Even assuming that the Spirits' suspension of Caldwell was improper; that the Spirits had an economic motive to remove Caldwell from the team; that the ABA would have been advantaged by Caldwell's exit from professional basketball, no inference of concerted action is proper based on the evidence submitted by the parties. The defendants' motions for summary judgment on the first claim is granted.
Having considered each of Caldwell's claims individually, we state, in the interests of clarity, that his evidence, when considered in the aggregate fares no better in raising a genuine issue of material fact upon which a reasonable jury could infer the existence of concerted action by the defendants in violation of § 1.
3. Munchak's Alleged Participation in the Conspiracy11
While Caldwell concedes that there is no "direct evidence" that Munchak endorsed the Caldwell suspension, see Pl.'s Mem. at 17, he contends that Munchak nonetheless was part of the boycott. In support, Caldwell claims that Munchak (1) did not warn Caldwell of the boycott and thereby deprived Caldwell of the opportunity to seek preemptive injunctive relief and (2) ultimately did nothing to stop the boycott.
Caldwell further claims that Munchak had an economic incentive to terminate Caldwell's career: Munchak was personally liable for all but $ 10,000 of the pension obligation to Caldwell. Since this obligation increased with each additional year that Caldwell played professional basketball, shortening Caldwell's career, this argument goes, would reduce Munchak's contractual obligation for pension benefits. As further support that Munchak wanted to limit his contractual obligation to Caldwell, Caldwell notes that Munchak had sued Caldwell to reduce his pension obligation from $ 600 to $ 60 per month for each year he played professional basketball. Caldwell also emphasizes that he was notified of his suspension on the day his trial against Munchak regarding Munchak's pension obligations was scheduled to begin and that this "resulted in a lengthy adjournment of that case," which purportedly inured to Munchak's benefit. Id.
Even assuming the existence of a conspiratorial boycott of Caldwell by the other defendants (or by other persons), this Court concludes that Caldwell did not offer any evidence that could support the inference that Munchak participated in or approved a conspiracy to boycott Caldwell from professional basketball. While admitting that no "direct evidence" exists which demonstrates Munchak's participation in the boycott, Caldwell claims that Munchak should have acted affirmatively to prevent the boycott. Specifically, Caldwell argues that Munchak was empowered under ABA By-laws to unilaterally reinstate Caldwell with back pay, an assertion disputed by Munchak. Munchak's Mem. at 17. Caldwell claims that Munchak should have used this unilateral power despite the fact that Caldwell decided to bring suit in federal court rather than pursue remedies available to him through the Office of the Commissioner.
Even assuming that Munchak had the unilateral power to reinstate Caldwell with back pay -- and there is much undisputed evidence in the record that indicates that Munchak acted entirely appropriately and in accordance with relevant by-laws -- Caldwell does not point to a single shred of evidence that shows that Munchak's failure to act was in furtherance of a conspiracy to boycott Caldwell. See also Caldwell, 548 F. Supp. at 761 (ABA by-laws "merely gives the Commissioner the power to resolve all disputes that are submitted to him"). There is no evidence in the record to suggest that Munchak's alleged failure to act was anything but unilateral.
Moreover, the undisputed evidence indicates that: (1) Munchak did not participate in the decision to suspend Caldwell; (2) as ABA Commissioner, he scheduled a hearing, at the joint request of Caldwell and the Players' Association, to resolve the dispute between Caldwell and the Spirits; and (3) he also offered to recuse himself from presiding over his hearing to avoid any conflict of interest. It is not without significance that it was Caldwell who decided not to pursue remedies available through the Office of the ABA Commissioner. Having stripped the Office of the Commissioner of jurisdiction over his dispute with the Spirits, Caldwell cannot plausibly assert that Munchak's failure to resolve that dispute unilaterally is a conspiratorial act in violation of § 1 of the Sherman Act.
