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North American Soccer League, LLC v. United States Soccer Federation, Inc.

United States District Court, E.D. New York

November 4, 2017

NORTH AMERICAN SOCCER LEAGUE, LLC, Plaintiff,
v.
UNITED STATES SOCCER FEDERATION, INC., Defendant.

          MEMORANDUM & ORDER

          MARGO K. BRODIE UNITED STATES DISTRICT JUDGE.

         Plaintiff North American Soccer League, LLC (“NASL” or “Plaintiff”) filed the above-captioned action on September 19, 2017, alleging violations of Section 1 and Section 2 of the Sherman Antitrust Act. (Compl., Docket Entry No. 1.) On September 20, 2017, Plaintiff moved for a preliminary injunction, seeking a Division II designation for the duration of this litigation.[1] (Pl. Mot. for Prelim. Inj. (“Pl. Mot.”), Docket Entry No. 3; Pl. Mem. in Supp. of Pl. Mot. (“Pl. Mem.”), Docket Entry No. 3-1.) Defendant United States Soccer Federation, Inc. (“USSF” or “Defendant”) opposed the motion on October 16, 2017, and Plaintiff replied on October 23, 2017. (Def. Opp'n to Pl. Mot. (“Def. Opp'n”), Docket Entry No. 27; Pl. Reply to Def. Opp'n to Pl. Mot. (“Pl. Reply”), Docket Entry No. 30.) The Court heard oral arguments on October 31, 2017.[2] Although the Court finds that Plaintiff has shown irreparable harm, that the balance of hardships tips in its favor, and that an injunction would not harm the public interest, because as set forth below, the Court finds that Plaintiff has not made a clear showing of entitlement to relief, the Court denies Plaintiff's motion for a preliminary injunction.

         I. Background

         Plaintiff NASL is a men's professional soccer league located in the United States and Canada.[3] (Compl. ¶ 2.) NASL formed in 2009 when several teams broke away from the United Soccer Leagues, another men's professional league, due to differing visions. (Id. ¶ 77; Stefan Szymanski Decl. in Supp. of Pl. Mot. (“Szymanski Decl.”) ¶ 76, Docket Entry No. 3-3.) At that time, the United Soccer Leagues consisted of two divisions, USL First and Second Divisions (“USL-1” and “USL-2” respectively). (Sunil K. Gulati Decl. in Supp. of Def. Opp'n to Pl. Mot. (“Gulati Decl.”) ¶ 113, Docket Entry No. 26-1.) After the formation of the NASL, the remaining teams in the United Soccer Leagues later created the current existing United Soccer League Pro (“USL”). (Id.) From its inception, NASL has been organized under a club-centric model with each individual team retaining ownership and decision-making power. (Compl. ¶¶ 9, 77.)

         Defendant USSF is a non-profit, membership organization which serves as the governing body for soccer in the United States. (Id. ¶ 16; Pl. Mem. at 1.) USSF asserts that it derives its authority to govern professional soccer from Fédération Internationale de Football Association (“FIFA”), a private international soccer federation.[4] (Compl. ¶¶ 16, 59.) USSF also serves as the national governing body for U.S. Olympic and amateur soccer under the Ted Stevens Olympic and Amateur Sports Act (“Stevens Act”). (Id. ¶ 59 n.3.) In both capacities, USSF's stated mission is to “make soccer, in all its forms, a preeminent sport in the United States and to continue the development of soccer at all recreational and competitive levels.” (Steven R. Peterson Decl. in Supp. of Def. Opp'n to Pl. Mot. (“Peterson Decl.”) ¶ 44, Docket Entry No. 26-6.) The USSF membership is divided primarily into four categories: (1) a Youth Council, representing the interests of youth soccer; (2) an Adult Council, representing the interests of amateur soccer; (3) a Professional Council, representing the interests of professional leagues that are members of USSF; and (4) an Athlete's Council, representing soccer athletes. (Gulati Decl. ¶ 33.) These four councils, along with a few other eligible voters, make up the National Council, the legislative body of USSF. (Id. ¶¶ 32-35.)

         USSF adopts, amends and applies the Professional League Standards (“PLS”), a set of requirements for professional soccer leagues seeking Division I, II, or III designation in the United States. Similar to the structure of the National Collegiate Athletic Association (“NCAA”), Division I status is the most desirable. (See Pl. Mem. at 2.) Division I status signifies the highest level of competition and overall status, conferring several competitive and financial benefits, including better positioning in international competitions and higher-quality sponsorships. (Compl. ¶¶ 41, 62- 63.) NASL asserts that USSF adopted and applied the PLS in a discriminatory manner as part of a conspiracy to entrench Major League Soccer, LLC (“MLS”), a men's soccer league with longstanding ties to Defendant, and USL as the sole Division I and II soccer leagues in the United States, respectively.[5] (Id. ¶¶ 2, 4, 7, 23, 52, 122.)

