Posted by : Matthew Wild | On : September 4, 2008

The United States Court of Appeals for the Seventh Circuit applied the Copperweld doctrine to a sports league for the first time. In so doing, it recently affirmed summary judgment in favor of the NFL, its teams and Reebok in an antitrust challenge to an exclusive license of team names and logos to Reebok for use on headwear. American Needle Inc. v. Nat’l Football League, No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008) (attachedĀ  American Needle v. NFL). The plaintiff — an unsuccessful bidder — alleged that the collective action by the teams to combine all of their intellectual property rights and create an exclusive license was a conspiracy to prevent other vendors from obtaining licenses to the team names and logos in violation of Section 1 of the Sherman Act. The plaintiff also alleged that the teams monopolized “the NFL team licensing and product wholesale markets” in violation of Section 2 of the Sherman Act. Id. at *2. The Seventh Circuit held that the teams should be treated as a single entity under the Copperweld doctrine. As explained in Wild, et al., “Private Equity Groups Under Common Legal Control Constitute a Single Enterprise Under the Antitrust Laws,” 3 NYU Journal of Law and Business 231, 237 and n.31 (attached under articles above), that doctrine treats two or more firms that are under common ownership or have a unity of interest in a common course of action as a single firm incapable of conspiring or otherwise acting collectively under the antitrust laws. The Seventh Circuit did so because “the teams share a vital economic interest in collectively promoting all of NFL football” (id. at *7) and should be able to cooperate so that the NFL “can compete against other entertainment providers.” Id. at *8.



Posted by : Matthew Wild | On : August 5, 2008

The First Circuit recently denied antitrust immunity to a labor union and certain contractors in an action by non-union shops alleging that the defendants forced them from the market in violation of Sections 1 and 2 of the Sherman Act. American Steel Erectors, Inc. v. Local Union No. 7, No. 07-1832, 2008 WL 2941576 (1st Cir. Aug. 1, 2008) (attached American Steel Erectors v. Local 7). In particular, “Plaintiffs allege a conspiracy between the Union and union employers to monopolize the structural steel industry in the Boston area and push non-union employers like Plaintiffs out of the market. To this end, Plaintiffs claim that Local 7 used Fund subsidies and other tactics to ensure that contracts were awarded to signatory contractors, rather than Plaintiffs. Specifically, Plaintiffs assert that Local 7 used Fund subsidies to assist signatory employers in underbidding Plaintiffs on erection jobs. Plaintiffs also claim that Local 7 used subsidies, threats, and picketing to pressure fabricators, developers, owners, and general contractors (none of which directly employ Local 7 workers) into breaching contracts with Plaintiffs and replacing them with signatory contractors.” The district court granted Defendants summary judgment holding that this activity was immune from the antitrust laws under the statutory labor exemption. The First Circuit reversed. For that exemption to apply, “the union [must] act[] in its self-interest and … not combine with non-labor groups.” Id. (quoting United States v. Hutcheson, 312 U.S. 219, 231 (1941). The First Circuit held that the activity did not satisfy the second prong for numerous reasons. At base, the court noted that the because the subsidies are collected through, and paid to, employers through collective bargaining agreements, they by definition involve a combination with non-labor groups. Although not addressed by the district court, the First Circuit also determined that the non-statutory labor exemption — which “shields some restraints on competition imposed through the bargaining process, where the alleged anticompetitive conduct is anchored in the collective-bargaining process, concerns only the parties to the collective bargaining relationship, and relates to wages, hours, conditions of employment, or other mandatory subjects of collective bargaining” — did not apply. The First Circuit held that “there are sufficient genuinely disputed issues of material fact here to render summary judgment inappropriate. Plaintiffs have alleged concerted union-employer action that extended beyond merely the wage deduction provided for in the CBA and the job-by-job subsidy agreements, to collaboration in the identification and acquisition of target projects.”



Posted by : Matthew Wild | On : April 10, 2008

In Madison Square Garden, L.P. v. Nat’l Hockey League, No. 07-4927-CV, 2008 WL 746524 (2d Cir. Mar. 19, 2008), the Second Circuit denied Madison Square Garden — owner of the Rangers — a preliminary injunction against threatened fines for non-compliance with the NHL’s internet policy. That policy requires that all team websites had to be migrated to a common technology platform managed by the NHL and linked to the NHL’s website. When threatened, MSG brought suit seeking preliminary and permanent injunctive relief based on alleged violations of Section 1 of the Sherman Act and the Donnelly Act. The Southern District of New York denied MSG’s motion for a preliminary injunction and the Second Circuit affirmed holding that “MSG failed to establish a likelihood of success on the merits or sufficiently serious questions” on the merits. Id. at *2. The Second Circuit refused to apply a “quick look” because “the likelihood of anticompetitive effects is not] so obvious that ‘an observed with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets.'” Id. (citations omitted). In applying the rule of reason, the Second Circuit held that “MSG did not show that the NHL’s website ban has had an actual adverse effect on competition in the relevant market. Nor did MSG demonstrate that the many procompetitive benefits of the NHL’s restriction could be achieved through an alternative means that is less restrictive of competition. While there will certainly be substantive issues for the district court to address on the merits-for example, how the antitrust laws apply to the NHL as a sports league, and what the relevant market is in this case-the district court’s conclusion that preliminary injunctive relief was unwarranted falls well within the range of permissible decisions, and did not constitute an abuse of discretion.” Id. This case illustrates the difficulty of a sports team’s ability to challenge league action which benefits the league collectively. It should be noted, however, that NHL is unlikely to receive immunity under the Copperweld doctrine. See, e.g., Nat’l Hockey League Players Ass’n v. Plymouth Whalers Hockey Club, 419 F.3d 462 (6th Cir. 2005) (courts considering the actions of professional sports leagues have found the leagues to be joint ventures whose members act in concert (i.e., agree ) to promulgate league rules, rather than one solitary acting unit”).