Finally, Caldwell's postulated economic motive on the part of Munchak, without more, does not support the conclusion that Munchak participated in a group boycott of Caldwell. This motive argument is undercut by the undisputed evidence that Munchak advanced funds to enable Caldwell to participate in an exhibition summer league. Further, this Court does not believe that the so-called economic motive makes any sense: if Munchak really wanted to limit his exposure as guarantor of the pension provisions in Caldwell's contract, why would he wait until the final year of the five year contract to attempt to minimize his potential exposure?
Therefore, even if this Court had found that genuine issues of fact existed as to whether the other defendants had engaged in a concerted refusal to deal with Caldwell, summary judgment would still have been appropriate in favor of Munchak because Caldwell has presented no evidence that he participated in such a boycott.
VIOLATION OF SECTION 2 OF THE SHERMAN ACT
Section 2 of the Sherman Act provides that:
Every 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 . . .
15 U.S.C. § 2. Caldwell claims that the defendants violated § 2 of the Sherman Act in three ways: "they monopolized the market for professional basketball player services; they attempted to monopolize that market; and they conspired to monopolize that market." Pl.'s Mem. at 68. For many of the reasons already stated, this Court concludes that the plaintiff has failed to present evidence sufficient to support elements of his § 2 claims, and, accordingly, the defendants are entitled to summary judgment. We will discuss each of Caldwell's § 2 claims separately.
1. Unlawful Monopolization
Unlawful monopolization has two elements: "(1) the possession of monopoly power in the relevant market and (2) the 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." Eastman Kodak Co., 112 S. Ct. at 2089 (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966)); accord Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 596, 86 L. Ed. 2d 467, 105 S. Ct. 2847 n.19 (1985).
The Court must first determine the relevant market and then decide whether the defendants had "monopoly power" in that market. Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186, 188 (2d Cir. 1992). Defining the relevant product and geographic markets in an antitrust case is often a difficult task. See generally United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 100 L. Ed. 1264, 76 S. Ct. 994 (1956); United States v. Yellow Cab Co., 332 U.S. 218, 91 L. Ed. 2010, 67 S. Ct. 1560 (1947). In its opposition papers, the plaintiff has defined the relevant market as "the market for professional player services."
Pl.'s Mem. at 68. The defendants have accepted, for the purposes of this motion, that the plaintiff's market definition is correct. The parties assume that this market includes all ABA and NBA teams during the mid 1970s.
"Monopoly Power is the power to control prices or exclude competition." E.I. du Pont, 351 U.S. at 391. See also Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2, 14, 80 L. Ed. 2d 2, 104 S. Ct. 1551 (1984) (market power is the "power to force a purchaser to do something he would not do in a competitive market"); Apex Oil Co. v. DiMauro, 713 F. Supp. 587, 600 (S.D.N.Y. 1989) (monopoly power defined as "the impairment of competition through an unlawfully acquired market structure which allows the monopolist to exclude competition or to raise prices without being undercut"). The existence of monopoly power "ordinarily is inferred from the seller's possession of a predominant share of the market." Eastman Kodak Co., 112 S. Ct. at 2081; Jefferson Parish, 466 U.S. at 17; Grinnell Corp., 384 U.S. at 571. Judge Learned Hand's rule of thumb in the ALCOA case has guided courts for nearly half a century: 90 percent "is enough to constitute a monopoly; it is doubtful whether sixty or sixty-four percent would be enough; and certainly thirty-three percent is not." United States v. Aluminum Co. of America, 148 F.2d 416, 424 (1945). Courts routinely find monopoly power where the defendant possesses a market share greater than 70 percent. See Grinnell, 384 U.S. at 571 (87 percent of the market constituted monopoly power); Hiland Dairy, Inc. v. Kroger Co., 402 F.2d 968, 974 & n.6 (8th Cir. 1968) (surveying cases and noting that percentages greater than 70 percent generally are found to constitute monopoly power), cert. denied, 395 U.S. 961, 23 L. Ed. 2d 748, 89 S. Ct. 2096 (1969).