         a. Development of MLS and ties to USSF

         Professional “football” or soccer has had a long, troubled history in the United States. While USSF itself was initially formed in 1913 in part in combination with the American Football Association, an organization “compromised principally of professional leagues and teams, ” professional soccer leagues in the United States have failed to maintain lasting success. (Gulati Decl. ¶¶ 48, 69.) Until the 1990s, there were numerous leagues and teams, with the original North American Soccer League (“Original NASL”) being most prominent.[6] (Id. ¶ 48; Compl. ¶ 70.) Formed in 1968, the Original NASL folded in 1984, leaving a void in top-tier professional soccer leagues in the United States. (Compl. ¶ 70; Gulati Decl. ¶ 48.)

         In 1988, FIFA awarded USSF the right to host the 1994 FIFA World Cup in the United States. (Gulati Decl. ¶ 50.) In exchange, FIFA demanded that USSF “facilitate the development of a sustainable first division outdoor professional men's soccer team.” (Id. ¶ 50; Compl. ¶¶ 71-72.) With this mandate, USSF eventually formed World Cup USA 94 (“USA 94”), a separate legal entity, which was tasked with establishing first division professional soccer in the United States. (Gulati ¶¶ 52-54.) After review of plans submitted by three groups, the USSF Board of Directors (the “Board”) selected Major League Professional Soccer, Inc. (“MLPS”), an entity backed by Alan I. Rothenberg, the then-President of USSF, to develop the league. (Id. ¶¶ 54, 90; Compl. ¶¶ 71-74.) After the 1994 World Cup, MLPS was reorganized into MLS. (Gulati Decl. ¶ 58.) With the help of a five-million-dollar loan from the United States Soccer Foundation, an entity created to manage the assets generated from the 1994 World Cup, MLS began league play in 1996. (Id. ¶¶ 56-59, 65; Compl. ¶ 74.) Given soccer's lack of popularity in the United States, USSF prioritized “stability and the avoidance of consumer confusion” in helping MLS take hold. (Gulati Decl. ¶ 64.) Thus, USSF made a conscious decision “to not sanction any other league as a first division (Division I) men's professional outdoor league until MLS had finished its second full season in 1997 - to give it a ‘runway' of sorts.” (Id. ¶ 64.) MLS began league play with ten teams in 1996 and has operated continuously as a Division I league. (Id. ¶ 65; Compl. ¶ 21.) In contrast to NASL, MLS began play under a single-entity structure, reserving ownership and management power in the league itself. (Compl. ¶ 75.)

         MLS and USSF have also maintained a business relationship, most notably through Soccer United Marketing (“SUM”), the marketing affiliate for MLS. (Id. ¶¶ 22, 32; Gulati Decl. ¶ 227.) In 2004, after “negotiations that were conducted at arms-length, [and] were lengthy and occasionally testy, ” USSF granted SUM sponsorship and broadcast rights to the Men's and Women's National Team games over which it controls.[7] (Gulati Decl. ¶ 229.) These rights were then “bundle[d]” with MLS' rights to obtain a much more lucrative sponsorship and broadcast deal than MLS and Defendant could have gained standing alone. (Id. ¶ 230.) SUM negotiated an eight-year, $720 million broadcasting agreement with ESPN in 2014 for USSF's and MLS' joint package to run through 2022. (Compl. ¶ 106.) In 2015, USSF extended its marketing relationship with SUM for another eight-years.[8] (Gulati Decl. ¶ 231.)

         b. History of PLS and governance structure of USSF

         The PLS were first developed in 1995, a year prior to MLS' inaugural season.[9] (Id. ¶¶ 74, 78.) “The Division I PLS were adopted in 1995 and the Division II and III PLS were adopted in 1996.” (Id. ¶ 78.) The PLS were revised in 2008, 2010 (for only Division II) and in 2014. (Id. ¶ 78; Szymanski Decl. ¶ 63.) There were also proposed changes in 2015 that were never implemented due to objections by NASL. (Gulati Decl. ¶ 78.)

         Since 2008, the Professional League Standard Task Force (the “Standard Task Force”) has been responsible for reviewing and proposing amendments to the PLS. (Id. ¶ 79.) The Standard Task Force is comprised of individuals that USSF believes are “familiar with professional soccer, ” excluding Board members and others “then-associated with any professional leagues.” (Id. ¶ 79.) The Standard Task Force's recommendations are first submitted to the “then-existing” professional leagues for review and comment. (Id. ¶ 80.) After reviewing the comments provided by the leagues, the Standard Task Force provides the Board with a final set of proposed amendments. (Id. ¶ 80.) The Board then reviews and votes on the proposals, but excludes from voting all members who have a “then-current relationship” with any professional leagues. (Id. ¶ 81.)

