Laumann et al v. National Hockey League et al
Filing
90
OPINION AND ORDER: For the foregoing reasons, Plaintiffs Garber and Herman are dismissed from both cases, and Silver is dismissed from the Garber case, for lack of antitrust standing. The Section Two claim (Claim Four) is dismissed against the RSN an d MVPD defendants, but may proceed against the League defendants. The Section One claims may proceed against all defendants. A conference in this matter is scheduled for December 18,2012 at 5:00 p.m. The Clerk of the Court is directed to close these motions [Docket Entry No. 74,12 Civ. 1817 and Docket Entry No.65, 12 Civ. 3704]. (Signed by Judge Shira A. Scheindlin on 12/5/2012) (ago)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
THOMAS LAUMANN, FERNANDA GARBER,
ROBERT SILVER, GARRETT TRAUB, DAVID
DILLON and PETER HERMAN, representing
themselves and all other similarly situated,
OPINION AND
ORDER
Plaintiffs,
- againstNATIONAL HOCKEY LEAGUE, et al.,
12 Civ. 1817 (SAS)
Defendants.
)(
FERNANDA GARBER, MARC LERNER, DEREK
RASMUSSEN, ROBERT SILVER, GARRETT
TRAUB, and PETER HERMAN representing
themselves and all other similarly situated,
12 Civ. 3074 (SAS)
Plaintiffs,
- againstOFFICE OF THE COMMISSIONER OF BASEBALL,
et al.,
Defendants.
--------------------------------------------------------------------
)(
SHIRA A. SCHEINDLIN, U.S.D.J.:
I.
INTRODUCTION
Plaintiffs bring this consolidated putative class action against the
National Hockey League (“NHL”) and Major League Baseball (“MLB”), various
clubs within the Leagues, regional sports networks (“RSNs”) that televise the
games, and Comcast and DirecTV, multichannel video programming distributors
(“MVPDs”).1 Plaintiffs challenge “defendants’ . . . agreements to eliminate
competition in the distribution of [baseball and hockey] games over the Internet
and television [by] divid[ing] the live-game video presentation market into
exclusive territories, which are protected by anticompetitive blackouts” and by
“collud[ing] to sell the ‘out-of-market’ packages only through the League [which]
exploit[s] [its] illegal monopoly by charging supra-competitive prices.”2 Plaintiffs
claim that these agreements “result in reduced output, diminished product quality,
diminished choice and suppressed price competition” in violation of the Sherman
Antitrust Act,3 and request statutory damages and injunctive relief on behalf of
themselves and the class.4 Defendants jointly move to dismiss all claims pursuant
1
This motion to dismiss arises out of two consolidated cases. Laumann
v. National Hockey League, et al., No. 12 Civ. 1817 involves professional hockey
telecasting, and Garber v. Office of the Commissioner of Baseball, et al., No. 12
Civ. 3704, involves professional baseball telecasting. There are no cross-league
allegations.
2
Laumann Second Amended Complaint (“Laumann Compl.”) ¶ ¶¶ 2, 8;
Garber First Amended Complaint (“Garber Compl.”) ¶¶ 2, 11.
3
Laumann Compl. ¶ 10; Garber Compl. ¶ 13.
4
See Laumann Compl. at 40-41; Garber Compl. at 41-42. The
Sherman Antitrust Act authorizes suit for an alleged antitrust violation in “any
-2-
to Federal Rule of Civil Procedure 12(b)(6).5
II.
BACKGROUND6
A.
The Agreements to Telecast Baseball and Hockey
Plaintiffs are subscribers to television7 and/or Internet8 services that
district court of the United States in the district in which the defendant resides or is
found or has an agent” and provides for treble damages, interest, and attorneys fees
and costs. 15 U.S.C. § 15(a).
5
Moving defendants in Laumann are the NHL, NHL Enterprises, L.P.,
NHL Interactive Cyberenterprises, LLC, and nine NHL clubs, Comcast
Corporation and four of its affiliate Comcast SportsNet entities, DirecTV, LLC,
DirecTV Sportsnetworks LLC and one of its affiliate Root Sports entities, and the
Madison Square Garden Company. Moving defendants in Garber are the MLB,
Major League Baseball Enterprises, Inc., MLB Advanced Media, L.P., and MLB
advanced Media, Inc., eight of the nine named individual club defendants, Comcast
and three of its affiliated Comcast Sportsnet entities, DirecTV, DirecTV
Sportsnetworks LLC and three of its affiliate Root Sports entities, and Yankees
Entertainment & Sports Networks, LLC. An additional named club, Chicago
National League Baseball Club, LLC, filed a bankruptcy notice on June 28, 2012
(Garber Dkt. No. 53) and is not party to the motion to dismiss.
6
Unless otherwise noted, all facts are drawn from the Laumann Second
Amended Complaint and Garber First Amended Complaint and are presumed true
for the purposes of this motion.
7
Fernanda Garber purchased video service from Comcast, which
included Comcast Sportsnet California and Comcast Sportsnet Bay Area. See
Laumann Compl. ¶ 13; Garber Compl. ¶ 16. Garrett Traub purchased video service
from Comcast, which included channels carrying professional hockey games, and
also purchased NHL Center Ice. See Laumann Compl. ¶ 16; Garber Compl. ¶ 20.
Robert Silver purchased satellite service from DirecTV, which included channels
carrying professional hockey games, and also purchased NHL Center Ice. See
Laumann Compl. ¶ 15; Garber Compl. ¶ 19. Peter Herman (together with Garber,
Silver, and Traub the “Television plaintiffs”) purchased, and continues to receive
video service from DirecTV. See Laumann Compl. ¶ 18. The Television plaintiffs
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include live hockey and baseball telecasts. Defendant National Hockey League is
an unincorporated association of thirty major league professional ice hockey clubs,
nine of which are named as defendants in Laumann.9 Defendant Office of the
Commissioner of Baseball, doing business as Major League Baseball, is an
unincorporated association of thirty professional baseball clubs, nine of which are
named as defendants in Garber.10 The Complaints also name subsidiaries of the
seek to represent individuals who purchased television service from DirecTV or
Comcast that included live NHL or MLB games not available through a sponsored
telecast. See Laumann Compl. ¶ 36; Garber Compl. ¶ 41.
8
Thomas Laumann has been a subscriber to the NHL Gamecenter Live
Internet package from the NHL League defendants since 2010. See Laumann
Compl. ¶ 14. David Dillon purchased NHL Gamecenter Live in 2011 and also
subscribes to pay television service and “intends to purchase television and
professional hockey programming services in the future.” Id. ¶ 17. Marc Lerner
and Derek Rasmussen (together with Laumann and Dillon, the “Internet
plaintiffs”) purchased the MLB.tv Internet package from the MLB League
defendants. Garber Compl. ¶¶ 17-18. The Internet plaintiffs seek to represent
classes of individual purchasers of NHL GameCenter Live (in Laumann) and
MLB.TV (in Garber). See Laumann Compl. ¶ 36; Garber Compl. ¶ 41.
9
See Laumann Compl. ¶ 19. The clubs named as defendants are the
Chicago Blackhawks Hockey Team, Inc.; Comcast-Spectacor, L.P. (d/b/a
“Philadelphia Flyers”); Hockey Western New York, LLC (d/b/a “Buffalo Sabres”);
Lemieux Group, L.P. (d/b/a “Pittsburgh Penguins”); Lincoln Hockey, LLC (d/b/a
“Washington Capitals”); New Jersey Devils, LLC; New York Islanders Hockey
Club, L.P.; New York Rangers Hockey Club; and San Jose Sharks, LLC. See id. at
10-11. The Complaint also lists other NHL member clubs that are not named as
defendants. See id. at 11-12.
10
See Garber Compl. ¶ 27. The MLB clubs named as defendants are:
Athletics Investment Group, LLC (Oakland Athletics); Baseball Club of Seattle,
L.P. (Seattle Mariners); Chicago National League Ball Club, LLC (Chicago Cubs);
-4-
Leagues that pursue their commercial opportunities, including Internet operations
(together with the NHL, MLB and the named individual clubs, the “League
defendants”).11 Plaintiffs allege that “[p]ursuant to a series of agreements between
and among Defendants, the League[s] ha[ve] obtained centralized control over
distribution of live video programming of [hockey and baseball] games” and “the
clubs have agreed not to compete in business matters related to the video
presentation of live major-league men’s professional [hockey and baseball]
games.”12
Both the NHL and MLB are “ultimately controlled by, and operate for
the benefit of the clubs.”13 “Though necessarily cooperating to produce inter-club
games, each club operates as an independently owned and managed business,
Chicago White Sox, Ltd.; Colorado Rockies Baseball Club, Ltd.; New York
Yankees Partnership; Phillies, L.P.; Pittsburgh Baseball, Inc. (Pittsburgh Pirates);
and San Francisco Baseball Associates, L.P. (San Francisco Giants). See id. at 1112. The Complaint also lists other MLB member clubs which are not named as
defendants. See id. at 12-13.
11
Defendant NHL Enterprises, L.P., through its subsidiary, defendant
NHL Interactive Cyberenterprises LLC, operates the NHL’s website and streaming
services. See Laumann Compl. ¶¶ 22-23. Defendant MLB Advanced Media, L.P.
operates the League’s Internet streaming of live games, pursuant to rights granted
by individual clubs. See Garber Compl. ¶¶ 25-26.
12
Laumann Compl. ¶ 5; Garber Compl. ¶ 8.
13
Plaintiffs’ Memorandum of Law in Opposition to Defendants’
Motions to Dismiss the Complaints (“Pl. Mem.”) at 4.
