The opinion of the court was delivered by: POLLACK
The plaintiff, a recent promoter of women's professional tennis and the plaintiff-intervenor, ranked the world's number one woman professional tennis player, have sued to enjoin the United States Lawn Tennis Association ("USLTA" hereafter) and its officials from alleged interference with their respective business opportunities including plaintiff's promotion of professional tournaments and plaintiff-intervenor's freedom to play professional tennis in any tournament where other professionals are playing for prize money.
The defendants are charged with threatening to bar or having barred from those tournaments whose contestants conform to the rules and standards of the USLTA and thus are sanctioned by the USLTA, the tennis players under contract to the plaintiff who do not qualify because they participate in tournaments arranged by the plaintiff for which no sanction (approval) has been obtained from the USLTA. The complaint charges that the alleged conduct of defendants in this regard is in violation of the antitrust laws and amounts to a boycott and restraint of trade under Section 1 of the Sherman Act. The complaint further asserts that defendants' conduct unlawfully interferes with plaintiffs' contractual and business relations and is actionable under state law.
The complaint was filed on January 9, 1973 and 10 days later plaintiff presented therewith an application returnable January 26, 1973 for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure and Section 16 of the Clayton Act, 15 U.S.C. § 26, together with a request for a temporary restraining order. The Court ordered an immediate evidentiary hearing on the application and evidence was taken on five trial days, commencing on January 26, 1973, consisting of the testimony of witnesses and a substantial volume of exhibits. Decision was reserved on conclusion of the hearing.
In order to view the issues on this application in proper focus it is necessary to understand the backgrounds of the parties and the events from which this controversy arises. They are the following:
Defendant USLTA is a non-profit membership organization founded in 1881 and devoted to the development of tennis as a means of healthful recreation and physical fitness and to the establishment and maintenance of rules of play and high standards of amateurism and good sportsmanship. None of the officers receive any compensation for what they do.
The Constitution of the USLTA provides that there are five categories of members: Sectional Associations and Direct Member Clubs which are the only voting members of the Association, and Member Clubs and Organizations, Individual Members and Honorary Members. There are only three Direct Member Clubs, 17 Sectional Association members and several hundred Member Clubs and Organizations. A current Standing Order provides that all players resident in the United States or Puerto Rico, desiring to play in USLTA sanctioned tournaments, are required to enroll as Individual Members of the USLTA.
In order to achieve its objectives, the USLTA promulgated rules and regulations incorporated within its By-Laws and Standing Orders, for the approval or "sanctioning" of tennis tournaments, exhibition matches or team matches proposed to be held by any of its members.
There are sound reasons for sanctioning which are not anti-competitive in purpose. It assures uniformity of rules of play so that the caliber of players may be rated or "ranked" on the basis of an identical standard; it aids to assure an orderly schedule of tournaments which accommodates the reasonable needs of the players, the promoters and sponsors for organized competition; and it fosters the aim of providing the public with tennis competition of high caliber and ethical standards. Sanctioning indicates that a particular tournament is an official USLTA approved tournament, that the rules of tennis as defined in the Official USLTA Yearbook will be followed, that proper draws will be made, and that the results of the event will be considered for USLTA and local ranking purposes.
Under the rules and regulations of the USLTA, players who compete in unsanctioned events where spectator admission is charged, players' expenses paid or prize money offered, may be debarred from tournaments conducted pursuant to USLTA rules and regulations. Such action may, however, be taken only in accordance with specific provisions of the USLTA by-laws which provide such players with a full hearing, including the right to be represented by counsel and the right to appeal; debarment is not mandatory.
Prior to 1968, the USLTA only sanctioned amateur tournaments. There were professional tennis tournament players prior to that time, but they did not come under the jurisdiction of the USLTA once they "had turned pro." Rather, they played under contract with individual promoters and they toured the country playing exhibitions and tournaments; they were sometimes referred to as "contract pros" or "touring pros".
b. Professional Competition
In 1968, the USLTA along with the International Lawn Tennis Federation ("ILTF" hereafter) and its ninety-six member associations reorganized this system. Professional Players were allowed to play for prize money and to participate in designated USLTA sanctioned events; these are players who accept and perform under the rules and regulations of the USLTA and the events are designated as "open" tournaments.
Pursuant to the standing rules and regulations of the USLTA, a Professional Player is eligible to participate in sanctioned USLTA tournaments if that player has played only in tournaments sanctioned by the USLTA. Should that player participate in a "non-sanctioned" event, in which prize money is awarded, that player may be assigned the status of a contract pro, in which event he or she may participate only in those USLTA tournaments which are designated "open for all categories" of players, i.e., those who do or do not play under USLTA rules. A contract pro may apply for reinstatement to be permitted thereafter to play under the rules and regulations of USLTA thus restoring his eligibility for sanctioned tournaments.
After the change mentioned above was effected in 1968, promoters began to place top professional men under contract and to deliver them to tournaments only for a fee. The international coordinating body for amateur and professional tennis (ILTF) reacted to this development by closing all events to players under contract to such promoters. The ILTF has sanctioning power over international tournaments, including the U.S. "Open" held at Forest Hills. However, in July 1972, an agreement was reached with respect to men players, and now all ILTF as well as USLTA sanctioned tournaments are open to men contract pros.
USLTA sanctions are obtained on application therefor through a Sectional Organization and payment of a sanction fee. The sanction application goes to the USLTA Sanctions and Schedules Committee for its approval. In the case of prize money tournaments with more than $500 in prize money, the sanction fee is 6% of the prize money and travel allowance offered. The purpose of the fee is to help defray administrative costs of processing the application, the compilation of extensive records required to determine rankings, and the promotion of tennis. One-half of all sanction fees (except those for USLTA national title events) is returned to the Section in which the event is held for its purposes and uses. For the year 1971, to assist the plaintiff in her organization of a women's professional circuit, the maximum fee for women's events was $480.
Women's professional tournaments at first carried small prizes; in 1968 and 1969 there was $250,000 in prizes for men, $2,000 for women. This disparity was a particular source of disaffection for the women. In the summer of 1970, two top women players -- including the intervenor herein -- approached the plaintiff to ask her help in righting this disparity.
2. The Plaintiff-Tennis Promoter
Plaintiff Gladys M. Heldman, a resident of Houston, Texas, has for 20 years past been the owner, editor and publisher of "World Tennis Magazine" which had a circulation of about 40,000 copies in 1969 that increased to over 90,000 copies by December 1972 when she sold the magazine to Columbia Broadcasting System, continuing however as its editor and publisher. Mrs. Heldman formerly played tournament tennis, having ranked No. 1 in Texas, No. 2 in the Southwest and having played at Wimbledon and Forest Hills. She is a life member of the USLTA and has served it in official capacities. She first became a promoter or organizer of women's professional tennis tournaments in September 1970. She soon obtained her principal financial backing and sponsorship from the Philip Morris Company.
Plaintiff organized a tournament event for eight women, which was played in Houston in the fall of 1970 which had a prize purse of $7,500. The USLTA did not sanction that event, but all the players signed on with plaintiff for one week to gain the status of contract pros; in this way, the players fell outside ...