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NORTH AMERICAN SOCCER LEAGUE v. NFL

February 21, 1979

NORTH AMERICAN SOCCER LEAGUE et al., Plaintiffs,
v.
NATIONAL FOOTBALL LEAGUE et al., Defendants



The opinion of the court was delivered by: HAIGHT

MEMORANDUM OPINION

This is an antitrust case brought by the North American Soccer League ("NASL") and 21 of its member clubs against the National Football League ("NFL") and 25 of its member clubs to test the legality under the Sherman Act, 15 U.S.C. § 1 Et seq., of a proposed amendment to the NFL's constitution and by-laws implementing a "cross-ownership ban." The amendment, if enacted, would prevent the owner of a majority interest in an NFL club, or a member of his family, from acquiring any interest in another major team sport. To the extent that such cross-ownership presently exists, the amendment mandates divestiture, and imposes fines and other sanctions for non-compliance within the time specified. Plaintiffs assert their complaint under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, and 28 U.S.C. § 2201. They claim injunctive and declaratory relief, and treble money damages. Jurisdiction is posited upon 28 U.S.C. §§ 1331 and 1337, and venue asserted under 28 U.S.C. § 1391 and Sections 4 and 12 of the Clayton Act, 15 U.S.C. §§ 15 and 22. Plaintiffs now move pursuant to Rule 65, F.R.Civ.P. and Section 16 of the Clayton Act, 15 U.S.C. § 26, for a preliminary injunction restraining enactment of the amendment. Because plaintiffs have made the requisite showing for such relief, the injunction will issue.

 I.

 Preliminarily, we note that a number of the defendant NFL clubs have by their answers contested the Court's jurisdiction over their persons. Whatever the merits of those assertions and the jurisdictional issue is not pressed on this motion it is clear that a preliminary injunction, if otherwise appropriate, would not be inhibited. The NFL does not contest In personam jurisdiction. Rule 65 provides that an injunction is binding:

 
" . . . upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise."

 All member clubs of the NFL are by definition "in active concert or participation with" the League they formed to conduct their joint affairs. There is, in short, the requisite showing of privity. Golden State Bottling Co. v. National Labor Relations Board, 414 U.S. 168, 179-180, 94 S. Ct. 414, 38 L. Ed. 2d 388 (1973); Hart v. Community School Board of Brooklyn, N. Y. School District No. 21, 383 F. Supp. 699, 753 (E.D.N.Y.1974), Appeal dismissed, 497 F.2d 1027 (2d Cir. 1974); 7 Moore's Federal Practice P 65.13 (2d ed. 1978). No difficulty in notifying the NFL member clubs of the Court's order need be anticipated.

 II.

 Plaintiffs move for a preliminary injunction, prohibitory in nature, to prevent the NFL and its member clubs from enacting a particular amendment to the NFL constitution and by-laws. The record on the motion consists of the pleadings, affidavits and exhibits. Two oral arguments have been heard, the first shortly after service of the motion and the second after filing of extensive and able briefs. While discovery is proceeding on the merits, both plaintiffs and defendants stated that an evidentiary hearing need not precede resolution of the present motion. In these circumstances no evidentiary hearing is required. Jacobson & Co., Inc. v. Armstrong Cork Co., 548 F.2d 438, 442 (2d Cir. 1977).

 The showing a plaintiff must make to obtain a preliminary injunction has been the subject of a number of recent Second Circuit decisions, not all of them entirely reconcilable. For a time Sonesta International Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973) appeared to declare a two-pronged test as the rule of the Circuit:

 
"The settled rule is that a preliminary injunction should issue only upon a clear showing of either (1) probable success on the merits And possible irreparable injury, Or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation And a balance of hardships tipping decidedly toward the party requesting the preliminary relief." (emphasis in original).