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competing against each other in various markets.”14 In both the NHL and MLB,
each team owns the initial right to control telecasts of its home games, and keeps
the revenues it generates from the sale of these rights.15 The teams in each League
have mutually agreed to permit the visiting team to produce a separate telecast of
the games.16
1.
“In-Market” Agreements
The vast majority of telecasts are produced by arrangement between
individual teams and RSNs, a number of which are named as defendants.17 RSNs
are local television networks that negotiate contracts with individual NHL or MLB
clubs to broadcast the majority of the local club’s games within that club’s telecast
territory.18 Several defendant RSNs are owned and controlled by defendant
14
Laumann Compl. ¶ 20; Garber Compl. ¶ 23.
15
See Laumann Compl. ¶¶ 20, 61; Garber Compl. ¶¶ 23, 64. See also
NHL Constitution § 4.4 (“Property Rights of Home Club. Each member hereby
irrevocably conveys . . . all right, title and interest . . . to each hockey game played
by its team as a visiting club . . . to the member in whose home territory said game
is played.”); MLB Constitution Art. X § 4 (granting to the commissioner “acting as
[the clubs’] agent, the right to sell, on their behalf, throughout the United States . .
. exclusive or non-exclusive television and radio or other video or audio media
rights (including the Internet and any other online technology)”) (emphasis added).
16
See Pl. Mem. at 6.
17
See Laumann Compl. ¶ 58; Garber Compl. ¶ 61.
18
Id.
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Comcast,19 several are owned and controlled by defendant DirecTV,20 and two are
independent of the MVPDs, but share ownership with an individual club.21
RSNs produce the games and sell their programming to MVPDs
including Comcast, a cable distributor, and DirecTV, a satellite distributor (the
upstream market).22 MVPDs, in turn, sell programming to consumers (the
downstream market).23 Pursuant to agreements with the RSNs, MPVDs make RSN
19
The Comcast RSN defendants include Comcast Sportsnet Philly, L.P.
(RSN for Philadelphia Phillies and Flyers), Comcast Sportsnet Mid-Atlantic, L.P.
(RSN for Washington Capitals), Comcast Sportsnet Bay Area, L.P. (RSN for San
Francisco Giants, Oakland Athletics and San Jose Sharks), Comcast Sportsnet
Chicago, L.P. (RSN for Chicago Cubs, White Sox, and Blackhawks) all of which
are owned and controlled by Comcast. See Laumann Compl. ¶ 30; Garber Compl.
¶ 33.
20
The DirecTV RSN defendants include Root Sports Pittsburgh (RSN
for Pittsburgh Pirates and Penguins), Root Sports Rocky Mountain (RSN for
Colorado Rockies), Root Sports Northwest (RSN for Seattle Mariners) all of which
are wholly-owned subsidiaries of DirecTV and/or its subsidiary DirecTV Sports
Networks LLC. See Laumann Compl. ¶ 28; Garber Compl. ¶ 31.
21
Defendant Yankees Entertainment and Sports Networks, LLC
(“YES”) is the RSN for New York Yankees and is co-owned with the New York
Yankees. See Garber Compl. ¶ 34. Defendant Madison Square Garden Company
(“MSG”) owns the New York Rangers as well as two RSNs, MSG Network and
MSG Plus, which carry the games of the New York Rangers and Islanders, and the
New Jersey Devils and Buffalo Sabres. See Laumann Compl. ¶ 24.
22
See Laumann Compl. ¶¶ 70-71; Garber Compl. ¶¶ 74-75. See also
Brantley v. NBC Universal, Inc., 675 F.3d 1192, 1195 (9th Cir. 2011) (dividing the
television market into upstream and downstream markets).
23
See Laumann Compl. ¶¶ 70-71; Garber Compl. ¶¶ 74-75.
-7-
programming available as part of standard packages sold to consumers within the
RSN’s designated territory, and black out games in unauthorized territories, in
accordance with the agreements between the RSNs and the Leagues.24 The
Complaints allege that the “regional blackout agreements,” made “for the purpose
of protecting the local television telecasters,” are “[a]t the core of Defendants’
restraint of competition.”25 “But for these agreements,” plaintiffs allege, “MVPDs
would facilitiate ‘foreign’ RSN entry and other forms of competition.”26 Plaintiffs
argue that the “MVPDs also directly benefit from the blackout of Internet streams
of local games, which requires that fans obtain this programming exclusively from
the MVPDs.”27
A small percentage of games are produced under national contracts
between the Leagues (pursuant to rights granted by the individual teams) and
national networks.28 These limited nationally televised games provide the only
24
See id.
25
Laumann Compl. ¶ 63-64; Garber Compl. ¶ 67-68.
26
Laumann Compl. ¶ 71; Garber Compl. ¶ 75.
27
Pl. Mem. at 10.
28
See Laumann Compl. ¶ 62; Garber Compl. ¶ 66. A few national
games in both Leagues are carried on broadcast television, but most are shown on
national pay-television channels. See id. Three networks carry MLB games
nationwide. Turner Broadcast System (“TBS”) is a nationwide cable and satellite
television channel whose MLB presentations during the regular season are
-8-
opportunity for fans to watch a game not involving a local team without purchasing
an out-of-market package.
2.
“Out-of-Market” Agreements
With the limited exception of nationally televised games, standard
MVPD packages only televise “in-market” games (i.e., games played by the team
in whose designated home territory the subscriber resides). For a consumer to
obtain out-of-market games, there are only two options – television packages and
Internet packages – both of which are controlled by the Leagues.29 Television
packages – NHL Center Ice and MLB Extra Innings – are available for purchase
from MVPDs, in accordance with agreements between the MVPDs and the
Leagues. These packages require the purchase of all out-of-market games even if a
consumer is only interested in viewing a particular game or games of one particular
typically blacked out in the local markets of the teams involved in the game being
presented. See Garber Compl. ¶ 38. ESPN, another nationwide cable and satellite
channel carries certain MLB games exclusively. See id. ¶ 39. Fox Broadcasting
Company is an over-the-air television network whose MLB presentations are
subject to nationwide exclusivity which prevents the presentation of non-Fox
games in any market. See id. ¶ 40. The two most significant national producers of
NHL games in the United States are both controlled by Comcast: NBC, an overthe-air network, that airs games nationwide, and NBC Sports Network, a paytelevision sports channel available exclusively through cable and satellite
providers. See Laumann Compl. ¶ 31. Fox Sports Net, Inc. owns and controls
eleven RSNs that produce and present NHL games. See id. ¶ 33.
29
Laumann Compl. ¶ 75; Garber Compl. ¶ 79.
-9-
non-local team. They also require a subscription to the standard digital television
package.30 Internet packages – NHL Gamecenter Live and MLB.tv – are available
directly through the Leagues and also require the purchase of all out-of-market
games. Neither local games nor nationally televised games are available through
these packages.31 Thus, “there is no authorized method for viewing [local] games
on the Internet.”32 For example, an NHL Gamecenter Live subscriber in New York
cannot watch New York Rangers games through any Internet source, but instead
must subscribe to MSG through an MVPD. The alleged purpose of the limitation
on Internet programming is to protect the RSNs’ regional monopolies and insulate
MVPDs that carry them from Internet competition.33
Plaintiffs allege that the market divisions and centralization of rights
to distribute out-of-market games in the Leagues have “adversely affected and
substantially lessened competition in the relevant markets” by reducing output of
live MLB and NHL game presentations, raising prices, and rendering output
30
See Laumann Compl. ¶¶ 75, 80; Garber Compl. ¶¶ 79, 84.
31
See Laumann Compl. ¶ 78-81; Garber Compl. ¶ 82-86. The New
York Yankees, through YES, provides in-market streams, but only to consumers
who already subscribe to YES through their television provider, and at additional
cost. See Garber Compl. ¶ 90.
32
Pl. Mem. at 13 (citing Laumann Compl. ¶ 83; Garber Compl. ¶ 86).
33
See id.
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“unresponsive to consumer preference to view live [MLB and NHL] games,
including local games, through both Internet and television media.”34
B.
The Alleged Markets and Products
The Complaints allege relevant product/service markets for “the
provision of major league professional ice hockey [and baseball] contests in North
America.”35 In addition, and “[m]ost importantly for this action, there is a relevant
market for live video presentations of [professional baseball and hockey] games
over media such as cable and satellite television and the Internet.”36 These markets
are “characterized by high barriers to entry” in which the NHL and MLB, as the
only providers of these games, acting through and with the independent clubs that
own and control the Leagues, have market power.37 The NHL’s and MLB’s
dominance in the production of professional hockey and baseball games
respectively “give [them] the ability, together with [their] television partners, to
exercise market power in the market for live video presentations of [professional
baseball and hockey] games.”38
34
Garber Compl. ¶ 97; see also Laumann Compl. ¶ 93.
35
Laumann Compl. ¶ 55; Garber Compl. ¶ 59.
36
Garber Compl. ¶ 60. See also Laumann Compl. ¶ 56.
37
Id.
38
Id.
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C.
The Claims
Based on the foregoing facts, plaintiffs allege four antitrust violations:
(1) for Television plaintiffs, violation of Section 1 of the Sherman Antitrust Act
based on agreements to “forbid[] the carrying or online streaming of any
[NHL/MLB] game in any geographic market except those licensed by the
[NHL/MLB] team in that geographic market” (Claim I);39 (2) for Television
plaintiffs, violation of Section 1 based on agreements “that [NHL/MLB] will be the
exclusive provider of live ‘out-of-market’ games distributed through television
providers” (Claim II);40 (3) for Internet plaintiffs, violation of Section 1 based on
agreements “that [NHL/MLB] will be the exclusive provider of live ‘out-ofmarket’ games over the Internet” (Claim III);41 and (4) for all plaintiffs, violation
of Section 2 for conspiracy to monopolize the “market for video presentations of
major league [hockey/baseball] games and Internet streaming of the same” (Claim
IV).42
Defendants make six arguments why plaintiffs’ claims must be
39
Laumann Compl. ¶ 106; Garber Compl. ¶ 113.