         Since at least 2009, USSF has required professional leagues to apply annually for a divisional designation. (Id. ¶ 108.) As part of this process, the leagues must submit an “annual report, ” including “the status of compliance” with the PLS, requests and reasons for any waivers if necessary, and a plan to fully comply. (Id.) These reports and applications are submitted to the Professional League Task Force (the “Application Task Force”) for review. (Id. ¶ 109.) After review, the Application Task Force submits its recommendation for approval or denial to the Board. (Id. ¶ 111.)

         The Board, which ultimately votes on amendments to and applications of the PLS, consists of fifteen directors. (Id. ¶ 43.) The Board is comprised of a cross-section of soccer interests in the United States, including representatives of athletes, amateurs, and professionals. (Id.) The National Council elects three independent directors, in addition to the USSF President and Vice President. (Id. ¶¶ 43-44.) The professional leagues officially have two votes on the Board in the form of the Chairman of the Professional Council and one additional Professional Council delegate. (Id. ¶ 43.) Given the voting structure of the Professional Council, which considers the number of teams and season attendance at games for each league, MLS has had the voting power to control who represents the Professional Council on the Board. (Compl. ¶ 17; Roger Pielke, Jr. Decl. in Supp. of Pl. Mot. (“Pielke Decl.”) ¶¶ 32, 58, Docket Entry No. 30-25.) Plaintiff asserts that MLS has thus controlled the official recommendations made by the Professional Council to the Board with regard to its divisional designation. (Compl. ¶ 17.) Plaintiff also contends that given the personal ties between USSF and MLS, the latter has been able to exert influence on the Board in a more informal manner. (Id. ¶¶ 18-19.)

         c. Amendments to the PLS

         The PLS operated in its original form from 1996 to 2008. (Gulati Decl. ¶ 78.) In 2008, however, Sunil Gulati, the then-USSF President, asked Burton Haimes, a Board member elected by the Youth Council, to form the Standard Task Force to “revisit” the standards. (Id. ¶ 82.) After review, the Standard Task Force proposed amendments to the “time zone requirement” which had previously required Division I leagues to operate in at least three time zones and Division II leagues to do so in at least two time zones. (Id.) The proposed change required the time zones be “in the continental United States.” (Id.; Compl. ¶ 125.) The proposal was adopted by the Board after review and comment by the then-existing professional leagues. (Gulati Decl. ¶ 86.)

         In 2010, in response to the “issues created by NASL and USL-1, ” Gulati appointed another Standard Task Force to revisit the Division II PLS. (Id. ¶ 90.) This time the Standard Task Force recommended that the Division II PLS be revised to require “each team to post a $750, 000 performance bond, with a league maximum of $15 million, ” to cover the cost of a team's operations in case it defaulted mid-season. (Id. ¶ 91.) The individual team bond could be reduced to $500, 000 and the league maximum to $10 million if all the teams agreed to make the bonds joint and several. (Id.) These proposals were adopted by the Board. (Id. ¶ 93.)

         Sometime in “late 2012, ” USSF decided to take a more “comprehensive review” of the PLS because “the sport of soccer [had] beg[u]n to experience growth and momentum.” (Id. ¶ 94; Steven Davidoff Solomon Decl. in Supp. of Def. Opp'n to Pl. Mot. (“Solomon Decl.”) ¶ 73, Docket Entry No. 26-7.) However, before changes were implemented, NASL announced expansion plans in mid-2013. (Compl. ¶ 134.) A few months later, on November 18, 2013, USSF officially announced that it would be revising the PLS. (Id.) While the Standard Task Force proposed a number of amendments, those most relevant to this dispute are as follows: (1) increasing the minimum number of teams from ten to twelve, with fourteen required by year three in Division I; (2) requiring teams to occupy three time zones in the continental United States, specifically for the first time in the Eastern, Central and Pacific time zones in Division I and Division II (after six years in operation); and (3) requiring each team to have a “principal owner” with an individual net worth of at least $40 million dollars, in addition to the existing $70 million combined net worth and $1 million per-team performance bond requirements.[10] (Id. ¶¶ 136-43; Gulati Decl. ¶ 96.) These proposals were provided to all the then-existing professional leagues for review and comment. (Gulati Decl. ¶ 97; Nov. 18, 2013 USSF Memo re: PLS, annexed to Gulati Decl. as Ex. 9.) In response, Bill Peterson, the then-Commissioner of NASL sent USSF a letter focusing primarily on Division II PLS that were adopted in 2010, asking for a reduction in the performance bond requirements for NASL teams and the league as a whole. (Id. ¶ 98; Nov. 27, 2013 NASL Letter re: PLS, annexed to Gulati Decl. as Ex. 10.) Without any further comments from the NASL, the proposed amendments were adopted by the Board on February 28, 2014. (Gulati Decl. ¶ 99; Compl. ¶ 136.)

