MLB Reply Brief in Support of Motion for Summary Judgment

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

THOMAS LAUMANN, ROBERT SILVER, GARRETT TRAUB, and DAVID DILLON, representing themselves and all others similarly situated,

Plaintiffs,

v.

NATIONAL HOCKEY LEAGUE et al.,

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) )

12-cv-1817 (SAS)

FERNANDA GARBER, MARC LERNER, DEREK RASMUSSEN, ROBERT SILVER, GARRETT TRAUB, and PETER HERMAN representing themselves and all others similarly situated,

Plaintiffs,

v.

OFFICE OF THE COMMISSIONER OF BASEBALL et al.,

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) )

12-cv-3704 (SAS)

ECF Cases

Electronically Filed

REPLY MEMORANDUM OF LAW IN SUPPORT OF NHL DEFENDANTS AND MLB DEFENDANTS MOTIONS FOR SUMMARY JUDGMENT

Case 1:12-cv-03704-SAS-MHD Document 311 Filed 06/24/14 Page 1 of 26

TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................................................... iiTABLE OF ABBREVIATIONS ................................................................................................... viPRELIMINARY STATEMENT .....................................................................................................1ARGUMENT ...................................................................................................................................3

I. SUMMARY JUDGMENT FOR THE LEAGUES CAN BE GRANTED ON A QUICK LOOK OR FULL RULE OF REASON ANALYSIS ..................3

II. PLAINTIFFS FAIL TO RAISE ANY GENUINE ISSUES OF MATERIAL FACT ..................................................................................................4

III. THE LEAGUES HAVE THE RIGHT TO PREVENT MEMBERS FROM COMPETING WITH THE VENTURE PRODUCT ...............................................5

IV. THERE IS NO GENUINE DISPUTE THAT THE RESTRAINTS ARE ESSENTIAL TO THE NATIONAL CONTRACTS AND OOM PACKAGES ............................................................................................................6

V. THE LEAGUES ADDITIONAL PROCOMPETITIVE JUSTIFICATIONS ALSO ARE UNDISPUTED ....................................................7A. The Leagues Internal Rules Enable the Leagues and Their Clubs

to License Exclusive Telecast Rights ..........................................................7B. Incentivizing and Balancing Local and National Interests ..........................8C. Preventing Free-Riding ..............................................................................10D. Fostering Competitive Balance ..................................................................10

VI. PLAINTIFFS OFFER NO EFFECTIVE LESS RESTRICTIVE ALTERNATIVE ....................................................................................................12

VII. PLAINTIFFS FAIL TO OFFER ANY EVIDENCE OF ACTUAL HARM .........12VIII. THE BASEBALL EXEMPTION BARS ANTITRUST CLAIMS

CONCERNING MLBS VIDEO RULES AND STRUCTURES .........................15CONCLUSION ..............................................................................................................................18


ii

TABLE OF AUTHORITIES

Cases Page(s)

American Needle, Inc. v. National Football League, 560 U.S. 183 (2010) ...........................................................................................................11

Association of Independent Television Stations, Inc. v. College Football Association, 637 F. Supp. 1289 (W.D. Okla. 1986) .................................................................................5 Bragdon v. Abbott, 524 U.S. 624 (1998) ...........................................................................................................14 Brooke Group v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) ...........................................................................................................14 Capital Imaging Associates, P.C. v. Mohawk Valley Medical Associates, Inc., 996 F.2d 537 (2d Cir. 1993)...............................................................................................12 CDC Technologies, Inc. v. IDEXX Laboratories, Inc., 186 F.3d 74 (2d Cir. 1999)...................................................................................................3 Charles O. Finley & Co. v. Kuhn, 569 F.2d 527 (7th Cir. 1978) .............................................................................................15 Chicago Professional Sports Ltd. Partnership v. National Basketball Association, 95 F.3d 593 (7th Cir. 1996) ...............................................................................................10 Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) .........................................................................................................3 Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) .............................................................................................................4 In re Dewey Ranch Hockey, LLC, 414 B.R. 577 (Bankr. D. Ariz. 2009) ...................................................................................9 Dominguez v. UAL Corp.,

666 F.3d 1359 (D.C. Cir. 2012) .....................................................................................4, 14 Flood v. Kuhn,

407 U.S. 258 (1972) .....................................................................................................16, 17 Henderson Broad. v. Houston Sports Association,

541 F. Supp. 263 (S.D. Tex. 1982) ....................................................................................17


iii

General Electric Co. v. Joiner, 522 U.S. 136 (1997) .............................................................................................................4 Independent Entertainment Group, Inc. v. National Basketball Association,

853 F. Supp. 333 (C.D. Cal. 1994) ......................................................................................6 K.M.B. Warehouse Distributors, Inc. v. Walker Manufacturing Co.,