40
Laumann Compl. ¶ 112; Garber Compl. ¶ 119.
41
Laumann Compl. ¶ 118; Garber Compl. ¶ 125.
42
Laumann Compl. ¶ 123; Garber Compl. ¶ 130.
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dismissed. First, plaintiffs have not alleged harm to competition.43 Second,
plaintiffs lack standing on the following grounds: (1) plaintiffs are “indirect
purchasers;” (2) plaintiffs’ injuries are “too attenuated and remote from the alleged
horizontal conspiracy;” (3) the Garber plaintiffs lack standing to assert claims
concerning the MLB Extra Innings television package, because none of them
purchased that product; (4) five of six plaintiffs are “former subcribers who assert
no intention to subscribe to any of the challenged television or Internet services in
the future,” and therefore lack standing to request injunctive relief.44 Third,
plaintiffs allege “no cognizable conduct by Comcast, DirecTV or any of the RSN
Defendants” because “[t]he only plausible allegations as to these Defendants relate
to their vertical distribution, which is presumptively legal.”45 Fourth, the alleged
horizontal activities of the NHL and MLB defendants are “lawful on their face” as
the “very core of what professional sports league ventures do – sell their jointly
created product.”46 Fifth, plaintiffs’ “proposed relevant market is insufficient as a
matter of law” because plaintiffs fail to “allege facts regarding reasonable
43
See Memorandum of Law in Support of Defendants’ Motion to
Dismiss the Complaints (“Def. Mem.”) at 2.
44
Id. at 3-4.
45
Id. at 4.
46
Id. at 5.
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interchangeability or cross-elasticity of demand.”47 Sixth, plaintiffs’ Section 2
claims must be dismissed for: (1) failure to allege any anticompetitive effect; (2)
failure to allege any plausible “conspiracy” among the Leagues, the clubs and the
RSNs and distributors; and (3) failure to allege any of the necessary elements of a
monopolization claim.48
III.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) provides that a complaint
must be dismissed if it “fail[s] to state a claim upon which relief can be granted.”
In deciding a motion to dismiss the court “accept[s] all factual allegations in the
complaint as true, and draw[s] all reasonable inferences in the plaintiff’s favor.”49
For the purposes of such a motion, “a district court may consider the facts alleged
in the complaint, documents attached to the complaint as exhibits, and documents
incorporated by reference in the complaint”50 as well as “documents that, although
47
Id.
48
See id. at 6. MSG and the Rangers join only those sections relating to
Television plaintiffs’ standing, the RSN and television distributors’ role in the
conspiracies, and the existence of monopoly power for purposes of the Section 2
claim.
49
Wilson v. Merrill Lynch & Co., 671 F.3d 120, 128 (2d Cir. 2011)
(quotation marks omitted).
50
DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010).
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not incorporated by reference, are integral to the complaint.”51
Under the “two-pronged approach” set forth by the Supreme Court in
Ashcroft v. Iqbal, “[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice” to withstand a motion to
dismiss.52 However, “[w]hen there are well-pleaded factual allegations, a court
should assume their veracity and then determine whether they plausibly give rise to
an entitlement for relief.”53 To survive a Rule 12(b)(6) motion to dismiss, the
allegations in the complaint must meet a standard of “plausibility.”54 A claim is
facially plausible “when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged.”55 Plausibility “is not akin to a probability requirement;” rather,
plausibility requires “more than a sheer possibility that a defendant has acted
unlawfully.”56
51
Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004).
52
556 U.S. —, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)).
53
Id. at 1950. Accord Kiobel v. Royal Dutch Petroleum Co., 621 F.3d
111, 124 (2d Cir. 2010).
54
Twombly, 550 U.S. at 564.
55
Iqbal, 129 S. Ct. at 1949 (quotation marks omitted).
56
Id. (quotation marks omitted).
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IV.
APPLICABLE LAW
A.
Antitrust Standing57
The Clayton Act permits private parties to institute actions under the
federal antitrust laws for damages and injunctive relief.58 However, a private
plaintiff has standing to enforce Sections 1 and 2 of the Sherman Act only if he or
she suffered “antitrust injury” and is a “proper party” to bring suit.59 In making
this determination a court must “evaluate the plaintiff’s harm, the alleged
wrongdoing by the defendants, and the relationship between them.”60 The Second
57
As in any federal case, plaintiffs must establish Article III standing
before considering the substance of the antitrust claims. See Ross v. Bank of
America, N.A.(USA), 524 F.3d 217, 222 n.1 (2d Cir. 2008) (“A court proceeds to
an antitrust standing analysis only after Article III standing has been established.”).
To establish Article III standing plaintiff “must allege and show that [he]
personally ha[s] been injured, not that injury has been suffered by other,
unidentified members of the class to which he belongs and which [he] purports to
represent.” Lewis v. Casey, 518 U.S. 343, 357 (1996).
58
See 15 U.S.C. § 12 et seq. Section 4 of the Clayton Act states, in
relevant part, that “[a]ny person who shall be injured in his business or property by
reason of anything forbidden in the antitrust laws may sue therefor in any district
court of the United States . . . , and shall recover threefold the damages by him
sustained.” Id. § 15. Section 16 states that “[a]ny person . . . shall be entitled to sue
for and have injunctive relief . . . against threatened loss or damage by a violation
of the antitrust laws.” Id. § 26.
59
Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 110-11
(1986).
60
Associated Gen. Contractors v. California State Council of
Carpenters, 459 U.S. 519, 535 (1983).
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Circuit analyzes antitrust standing under a two part test.61 First, a “‘plaintiff must
show . . . injury of the type the antitrust laws were intended to prevent and that
flows from that which makes defendants’ acts unlawful.’”62 Second, a plaintiff
must show
that he is a proper plaintiff in light of four ‘efficient enforcer'
factors: (1) the directness or indirectness of the asserted injury; (2)
the existence of an identifiable class of persons whose self-interest
would normally motivate them to vindicate the public interest in
antitrust enforcement; (3) the speculativeness of the alleged
injury; and (4) the difficulty of identifying damages and
apportioning them among direct and indirect victims so as to
avoid duplicative recoveries.63
B.
Sherman Act Section 1
Section 1 of the Sherman Act prohibits “[e]very contract, combination
in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce
61
See In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 688
(2d Cir. 2009).
62
Id. (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
477, 489 (1977)). Accord Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90,
96 (2d Cir. 1998) (holding that a plaintiff must show that “the loss he asserts
derives from activities that have a ‘competition- reducing’ effect.”) (quoting
Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 342-44 (1990)
(emphasis in original)). See also infra Part IV.B (discussing requirement of harm
to competition).
63
Id. (quoting Volvo N. Am. Corp. v. Men’s Int’l Prof’l Tennis Council,
857 F.2d 55, 66 (2d Cir.1988)) (citing Associated Gen. Contractors, 459 U.S. at
540-45).
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among the several States.” The Supreme Court has clarified that Section 1
“outlaw[s] only unreasonable restraints.”64 To establish a Section 1 violation, a
plaintiff must allege: “(1) concerted action between at least two legally distinct
economic entities; (2) that constitute[s] an unreasonable restraint of trade either per
se or under the rule of reason.”65
Certain agreements which courts, after “considerable experience with
the type of restraint at issue,” determine to have “manifestly anti-competitive
effects and lack any redeeming virtue,” are deemed per se violations of the
Sherman Act.66 Outside this category of “necessarily illegal” restraints, “[t]he rule
of reason is the accepted standard for testing whether a practice restrains trade in
violation of § 1.”67 “The rule [of reason] distinguishes between restraints with
64
Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006) (internal quotation marks
omitted) (emphasis in original).
65
Primetime 24 Joint Venture v. National Broad., Co., Inc., 219 F.3d 92,
103 (2d Cir. 2000) (internal quotations omitted). Accord E & L Consulting, Ltd. v.
Doman Indus. Ltd., 472 F.3d 23, 29 (2d Cir. 2006) (“A violation of Section 1
generally requires a combination or other form of concerted action between two
legally distinct entities resulting in an unreasonable restraint on trade.”).
66
Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 887
(2007) (internal quotations and citations omitted). Categorizing a restraint as per
se illegal “eliminates the need to study the reasonableness of an individual restraint
in light of the real market forces at work.” Id. at 886.
67
Id. at 885-86.
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anticompetitive effect that are harmful to the consumer and restraints stimulating
competition that are in the consumer’s best interest.”68 A court must “determine
whether the [] restriction is a naked restraint on trade, and thus invalid, or one that
is ancillary to the legitimate and competitive purposes of the business association
and thus valid.”69
Under the rule of reason
plaintiffs bear an initial burden to demonstrate the defendants’
challenged behavior had an actual adverse effect on competition
as a whole in the relevant market . . . evidence that plaintiffs have
been harmed as individual competitors will not suffice. . . . If the
plaintiffs satisfy their initial burden, the burden shifts to the
defendants to offer evidence of the pro-competitive effects of their
agreement. . . . Assuming defendants can provide such proof, the
burden shifts back to the plaintiffs to prove that any legitimate
competitive benefits offered by defendants could have been
achieved through less restrictive means. . . .70
Finally, certain challenged practices warrant an “abbreviated or quick-look rule of
68
Id. at 886.
69
Dagher, 547 U.S. at 7.
70
Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290,
317 (2d Cir. 2008) (internal quotation omitted). In making this determination “the
factfinder weighs all of the circumstances of a case” including “specific
information about the relevant business . . . , the restraint’s history, nature, and
effect . . . and [w]hether the businesses involved have market power.” Leegin, 511
U.S. at 886-87 (internal quotations and citations omitted).
