Dkt. No. 266 in 12 Civ. 1817, and Dkt. No. 339 in 12 Civ. 3704.

SO ORDERED:

Dated:

New York, New York
May 14, 2015

116

Moreover, even if defendants did explicitly represent that the
territorial restraints would be lifted across the entire market in the event that
plaintiffs prevail, this would still leave unaddressed the interests of absent class
members who potentially stand to "lose" in the BFW - and who might, on that
basis, prefer to exercise some voice in the litigation. Because (b )(2) certification
"helps []absent parties," concern for unnamed class members is an independent
reason for certification. Newberg on Class Actions § 4:34 (emphasis in original).
Even if defendants were - hypothetically - to assure the Court that certification
is unnecessary to secure class-wide relief, it would still be necessary to ensure
optimal representation.
61

- Appearances For Plaintiffs:
Edward A. Diver, Esq.
Howard I. Langer, Esq.
Peter E. Leckman, Esq.
Langer Grogan & Diver, P.C.
Three Logan Square, Suite 4130
1717 Arch Street
Philadelphia, Pennsylvania 19103
[phone]
Kevin M. Costello, Esq.
Gary E. Klein, Esq.
Klein Kavanagh Costello, LLP
85 Merrimac St., 4th Floor
Boston, Massachusetts 02114
[phone]
Michael Morris Buchman, Esq.
John A. Ioannou, Esq.
Motley Rice, LLC
600 Third Avenue
New York, New York 10016
[phone]
Marc I. Gross, Esq.
Adam G. Kurtz, Esq.
Pomerantz, LLP
600 Third Avenue
New York, New York 10016
[phone]
Robert LaRocca, Esq.
Kohn, Swift & Graf, P.C.
One South Broad Street
Suite 2100
62

Philadelphia, Pennsylvania 19107
[phone]
J. Douglas Richards, Esq.
Jeffrey Dubner, Esq.
Cohen, Milstein, Sellers & Toll, PLLC
88 Pine Street
New York, New York 10005
[phone]
Michael J. Boni, Esq.
Joshua D. Snyder, Esq.
Boni & Zack, LLC
15 St. Asaphs Road
Bala Cynwyd, Pennsylvania 19004
[phone]
For Defendants Office of the Commissioner of Baseball, Major League
Baseball Enterprises Inc., MLB Advanced Media L.P., MLB Advanced
Media, Inc., Athletics Investment Group, LLC, The Baseball Club of
Seattle, L.L.P., Chicago White Sox, Ltd., Colorado Rockies Baseball Club,
Ltd., The Phillies, Pittsburgh Baseball, Inc., and San Francisco Baseball
Associates, L.P. :
Beth A. Wilkinson, Esq.
Samantha P. Bateman, Esq.
Paul, Weiss, Rifkind Wharton & Garrison LLP
2001 K St. NW
Washington, D.C. 20006
[phone]
Bradley I. Ruskin, Esq.
Helene Debra Jaffe, Esq.
Jennifer R. Scullion, Esq.
Colin Kass, Esq.
Proskauer Rose LLP
11 Times Square
New York, New York 10036
63

[phone]
Thomas J. Ostertag, Esq.
Senior Vice President and General Counsel
Office of the Commissioner of Baseball
245 Park Avenue
New York, New York 10167
[phone]
For Defendants National Hockey League, NHL Enterprises, L.P., NHL
Interactive Cyberenterprises, LLC, Chicago Blackhawk Hockey Team, Inc.,
Comcast-Spectator, L.P., Hockey Western New York LLC, Lemieux Group,
L.P., Lincoln Hockey LLC, New Jersey Devils LLC, New York Islanders
Hockey Club, L.P., and San Jose Sharks, LLC:
Shepard Goldfein, Esq.
James A. Keyte, Esq.
Paul M. Eckles, Esq.
Matthew M. Martino, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
[phone]
For Defendants Comcast Corporation, Comcast SportsNet Philadelphia, L.P.,
Comcast SportsNet Mid-Atlantic L.P., Comcast SportsNet
California, LLC, and Comcast SportsNet Chicago, LLC:
Arthur J. Burke, Esq.
James W. Haldin, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
[phone]
For Defendants DIRECTV, LLC, DIRECTV Sports Networks, LLC,
DIRECTV Sports Net Pittsburgh, LLC a/k/a Root Sports Pittsburgh,
DIRECTV Sports Net Rocky Mountain, LLC a/ka/a Root Sports Rocky
64

Mountain, and DIRECTV Sports Net Northwest, LLC a/ka/a Root Sports
Northwest:
Louis A. Karasik, Esq.
Andrew E. Paris, Esq.
Stephanie A. Jones, Esq.
Alston & Bird LLP
333 South Hope Street, 16th Floor
Los Angeles, California 90071
[phone]
For Defendant New York Yankees Partnership:
Jonathan Schiller, Esq.
Alan Vickery, Esq.
Christopher Duffy, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue
New York, New York 10022
[phone]
For Defendants The Madison Square Garden Company and New York
Rangers Hockey Club:
Stephen R. Neuwirth, Esq.
Deborah Brown, Esq.
Richard I. Werder, Jr., Esq.
Quinn Emanuel Urquhart & Sullivan, LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
[phone]
For Defendant Yankees Entertainment Sports Network, LLC:
John E. Schmidtlein, Esq.
Kenneth Charles Smurzynski, Esq.
James Harris Weingarten, Esq.
William Jefferson Vigen, Esq.
65

Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
[phone]

66