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Laumann v. National Hockey League

United States District Court, S.D. New York

November 25, 2013

THOMAS LAUMANN, FERNANDA GARBER, ROBERT SILVER, GARRETT TRAUB, DAVID DILLON and PETER HERMAN, representing themselves and all other similarly situated, Plaintiffs,
v.
NATIONAL HOCKEY LEAGUE, et al., Defendants. FERNANDA GARBER, MARC LERNER, DEREK RASMUSSEN, ROBERT SILVER, GARRETT TRAUB, and PETER HERMAN representing themselves and all other similarly situated, Plaintiffs,
v.
OFFICE OF THE COMMISSIONER OF BASEBALL, et al., Defendants

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[Copyrighted Material Omitted]

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For Plaintiffs: Edward A. Diver, Esq., Howard I. Langer, Esq., Peter E. Leckman, Esq., Langer Grogan & Diver, P.C., Philadelphia, Pennsylvania; Kevin M. Costello, Esq., Gary E. Klein, Esq., Klein Kavanagh Costello, LLP, Boston, Massachusetts; Michael Morris Buchman, Esq., John A. Ioannou, Esq., Pomerantz Haudek Block Grossman & Gross LLP, New York, New York; Alex Schmidt, Esq., Mary Jane Fait, Esq., Wolf Haldenstein Adler Freeman & Herz LLP, New York, New York; Robert LaRocca, Esq., Kohn, Swift & Graf, P.C., Philadelphia, Pennsylvania; J. Douglas Richards, Esq., Jeffrey Dubner, Esq., Cohen, Milstein, Sellers & Toll, PLLC, New York, New York.

For 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, Defendants: Andrew E. Paris, Esq., Joann M. Wakana, Esq., Louis A. Karasik, Esq., Alston & Bird LLP, Los Angeles, California.

For Comcast Corporation, Comcast SportsNet Philadelphia, L.P., Comcast SportsNet Mid-Atlantic L.P., Comcast SportsNet California, LLC, and Comcast SportsNet Chicago, LLC, Defendants: Arthur J. Burke, Esq., James W. Haldin, Esq., Davis Polk & Wardwell, New York, New York.

OPINION

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OPINION AND ORDER

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 (together the " League Defendants" ), regional sports networks (" RSNs" ) that televise the games, and Comcast and DIRECTV, multichannel video programming distributors (" MVPDs" ).

On July 27, 2012, the defendants jointly moved to dismiss the complaints in both actions, Garber v. Office of the Commissioner of Baseball (" Garber" ) and Laumann v. National Hockey League (" Laumann" ) . In an Opinion and Order dated December 5, 2012, I granted the motion in part and denied it in part.[1] Plaintiffs Fernanda

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Garber and Peter Herman were dismissed from both cases, and plaintiff Robert Silver was dismissed from the Garber case, for lack of antitrust standing. Because none of those defendants had purchased out-of-market packages in the relevant cases, their only injury from the alleged antitrust violation stemmed from " some unidentified increased price of their overall cable package." [2] Such an injury is " speculative and difficult to identify and apportion," as well as remote from the primary agreements among the League defendants.[3] Thus, only those plaintiffs who had purchased out-of-market packages in the relevant cases were allowed to proceed.[4]

On January 7, 2013, Comcast and DIRECTV moved to stay the proceedings pending the outcome of the Supreme Court case American Express Co. v. Italian Colors Rest., 133 S.Ct. 2304, 186 L.Ed.2d 417 (2013). That motion was denied in a Memorandum Opinion dated March 6, 2013.[5]

In a stipulation so ordered on August 8, 2013, plaintiffs Robert Silver and Vincent Birbiglia, both of whom purchased out-of-market television packages from DIRECTV, agreed to stay their claims against DIRECTV.[6] DIRECTV agreed not to seek a stay or dismissal of the plaintiffs' claims against other defendants based on the DIRECTV arbitration clause, or to seek a stay or dismissal of plaintiff Garrett Traub's claims against DIRECTV on the basis of the Comcast arbitration clause.[7] The parties were unable to reach a stipulation regarding plaintiff Marc Lerner's claims against DIRECTV.

On August 19, 2013, Comcast and the Comcast RSNs (the " Comcast Defendants" ) filed a motion to compel arbitration against Traub, Silver, Birbiglia, Thomas Laumann, and Derek Rasmussen, and to stay the claims of all plaintiffs, including David Dillon and Marc Lerner, pending resolution of the arbitration. On the same date, DIRECTV filed a motion to compel arbitration and stay claims against Lerner. For the reasons that follow, Comcast's motion is GRANTED as to Traub, Laumann, and Rasmussen, and DENIED as to Silver, Birbiglia, Dillon, and Lerner. DIRECTV's Motion is DENIED in full.

II. BACKGROUND

A. Relevant Alleged Facts

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." [8] Plaintiffs claim that these

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agreements " result in reduced output, diminished product quality, diminished choice and suppressed price competition" in violation of the Sherman Antitrust Act.[9]

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). The MVPDs obtain the local programming from RSNs, who derive their rights from the individual teams subject to an agreement not to sell their content outside the regional market.[10] Several defendant RSNs are owned and controlled by Comcast, several are owned and controlled by DIRECTV, and two are independent of the MVPDs.[11]

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.[12] Television packages -- NHL Center Ice and MLB Extra Innings -- are available for purchase from MVPDs such as Comcast and DIRECTV. These packages require the purchase of all out-of-market games even if a consumer is only interested in viewing the games of one team. 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, allegedly to protect the RSNs' regional monopolies and insulate the MVPDs that carry them from internet competition.[13]

B. The Comcast Agreement

The Comcast Customer Service Agreement (" Comcast Agreement" ) contains an arbitration clause that covers " any dispute, claim or controversy between you and Comcast regarding any aspect of your relationship with Comcast . . . whether based in contract, statute, regulation, ordinance, tort . . ., or any other legal or equitable theory" and " is to be given the broadest possible meaning that will be enforced." [14] As used in the arbitration provision, " Comcast" includes parents, subsidiaries and affiliated companies of Comcast.[15]

The Comcast arbitration provision applies to disputes about " the validity, enforceability or scope of this Arbitration Provision." [16] It also incorporates by reference the rules of the American Arbitration Association (" AAA" ),[17] which in turn

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provide that the arbitrator shall have the power to decide threshold issues of arbitrability including the existence, scope, and ...


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