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Laumann v. NHL

United States District Court, S.D. New York

August 8, 2014

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

Decided August 4, 2014

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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 Office of the Commissioner of Baseball, Major League Baseball Enterprises Inc., MLB Advanced Media L.P., MLB Advanced Media, Inc., Athletics Investment Group, LLC, The Baseball Club of Seattle, L.L.P., Chicago White Sox, Ltd., Colorado Rockies Baseball Club, Ltd., The Phillies, Pittsburgh Baseball, Inc., and San Francisco Baseball Associates, L.P., Defendants: Bradley I. Ruskin, Esq., Carl Clyde Forbes, Esq., Helene Debra Jaffe, Esq., Jennifer R. Scullion, Esq., Robert Davis Forbes, Esq., Proskauer Rose LLP, New York, New York; Thomas J. Ostertag, Esq., Senior Vice President and General Counsel, Office of the Commissioner of Baseball, New York, New York.

For National Hockey League, NHL Enterprises, L.P., NHL Interactive Cyberenterprises, LLC, Chicago Blackhawk Hockey Team, Inc., Comcast-Spectacor, L.P., Hockey Western New York LLC, Lemieux Group, L.P., Lincoln Hockey LLC, New Jersey Devils LLC, New York Islanders Hockey Club, L.P. and San Jose Sharks, LLC, Defendants: Shepard Goldfein, Esq., James A. Keyte, Esq., Paul M. Eckles, Esq., Matthew M. Martino, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, 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.

For Yankees Entertainment and Sports Networks, LLC and New York Yankees Partnership: Jonathan D. Schiller, Esq., Alan Vickery, Esq., Christopher Duffy, Esq., Boies, Schiller & Flexner LLP, New York, New York.

For The Madison Square Garden Company and New York Rangers Hockey Club, Defendants: Stephen R. Neuwirth, Esq., Richard I. Werder, Jr., Esq., Ben M. Harrington, Esq., Quinn Emanuel Urquhart Oliver and Sullivan LLP, New York, New York.

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OPINION AND ORDER

Shira A. Scheindlin, United States District Judge.

I. INTRODUCTION

Plaintiffs bring these putative class actions against the National Hockey League (" NHL" ) and various individual clubs in the league (the " NHL Defendants" ); Major League Baseball (" MLB" ) and various individual clubs in the league (the " MLB Defendants" ) (together the " League Defendants" ); multiple regional sports networks (" RSNs" ) that produce and distribute professional baseball and hockey programming; [1] two multichannel video programming distributors (" MVPDs" or " distributors" ), Comcast and DIRECTV (together with the RSNs, the " Television Defendants" or " broadcasters" ); Madison Square Garden Company and the New York Rangers Hockey Club (the " MSG Defendants" ); and New York Yankees Partnership and Yankees Entertainment & Sports Network, LLC (" YES" ) (together the " Yankee Defendants" ). Plaintiffs allege violations under Sections 1 and 2 of the Sherman Antitrust Act (the " Sherman Act" ).

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.[2] Plaintiffs Fernanda Garber and Peter Herman were

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dismissed from both cases, and plaintiff Robert Silver was dismissed from the Garber case, for lack of antitrust standing. Additionally, I dismissed plaintiffs' claims under Section 2 of the Sherman Act against the Television Defendants.[3]

On August 19, 2013, Comcast and its affiliated RSNs (the " Comcast Defendants" ) filed a motion to compel arbitration against Garrett Traub, Silver, Vincent Birbiglia, Thomas Laumann, and Derek Rasmussen, and to stay the claims of David Dillon and Marc Lerner pending resolution of the arbitration. Comcast's motion was granted as to Traub, Laumann, and Rasmussen, but denied as to Silver, Birbiglia, Dillon, and Lerner. The same day, DIRECTV and its affiliated RSNs (the " DIRECTV Defendants" ) filed a motion to compel arbitration against Lerner. DIRECTV's motion was denied in full.[4]

The Comcast Defendants, the DIRECTV Defendants, the NHL Defendants, and the MLB Defendants now move for summary judgment on the remaining claims.[5] For the reasons that follow, all four motions are DENIED in full.