The Second Circuit has stated that summary judgment is appropriate in § 2 cases where the defendant's market share is "less than 50%, or even somewhat above that figure, and the record contains no significant evidence concerning the market structure to show that the defendant's share of that market gives it monopoly power." Broadway Delivery Corp. v. United Parcel Serv. of America, Inc., 651 F.2d 122, 129 (2d Cir.) (emphasis in original), cert. denied, 454 U.S. 968, 70 L. Ed. 2d 384, 102 S. Ct. 512 (1981). This is such a case.
Plaintiff contends that the ABA member teams held 36% of the relevant market's capacity for professional basketball player services at the time Caldwell was suspended. This number is arrived at by creating a fraction in which the number of ABA teams (10) is the numerator, and the total number of teams in the MBA and the ABA (28) is the denominator. We believe that plaintiff's approach to define market share can be described, charitably, as simplistic. The Supreme Court has recently reiterated that in determining the existence of market power, the court must "examine closely the economic reality of the market at issue." Eastman Kodak Co., 112 S. Ct. at 2082. Plaintiff's conclusion regarding the ABA's market share does not take into account disparities between the leagues in ticket sales, broadcast revenues, licensing fees, and other income. In addition, the fact that the ABA was never as successful as the MBA at recruiting the best basketball players and that the ABA collapsed approximately two years after Caldwell's suspension emphasizes that measuring the ABA's monopoly power by reference to the number of teams in the league greatly overstates its strength in the relevant market.
Moreover, even assuming that the ABA had a market share of 36%, that would hardly be sufficient to constitute "market power." Plaintiff, however contends that it is the ABA's market share, combined with additional actions taken by the defendants, which "gave them total market control and which permitted them to ban Caldwell from professional basketball throughout the entire United States." Pl.'s Mem. at 69. These other factors are as follows:
a) the filing of antitrust suits against the NBA accusing the NBA of trying to drive the ABA out of business by raiding ABA players; b) the threat of a lawsuit for contract interference if an NBA team signed an ABA player to whom an ABA team claimed exclusive rights; and c) actual intervention by the ABA Commissioner to dissuade an NBA team from giving Caldwell a tryout, even after Caldwell's contract with the Spirits had expired.
Pl.'s Mem. at 69.
We conclude there is no basis in fact or law for concluding that the defendants obtained "total market control," id., "complete monopsony control over the players services market," id. at 70, or "control over the market for player services," id., as Caldwell alleges based on the ABA's position in the market coupled with these other factors. These other factors cannot be equated with monopoly power, as that term is defined under § 2. This is an obvious attempt by Caldwell to dress his unsuccessful § 1 claim in the garb of § 2, which must fail.
2. Attempted Monopolization
To make out a claim for attempted monopolization, the plaintiff must demonstrate: "(1) that the defendant has engaged in predatory or anti-competitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Spectrum Sports, Inc. v. McQuillan, 122 L. Ed. 2d 247, 113 S. Ct. 884, 890-91 (1993); see also Ortho Diagnostic Systems, Inc. v. Abbott Laboratories, Inc., 822 F. Supp. 145, 1993 U.S. Dist. LEXIS 7101, 93 Civ. 2656 (LBS), 1993 WL 181333 at *7 (S.D.N.Y. May 28, 1993). We do not believe that Caldwell has demonstrated a genuine issue of fact as to any of the three elements.
Caldwell's evidence of the first element -- intent to monopolize -- simply reiterates the evidence from which Caldwell claims that concerted action under § 1 can be inferred. See Pl.'s Mem. at 72. Caldwell relies on the same body of evidence to support the second element -- predatory or anticompetitive conduct. Id. We do not believe that a reasonable jury could conclude that this evidence, discussed at length in Part I of this Opinion, satisfies either element.