         Despite the amendments in 2014, Gulati and USSF believed more changes were necessary as early as December 2014. (Compl. ¶ 147; Gulati Decl. ¶ 101.) Gulati “expressed [] concern” that the grant of too many waivers “to NWSL[11], NASL, and USL” were having a negative impact on the credibility of the PLS. (Gulati Decl. ¶ 101.) Accordingly, Gulati “ask[ed] the Standard Task Force to once again look at strengthening the standards.” (Id.) But before any amendments were proposed, NASL submitted a Division I application to USSF for the first time on May 31, 2015. (Compl. ¶ 146.) A few weeks later, on June 24, 2015, the Standard Task Force recommended a number of changes, the most relevant to this dispute are as follows: (1) increasing the minimum team requirement from twelve to sixteen for Division I; (2) strengthening the market size requirement so that seventy-five percent of the league's teams had to play in metropolitan markets of at least 2, 000, 000 people, doubling the previous 1, 000, 000 people requirement for Division I; (3) increasing the combined net worth requirement from $70 to $80 million per team for Division I; and (4) requiring each league to present annual plans for expansion and growth. (Id. ¶¶ 147-54; Gulati Decl. ¶ 104.) In response to these proposed changes, NASL submitted a letter that largely mirrors the Complaint in this dispute. (Gulati Decl. ¶ 141; July 23, 2015 NASL Letter re: PLS, annexed to Gulati Decl. as Ex. 18.) Following NASL's letter, the amendments were never submitted to the Board and never adopted.[12] (Gulati Decl. ¶ 105.)

         d. Challenges to the application of the PLS

         NASL has had designs to compete with MLS in Division I from the very beginning of its existence.[13] (See Compl. ¶¶ 126-27.) Despite such expectations, NASL first applied for Division II sanctioning for the 2010 season after breaking away from the United Soccer Leagues. (Id. ¶ 129; Gulati Decl. ¶ 114.) At the same time, the teams remaining in USL-1 also applied for a Division II designation. (Id.) The Application Task Force found both applications lacking, including the failure of both leagues to meet the minimum eight team requirement. (Gulati Decl. ¶ 116.) Both leagues were thus denied an independent Division II sanction for the 2010 season and instead were allowed to compete jointly in 2010 as a USSF-run league under a Division II designation. (Compl. ¶¶ 129, 133.)

         NASL applied for an independent Division II sanction for the 2011 season. (Gulati Decl. ¶ 118.) Despite NASL's failure to comply with all of the PLS Division II requirements, the Board approved the Application Task Force's recommendation to grant NASL “provisional” membership and sanction as a Division II league. (Id.) This provisional status was revoked, however, after questions arose regarding the financial viability of several NASL teams. A month after USSF revoked NASL's Division II designation, the NASL re-applied, despite failing to comply with the PLS. (Id.) The Board again granted NASL a “provisional” Division II status for the 2011 season. (Id. ¶¶ 120, 125.) During this time, USSF granted USL Division III status. (Id. ¶ 119.)

         In 2011, Plaintiff applied to change its “provisional” Division II status to full membership. Despite NASL's failure to comply with the PLS, the Board adopted the Application Task Force's recommendation to grant the application with various waivers. (Id. ¶¶ 126-27; Compl. ¶ 134.) At the same time, the Board re-sanctioned MLS as a Division I league and USL as a Division III league, both without any waivers. (Gulati Decl. ¶ 127.)

         The following year, in 2012, the Board again granted NASL's application for Division II status with the necessary waivers. (Id. ¶¶ 128-29.) At the same time, the Board re-sanctioned MLS with a single waiver and re-sanctioned USL without any waivers. (Id. ¶ 129.) In contrast, in 2013, NASL's application was granted without any waivers while MLS and USL were each approved with the need for several team waivers. (Id.) In 2014, the Board re-sanctioned MLS without any waivers and sanctioned both NASL and USL with several team waivers. (Id.)