61 F.3d 123 (2d Cir. 1995)...................................................................................................3 Laumann v. National Hockey League,

907 F. Supp. 2d 465 (S.D.N.Y. 2012) ............................................................................3, 15 Madison Square Garden v. National Hockey League,

No. 07-cv-8455(LAP), 2007 WL 3254421 (S.D.N.Y. Nov. 2, 2007), affd, 270 F. Appx 56 (2d Cir. 2008).............................................................................................5, 6, 12

Major League Baseball v. Butterworth,

181 F. Supp. 2d 1316, affd, Major League Baseball v. Crist, 331 F.3d 1177 (11th Cir. 2003) ...........................................................................................................................15

Major League Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290 (2d Cir. 2008)...........................................................................4, 5, 10, 11, 12

McCoy v. Major League Baseball,

911 F. Supp. 454 (W.D. Wash. 1995) ..........................................................................15, 17 Meredith Corp. v. SESAC LLC,

No. 09-9177, 2014 WL 812795 (S.D.N.Y. Mar. 3, 2014) .................................................12 Morsani v. Major League Baseball,

79 F. Supp. 2d 1331 (M.D. Fla. 1999) ...............................................................................15 Murray v. National Football League,

1998 WL 205596 (E.D. Pa. 1998) .....................................................................................15 National Basketball Association v. SDC Basketball Club, Inc.,

815 F.2d 562 (9th Cir. 1987) ...............................................................................................9 National Collegiate Athletic Association v. Board of Regents of University of Oklahoma,

468 U.S. 85 (1984) .............................................................................................................11 New Orleans Pelicans Baseball v. Natl Assn of Profl Baseball Leagues,

1994 WL 631144 (E.D. La. 1994) .....................................................................................15 Piazza v. Major League Baseball,

831 F. Supp. 420 (E.D. Pa. 1993) ......................................................................................15


iv

Polygram Holding, Inc. v. Federal Trade Commission,

416 F.3d 29 (D.C. Cir. 2005) ...............................................................................................6 Race Tires America, Inc., et al. v. Hoosier Racing Tire Corp.,

614 F.3d 57 (3d Cir. 2010)...................................................................................................3 Radovich v. National Football League,

352 U.S. 445 (1957) .......................................................................................................2, 15 Raskin v. Wyatt Co.,

125 F.3d 55(2d Cir. 1997)....................................................................................................5 Rothery Storage & Van Co. v. Atlas Van Lines, Inc.,

792 F.2d 210 (D.C. Cir. 1986) .............................................................................................5 San Jos v. Office of the Commissioner of Baseball,

2013 WL 5609346 (N.D. Ca. 2013) ............................................................................15, 17 Saybolt v. Schreiber,

407 F.3d 34 (2d Cir. 2005).................................................................................................17 State of New York v. Anheuser-Busch, Inc.,

811 F. Supp. 848 (E.D.N.Y. 1993) ......................................................................................9 Sunbeam Television v. Nielsen Media Research,

711 F.3d 1264 (11th Cir. 2013) .........................................................................................15 Texaco, Inc. v. Dagher,

547 U.S. 1 (2006) .................................................................................................................6 In re Text Messaging Antitrust Litigation,

2014 U.S. LEXIS 68237 (N.D. Ill. 2014) ............................................................................5 Toolson v. New York Yankees, Inc.,

346 U.S. 356 (1953) ...........................................................................................................16 Toolson v. New York Yankees, Inc.,

1953 WL 78316 (1953) ................................................................................................16, 17 Trans Sport, Inc. v. Starter Sportswear, Inc.,

964 F.2d 186 (2d Cir. 1992).................................................................................................9 United States v. Penn-Olin Chemical Co.,

378 U.S. 158 (1964) .............................................................................................................5


v

United States Football League v. National Football League, 634 F. Supp. 1155 (S.D.N.Y. 1986) ...................................................................................16

Virgin Atlantic Airways Ltd. v. British Airways PLC,

257 F.3d 256 (2d Cir. 2001)...........................................................................................3, 12 Virgin Atlantic Airways Ltd. v. British Airways PLC,

69 F. Supp. 2d 571 (S.D.N.Y. 1999) ..................................................................................14 Wisconsin Interscholastic Athletic Association v. Gannett, Co.,

658 F.3d 614 (7th Cir. 2011) ...............................................................................................8

Statutes 15 U.S.C. 1294 ............................................................................................................................17

Legislative Materials Organized Professional Team Sports: Hearings on H.R. 5307, H.R. 5319, H.R. 5383,

H.R. 6876, H.R. 6877, H.R. 8023, and H.R. 8124 before the Antitrust Sub-Committee of the Senate Judiciary Committee, 85th Congress 101 (1957). .....................17