-19-
reason analysis”71 either “because the great likelihood of anticompetitive effects
can be easily ascertained”72 or, on the flip side, where “restraints on competition
are essential if the product is to be available at all [such that] the agreement is
likely to survive the Rule of Reason.”73
C.
Sherman Act Section 2
Section 2 of the Sherman Act states that “[e]very person who shall
monopolize, or attempt to monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the trade or commerce among the
several States, or with foreign nations, shall be deemed guilty of a felony . . . .”
In order to state a claim for monopolization under Section 2, plaintiffs must
establish “‘(1) the possession of monopoly power in the relevant market and (2) the
71
Salvino, 542 F.3d at 317 (internal quotations omitted).
72
Id. The Supreme Court found an abbreviated analysis appropriate
where a plan expressly limited the number of college football games that could be
televised and fixed a minimum price for those games. See National Collegiate
Athletic Ass’n v. Board. of Regents of the Univ. of Oklahoma, 468 U.S. 85, 109-10
(1984) (“NCAA”) (holding that no “detailed market analysis” was necessary to find
that an NCAA plan to “commandeer[] the rights of its members and s[ell] those
rights for a sum certain” had the effect of “utterly destroy[ing] free market
competition.”).
73
American Needle, Inc. v. National Football League, 130 S. Ct. 2201,
2216-17 (2010) (noting that “the Rule of Reason can sometimes be applied in the
twinkling of an eye” and that certain “features of the NFL may save agreements
amongst the teams . . . for example . . . the interest in maintaining a competitive
balance”) (internal quotations and citations omitted).
-20-
willful acquisition or maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business acumen, or historic
accident.’”74 Specifically, “a plaintiff must establish ‘(1) that the defendant has
engaged in predatory or anticompetitive conduct with (2) a specific intent to
monopolize and (3) a dangerous probability of achieving monopoly power.’”75
V.
DISCUSSION
A.
Antitrust Standing76
74
PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 104 (2d Cir. 2002)
(quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)).
75
Id. (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456
(1993)).
76
In addition to arguing that plaintiffs lack antitrust standing, defendants
assert that certain plaintiffs lack Article III standing to seek injunctive relief
because they cannot show “‘likelihood that [they] will again be injured in a similar
way.’” Shain v. Ellison, 356 F.3d 211, 215-16 (2d Cir. 2004) (quoting City of Los
Angeles v. Lyons, 461 U.S. 95, 111 (1983)). However, at least one plaintiff who
has purchased each out-of-market package plausibly alleges continuing harm.
Laumann “has been a subscriber to NHL Gamecenter Live since at least 2010,”
Laumann Compl. ¶ 14 (emphasis added); Traub purchased MLB Extra Innings in
2011 and NHL Center Ice in 2011-2012 and intends to purchase this programming
in the future, Garber Compl. ¶ 20, Laumann Compl. ¶ 16; Dillon purchased NHL
Gamecenter Live beginning in 2011 and intends to purchase it again in the future,
Laumann Compl. ¶ 17; Lerner and Rasmussen subscribed to MLB.tv Internet
streaming package during the 2011 season. Garber Compl. ¶¶ 17-18. Named
plaintiffs’ stated intent to purchase again and the fact that packages are purchased
seasonally suggests that plaintiffs “are likely to suffer future [injury]” and thus
have standing to pursue injunctive relief. Deshawn E. by Charlotte E. v. Safir, 156
F.3d 340, 344 (2d Cir. 1998). Accord Shain, 356 F.3d at 215 (plaintiff must
establish likelihood of a “future encounter”).
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While “[r]educed consumer choice and increased prices . . . when they
are the result of an anticompetitive practice, constitute antitrust injury,”77 the
Supreme Court recognized that “Congress did not intend antitrust laws to provide a
remedy in damages for all injuries that might conceivably be traced to an antitrust
violation.”78 Defendants challenge Television plaintiffs’ standing to sue on the
grounds that they are indirect purchasers of the product in question, and that their
injuries are too remote from the alleged conduct.79
1.
Illinois Brick Direct Purchaser Requirement
The Supreme Court’s decision in Illinois Brick Co. v. Illinois
established that “[g]enerally only direct purchasers have standing to bring civil
antitrust claims.”80 The rule serves to avoid the difficulties of “apportion[ing]
77
Brantley, 675 F.3d at 1202, 1202 n. 11. Accord id. (“Had the
plaintiffs succeeded in pleading an injury to competition, the complaint’s
allegations of reduced choice (due to the inability to purchase a la carte
programming) and increased prices would sufficiently plead . . . a Section 1
claim.”).
78
Associated Gen. Contractors, 459 U.S. at 534.
79
See Def. Mem. at 26, 35. Defendants do not challenge the standing of
the Internet plaintiffs.
80
Simon v. KeySpan Corp., 694 F.3d 196, 201-02 (2d Cir. 2012) (citing
Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977)). Illinois Brick bars only
damages under Clayton Act § 4, not injunctive relief under § 16. See, e.g.,
Dickson v. Microsoft Corp., 309 F.3d 193, 214 n. 24 (4th Cir. 2002) (citing cases);
In re Public Offering Antitrust Litig., No. 98 Civ. 7890, 2004 WL 350696, at *26
(S.D.N.Y. Feb. 25, 2004).
-22-
recovery among all potential plaintiffs . . . from direct purchasers to middlemen to
ultimate consumers” and eliminate the possibility of duplicative recovery, and
promotes enforcement by purchasers who have been most directly injured by the
alleged violation.81 Because Television plaintiffs purchased programming from the
MVPDs, they must show why Illinois Brick does not bar their claims for damages
against the remaining defendants.82
Plaintiffs argue that these claims fall under two recognized exceptions
to Illinois Brick – the “ownership or control exception” and the “co-conspirator
exception.”83 The Supreme Court expressly recognized an exception to Illinois
Brick “where the direct purchaser is owned or controlled by its customer,” 84 and
courts have “expanded [the exception] to include instances where the defendant
owns or controls the intermediary that sold the goods to the indirect-purchaser
81
Illinois Brick, 431 U.S. at 728-33, 741-47. Accord Kansas v.
UtiliCorp United, Inc., 497 U.S. 199, 216 (1990) (affirming Illinois Brick and
cautioning that “the possibility of allowing an exception [to the direct purchaser
requirement], even in rather meritorious circumstances, would undermine the
rule”).
82
Defendants argue that both Comcast and DirecTV and the RSNs are
middlemen. See Def. Mem. at 27-28. Plaintiffs argue that the RSNs produce the
relevant product, and that the market divisions occur at the retail level, therefore
RSNs are not middlemen. See Pl. Mem. at 49-50.
83
See Pl. Mem. at 50, 52.
84
Illinois Brick, 431 U.S. at 736 n.16.
-23-
plaintiff.”85 Additionally, courts have held that “‘Illinois Brick does not limit suits
[where] [t]he consumer plaintiff is a direct purchaser from the dealer who . . . has
conspired illegally with the manufacturer with respect to the very price paid by the
consumer.’”86 The two exceptions share a common logic – where the relationship
between the parties in a multi-tiered distribution chain is such that plaintiffs are the
first or only victims of alleged anticompetitive agreements, the rationale for the
Illinois Brick bar disappears.
The Second Circuit has not addressed the “co-conspirator
exception,”87 and those circuits that have addressed it have not taken a uniform
view of its scope. The Fourth and Ninth Circuits have limited the exception to
situations in which “[d]efendants have conspired to fix the price that [p]laintiffs
85
In re Vitamin C Antitrust Litig., 279 F.R.D. 90,101 (E.D.N.Y. 2012)
(citing In re Industrial Diamonds Antitrust Litig., 119 F. Supp. 2d 418, 421
(S.D.N.Y. 2000)).
86
In re ATM Fee Antitrust Litig., 686 F.3d 741, 750 (9th Cir. 2012)
(quoting 2A Phillip E. Areeda et al., Antitrust Law ¶ 346h). Accord Dickson, 309
F.3d at 214-15 (conspiracy to fix the price paid by the consumer is an exception to
Illinois Brick, because it is “grounded on the damages theory underlying the
alleged conspiracy”—i.e., “no overcharge has been passed on to the consumer”).
See also Paper Sys. Inc. v. Nippon Paper Indus. Co., Ltd., 281 F.3d 629, 631-32
(7th Cir. 2002); Howard Hess Dental Labs. Inc. v. Dentsply Intern., Inc., 424 F.3d
363, 383 (3d Cir. 2005).
87
Once again, the Second Circuit has not expressed an opinion on the
expansion of the ownership or control exception.
-24-
paid directly”88 – a requirement that, if adopted, would be fatal to the Television
plaintiffs’ claims, as they do not allege that the Leagues or RSNs had any role in
setting prices for television programming.89 In contrast, in Paper Systems Inc. v.
Nippon Paper Industries Co., Ltd., the Seventh Circuit eschewed the notion of a
“co-conspirator exception” instead stating simply that Illinois Brick “allocate[s] to
the first non-conspirator in the distribution chain the right to collect 100% of the
damages.”90 Thus, where intermediate purchasers in the chain of distribution (here
the RSNs and MVPDs) are alleged to be participants in the conspiracy, the first
88
In re ATM Fee Antitrust Litig., 686 F.3d at 751. Accord Dickson, 309
F.3d at 214-15. Dickson held that Illinois Brick barred allegations that a licensing
agreement between computer sellers and Microsoft resulted in supracompetitive
prices where computer purchasers did not allege any conspiracy between Microsoft
and the sellers to set the resale price of the software, but rather claimed that
overcharges were passed on to the consumers by the sellers when the consumers
purchased personal computers from the sellers. See id. at 215.