         On May 31, 2015, NASL submitted its first and only application for Division I status. (Compl. ¶ 146; Gulati Decl. ¶ 137.) In its application, NASL asserted that it satisfied all Division I standards except for those that it deemed illegitimate and anticompetitive. (Compl. ¶ 146; Gulati Decl. ¶ 138.) NASL thus requested waivers for the requirements it did not meet. (Compl. ¶ 146.) On October 30, 2015, NASL sent a letter to USSF again reiterating its request for a Division I sanction. (Gulati ¶ 149; Oct. 30, 2015 NASL Letter re: PLS and Division I Sanction, annexed to Gulati Decl. as Ex. 24.) USSF responded on November 6, 2015 by stating that it would consider NASL's letter as a request for necessary waivers to obtain a Division I sanction. (Gulati Decl. ¶ 150.) NASL later requested an opportunity to give a presentation to the Application Task Force on the merits of its application, including the illegitimacy of the parts of the PLS it did not meet, eventually making its presentation on December 5, 2015. (Id. ¶¶ 155-56; Nov. 23, 2015 NASL Letter re: Application Task Force, annexed to Gulati Decl. as Ex. 30.) On January 13, 2016, the Board granted NASL the opportunity to plead its case for Division I sanctioning to the Board. (Id. ¶ 163.) At the same time as the discussion over the PLS, the parties were also regularly communicating about NASL's relationship with Traffic Sports USA, Inc. (“Traffic Sports”), an entity with “substantial ownership interest in the [NASL] as well as a financial interest in several NASL teams.” (Id. ¶¶ 124, 144.) Traffic Sports had been indicted for “racketeering, conspiracy, money laundering and fraud” a few days before NASL had submitted its Division I application. (Id.) After discussion and negotiation on both issues, the Board finally voted to reject NASL's Division I application on March 8, 2016.[14] (Id. ¶¶ 169-70.) The Board had previously already approved Division II sanctioning for NASL with the necessary waivers on December 6, 2015. (Id. ¶ 158.)

         Unlike 2015, NASL only requested a Division II sanction in 2016, seeking three waivers. (Id. ¶ 185; Compl. ¶ 179.) NASL had suffered several setbacks in 2016, including the defection of several teams to the USL, and financial difficulty for others.[15] (Gulati Decl. ¶¶ 176, 180-81.) There was concern that NASL would struggle to field an eight team league for 2017. (Id. ¶¶ 180, 189.) Given these issues, representatives for the NASL requested that the Board delay its consideration of the divisional status of the NASL. (Id. ¶ 187.) Due to these and other concerns, the Application Task Force recommended that NASL's application for Division II status be rejected. (Id. ¶ 195; Compl. ¶ 179.) During this time, the Application Task Force also recommended that USL's Division II application be rejected. (Gulati Decl. ¶ 195.) Despite these recommendations, the Board voted to grant both leagues a provisional sanction for Division II subject to several conditions, including a showing of improvement. (Id. ¶ 203; Compl. ¶¶ 180-81.)

         In August of 2017, both Plaintiff and USL submitted their applications to the Application Task Force for 2018 sanctioning. (Gulati Decl. ¶ 207; Letter re: 2018 Division II Application (“2018 Application Letter”), annexed to Gulati Decl. as Ex. 55; Compl. ¶ 183.) NASL's application sought two waivers for (1) the minimum team requirement and (2) the time zone requirement to have teams in the Eastern, Central and Pacific time zones. (Compl. ¶¶ 183-85.) NASL alleged that it was in “advanced discussions” with various potential ownership groups. (Gulati Decl. ¶ 208.) However, NASL did not provide much detail as to these discussions and conceded that two of its eight existing teams had not committed to return, (id.; 2018 Application Letter annexed to Gulati Decl. as Ex. 55.), and Defendant later discovered that the North Carolina team had been wavering in its commitment. (Id.) USL also requested waivers but its requests were “team-specific.”[16] (Id. ¶ 210.) Following a presentation by NASL on September 1, 2017, the Board voted to deny NASL Division II status for 2018. (Id. ¶ 221; Compl. ¶ 186.) In contrast, the Board gave USL thirty days to strengthen its application, potentially with the help of as many as twenty waivers.[17] (Gulati Dec. ¶ 221; Compl. ¶ 187.) Both decisions were communicated to the respective leagues on September 3, 2017. (Compl. ¶ 186; Gulati Decl. ¶ 222.)

         II. Discussion

         a. Standard of Review

         “A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). The purpose of a preliminary injunction is to “preserve the relative positions of the parties until a trial on the merits can be held.” Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981). “A party seeking a preliminary injunction must ordinarily establish (1) irreparable harm'; (2) ‘either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits of its claims to make them fair ground for litigation, plus a balance of the hardships tipping decidedly in favor of the moving party'; [(3) that the balance of hardships tips in its favor]; and ([4]) ‘that a preliminary injunction is in the public interest.'” New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 650 (2d Cir. 2015), cert. dismissed sub nom. Allergan PLC v. New York ex. rel. Schneiderman, 136 S.Ct. 581 (2015) (citation omitted); Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887, 895 (2d Cir. 2015). However, a heightened standard is appropriate where: “(i) an injunction is ‘mandatory, ' or (ii) the injunction ‘will provide the movant with substantially all the relief sought and that relief cannot be undone even if the defendant prevails at a trial on the merits.'” New York ex rel. Schneiderman, 787 F.3d at 650 (citation omitted). A mandatory injunction may be granted “only upon a clear showing that the moving party is entitled to the relief requested, or where extreme or very serious damage will result from a denial of preliminary relief.”[18] Tom Doherty Assocs., Inc. v. Saban Entm't, Inc., 60 F.3d 27, 34 (2d Cir. 1995) (citation omitted).