Organized Professional Team Sports: Hearings on S. 616 and S. 886 before the Sub-

Committee on Antitrust and Monopoly of the Senate Judiciary Committee, 86th Congress 69 (1959). ...........................................................................................................17

Professional Sports Antitrust Bill-1965: Hearings on S. 950 before the Sub-Committee

on Antitrust and Monopoly of the Senate Judiciary Committee, 89th Congress 160 (1965). ................................................................................................................................17

Other Authorities Araton, Harvey, Abandon Hope, Almost All Ye Who Enter the NBA Playoffs, N.Y. Times,

May 31, 2014. ....................................................................................................................11 Crawford, Gregory S. and Ali Yurukoglu, The Welfare Effects of Bundling in

Multichannel Television Markets, 102 Am. Econ. Rev. 643 (June 2012) .........................14 Horowitz, Ira, Sports Broadcasting, in Government and the Sports Business 275 (Roger

Noll ed., 1974) ...................................................................................................................16


vi

TABLE OF ABBREVIATIONS

NHL and MLB Defendants use the following abbreviations herein:

Bettman __ refers to the Declaration of Commissioner Gary B. Bettman.

Crumb __ refers to the Declaration of Patrick W. Crumb.

Feeney __ refers to the Declaration of Reagan E. Feeney.

Jones __ refers to the Declaration of Lawrence A. Jones.

Leonsis __ refers to the Declaration of Ted Leonsis.

Litner __ refers to the Declaration of Jon D. Litner.

MLB refers to the Office of the Commissioner of Baseball.

MLB Br. refers to the MLB Defendants Memorandum of Law in Support of Their Motion for Summary Judgment.

MLB SUF refers to MLB Defendants L.R. 56.1 Statement of Undisputed Facts.

MVPD refers to Multichannel Video Programming Distributor.

NHL refers to the National Hockey League.

NHL Br. refers to the NHL Defendants Memorandum of Law in Support of Their Motion for Summary Judgment.

NHL SUF refers to the NHL Defendants L.R. 56.1 Statement of Undisputed Facts.

Noll at __ refers to a page or range of pages within the Noll Declaration.

Opp. refers to Plaintiffs Memorandum of Law in Opposition to Defendants Motions for Summary Judgment.

Resp. ___ SUF refers to Plaintiffs response to a L.R. 56.1 Statement of Undisputed Facts.

RSN refers to regional sports network.

Selig __ refers to the Declaration of Commissioner Allan H. Bud Selig.

Tully __ refers to the Declaration of Christopher Tully.

Wildhack __ refers to the Declaration of John Wildhack.


1

PRELIMINARY STATEMENT

The material facts compelling judgment for the NHL and MLB Defendants (the Leagues)

are undisputed. Plaintiffs concede most of the pivotal facts and otherwise offer nothing but

inadmissible hearsay, conclusory assertions, and Dr. Nolls speculation. Lawyers and experts

cannot create factual issues, and Plaintiffs failure to adduce facts is fatal to their claims.

Judgment for the Leagues is compelled on multiple, independent grounds.

First, Plaintiffs concede that, as a matter of law, a lawful venture may restrict its members

from competing with the venture product. Plaintiffs do not challenge the legality or benefits of

bundled, League-wide out-of-market (OOM) and national network packages; their but-for

world depends on such packages continuing. Plaintiffs also admit that games are principally

exhibited by live telecast, every exhibition of a League game necessarily is a joint effort, and,

indeed, that the very same telecasts of League games that RSNs produce and distribute in-market

are pooled as the components of the Leagues OOM packages. Thus, whether sold as individual

club packages or as League-wide packages, live telecasts of League games are necessarily

venture products, and the League may lawfully restrict clubs from licensing such telecasts in

competition with the League packages.

Second, Plaintiffs do not dispute, factually, that national broadcasters have required territorial

restraints in their licenses. That makes the restraints essential to those venture products and

thus lawful.

Third, Plaintiffs do not genuinely contest the underlying facts of other long-established

business justifications. They concede same game broadcast exclusivity is standard and

procompetitive and agree that the Leagues telecast territories avoid overlapping telecasts of

the same gamei.e., preserve exclusivity. Plaintiffs ignore the Second Circuits summary

judgment decision in Trans Sport, which upheld territorial restrictions based on many of the

same justifications here, even assuming monopoly power. Plaintiffs also ignore the undisputed

facts and controlling law on preventing free-riding and promoting competitive balance, which

are judicially-established procompetitive rationales for professional sports leagues.


2

Each of the foregoing supports summary judgment on a quick look basis.