Plaintiff contends that the third element of attempted monopolization -- a dangerous probability of achieving monopoly power -- is satisfied because "defendants were effectively able to control 100% of the market as demonstrated by the fact that Caldwell was not even able to get a tryout with any pro team in either league after his suspension." Pl.'s Mem. at 73 (emphasis in original). We have considered and rejected this argument in connection with Caldwell's § 1 claim. We conclude that no reasonable trier of fact could infer, based on the fact that no team ever expressed an interest in hiring Caldwell, that the defendants were dangerously close to monopolizing the professional basketball market.
Plaintiff also claims that he has shown more than a mere probability of achieving monopoly: he claims that "the defendants actually succeeded here because they cut Caldwell off from the entire market." Pl.'s Mem. at 72. Even assuming, arguendo, that the defendants "cut Caldwell off,"
this does not indicate that there was a dangerous probability that the ABA or the Spirits or any of the other named defendants were close to monopolizing the market of "professional player services." Once again, it appears that Caldwell's confusion originates in his obvious attempt to fit his § 1 group boycott claim within the elements of a claim of attempted monopolization under § 2. Plaintiff's attempted monopolization claim is without merit.
3. Conspiracy to Monopolize
Finally, under § 2 of the Sherman Act, the offense of conspiracy to monopolize requires proof of "(1) concerted action, (2) overt acts in furtherance of the conspiracy, and (3) specific intent to monopolize." Volvo North America Corp. v. Men's Int'l Professional Tennis Council, 857 F.2d 55, 74 (2d Cir. 1988); accord United States v. Yellow Cab Co., 332 U.S. 218, 225, 91 L. Ed. 2010, 67 S. Ct. 1560 (1947); Apex Oil Co. v. DiMauro, 713 F. Supp. 587, 599-600 (S.D.N.Y. 1989). As we have discussed at great length in Part I of this Opinion, Caldwell has failed to offer evidence which would enable a reasonable jury to find concerted action on the part of any of the defendants. Accordingly, Caldwell's final claim under § 2 must be rejected as meritless.
CALDWELL'S PENDENT STATE CLAIMS
In his complaint, Caldwell asserts:
At the time the Defendants indefinitely suspended Plaintiff, Defendants acted maliciously with the intent to destroy Plaintiff's ability to further practice and work in his chosen profession.
Complaint, P 35. Caldwell admits that this was not well pleaded, Pl.'s Mem. at 75, and now contends -- eighteen years after this lawsuit was instituted -- that it sets forth a claim for either intentional tort or prima facie tort under New York law. This claim is asserted against the Spirits Defendants only. Pl.'s Mem. at 74.
1. Prima Facie Tort
The elements of prima facie tort are: "(1) intentional infliction of harm; (2) resulting in special damages; (3) without excuse or justification; (4) by an act or series of acts that would otherwise be lawful." Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 332, 451 N.E.2d 459, 467, 464 N.Y.S.2d 712, 720 (1983); accord Twin Laboratories v. Weider Health & Fitness, 900 F.2d 566, 571 (2d Cir. 1990). This tort is "designed to provide a remedy for intentional and malicious actions that cause harm and for which no traditional tort provides a remedy." Curiano v. Suozzi, 63 N.Y.2d 113, 118, 469 N.E.2d 1324, 1327, 480 N.Y.S.2d 466, 469 (1984). Consequently, an action for prima facie tort will not lie where the allegations fall within the scope of a traditional tort theory. Id.