         Here, the heightened standard applies because Plaintiff requests a mandatory injunction seeking to “alter rather than maintain the status quo.”[19] New York Civil Liberties Union v. New York City Transit Auth., 684 F.3d 286, 294 (2d Cir. 2012). Defendant's divisional designation is granted on an annual basis. (Gulati Decl. ¶ 108.) Although designated as a Division II league for 2017, Plaintiff has already been denied Division II status for 2018. (Compl. ¶ 186; Gulati Decl. ¶ 222.) Plaintiff's requested relief would disrupt the status quo by effectively requiring Defendant to reverse its previous denial. With or without court intervention, Plaintiff required Defendant to act affirmatively in its favor to receive any designation in 2018. See also Jessup v. Am. Kennel Club, Inc., 862 F.Supp. 1122, 1128 (S.D.N.Y. 1994) (applying heightened standard for mandatory injunctions where plaintiff sought to restore former standards). Under these circumstances, Plaintiff's request is more analogous to a request for reinstatement of previously terminated benefits. See, e.g., Lawrence v. Town of Brookhaven Dep't of Hous., Cmty. Dev. & Intergovernmental Affairs, No. 07-CV-2243, 2007 WL 4591845, at *6 (E.D.N.Y. Dec. 26, 2007) (holding request to “continue” previously terminated Section 8 benefits to be a mandatory injunction) aff'd, 393 Fed.Appx. 791 (2d Cir. 2010); Union Cosmetic Castle, Inc. v. Amorepacific Cosmetics USA, Inc., 454 F.Supp.2d 62, 68 (E.D.N.Y. 2006) (finding reinstatement of previously terminated business relationships with plaintiffs would constitute mandatory injunction); Brown v. New York City Health & Hosps. Corp., No. 96-CV-0156, 1996 WL 68558, at *2 (E.D.N.Y. Feb. 5, 1996) (finding request to reinstate plaintiffs to prior positions to be a request for mandatory injunction).

         b. Irreparable harm

         Irreparable harm is “the single most important prerequisite for the issuance of a preliminary injunction, ” requiring the movant to show such injury is “likely” before the other elements may be considered.[20] Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) (citation omitted); Rodriguez ex rel. Rodriguez v. DeBuono, 175 F.3d 227, 234 (2d Cir. 1999). To establish irreparable harm, “[p]laintiffs must demonstrate that absent a preliminary injunction they will suffer an injury that is neither remote nor speculative, but actual and imminent, and one that cannot be remedied if a court waits until the end of trial to resolve the harm.” Id. (citation omitted). Absent “extraordinary circumstances, ” injunctions are also unavailable where there is an “adequate remedy at law, such as money damages. Id. (citation omitted). Courts have “found irreparable harm where a party is threatened with the loss of a business, ” particularly when the “very viability” of the business is at risk. Tom Doherty, 60 F.3d at 37-38.

         Plaintiff asserts several theories as to the irreparable harm it will suffer. First, Plaintiff alleges that it will likely cease to exist absent injunctive relief. (Pl. Mem. at 16.) In support, several current team owners have submitted declarations attesting to Plaintiff's dire circumstances. (See Riccardo Silva Reply Decl. in Supp. of Pl. Mot. (“Silva Decl.”) ¶¶ 4-5, 8, 11, Docket Entry No. 30-21; Capriotti II Reply Decl. in Supp. of Pl. Mot. (“Capriotti II Decl.”) ¶¶ 4-5, 8, 11, Docket Entry No. 30-22; Robert J. Watkins Reply Decl. in Supp. of Pl. Mot. (“Watkins Decl.”) ¶¶ 4-5, 8, 11, Docket Entry No. 30-23.) The owners allege that Division III status is fundamentally at odds with the Plaintiff's business model. (See Silva Decl. ¶ 8; Capriotti II Decl. ¶ 8; Watkins Decl. ¶ 8.) Division III status allegedly does not provide sufficient revenues to continue operations “in a manner consistent with [Plaintiff's] plans, ” likely leading to the departure or closure of several teams. (See Silva Decl. ¶ 8; Capriotti II Decl. ¶ 8; Watkins Decl. ¶ 8; Rocco B. Commisso Decl. in Supp. of Pl. Mot. (“Commisso Decl.”) ¶ 26, Entry Docket No. 3-2; Pl. Reply in Supp. of Pl. Mot. (“Pl. Reply”) 3, Docket Entry No. 30.)