Fourth, even under full rule of reason scrutiny, summary judgment is still required. Plaintiffs

offer no less restrictive alternative, certainly none that meets all of the Leagues procompetitive

justifications. This is dispositive under Virgin Atlantic. Plaintiffs also do not dispute they must

prove consumers market wide would be better off without the alleged restraints, yet they offer

no evidence to carry that burden. Despite Plaintiffs assertions that they are not challenging

same game exclusivity (e.g., a clubs ability to grant an RSN an exclusive license to telecast

games played by that club), Plaintiffs entire case rests on the factually unsupported hypothesis

of Dr. Noll that, absent territories, live video exhibitions of every game played by every team

would be sold everywhere by at least two competing sellersthe RSNs (in individual team

packages) and the Leagues (in bundled packages of the very same RSN feeds being sold in the

team packages). Dr. Nolls speculative model eliminates telecast exclusivity for any game and

studiously avoids addressing the testimony from the market participants (Comcast, DirecTV,

FOX, or ESPN) that shows his model flies in the face of market realities. Dr. Nolls presumption

(that an RSN, which he assumes would distribute nationally, would give its same game

programming to a League to sell as part of a national, League-wide package in direct competition

with that RSN) is absurd and without factual predicate. Indeed, Plaintiffs point to no example in

television entertainment of a network being forced to sell its programming in competition with

itself.

Finally, with respect to the MLB Defendants, Plaintiffs cannot avoid decades of Supreme

Court precedent that exempts the business of baseballincluding its territorial telecast rules

and structuresfrom antitrust scrutiny. Nothing in the out-of-context snippets and quotes

Plaintiffs cite alters the legal conclusion that the exemption is an umbrella over baseball.

Radovich, 352 U.S. at 450-51 (emphasis added).


3

ARGUMENT

I. SUMMARY JUDGMENT FOR THE LEAGUES CAN BE GRANTED ON A QUICK LOOK OR FULL RULE OF REASON ANALYSIS

Plaintiffs misstate the parties respective burdens and this Courts authority to grant summary

judgment, whether under American Needles quick look paradigm or a full rule of reason

approach. Under a quick look analysis, even assuming Plaintiffs have met their initial burden,

Defendants may respond with evidence of procompetitive justifications.1 If the evidence shows,

without material dispute, the restraints are essential to the venture product or otherwise serve

well-recognized procompetitive virtues, the Court may decide as a matter of law that the

restraints are procompetitive. Less restrictive alternatives do not come into play under such an

analysis. Nor does a court weigh the undisputed procompetitive virtues.2 Because Plaintiffs

do not genuinely dispute the facts supporting the procompetitive virtues of the Leagues rules,

the Court may grant judgment for the Leagues on just such a quick look.

Even when a quick look is not applicable, the rule of reason does not automatically require

weighing of harms and benefits, as Plaintiffs suggest (Opp. at 29). Virgin Atlantic held that, in

the face of undisputed facts showing the procompetitive value of a restraint, a plaintiff cannot

survive summary judgment unless it proves a less restrictive alternative that meets the same

legitimate objectives of the restraint. Plaintiffs fail to do so here.

Finally, summary judgment must be granted if Plaintiffs have no evidence showing that

consumers have been harmed by the restraints.3 The Supreme Court confirmed in Comcast

Corp. v. Behrend, 133 S. Ct. 1426, 1433-34 (2013), that a but-for analysis is the fundamental

1 Laumann, 907 F. Supp. 2d at 473 n.73; NHL Br. at 8 (quick look cases for sports defendants). 2 E.g., Race Tires of Am., 614 F.3d at 80 (granting summary judgment under quick look). Plaintiffs effort to characterize Race Tires as a mere racing standard case (Opp. 37) ignores the relevant holding in that case that a quick look does not consider less restrictive alternatives. 3 E.g., Virgin Atlantic, 257 F.3d at 265 (even if plaintiff could meet initial burden of proof based on market power inferences, it lacked sufficient evidence to carry its ultimate burden to prove harm to consumers from alleged conduct; affirming summary judgment); K.M.B. Warehouse Distrib., at 127; CDC Tech., at 80-81.


4

way to define consumer harm allegedly flowing from a restraint. As a matter of law, however,

Plaintiffs cannot simply assume the current structure will continue if one of its underpinnings

territorially defined exclusive game licensingis destroyed.4

Summary judgment for the Leagues is required under these settled standards.