89
See In re ATM Fee Antitrust Litig., 686 F.3d at 751(holding coconspirator theory unavailable because “while Plaintiffs allege a conspiracy to set
interchange fees, they fail to show a conspiracy to set foreign ATM fees. Plaintiffs
do not allege that [the ATM network] has control to set foreign ATM fees.
Further, Bank Defendants have no control over the foreign ATM fees of other
Bank Defendants or [ATM network] members.”).
90
281 F.3d 629, 631-32 (7th Cir. 2002). Accord Lowell v. American
Cyanamid Co., 177 F.3d 1228, 1233 (11th Cir. 1999) (“Illinois Brick simply does
not apply where the complaint alleges a vertical conspiracy with no pass-on.”); In
re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 604 (7th Cir.
1997) (“[A]ny indirect-purchaser defense would go by the board since the
[plaintiffs] would then be direct purchasers from the conspirators.”).
-25-
purchasers who are not part of the conspiracy “are entitled to collect damages from
both the manufacturers and their intermediaries if conspiracy and overcharges can
be established.”91
While mindful of the Supreme Court’s admonition against even the
“most meritorious of exceptions” to the direct purchaser requirement, 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.92
Thus, holding that the first purchaser who is not party to the unlawful agreements
to restrain trade has standing to sue is not an exception to Illinois Brick, but rather a
recognition that Illinois Brick “bans Clayton Act lawsuits by persons who are not
direct purchasers from the defendant antitrust violator[s].”93
As discussed in depth below, plaintiffs have alleged complex
arrangements in which the RSNs – the level at which the directly relevant market
(for video presentation) is divided – are affiliated with the club for whom they
91
Paper Sys. Inc., 281 F.3d at 632 (citing Texas Indus., Inc. v. Radcliff
Materials, Inc., 451 U.S. 630 (1981)).
92
See NCAA, 468 U.S. at 106-07 (“Congress designed the Sherman Act
as a consumer welfare prescription.”) (citation omitted); Stamatakis Indus., Inc. v.
King, 965 F.2d 469, 471 (7th Cir. 1992) (“[A]ntitrust laws, [] protect consumers
from suppliers rather than suppliers from each other.”).
93
In re Linerboard Antitrust Litig., 305 F.3d 145, 158–60 (3d Cir.2002)
(emphasis added).
-26-
provide programming and/or are owned by the MVPDs which ultimately sell the
programming to consumers.94 In addition, plaintiffs allege that the MVPDs benefit
directly from the agreements that limit Internet broadcasting of games.95 Even if
the RSN and MVPD defendants could hypothetically “change sides and align
themselves as plaintiffs,” they have shown no inclination to do so, and plaintiffs
allege that doing so would run counter to their interests in maintaining the
challenged agreements.96 Where all middlemen are alleged to be co-conspirators,
94
See supra nn.21-22, discussing RSN affiliations. See also infra Part
V.B. (discussing agreements among defendants); Pl. Mem. at 51 (arguing that
because the MVPDs control their subsidiary RSNs “it is inconceivable that
Comcast and DirecTV would sue their own subsidiaries”). Because I find the “coconspirator exception” applicable for purposes of antitrust standing, I need not
determine whether plaintiffs have plausibly alleged “such functional economic or
other unity [between the RSNs and MVPDs] that there effectively has been only
one sale between the defendant and the indirect purchaser.” In re Vitamin C
Antitrust Litig., 279 F.R.D. at 101-02.
95
To the extent that the MVPDs compete with the Leagues (vis-a-vis
Internet sales) for distribution of games, the Second Circuit’s holding that Illinois
Brick is inapplicable where the alleged middleman “[could] not be characterized
solely as a customer” of the primary seller, but “was also a competitor . . . in the
retail market” provides another reason that plaintiffs here are not barred by Illinois
Brick. Law Offices of Curtis V. Trinko, L.L.P. v. Bell Atlantic Corp., 305 F.3d 89,
106 (2d Cir. 2002)(rev’d on other grounds in Verizon Comms. Inc. v. Law Offices
of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). See also Verizon Comms. Inc., 540
U.S. at 416-18 (Stevens, J. concurring) (stating that he would have reversed the
Second Circuit on standing grounds, analyzed under Associated General
Contractors).
96
See Paper Sys. Inc., 281 F.3d at 631-32. While it is true that Madison
Square Garden Company, a defendant in this case, did sue the NHL in 2007 for
antitrust violations arising out of the very agreements at issue here, it sought only
-27-
the problems of apportioning recovery among all potential plaintiffs and
duplicative recovery simply do not arise, and the principle of permitting the
purchasers who have been most directly injured is honored.97
2.
Standing Under Associated General Contractor Factors
Although they are not barred by the specific Illinois Brick rule,
plaintiffs must still establish that they are “efficient enforcers” of the antitrust laws
under the factors set forth in Associated General Contractors.98 Defendants argue
that plaintiffs’ claims are based on “[s]ome unidentified overcharge in the price TV
plaintiffs pay Comcast or DirecTV for television service generally, regardless of
injunctive relief and ultimately settled. See 3/3/09 Stipulation and Order of
Dismissal, Madison Square Garden v. National Hockey League, 07-cv-08455
(“MSG v. NHL”) (dismissing MSG’s case against the NHL with prejudice). It
would be ironic if “a cartel-member plaintiff seek[ing] to remove [a] restraint –
such that the member’s interest coincides with the public interest in vigorous
competition” could sue but the public (consumers) could not. Daniel v. American
Bd. of Emergency Medicine, 428 F.3d 408, 440 (2d Cir. 2005).
97
See Illinois Brick, 431 U.S. at 728-33, 741-47. The fact that
numerous RSNs and MVPDs are not joined as defendants is not a problem
because, under the the principal of joint and several liability, “each member of a
conspiracy is liable for all damages caused by the conspiracy’s entire output.”
Paper Sys. Inc., 281 F.3d at 632 (citing Texas Indus., Inc., 451 U.S. 630).
98
See 459 U.S. at 535 (in determining whether a plaintiff has antitrust
standing, courts must “evaluate the plaintiff’s harm, the alleged wrongdoing by the
defendants, and the relationship between them”). The standing analysis under
Associated General Contractors also applies to claims for injunctive relief. See
Daniel, 428 F.3d at 451 (“The extent to which these factors apply when plaintiffs
sue for injunctive relief depends on the circumstances of the case.”).
-28-
whether they have ever watched, or even desired to watch an NHL or MLB
game.”99 Moreover, “the allegedly overpriced RSN channel itself includes more
than just MLB or NHL programming and is but one channel among tens or
hundreds of channels included in the general television packages offered by
Comcast and DirecTV” and therefore “it would be impossible to ascertain what
effect, if any at all, the alleged violation had on the pricing of the various packages
sold by Comcast and DirecTV to consumers.”100
Here the relevant markets are for professional hockey and baseball
programming. While plaintiffs argue that “‘consumers . . . generally do meet [the
standing] test,’”101 only “consumers in the market where trade is allegedly
restrained are presumptively the proper plaintiffs to allege antitrust injury.”102
Purchasers of the out-of-market packages, whether television or Internet, are
clearly consumers in the relevant market of professional hockey and baseball
games, and allege not only increased price, but also reduced consumer choice from
99
Def. Mem. at 36.
100
Id. at 37.
101
Pl. Mem. at 55 (quoting Daniel, 428 F.3d at 451 (Katzmann, J.,
dissenting in part)).
102
Serpa Corp. v. McWane, Inc., 199 F.3d 6, 10 (1st Cir. 1999)
(emphasis added).
-29-
lack of competition.103 Moreover, because no innocent parties stand between them
and the alleged agreements, they are the most efficient enforcers.
In contrast, plaintiffs who merely subscribe to Comcast and DirecTV,
but do not subscribe to an out-of-market package, allege that they are consumers of
television generally, not that they are consumers of professional hockey or baseball
games.104 Neither Garber nor Herman alleges that she or he was prevented from
viewing games as a result of the black-out agreements, nor do they claim that they
were charged supracompetitive prices for games that they wished to view. These
plaintiffs’ only claims are based on some unidentified increased price of their
overall cable package allegedly stemming from the absence of competition from
out-of-market baseball clubs and their RSNs. Their alleged injuries are both
speculative and difficult to identify and apportion in light of the packaged nature of
103
See Laumann Compl. ¶ 10; Garber Compl. ¶ 13; see also MSG Br. at
27 (noting that fans “are deprived of alternatives that could be offered by
individual clubs – such as the ability to purchase single games or the games of a
single team – and of the lower prices that would result from such competition with
the Center Ice package”). Furthermore, aside from the fact that television
purchasers of out-of-market packages purchased from MVPDs rather than directly
from the League, as in the case of Internet purchasers, their positions within the
alleged antitrust scheme are largely analogous. As I have already declined to
dismiss plaintiffs based on their indirect purchaser status, and defendants do not
argue that Internet plaintiffs lack standing, it follows logically that purchasers of
out-of-market television packages should be permitted to remain in the suit.
104
See Garber Compl. ¶ 60. See also Laumann Compl. ¶ 56.
-30-
television services, not to mention their remoteness from the primary agreements
among League defendants, which makes determination of the causal connection
even more difficult.105 Permitting 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 [MLB and NHL programming] at all.”106
Thus, plaintiffs Garber and Herman are dismissed for failure to establish that they
are “proper plaintiffs” under the Associated General Contractor factors.107 Silver
is dismissed from the Garber case, because he does not allege that he subscribed to
105
The fact that plaintiffs’ remoteness from the first level of the alleged
conspiracy did not mandate dismissal under Illinois Brick does not mean the Court
cannot consider it under the more general antitrust standing inquiry. See Illinois
Brick, 431 U.S. at 728 n.7 (“[T]he question of which persons have been injured by
an illegal overcharge for purposes of § 4 is analytically distinct from the question
of which persons have sustained injuries too remote to give them standing to sue
for damages under § 4.”) (emphasis added).