II. BACKGROUND

NHL is an unincorporated association of thirty major league professional ice hockey clubs, nine of which are named as defendants in Laumann.[6] MLB is an unincorporated association of thirty professional baseball clubs, nine of which are named as defendants in Garber.[7] The clubs within each League are competitors -- both on the field and in the contest to broaden their fan bases. However, the clubs must also coordinate in various ways in order to produce live sporting events, including agreeing upon the game rules and setting a schedule of games for the season.[8] Both leagues divide their member teams into geographic territories and assign each team a home television territory (" HTT" ) for broadcasting purposes.[9] Neither the Comcast Defendants nor the DIRECTV Defendants played a role in the initial creation of the Leagues' HTTs.[10]

The structure of the territorial broadcasting system is largely uncontested. By League agreement, each club agrees to license its games for telecast only within its designated HTT.[11] The clubs then contract with RSNs through Rights Agreements.[12]

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The Rights Agreements generally provide each RSN the exclusive right to produce a club's games and telecast them in the HTT.[13] The Agreements do not permit the RSNs to license telecasts for broadcast outside the HTTs.[14] The Rights Agreements also require the RSNs to provide their telecasts to the Leagues without charge for use in the out-of-market packages (" OOM packages" ).[15] The clubs keep the revenue from their respective Rights Agreements. There are significant differences in the economic value of the various HTTs.[16]

In order to produce the telecasts of live games, the RSNs invest in equipment, production facilities, and a large staff.[17] They also produce " shoulder" programming such as pre-game and post-game shows.[18] The RSNs then sell their programming to MVPDs like Comcast and DIRECTV through Affiliation Agreements, and the MVPDs televise the programming through standard packages sold to consumers within the HTT.[19] Even when an MVPD agrees to carry a RSN, it does not always distribute that RSN throughout its entire territory.[20] The MVPDs acquire the rights to broadcast the games subject to the territorial restrictions in the RSNs' agreements with the Leagues.[21] The MVPDs black out games in unauthorized territories in accordance with those restrictions.

Fans can watch out-of-market games in one of two ways. First, some games are televised nationally through contracts between the Leagues and national broadcasters like ESPN and Fox.[22] The clubs have agreed to allow the Leagues to negotiate national contracts on their behalf. The Leagues' agreements with national broadcasters contain provisions requiring the Leagues to preserve the HTTs.[23] The revenues from national broadcasts are shared equally among the clubs.[24]

Second, the Leagues produce OOM packages in both television and Internet format. The television packages -- NHL Center Ice and MLB Extra Innings -- are available for purchase through MVPDs, including Comcast and DIRECTV.[25] The Internet packages -- NHL GameCenter Live and MLB.tv -- are available for purchase

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directly from the Leagues.[26] The OOM packages are comprised of local RSN programming from each of the clubs.[27] As with the national broadcasts, revenues from the OOM packages are shared equally among the clubs.[28]

Each of the OOM packages requires the purchase of the full slate of out-of-market games, even if a consumer is only interested in viewing the games of one team. The OOMs exclude in-market games to " avoid diverting viewers from local RSNs that produce the live game feeds that form the OOM packages." [29]

In sum, each RSN is the sole producer of its club's games[30] and the sole distributor of those games within the HTT aside from limited nationally broadcasted games. The OOM packages do not show in-market games to avoid competition with the local RSN. Additionally, the territorial broadcast restrictions allow each RSN to largely avoid competing with out-of-market games produced by other RSNs.

Internet streaming rights are owned by the Leagues and/or the clubs.[31] The RSNs have no right to license their programming for Internet streaming directly. The Internet OOM packages are the primary way for fans to view games on the Internet. Additionally, some MVPDs have negotiated with the Leagues to provide Internet streaming of out-of-market games to subscribers of the OOM television packages.[32] Internet streaming of in-market games remains largely unavailable to consumers.[33]

III. STANDARD OF REVIEW

Summary judgment is appropriate " only where, construing all the evidence in the light most favorable to the non-movant and drawing all reasonable inferences in that party's favor, there is 'no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law.'" [34] " A fact is material if it might affect the outcome of the suit under the governing law, and an issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." [35]

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" [T]he moving party has the burden of showing that no genuine issue of material fact exists and that the undisputed facts entitle him to judgment as a matter of law." [36] To defeat a motion for summary judgment, the non-moving party must " do more than simply show that there is some metaphysical doubt as to the material facts," [37] and " may not rely on conclusory allegations or unsubstantiated speculation." [38]

In deciding a motion for summary judgment, " [t]he role of the court is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried." [39] " 'Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences'" are jury functions, not those of a judge.[40]

IV. APPLICABLE LAW

A. Section 1 of the Sherman Act

Section 1 of the Sherman Act prohibits " [e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States." [41] " The crucial question in a Section 1 case is [] whether the challenged conduct stems from independent decision or from an agreement, tacit or express." [42] " In order to prove a conspiracy, the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the [defendant] and others had a conscious commitment to a common scheme designed to achieve an unlawful ...


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