II. PLAINTIFFS FAIL TO RAISE ANY GENUINE ISSUES OF MATERIAL FACT

To avoid summary judgment, the opposing party must proffer admissible evidence that

set[s] forth specific facts showing a genuinely disputed factual issue that is material under the

applicable legal principles. Salvino, 542 F.3d at 310. Plaintiffs do not dispute many of the key

facts put forth by the Leagues.5 And in the vast majority of instances where Plaintiffs say they

dispute a fact, they cite no evidence, argue a proposition not presented, cite inadmissible

hearsay, or throw in patently meritless objections that terms (admitted elsewhere) are suddenly

vague or that executives cannot testify to the day-to-day realities of their businesses based on

decades of direct experience.6 None of this gamesmanship raises any genuine issue of fact.7

To the extent they cite anything in response to the Leagues L.R. 56.1 facts, Plaintiffs rely

almost exclusively on Dr. Noll. Tellingly, however, Dr. Noll does not address any of the moving

declarations and identifies no material fact in dispute, offering only his own speculations.8 This

raises no genuine issue of fact, as recently found regarding Dr. Nolls opinions in another

4 Dominguez, 666 F.3d at 1364 (plaintiff could not even show standing, let alone defeat summary judgment, absent concrete facts showing business model would continue absent restraints). 5 E.g., Resp. MLB SUF 1, 7, 9, 61, 72; Resp. NHL SUF 1, 4. 6 E.g., Resp. MLB SUF 2; Resp. MLB SUF 132 & 174 (citing internet reports on non-party contracts and video products); Resp. MLB SUF 7 (admitted) and 11 (disputed as vague); Resp. MLB SUF 54 (objecting that Comm. Selig cannot testify to fact of MLBs efforts to enhance competitive balance). Plaintiffs also fill their brief with hearsay and lawyer assertions concerning alleged licensing terms of non-party leagues and aggregators such as Netflix and Hulu. E.g., Opp. at nn.18, 23, 25, 27, 30 & 31. There is no testimony or admissible evidence of any of this, nor the terms and circumstances of the licenses (such as whether networks retain exclusive first run rights on content licensed for later viewing on Hulu or Netflix). 7 Salvino, 542 F. 3d at 314-15 (improper objections and responses raise no genuine issue). 8 Though Dr. Nolls testimony is inadmissible for the reasons set forth herein (among others), Defendants also reserve the right to raise challenges under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), and General Elec. Co. v. Joiner, 522 U.S. 136 (1997).


5

antitrust case.9 As Salvino held, expert[] opinions that are without factual basis, based on

speculation and conjecture, or conclusory are inappropriate material for consideration on a

motion for summary judgment and insufficient to defeat summary judgment.10

III. THE LEAGUES HAVE THE RIGHT TO PREVENT MEMBERS FROM COMPETING WITH THE VENTURE PRODUCT

Plaintiffs do not dispute that the Leagues packages are venture products. NHL SUF 3.

Nor do they dispute the legitimacy and benefits of League-wide packages. Indeed, Plaintiffs

sole model of anticompetitive harm necessarily assumes the continuation of League packages of

essentially all games of all teams.

The Leagues are entitled to prevent clubs from licensing the components (the RSN telecasts)

of collective, League venture products in competition with those products. NHL Br. at 10; MLB

Br. at 17-19.11 Plaintiffs cannot rely on the fiction that game telecasts licensed by clubs are

somehow separate products that must be allowed to compete with the products of [the] joint

venturei.e., the League packages. Opp. at 41. Plaintiffs admit no single club can produce or

exhibit a single game, much less a League-wide product on its own. Resp. MLB SUF 7

(emphasis added); Resp. NHL SUF 4; see also Salvino, 542 F.3d 290, 296. Thus, by Plaintiffs

own admission, clubs are interdependent venturers in the exhibition of gamesthe opposite of

the competing producers of American Idol, The Voice and the X Factor in Plaintiffs example.

Moreover, no game is created or licensed for telecast as an individual game: games are created

and licensed for telecast only in packages as part of a season requiring the participation and

agreement of all clubs and the League interdependently creating a League product.

Plaintiffs also admit the exact same game telecasts produced and distributed in-market by

9 See In re Text Messaging Antitrust Litig., 2014 U.S. LEXIS 68237 (N.D. Ill. 2014) (Dr. Nolls opinion could not establish dispute of material fact based upon the same underlying evidence). 10 See also Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997) (an experts report is not a talisman against summary judgment.). 11 See, e.g., MSG, 2007 WL 3254421, at *7; Penn-Olin, 378 U.S. at 169; Rothery Storage, 792 F.2d at 214; cf Assn of lndep. Television Stations, Inc., 637 F. Supp. at 1306 (The Supreme Court has recognized that joint venturers are not required individually to compete with the product jointly produced.) (citing Penn-Olin).


6

RSNs are pooled by the clubs (royalty-free) to form the Leagues OOM packages for out-of-

market distribution. RSN game feeds are thus the components of the Leagues cable, satellite

and internet OOM packages. Resp. MLB SUF 7, 147-48. Telecast packages of games played by

any particular club and any bundled package of games among all clubs are, therefore, League

venture products and the Leagues may restrict competition among venture products.