106
Kloth v. Microsoft Corp., 444 F.3d 312, 324 (4th Cir. 2006)
(dismissing plaintiffs claims where “it is merely coincidental that they purchased
Microsoft products at all” and “[i]t would be even more speculative to determine
the relevant benefits and detriments that non-Microsoft products would have
brought to the market and the relative monetary value . . . to a diffuse population of
end users”).
107
It is worth noting that the remaining Television plaintiffs are just as
capable of raising any meritorious arguments that general Comcast and DirecTV
subscribers would have raised because, as a prerequisite to purchasing out-ofmarket packages, they must subscribe to the general television package.
-31-
an out-of-market baseball package.108
B.
Section One Claims Regarding “In-Market” and “Out-ofMarket” Agreements
1.
Agreements Among Defendants
As discussed briefly in the context of standing, plaintiffs allege a
multi-level conspiracy consisting of horizontal and vertical agreements implicating
the League defendants, the RSNs and the MVPDs. “The question whether an
arrangement is a contract, combination, or conspiracy is different from and
antecedent to the question whether it unreasonably restrains trade.”109
a.
League Defendants
Plaintiffs’ allegations arise initially out of agreements by the
individual clubs, as a league, to establish exclusive local telecast territories for each
club and to grant the Leagues the exclusive rights to market those games outside
the local territories. In American Needle, Inc. v. National Football League the
Supreme Court held that when it comes to “marketing property owned by the
separate teams,” individual sports teams that together comprise a league “do not
possess either the unitary decisionmaking quality or the single aggregation of
108
See Garber Compl. ¶ 19. Because Silver is a former purchaser of
NHL Center Ice, he may proceed with the Laumann suit.
109
American Needle, 130 S. Ct. at 2206.
-32-
economic power” of a single entity and “their objectives are not common.”110
Where teams compete against each other in the relevant market, their concerted
action may “deprive the marketplace of independent centers of decisionmaking and
therefore of actual or potential competition.”111 Like the intellectual property at
issue in American Needle, the rights at issue here belong initially to the individual
clubs.112 Plaintiffs have alleged that absent these agreements the clubs would
compete against each other in the markets for hockey and baseball programming.113
The fact that the NHL and MLB are lawful joint ventures does not
preclude plaintiffs from challenging the Leagues’ particular policies under the rule
of reason.114 Defendants’ argument that the teams cannot unlawfully conspire
with respect to out-of-market games because only the Leagues can own those
110
Id. at 2212-14.
111
Id.
112
See Pittsburgh Athletic Co. v. KQV Broad. Co., 24 F. Supp. 490, 492
(W.D. Pa. 1938) (holding that the Pittsburgh Athletic Company, owner of the
Pittsburgh Pirates, could grant “the exclusive right to broadcast, play-by-play,
descriptions or accounts of the games played by the ‘Pirates’ at this and other
fields”).
113
See Laumann Compl. ¶ 71; Garber Compl. ¶ 75.
114
See Starr v. Sony BMG Music Entm’t, 592 F.3d 314, 326 (2d Cir.
2010) (holding that claims that agreements by a lawful joint venture were “actually
anticompetitive and unreasonable” reviewable under the rule of reason) (citing
Dagher, 547 U.S. at 7).
-33-
games assumes the legality of the very agreements challenged here. There is no
distinction between in-market and out-of-market games other than that the clubs
have agreed to cede to the Leagues the right to market the games, to which they
have initial rights, outside their local territories.115 American Needle conclusively
established that these kinds of arrangements are subject to Section 1 scrutiny.
b.
Role of RSNs
Plaintiffs argue that the RSNs have participated in a conspiracy to
divide the market for professional baseball and hockey programming.116 They
assert that RSNs do not merely “pass through” the relevant product unchanged
from the Leagues to the consumers: rather, RSNs purchase rights from the clubs,
and produce video presentations of the games – the product in question – subject to
anticompetitive agreements not to sell programming for a given hockey or baseball
club outside the defined territory surrounding that club.117 Plaintiffs argue that
“[t]he fact that the clubs have a central role in orchestrating this horizontal
115
Defendants cite Washington v. National Football League in support of
their argument that “a ‘league’ game is necessarily a ‘league’ product.” Def. Mem.
at 47. But that case is involved “historical football game footage, something that
the individual teams do not separately own, and have never separately owned.”
Washington, No. 11 Civ. 3354, 2012 WL 3017961, at *2 (D. Minn. June 13, 2012).
116
See Pl. Mem. at 43.
117
See id. Plaintiffs note that “[t]he conspiracies are . . . to divide the
consumer markets for live sports programming.” Id. at 42 (emphasis in original).
-34-
agreement” does not negate the horizontal character of the alleged agreements by
the RSNs, because “each RSN plainly understood that it was getting a regional
monopoly in exchange for an agreement to respect other RSN’s regional
monopolies.”118 Thus, “[e]ven when the focus is on the horizontal agreement at the
club level, the RSNs are still liable, as their role in carrying out the clubs’ division
of the market is not innocent.”119
Plaintiffs do not plausibly allege that the RSNs entered into actual
agreements with one another to enforce the territorial market divisions established
by the League defendants, but it is not necessary that they do so in order to
implicate the RSNs in the conspiracy to divide the market. First of all, courts have
recognized that “vertical agreements can [] injure competition by facilitating
horizontal collusion.”120 It is well established, for example, that a distributor’s
coordination of horizontal agreements in restraint of trade at the next distribution
level by entering into a series of identical vertical agreements with multiple parties
118
Id. at 44-45.
119
Id. at 45.
120
Brantley, 675 F.3d at 1198 (citing Leegin, 551 U.S. at 893). Accord
Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 59 (1977) (vertical
agreements between a manufacturer and distributors restricting retail locations are
analyzed under the rule of reason).
-35-
may subject all participants to antitrust liability.121 Moreover, where parties to
vertical agreements have knowledge that other market participants are bound by
identical agreements, and their participation is contingent upon that knowledge,
they may be considered participants in a horizontal agreement in restraint of
trade.122 It defies reason to suggest that the RSNs lack knowledge that all other
RSNs have analogous agreements with the respective individual clubs, and it is at
least plausible that the terms of the agreement between the clubs and the RSNs are
contingent upon that knowledge. Plaintiffs have therefore adequately alleged
121
See, e.g., Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226
(1939) (inferring agreement among film exhibitors where a movie distributor sent
letters to each film exhibitor placing limitations on exhibition and advising that
others were participating and that cooperation was essential); Toys “R” Us, Inc. v.
Federal Trade Comm’n, 221 F.3d 928, 930 (7th Cir. 2000) (finding that a
manufacturer coordinated a horizontal agreement in restraint of trade through
signing identical vertical agreements with a number of toy manufacturers whereby
manufacturer agreed to restrict the distribution of its products to low-priced
warehouse club stores on the condition that the other manufacturers would do the
same). Cf. Leegin, 551 U.S. at 893 (holding the possibility that “a group of
retailers might collude to fix prices to consumers and then compel a manufacturer
to aid the unlawful arrangement” to be a “legitimate [antitrust] concern”).
122
See Interstate Circuit, 306 U.S. at 227 (“Acceptance by competitors,
without previous agreement, of an invitation to participate in a plan, the necessary
consequence of which, if carried out, is restraint of interstate commerce, is
sufficient to establish an unlawful conspiracy under the Sherman Act.’); Howard
Hess Dental Labs, Inc. v. Dentsply Intern., Inc., 602 F. 3d 237, 255 (3d Cir. 2010)
(suggesting that plaintiffs may plead a hub-and-spoke conspiracy by making
“factual allegations to plausibly suggest” that the distributor defendants – the
spokes – “had knowledge” of the conspiracy).
-36-
participation on the part of the RSNs in the conspiracy to geographically divide the
market for professional hockey and baseball games.123
c.
Role of MVPDs
Plaintiffs claim that Comcast and DirecTV are active participants in
the challenged schemes in two ways. “First, they actively control their subsidiary
RSN’s in the very matters that are the subject of this lawsuit . . . [and] second, the
MVPDs are the only parties that can actively implement the geographical divisions
for television programming . . . [and] have agreed to do just that.”124 In addition,
plaintiffs claim that “MVPDs are the direct beneficiaries of restrictions that prevent
Internet streaming of local games.”125
123
To be clear, plaintiffs do not contend that the RSNs’ liability arises
out of their exclusive agreements to telecast the games of the clubs with which they
contract. See Pl. Mem. at 45 (conceding that clubs “are entitled to enter into an
exclusive relationship with [an RSN]” to produce telecasts, and even to “limit [the
RSN’s] distribution geographically so long as that decision is unilateral”). Rather,
the RSNs’ role arises out of their alleged participation in agreements to
geographically divide the market for baseball and hockey programming.
Defendants’ argument that the Supreme Court “has approved precisely such
restrictions because they ‘often promote interbrand competition,” does not render
the RSN defendants’ vertical agreements automatically lawful – it merely means
that they are subject to rule of reason analysis. See Consolidated Reply
Memorandum of Law in Support of Defendants’ Motion to Dismiss the
Complaints (“Def. Rep.”) at 7 (citing Continental T.V., 433 U.S. at 53).
124
Pl. Mem. at 46.
125
Id.