 The Sonesta formulation was repeated in numerous subsequent cases. However, in Triebwasser & Katz v. A. T. & T. Co., 535 F.2d 1356, 1359 (2d Cir. 1976), the Court stressed that irreparable injury was required under both prongs of the Sonesta test:

 
"(T)his language of the second prong of the Sonesta test does not eliminate the basic obligation of the plaintiff to make a clear showing of the threat of irreparable harm. That is a fundamental and traditional requirement of all preliminary injunctive relief, since equity cannot intervene where there is an adequate remedy at law. If the element of irreparable damage is prerequisite for relief where the plaintiff must show probable success on the merits, then A fortiori where the plaintiff establishes something less than probable success as to the merits, need for proof of the threat of irreparable damage is more pronounced. In sum, the balancing of hardships test of Sonesta necessarily includes the showing of irreparable harm." (emphasis in original) (citations omitted).

 Some commentators regarded Triebwasser as a major revision of the Sonesta test, in that Triebwasser required a showing of irreparable harm in the second prong where none had been required before. Other commentators argued that irreparable harm had in the past been part of the second prong's proof of "balance of hardships," a view endorsed shortly after Triebwasser by at least one member of the Second Circuit. Mulligan, Preliminary Injunction in the Second Circuit, 43 Bklyn.L.Rev. 831, 832 (1977); to the extent that Sonesta indicated "that irreparable harm is not necessary for every preliminary injunction," Judge Mulligan disagreed with it. Id. at 839. In New York Association of Homes for Aging v. Toia, 559 F.2d 876, 880 (2d Cir. 1977), the Court said that under either Sonesta test "the movant must show a threat of irreparable harm"; a comparable holding in New York v. Nuclear Regulatory Commission, 550 F.2d 745, 755 (2d Cir. 1977) was embellished by the requirement that "the alleged threats of irreparable harm are not remote or speculative but are actual and imminent." A trace of confusion creeps back in, however, in the Court's recent citation of Sonesta for the proposition that the "moving party must make a showing of Possible irreparable harm," Selchow & Righter Co. v. McGraw-Hill Book Co., 580 F.2d 25, 27 (2d Cir. 1978). Cf. Caulfield v. Board of Education, 583 F.2d 605 (2d Cir. 1978), where the Court announced the standard as "Possible irreparable injury" but found that the District Court "could not conclude that the appellants were Likely to suffer irreparable injury." (emphasis added).

 Since the case at bar falls within the antitrust statutes, we must also conjure with 15 U.S.C. § 26, which authorizes a preliminary injunction under general principles of equity "and a showing that the danger of irreparable loss or damage is immediate . . . ." In Triebwasser, supra, the Second Circuit, after characterizing the showing of irreparable harm as necessary under either Sonesta test, went on to observe:

 
"In antitrust cases, the proposition requires no further elucidation since 15 U.S.C. § 26 explicitly requires for a preliminary injunction a showing "that the danger of irreparable loss or damage is immediate,' and we have so held in a recent private antitrust case, SCM Corp. v. Xerox Corp., 507 F.2d 358, 360 (2d Cir. 1974)."

 In SCM Corp. v. Xerox Corp., cited by the Second Circuit in Triebwasser, the Court characterized the Clayton Act's requirements as "merely declarative of ordinary equitable principles." 507 F.2d at 360. Thus the degree to which the Second Circuit regards the statute's requirement of Immediacy as a separate element is somewhat obscure. Jacobson, supra, also an antitrust case, reiterates the Sonesta formulae, 548 F.2d at 441 n. 2, but says nothing about the requirements of § 26. Jacobson does make clear that, as to the merits, within the antitrust context:

 
". . . the second branch of the Sonesta test requires no more than a showing of "sufficiently serious questions going to the merits to make them a fair ground for litigation.' 483 F.2d at 250."

 The formula I distill from these authorities is that the plaintiffs in this antitrust action are entitled to a preliminary injunction if they bring themselves within either of the two branches of Sonesta ; and, in so doing, ...


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