Plaintiffs reliance on Polygram Holding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir. 2005), is

misplaced. There, the court held that two record companies that formed a joint venture to

produce a Three Tenors album could not agree to restrict competition from earlier, non-venture

albums produced by each company individually. Plaintiffs argue that the cases here are like

Polygram. (See Opp. at 42 (What Defendants may not do here is exclude competition from

other games in order to protect the joint national games, just as the record companies could not

prevent competition from non-venture records by the same artists.) (emphasis added).)12 Here,

though, there are no non-venture productsi.e., non-League gamesrestricted by the

challenged restraints. The relevant law here is not Polygram but MSG, IEG, and Dagher. Those

cases recognize the legitimate interests of professional sports leagues in restraining individual

clubs from offering websites in competition with a league platform (MSG, 2007 WL 3254421, at

*6-7, *9) and restraining players from participating even in similar, but non-league, games in

competition with the league (IEG, 853 F. Supp. at 340), as well as the legitimate interests of

venturers in creating mutually exclusive territories in which to sell their venture product and in

setting the prices for that product (Dagher, 547 U.S. at 5). Plaintiffs ignore each of these cases.

IV. THERE IS NO GENUINE DISPUTE THAT THE RESTRAINTS ARE ESSENTIAL TO THE NATIONAL CONTRACTS AND OOM PACKAGES

American Needle endorsed a quick look for antitrust defendants where the restraints at

issue are essential to the venture product. Here, there is no genuine dispute that the territorial

structure is essential to, among other things, the national and OOM products that, Plaintiffs

admit, are venture products. E.g., Resp. NHL SUF 3. Plaintiffs concede that, since at least the

12 As discussed infra at 11-12, Salvino distinguished the NCAA and BMI cases.


7

mid-1980s, national broadcasters have required exclusive national distribution rights in their

contracts and the Leagues formalized local/national territories in response to the requirements of

their buyers. Opp. at 12; Resp. NHL SUF 5; Resp. MLB SUF 130, 131.13 Dr. Nolls speculation

that national broadcasters do not need national market exclusivity for their telecasts (Opp. at

45-46), is unsupported and beside the point: Plaintiffs do not dispute the procompetitive benefits

of the Leagues national and OOM packages. The uncontradicted testimony is that, absent the

restraints, the Leagues national and OOM packages either would not exist or would not exist to

their current extent. Jones 11-13, 21; Wildhack 12-20; Crumb 13-15; Litner 21.

V. THE LEAGUES ADDITIONAL PROCOMPETITIVE JUSTIFICATIONS ALSO ARE UNDISPUTED

A. The Leagues Internal Rules Enable the Leagues and Their Clubs to License Exclusive Telecast Rights

Plaintiffs admit the Leagues territorial structures make it possible for multiple licensors

the home club, the visiting club, and the Leagueto telecast the same game without creating

overlapping telecast rights to that game. Resp. MLB SUF 72. The only way the home and

visiting clubs can simultaneously license exclusive telecasts of the same game is if each has

rights to license only within largely distinct territories. And the only way to also have a League-

wide package without destroying the same game exclusivity for an RSN is if the League-wide

package avoids overlapping distribution of that game with the RSNs distribution.14 Since

Plaintiffs concede such exclusive content rights are typical in television and unproblematic

from an antitrust perspective (Opp. at 4, 45, 49), summary judgment for the Leagues is

appropriate.

13 The testimony in Plaintiffs response to MLB SUF 130 discusses RSNs, not national networks, and therefore raises no genuine issue of fact as to the role of territories in the national contracts. Moreover, Plaintiffs hearsay references to an earlier NHL contract with USA Network are immaterial; it is what the current networks require that matters. 14 Similarly, if there were no territorial restraints, a game between a Philadelphia club and a St. Louis club could be licensed for distribution in Chicago by three sellers, namely the two clubs (in team packages) and the relevant League (in a League-wide package). No telecaster would have exclusive rights to telecast that game in Chicago.


8

Further, Plaintiffs do not dispute the benefits of having both the home and visiting clubs

license telecasts of the same game, or of League-wide packages (which Plaintiffs expressly want

to continue in their but-for world).15 Yet despite their assertions,16 Plaintiffs are seeking to

eliminate same game exclusivity. Indeed, Dr. Nolls model purports to drive down prices by

expressly assuming multiple licensed sellers of the same gameRSNs (selling packages of

games for individual teams) and the Leagues (selling League-wide packages of all teams). Opp.

at 4.17 None of this can be squared with each individual clubs ability to make all of its games

available to only a single, exclusive broadcaster. Id. Conversely, Dr. Noll offered no model of

competition among only sellers of different, other games.