The touchstone of prima facie tort is "disinterested malevolence," meaning that the plaintiff cannot recover unless the defendant's conduct was not only harmful, but done with the sole intent to harm. Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 333, 451 N.E.2d 459, 468, 464 N.Y.S.2d 712, 721 (1983); Twin Laboratories, 900 F.2d at 571. Motives other than disinterested malevolence -- e.g., profit, self-interest, or business advantage -- will defeat a prima facie tort claim. Id. Caldwell has, throughout these proceedings, ascribed motives to the defendants which cannot be described as "disinterested malevolence," but rather are properly characterized as for profit, self-interest, or business advantage. See also Amodei v. New York State Chiropractic Ass'n, 160 A.D.2d 279, 553 N.Y.S.2d 713, 716 (3d Dep't 1990) (claim for prima facie tort barred where defendants' motivation for suspending plaintiff was the "maintenance of appropriate professional standards or the resolution of grievances"), aff'd, 77 N.Y.2d 891, 571 N.E.2d 70, 568 N.Y.S.2d 900 (1991). Although alternative pleading of prima facie tort is acceptable, and therefore alternative pleading of motives on the part of the defendants is also acceptable, nowhere in the complaint or in the papers responding to this motion does plaintiff claim, or offer evidence to support a claim, that the Spirits Defendants' sole motivation for acting as they did was disinterested malevolence rather than self-interest, profit, or business advantage. Accordingly, plaintiff's contention that the defendants are liable for prima facie tort is without merit.
In addition, it appears that Caldwell's complaint is insufficient to state a cause of action for prima facie or intentional tort insofar as it fails to plead special damages. See, e.g., Curiano v. Suozzi, 63 N.Y.2d at 117, 480 N.Y.S.2d at 469. This would provide alternative grounds for dismissing Caldwell's third claim. The Court denies Caldwell's belated request for leave to amend his complaint to remedy this omission. Caldwell did not seek leave to amend his complaint when he successfully moved to reinstate his claims in 1990, or when the defendants moved to dismiss this cause of action in 1991. More importantly, for eighteen years, the defendants had no notice that Caldwell's third claim was for prima facie or intentional tort. Indeed, in their initial moving papers defendants surmised that the plaintiff's pendent claim was for interference with prospective business advantage. Even the plaintiff characterizes this surmise under the circumstances as "understandable." Pl.'s Mem. at 75 n.36.
2. Intentional Tort
To prove intentional tort under New York law, Caldwell must demonstrate, in the very least: "(1) the intentional infliction of harm, (2) resulting in special damages, and (3) without excuse or justification." Chen v. United States, 854 F.2d 622, 627 (2d Cir. 1988); see also Board of Education v. Farmingdale Classroom Teachers Ass'n, 38 N.Y.2d 397, 406, 380 N.Y.S.2d 635, 644, 343 N.E.2d 278 (1975) ("Whenever there is an intentional infliction of economic damage, without excuse or justification, we will eschew formalism and recognize the existence of a cause of action."). Caldwell argues that the defendants' conduct is actionable as an intentional tort "if the [defendants'] conduct did violate the antitrust laws or was otherwise unlawful." Pl.'s Mem. at 78. See also Chen, 854 F.2d at 628 ("intentional tort involves means which are illegal and corrupt") (citation omitted). As we have already concluded in Parts I and II of this Opinion, Caldwell has failed to offer sufficient evidence to convince a reasonable jury that the defendants, individually or collectively, violated the antitrust laws. Nor has Caldwell offered evidence which tends to prove that the defendants used means which would otherwise be illegal or corrupt. Accordingly, summary judgment is granted to the defendants on plaintiff's claim for intentional tort.
For the reasons set forth above, The Spirits of St. Louis, Donald Schupak, Daniel Silna, and Tedd Munchak are entitled to summary judgment on all remaining claims asserted against them by plaintiff, and the complaint should be dismissed as against them. Plaintiff contends that the other defendants -- American Basketball Association, Inc., Ozzie Silna, and Harry Weltman -- have failed to appear in this action and are therefore in default. See Pl.'s Mem. at 1 n.1. The plaintiff is hereby ordered to inform the Court in writing, no later than July 16, 1993, of the status of this case with regard to these other defendants.
Dated: June 14, 1993
New York, New York
Leonard B. Sand