-37-
Plaintiffs do not allege that the MVPDs have agreed amongst
themselves in any way, and in fact, it is clear that MVPDS compete with each other
to sell packages containing hockey and baseball programming. However, plaintiffs
allege that Comcast and DirecTV own and control a number of RSNs, and that the
League restrictions on Internet dissemination of hockey and baseball games benefit
both the RSNs and the MVPDs. These allegations indicate that the MVPD
defendants are doing more than passively implementing the agreements among the
Leagues and the RSNs.126 They suggest “a unity of purpose or a common design
and understanding, or a meeting of minds in an unlawful arrangement” sufficient to
allege an agreement between the MVPDs and the RSNs and League Defendants to
restrain trade.127 Thus, while plaintiffs have not alleged horizontal agreements
among the MVPDs, they have plausibly alleged vertical agreements that not only
facilitate, but are essential to the horizontal market divisions.128
126
See also In the Matter of Applications of Comcast Corp., General
Elec. Co., and NBC Univ., Co., 26 F.C.C.R. 4252, 4293 (2011) (noting that
“vertical integration of certain video program networks [including RSNs] with a
particular MVPD [c]ould harm MVPD competition and enhance the integrated
MVPD’s market power”).
127
Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771
(1984) (holding that “a § 1 agreement may be found when the conspirators had a
unity of purpose or a common design and understanding, or a meeting of minds in
an unlawful arrangement”) (internal quotation omitted).
128
See Pl. Mem. at 48 (“The market division is not complete until
Comcast and DirecTV prevent viewers from watching telecasts.”).
-38-
2.
Harm to Competition
Plaintiffs do not argue that the agreements to divide the geographic
market and cede control over out-of-market games to the Leagues constitute per se
antitrust violations.129 The question is whether these agreements have
“anticompetitive effect that are harmful to the consumer” or whether they
“stimulat[e] competition . . . in the consumer’s best interest” – in other words,
whether they survive the rule of reason.130 In order to overcome defendants’
motion to dismiss, plaintiffs’ “allegations must ‘raise a reasonable expectation that
discovery will reveal evidence of’ an injury to competition.”131
Defendants argue that because the NHL and MLB are legitimate joint
ventures, and some cooperation with respect to the production of games is
necessary, that the conduct here – the production and distribution of live telecasts
of games – is “core activity” immune from antitrust scrutiny.132 However, the
notion that “the exhibition of [] league games on television and the Internet” is
129
See id. at 24 (“If this case involved anything other than sports, it
would present a clear per se violation of Section 1 of the Sherman Act.”) id. at 34
n.43 (acknowledging that “per se treatment is not appropriate” in considering
sports leagues’ restraints). Accord Salvino, 542 F.3d at 316, 334.
130
Leegin, 511 U.S. at 886.
131
Brantley, 675 F.3d at 1198 (quoting Twombly, 550 U.S. at 556).
132
See Def. Mem. at 5.
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clearly a “league issue”133 is contrary to longstanding precedent that agreements
limiting the telecasting of professional sports games are subject to antitrust
scrutiny, and analyzed under the rule of reason.134 Even if certain agreements by
sports leagues with respect to telecasting games may be “essential if the product is
to be available at all” this does not give league agreements regarding television
rights blanket immunity from antitrust scrutiny.135 To the contrary, the Supreme
Court has held that an agreement that “define[s] the number of games that may be
televised, establish[es] the price for each exposure, and . . . the basic terms of each
contract between the network and a home team” with the result that “[m]any games
for which there is a large viewer demand are kept from the viewers, and many
133
Id. at 47.
134
See NCAA, 468 U.S. at 99 (holding that “[b]y participating in an
association which prevents member institutions from competing against each other
on the basis of price or kind of television rights that can be offered to broadcasters,
the NCAA member institutions have created a horizontal restraint — an agreement
among competitors on the way in which they will compete with one another” that
is subject to scrutiny under the rule of reason); United States v. National Football
League, 116 F. Supp. 319, 322 (E.D. Pa. 1953) (holding that an agreement among
the teams of the NFL that no team would permit stations to telecast its games into
the home territory of another team on a day when that team was not playing at
home and was televising its game into its home territory, violated Section 1 of the
Sherman Act).
135
NCAA, 468 U.S. at 114 (internal quotation omitted) (rejecting this
very argument with respect to an agreement by the NCAA restricting broadcast of
college football games).
-40-
games for which there is little if any demand are nonetheless televised” may
constitute an antitrust violation.136
a.
“In-Market” Agreements
Plaintiffs allege that the Leagues’ arrangements define the territory in
which each individual team may televise its games, meaning that individual clubs
are prohibited from telecasting their baseball and hockey games outside the
designated home territory, irrespective of consumer demand for those games.
Plaintiffs echo defendants MSG and the New York Rangers’ argument, as
plaintiffs in a different case, that “‘[i]n a fully competitive marketplace, the
[individual clubs] could and would . . . increas[e] the opportunity to view [their]
games throughout the country, whether through cable, satellite or on the
Internet.’”137 In other words, the agreements result in an arrangement by which the
136
Id. at 108. Accord MSG v. NHL, No. 07 Civ. 8455, 2008 WL
4547518, at *11 (S.D.N.Y. Oct. 10, 2008) (MSG’s allegations that it “‘has been
and will continue to be unable to distribute Rangers games . . . through cable,
satellite, Internet and otherwise in ways that it believes are best suited to reaching
the Rangers fan base’ . . . plead harm to competition as a whole. . . [b]ecause it is
plausible that the . . . prohibition on independent websites constitutes a form of
output reduction.”).
137
Pl. Mem. at 24-25 (quoting MSG Compl. ¶ 37). See also id. at 1
(“‘[T]he serious harm to competition from a sports league’s division of
broadcasting territories has long been established as an antitrust violation.’”)
(quoting MSG Br. at 27).
-41-
clubs have authority over the output of their own games in their home territory, but
must “forego their own output” outside their home territory and cede to the
Leagues’ authority over out-of-market games. As numerous courts have
recognized, “a horizontal agreement that allocates a market between competitors
and restricts each company’s ability to compete for the other’s business may injure
competition.”138
b.
“Out-of-Market” Agreements
Defendants argue that the fact that the market division is part of a
larger joint-selling arrangement, which makes all games available to the vast
majority of viewers as “all-or-nothing” out-of-market packages, eliminates any
harm to competition.139 In contrast, plaintiffs allege that the agreements to
centralize control of all baseball and hockey out-of-market programming in the
Leagues, as exclusive distributors, are themselves unreasonable restraints of
trade.140 While Congress has exempted these types of joint agreements from
138
Brantley, 675 F.3d at 1198 (internal quotation and citation omitted).
139
See Def. Mem. at 16-20.
140
See Laumann Compl. ¶¶ 112-113, 117-118; Garber Compl. ¶¶ 119120, 125-126 (alleging antitrust violations based on agreements granting Leagues
exclusive rights to distribute out-of-market games).
-42-
antitrust scrutiny in sponsored telecasting, that exemption is inapplicable to the
telecasts of the hockey and baseball games at issue here.141
Contrary to defendants’ argument, Brantley v. NBC Universal, Inc.
does not sanction the alleged out-of-market “all or nothing” packages as a
replacement for individual competition among the clubs. In Brantley, the court
rejected allegations of unlawful tying where the tied television programs were
owned in the first instance by the programmers who chose to market the programs
as a package.142 The court analogized to the professional sports context noting that
there is no question that individual teams may package desirable and undesirable
141
Under the Sports Broadcasting Act (“SBA”), the antitrust laws “shall
not apply to any joint agreement [involving] professional team sports of football,
baseball, basketball, or hockey, by which any league of clubs . . . sells or otherwise
transfers all or any part of the rights of such league’s member clubs in the
sponsored telecasting of the games of football, baseball, basketball, or hockey, as
the case may be, engaged in or conducted by such clubs. 15 U.S.C. § 1291
(emphasis added). However, the term “‘[s]ponsored telecasting’ under the SBA
pertains only to network broadcast television and does not apply to non-exempt
channels of distribution such as cable television, pay-per-view, and satellite
television networks.” Kingray, Inc. v. NBA, Inc., 188 F. Supp. 2d 1177, 1183 (S.D.
Cal. 2002).
142
The allegations in Brantley were that “each programmer defendant,
because of its full or partial ownership of a broadcast channel and its ownership or
control of multiple important cable channels” exploited its market power by
requiring distributors as a condition to purchasing “must have” channels, to also
acquire and resell all the rest of the programmer’s less popular cable channels. 675
F.3d at 1195. Plaintiffs here do not allege unlawful tying.
-43-
game tickets as part of a season package.143 However, the arrangement here is
more akin to the League commandeering the individual clubs’ rights to sell tickets
to sports fans outside their home territory, and, as a replacement, conditioning the
purchase of a popular team’s tickets on the purchase of other teams’ tickets.
The Second Circuit established in Major League Baseball Properties,
Inc. v. Salvino, that agreements by individual clubs to grant the League the
exclusive right to license use of certain rights originally held by the individual
clubs are analyzed under the rule of reason.144 At issue in Salvino was an
agreement by MLB clubs to grant the League “the exclusive right – subject to
limited exceptions – to license Club names and logos for use on retail products for
national and international (i.e. not merely local) distribution . . . and to be sold at
retail within the Clubs’ respective local markets.”145 The court concluded that the
143
See Driskill v. Dallas Cowboys Football Club, Inc., 498 F.2d 321, 323
(5th Cir. 1974) (rejecting a claim that the Dallas Cowboys had unlawfully tied the
sale of undesirable preseason tickets to the sale of season ticket packages because
the Cowboys had a lawful monopoly in the market for the tied product – i.e.
preseason tickets).
144
542 F.3d at 309.
145
Id. at 297. The court rejected the claim that the agreement reduced
output because the “Clubs’ agreement to make [a wholly owned-subsidiary of
MLB] their exclusive licensor does not by its express terms restrict or necessarily
reduce the number of licenses to be issued; it merely alters the identity of the
licenses’ issuer.” Id. at 318.