The Leagues legitimate interests in fostering multiple, non-overlapping licenses to the same

game are undisputed. Summary judgment for the Leagues is therefore compelled under the

well-established law recognizing such exclusive rights incentivize investment and promotion.18

B. Incentivizing and Balancing Local and National Interests

The Leagues (and the TV Defendants) offered extensive evidence that the Leagues

challenged rules incentivize local investment and promotion of Major League Baseball and NHL

hockey by the clubs and their local telecasters, as well as by the Leagues national telecasters.19

15 By contrast, in the NFL example Plaintiffs cite (Opp. at 53), there is only one telecast of any given NFL game and that telecast is licensed by the league, not by the home or visiting club. 16 E.g., Opp. at 22-24, 42, 45, 49; Resp. MLB SUF 118, 123, 137. 17 MLB SUF 72. Plaintiffs similarly obfuscate by repeatedly claiming RSNs are granted exclusivity vis--vis other games that are telecast. However, no RSN agreement keeps out other games. It is undisputed that other games come into the territory licensed to an RSN through the Leagues networks, national telecasts, and OOM packages (under League structures that allow all of this other game distribution without destroying same game exclusivity). 18 NHL Br. at 11-14; see also Wis. Interscholastic Athletic Assn v. Gannett, Co., 658 F.3d 614, 626 (7th Cir. 2011) (exclusive contracts are common because they reasonably serve to maintain or enhance the value of an artistic or intellectual product.). 19 Bettman 4, 11, 18, 21; Leonsis 3, 5; Weinberg Dep., 61-62 (owners would not make substantial investment in clubs unless there was some protected territory in which they could exploit their marks.); Tortora Dep., 255-56 ([T]he league created territories from the outset to allow clubs to exploit a fan base and to cultivate and develop a fan base so that their buildings are full and people are attending and have an affinity to a team.); Selig 31-34; see also Comcast Br. 17-19; DirecTV Br. 17-18.


9

In response, Dr. Noll simply hypothesizes that monopolists do not need to promote their

products, so there is no reason to grant them an exclusive territory. Noll at 109. Dr. Noll ignores

that, unlike utilities, Leagues do not have a guaranteed body of customers. The Leagues, clubs,

and their telecasters have every right to build and expand their fan base.

Trans Sport, Inc. is directly on point. The Second Circuit heldon summary judgment

that justifications for exclusive territories applied to an NHL and MLB licensee, even assuming

the licensee had monopoly power and even if profit-maximizing was its ultimate objective.20

Further, the Second Circuit held that, even when there is evidence that [r]estrictions on

intrabrand competition . . . result in higher market prices, such facts do not establish any

genuine issue of material fact that exclusive territories are anticompetitive.21 Trans Sport is

consistent with the wide body of case law finding that the mere division of territories by

professional sports leagues without some independent anticompetitive conduct is permissible.22

Finally, Plaintiffs acknowledge the Leagues legitimate interest in balancing fan interest in

their local team with interest in the sport as a whole, but baldly assert without evidence or

authority that they believe a proper balance could be achieved without territorial rules. Opp. at

53. Plaintiffs also claim other sports are able to obtain a proper balance without territorial

restraints, but cite no evidence and ignore that many of those sports have broadcast structures

20 964 F. 2d at 188-192 (upholding exclusive territories that eliminated intrabrand competition because, inter alia, challenged policy incentivized long-term investments in product quality and image, and prevented free riding) and 189-90 (citing U.S.F.L. v. NFL, 842 F.2d 1335, 1360 (2d Cir. 1988) for proposition that maximizing rights fees was not anticompetitive). 21 Id.; see also St. of N.Y. v. Anheuser-Busch, Inc., 811 F. Supp. 848, 875 n. 73 (E.D.N.Y. 1993) (rejecting argument that company with monopoly power may not rely on same procompetitive justifications for exclusive territories as other businesses; citing Trans Sport for proposition that a business possessing monopoly power can validly impose vertical restraints that are intended primarily to maximize profits). 22 See, e.g., In re Dewey Ranch Hockey, LLC, 414 B.R. 577, 591 (Bankr. D. Ariz. 2009) (very nature of professional sports requires some territorial restrictions to incentivize and sustain team ownership); NBA v. SDC Basketball Club, Inc., 815 F.2d 562 (9th Cir. 1987) (mere existence of league territorial rules does not violate the antitrust laws). For this reason, among others, Plaintiffs Section 2 claims also fail. NHL Br. 22-23; MLB Br. 12, n.22.