         Defendant disagrees and claims that the “USL has shown that a league can not only survive, but thrive, as a Division III league.” (Def. Opp'n at 24.) Plaintiff asserts that USL's success as a Division III league may be attributable to factors that are inapplicable to NASL, including a “reserve-league relationship with MLS.”[21] (Pl. Reply at 4.) Further, Defendant asserts throughout the record that Plaintiff has been on shaky financial ground. (See Gulati Decl. ¶¶ 172, 180-81). In addition, Defendant itself acknowledges the importance of its divisional designations. (See Compl. ¶ 63; Def. Opp'n at 25 (discussing importance of maintaining credibility of the PLS)); October 31, 2017 Hr'g Tr. 53:13 (“Certainly a sanction is beneficial.”). Defendant thus understands that a drop in divisional status may indeed “deal a death blow to the NASL.”[22] (See Compl. ¶ 10.) Given the likely total loss of its business, Plaintiff has established irreparable harm. See also Galvin v. New York Racing Ass'n, 70 F.Supp.2d 163, 170 (E.D.N.Y. 1988) (“But the loss of business need not be total, so long as it is so great as to seriously compromise the company's ability to continue in its current form.”), aff'd sub nom. Galvin v. New York Racing Ass'n, Inc. (NYRA), 166 F.3d 1200 (2d Cir. 1998).[23]

         Relatedly, Plaintiff also asserts that it will lose the interest of potential investors. (Pl. Mem. at 16.) In support of this argument, Plaintiff submitted letters of intent from six potential new teams interested in joining the NASL in 2018. (Letters of Intent, annexed to Rocco B. Commisso Reply Decl. in Supp. of Pl. Mot. (“Commisso Reply Decl.”), Docket Entry No. 32, as Exs. B-G.) All six letters of intent expressly condition their commitment on Plaintiff retaining Division II status. Based on these contingent commitments, Plaintiff has demonstrated irreparable harm on the basis of potential loss of investors. See Levinson v. Cello Music & Film Sys., Inc., 199 F.3d 1322 (2d Cir. 1999) (discussing possibility of irreparable harm if “potential investors” had been deterred by the uncertainty caused by the issue in dispute); N. Am. Soccer League v. Nat'l Football League, 465 F.Supp. 665, 672 (S.D.N.Y. 1979) (finding irreparable harm in part due to “chilling effect . . . upon potential new investors”). The loss of potential investors also supports Plaintiff's showing of irreparable harm based on total loss of business. Part of the reason Plaintiff pursued these teams is to stabilize its league structure.

         c. Clear showing of entitlement to relief

         i. Sherman antitrust section 1 standard

         Section 1 of the Sherman Act prohibits “[e]very contract, combination . . . or conspiracy” that unreasonably restraints trade.[24] 15 U.S.C.A. § 1; United States v. Apple, Inc., 791 F.3d 290, 320-21 (2d Cir. 2015) (“Although the Sherman Act, by its terms, prohibits every agreement ‘in restraint of trade, ' [the Supreme] Court has long recognized that Congress intended to outlaw only unreasonable restraints.”) (citing State Oil Co. v. Khan, 522 U.S. 3, 10 (1997), cert. denied, 136 S.Ct. 1376 (2016)). Thus, to succeed on a Section 1 claim, “a plaintiff must prove that the common scheme designed by the conspirators ‘constituted an unreasonable restraint of trade either per se or under the rule of reason.'” Apple, 791 F.3d at 321 (citation omitted). Courts “presumptively” apply the rule of reason which requires consideration of “all of the circumstances of a case” in deciding whether the challenged practice violates Section 1. See Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006); Cont'l T. V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49-50 (1977). “Per se rules of illegality are appropriate only when they relate to conduct that is manifestly anticompetitive.” Cont'l T.V., 433 U.S. at 50. Given their potential for “significant procompetitive benefits, ” standard-setting by private associations are typically evaluated under the rule of reason. Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 501 (1988). Here, Plaintiff concedes that a variation of the rule of reason should apply. (See Pl. Mem. at 19-23.) The Court, however, first addresses the threshold inquiry of the existence of a concerted action. See Am. Needle, Inc. v. Nat'l Football League, 560 U.S. 183, 191 (2010) (“[A]n arrangement must embody concerted action in order to be a ‘contract, combination . . . or conspiracy'” under [Section] 1”).

         ii. Concerted action

         A conspiracy in violation of Section 1 requires proof of “a conscious commitment to a common scheme designed to achieve an unlawful objective” demonstrated by “direct or circumstantial evidence that tends to exclude the possibility of independent action by the [parties].'”[25] Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768 (1984). While evidence of “parallel conduct can be probative . . . [of] an antitrust conspiracy, ” such evidence “alone will not suffice.”[26] Apex Oil Co. v. DiMauro, 822 F.2d 246, 253 (2d Cir. 1987). “Accordingly, [] a plaintiff must show the existence of additional circumstances, often referred to as plus factors, which, when viewed in conjunction with the parallel acts, can serve to allow a fact-finder to infer a conspiracy.” Apple, 791 F.3d at 315 (citation and internal quotation marks omitted). “These ‘plus factors' may include: a common motive to conspire, evidence that shows that the parallel acts were against the apparent individual economic self-interest of the alleged conspirators, and evidence of a high level of interfirm communications.” Mayor of Baltimore, Md. v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013) (citation omitted). “[T]hese plus factors are neither exhaustive nor exclusive, but rather illustrative of the type of circumstances which, when combined with parallel behavior, might permit a jury to infer the existence of an agreement.” Id. at 136 n.6.