-44-
agreement was lawful, but only after careful consideration of the district court’s
factual conclusions concerning the impact of the licensing agreement on output,
and the viability of MLB’s justifications for its decision to consolidate licensing
rights in the League. Salvino suggests that granting the Leagues exclusive rights to
distribute out-of-market programming, and the Leagues’ decision to do so largely
in the form of blanket licensing, may very well be reasonable and in compliance
with antitrust law.146 However, plaintiffs have alleged the anticompetitive effect of
“forc[ing] . . . consumers to forego the purchase of [these games] from other
distributors [the individual clubs]” resulting in decreased consumer choice and
increased price – an allegation that states an injury to competition.147 Defendants
have not even alleged that these restraints on trade are justified, for example, by
arguing that “‘individual [teams] are inherently unable to compete fully
effectively’” or that the agreements are “necessary to maintain a competitive
balance.”148
146
Accord Broadcast Music, 441 U.S. at 1551 (“Not all arrangements
among actual or potential competitors that have an impact on price are . . .
unreasonable restraints.”) (discussing blanket licensing agreement).
147
Brantley, 675 F.3d at 1201.
148
Salvino, 542 F.3d at 323, 327 (discussing possible justification for
agreements in restraint of trade based on Broadcast Music and NCAA). To be sure
defendants may have little trouble justifying their agreements regarding
distribution of out-of-market games. See NCAA, 486 U.S. at 117 (noting that the
need to promote competitive balance among the teams may justify horizontal
-45-
Plaintiffs have adequately alleged harm to competition with respect to
the horizontal agreements among individual hockey and baseball clubs, as part of
the NHL and MLB, to divide the television market. Making all games available as
part of a package, while it may increase output overall, does not, as a matter of law,
eliminate the harm to competition wrought by preventing the individual teams
from competing to sell their games outside their home territories in the first
place.149 And plaintiffs in this case – the consumers – have plausibly alleged that
they are the direct victims of this harm to competition.150
C.
Section 2 Claim for Conspiracy to Monopolize the Market for
Video Presentation and Internet Streaming of Games
restraints on competition); Madison Square Garden, L.P. v. National Hockey
League, 270 Fed. App’x 56, 58 (2d Cir. 2008) (agreeing that “[i]t is far from
obvious that [the NHL’s ban on independent websites] has no redeeming value”).
However, the reasonableness of the agreements alleged is not so apparent that the
claims warrant dismissal without further inquiry.
149
See Clarett v. National Football League, 306 F. Supp. 2d 379, 399
(S.D.N.Y. 2004) (“[A]n effect on price or output is a sufficient but not a necessary
element of antitrust injury. Antitrust injury may arise from other anticompetitive
effects, including barriers to market entry.” ), rev’d on other grounds, 369 F.3d
124 (2004).
150
There is no question that Internet plaintiffs adequately alleged reduced
choice resulting from the allegedly anti-competitive League agreements, insofar as
“in-market” games are not available from any seller over the Internet. And
Television plaintiffs have alleged that they pay higher costs and have fewer choices
as a result of the same types of agreements for television programming. See also
MSG Compl. at 26 (alleging that preventing competition among teams in television
and Internet marketing harms consumers); MSG Br. at 27 (same).
-46-
The final claim, brought on behalf of all plaintiffs, is a Section 2 claim
for conspiracy to monopolize the “market for video presentations of major league
[hockey/baseball] games and Internet streaming of the same” and “use of that
power for the purposes of unreasonably excluding and/or limiting competition.”151
Defendants argue that the Section 2 claims must be dismissed for failure to allege
any of the necessary elements of a monopolization claim.152
It is well established that “[t]here are peculiar and unique
characteristics that set major league men’s ice hockey [and baseball] apart from
other sports or leisure activities, . . . that [c]lose substitutes do not exist”153 and that
the Leagues possess monopolies of their respective sports.154 It is also established
151
Laumann Compl. ¶ 123; Garber Compl. ¶ 130.
152
See Def. Mem. at 6. Defendants argue “failure to allege any
anticompetitive effect [and] failure to allege any plausible conspiracy among the
leagues, the clubs and the RSN’s and distributors.” Id.
153
Laumann Compl. ¶¶ 54-56; Garber Compl. ¶¶ 58-60. See, e.g.,
Fishman v. Estate of Wirtz, 807 F.2d 520, 531 (7th Cir. 1986) (professional
basketball); L.A. Mem’l Coliseum Comm’n v. National Football League, 726 F.3d
1381, 1393 (9th Cir. 1984) (professional football); U.S. Football League v.
National Football League, 644 F. Supp. 1040, 1056 (S.D.N.Y. 1986) (professional
football), aff’d, 842 F.2d 1335 (2d Cir. 1988); Philadelphia World Hockey Club v.
Philadelphia Hockey Club, 351 F. Supp. 462, 501 (E.D. Pa. 1972) (major league
hockey).
154
See Board. of Regents of Univ. of Okla. v. National Collegiate Athl.
Ass’n, 546 F. Supp. 1276, 1323 (W.D. Okla. 1982) (holding “that the relevant
market for testing whether the NCAA exercises monopoly power is live college
football television”).
-47-
that “[a] monopolist may not . . . use its market power, whether obtained lawfully
or not, to prevent or impede competition in the relevant market.”155 Having defined
the relevant market as the market for television broadcasting of professional
hockey and baseball games, plaintiffs have adequately alleged that NHL and MLB
exercise monopoly power defined as “‘[w]hen a product is controlled by one
interest, without substitutes available.’”156 Finally, as already discussed, plaintiffs
have plausibly alleged that the NHL and MLB have used their monopoly power to
restrict the broadcast of television programming in a manner that harms
competition.157 However, plaintiffs have not alleged any monopoly power on the
part of RSNs or MVPDs in the market for production of baseball and hockey
games, nor have they alleged facts in support of a conspiracy to monopolize the
market. Claim Four is therefore dismissed against the RSNs and MVPDs.
VI.
CONCLUSION
For the foregoing reasons, Plaintiffs Garber and Herman are dismissed
from both cases, and Silver is dismissed from the Garber case, for lack of antitrust
155
U.S. Football League v. National Football League, 842 F.2d at
1360–61 (citations omitted).
156
Board of Regents of Univ. of Okla., 546 F. Supp. at 1323 (quoting
United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 394 (1956)).
157
See supra Part V.B.2 (discussing harm to competition).
-48-
standing. The Section Two claim (Claim Four) is dismissed against the RSN and
MVPD defendants, but may proceed against the League defendants. The Section
One claims may proceed against all defendants. A conference in this matter is
scheduled for December 18,2012 at 5:00 p.m. The Clerk of the Court is directed
to close these motions [Docket Entry No. 74,12 Civ. 1817 and Docket Entry No.
65, 12 Civ. 3704].
SO ORDERED:
Dated:
December 5, 2012
New York, New York
-49
- Appearances For Plaintiffs:
Kevin M. Costello, Esq.
Gary E. Klein, Esq.
Kevin R. Costello, Esq.
Klein Kavanagh Costello, LLP
85 Merrimac St., 4th Floor
Boston, Massachusetts 02114
(617) 357-5034
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
(215) 320-5663
Michael Morris Buchman, Esq.
John A. Ioannou, Esq.
Pomerantz Haudek Block Grossman & Gross LLP
600 Third Avenue
New York, New York 10016
(212) 661-1100
Alex Schmidt, Esq.
Mary Jane Fait, Esq.
Wolf Haldenstein Adler Freeman & Herz LLP
270 Madison Avenue
New York, New York 10016
(212) 545-4600
-50-
Robert LaRocca, Esq.
Kohn, Swift & Graf, P.C.
One South Broad Street
Suite 2100
Philadelphia, Pennsylvania 19107
(215) 238-1700
J. Douglas Richards, Esq.
Jeffrey Dubner, Esq.
Cohen, Milstein, Sellers & Toll, PLLC
88 Pine Street
New York, New York 10005
(212) 838-7797
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.
Bradley I. Ruskin, Esq.
Carl Clyde Forbes, Esq.
Helene Debra Jaffe, Esq.
Jennifer R. Scullion, Esq.
Robert Davis Forbes, Esq.
Proskauer Rose LLP
11 Times Square
New York, New York 10036
(212) 969-3465
Thomas J. Ostertag, Esq.
Senior Vice President and General Counsel
Office of the Commissioner of Baseball
245 Park Avenue
New York, New York 10167
-51-
(212) 931-7855
For Defendants National Hockey League, NHL Enterprises, L.P., NHL
Interactive Cyberenterprises, LLC, Chicago Blackhawk Hockey Team, Inc.,
Comcast-Spectacor, 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 10036-6522
(212) 735-3000
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/k/a Root Sports Rocky Mountain, and DirecTV
Sports Net Northwest, LLC a/k/a Root Sports Northwest
Andrew E. Paris, Esq.
Joann M. Wakana, Esq.
Louis A. Karasik, Esq.
Alston & Bird LLP
333 South Hope Street
Los Angeles, California 90071
(213) 576-1000
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.
-52-
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
For Yankees Entertainment and Sports Networks, LLC and New York
Yankees Partnership
Jonathan D. Schiller, Esq.
Alan Vickery, Esq.
Christopher Duffy, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue, 7th Floor
New York, New York 10022
(212) 446-2300
For Defendants The Madison Square Garden Company and New York
Rangers Hockey Club
Stephen R. Neuwirth, Esq.
Richard I. Werder, Jr., Esq.
Ben M. Harrington, Esq.
Quinn Emanuel Urquhart Oliver and Sullivan LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
(212) 849-7000
-53-
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