         Plaintiff first claims that the adoption and changes to the PLS are express agreements in and of themselves sufficient to satisfy the concerted action prong of Section 1.[27] (See Pl. Reply at 4-5 (“[T]he USSF Standards Task Force agree upon new Standards, and the USSF's Board members then vote (and thus agree) on whether to promulgate them.”); see also Compl. ¶ 16 (“When these members act together with USSF to enact Professional League Standards, they are entering into contracts, combinations and conspiracies as those terms are defined under the Sherman Act.”).)

         Although Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 500 (1988), provides some support that any standard promulgated by a private standard-setting organization is inherently “an implicit agreement not to trade, ” the Second Circuit has cautioned that “every action by a trade association is not concerted action by [its] members.” AD/SAT, Div. of Skylight, Inc. v. Associated Press, 181 F.3d 216, 234 (2d Cir. 1999). “Consistent votes, ” absent additional evidence, is best viewed as “parallel conduct . . . equally consistent with legal behavior.” SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 437 (4th Cir. 2015), as amended on reh'g in part (Oct. 29, 2015), cert. denied, 136 S.Ct. 2485 (2016); see also Jessup, 862 F.Supp. at 1129 (observing the weakness of antitrust claims where the plaintiff failed to “identify or refer to specific acts or activities suggesting any illegal agreement or concerted action by Defendants” to revise the challenged standard); Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266, 273 (5th Cir. 2008) (citing Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284, 293-94 (5th Cir. 1988), for proposition “that though a trade association naturally involves collective action by competitors, it is not by its nature a ‘walking conspiracy'”).

         At the very least, Plaintiff must provide evidence that there was an agreement to agree to vote a particular way, compromising each individual Board member's independence.[28] See Indian Head, Inc. v. Allied Tube & Conduit Corp., 817 F.2d 938, 941 (2d Cir. 1987) (finding that the defendants “admitted[ly] . . . agreed” to oppose the plaintiff's proposal by “subverting the consensu[s] standard rules and procedures” of the rule-making association) (emphasis added) aff'd, 486 U.S. 492 (1988); see also Klickads, Inc. v. Real Estate Bd. of New York, Inc., No. 04-CV-8042, 2007 WL 2254721, at *4 (S.D.N.Y. Aug. 6, 2007) (whether defendants “consciously committed themselves” “to exclude plaintiff” through trade association rules and decisions a question of fact for jury) adhered to on denial of reconsideration sub nom. Klickads, Inc. v. Real Estate Bd. of New York, No. 04-CV-8042, 2007 WL 2981422 (S.D.N.Y. Oct. 9, 2007). Plaintiff fails to provide any such direct evidence.

         However, Plaintiff offers circumstantial evidence in support of a concerted action. See Ross v. Citigroup, Inc., 630 Fed.Appx. 79, 82 (2d Cir. 2015), as corrected (Nov. 24, 2015) (holding that conspiracies “m[ay] be proven though ‘inferences that may fairly be drawn from the behavior of the alleged conspirators.'”) (citation omitted). Viewing the votes on the adoption and amendments of the standard as “parallel conduct, ” Plaintiff's circumstantial evidence is assessed as potential “plus factors.”[29] To make its case, Plaintiff relies on an alleged conflict of interest arising from Defendant's relationship with SUM, the alleged arbitrary adoption, amendment, and application of the PLS, including most notably the initial decision to make MLS the only Division I league. (See Pl. Reply at 5-7.)

         1. PLS revision process

         While there is ample evidence of a conflict of interest between Defendant and MLS, Plaintiff fails to present sufficient evidence of undue influence in the actual standard-setting process, i.e., the process pursuant to which the PLS is revised. See Anderson News, L.L.C. v. Am. Media, Inc., 123 F.Supp.3d 478, 500 (S.D.N.Y. 2015) (“Motive to conspire may be inferred where the parallel ‘action taken [by defendants] had the effect of creating a likelihood of increased profits.'”) (citation omitted). To discredit the adequacy of the current procedures, Plaintiff points to, among other things, MLS' dominance of the Professional Council, an alleged loophole for “affiliated” member entities like MLS in the Defendant's Conflict of Interest Policy, and the continuing formal and informal influence of individuals with ties to MLS.[30] (Pielke Decl. ¶¶ 32, 45-47, 51, 54, 55-58) Plaintiff also asserts that Defendant's ties to MLS through SUM are an overarching influence on “any Board members, whether or not affiliated with MLS, ” in their decision-making related to the ...


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