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with similar limitations to the Leagues here.23 Plaintiffs failure to develop a record or produce

any evidence on these issues is fatal to their claims. See Salvino, 542 F.3d at 310.24

C. Preventing Free-Riding

The prevention of free-riding is a well-recognized procompetitive justification for league

restraints on member clubs. NHL Br. at 15-16; MLB Br. at 17-19. Courts recognize that free-

riding occurs within a professional sports league when clubs attempt to profit individually from

the investments and undertakings by the league as a whole. Id. Preventing free-riding is not just

a theoretical justification, but has in fact long been recognized as a rationale for the Leagues

decisions to grant their national broadcasters exclusivity and for jointly exploiting the national

market on behalf of all clubs through League-wide packages and networks.25

In response, Plaintiffs neither dispute the facts relied upon by the Leagues nor address the

law on free-riding in the professional sports context.26 Dr. Nolls contrary opinions on how he

would define free-riding are irrelevant and cannot create a triable issue of fact.

D. Fostering Competitive Balance

The Supreme Court and the Second Circuit have held that promoting competitive balance

23 Dr. Noll acknowledges the NFL and NBA also have territorial broadcast structures, including out-of-market packages (NFL Sunday Ticket and NBA League Pass). Noll at 61. 24 Neither MLB nor the NHL has conceded that the restraints at issue here violate the antitrust laws (Opp. at 8-11, 84), including as interpreted by cases like American Needle, Salvino, and Trans Sport. The MLB document cited (Opp. at 10) is a memorandum from a non-lawyer giving his personal view about whether third parties might try to assert antitrust claims. Likewise, a remark by one MLB club owner concerning the SBA (Opp. at 10 n.10) is irrelevant. Plaintiffs also argue that a former NHL President interpreted its Constitution as allowing clubs to broadcast their games OOM. Opp. at 10. But that simply confirms, as the NHL proved in its opening brief, the restraint at issue flows not from any nefarious conspiracy, but rather from the territorial limitations national broadcasters bargained for beginning in the mid-1980s. In any event, the NHLs OOM package, which introduces telecasts of other teams games into each teams television territory, is entirely consistent with the Presidents interpretation. 25 Bettman Ex. 4, NYI0071046 (1996 NHL decision finding national cable contract would have little value if geographically-distant clubs could rob the national broadcaster of exclusivity or free ride on its efforts.); Selig 42 (allowing club to exploit national market solely for its individual benefit is unfair, harmful and incompatible with the ventures basic compact.). 26 The Bulls trial decision Plaintiffs cite (Opp. at 39) was reversed. Chicago Profl Sports Ltd. v. NBA, 95 F.3d 593, 599 (7th Cir. 1996).


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also is a valid, procompetitive interest of professional sports leagues.27 Plaintiffs do not dispute

that the broadcast structures here allow each League to centrally license rights for the equal

benefit of every club, exactly the model Salvino found precisely tailored to foster competitive

balance. Plaintiffs offer only Dr. Noll, who thinks competitive balance is not important and that

teams (like restaurants) should just be allowed to fail. Noll at 120. The courts have rejected this

view precisely because professional sports teams (unlike restaurants) are interdependent.

Moreover, team failure is plainly harmful to consumers (fans) of that team and of the game.28

Plaintiffs suggest revenue sharing can cure competitive imbalance. But Salvino rejected a

similar suggestion (542 F.3d at 333) and Dr. Noll argues, inconsistently, that revenue sharing

makes competitive balance worse. Noll at 118. None of this overrides American Needles

recognition of the importance of competitive balance, nor the importance of the health, stability,

and fan support of clubs to that balance, which requires more than dollars. Selig 17-24.

Finally, Plaintiffs again cite NCAA and argue that competitive balance was rejected as a

justification in that case. In fact, the Supreme Court held that maintaining a competitive balance

was legitimate and important, but found the justification inapplicable in that case where the

NCAA failed to offer even a colorable basis for how its plan promoted competitive balance

between schools in different football divisions and some with no football at all. NCAA, 468 U.S.

at 118-19. Here, by contrast, the Leagues national and OOM products fall squarely within the

model Salvino found promotes competitive balance. Moreover, as Salvino found: (i) the NCAA

is materially different from the Leagues (because the essence of a professional sports league is

that interdependent members jointly produce a League product whereas colleges have existence

wholly independent of an umbrella organization such as the NCAA) and (ii) the NCAA did not

27 E.g., Am. Needle, 560 U.S. at 204 ([T]he interest in maintaining a competitive balance . . . is legitimate and important.); Salvino, 542 F.3d at 323 (interdependence and Major League Baseballs need for competitive balance among the Clubs distinguish the Clubs from the individual composers and publishers [in] Broadcast Music). 28 Outside this case, Dr. Noll apparently agrees competitive balance is important to professional sports. Araton, Abandon Hope, Almost All Ye Who Enter the NBA Playoffs, N.Y. Times, May 31, 2014, at SP11 (quoting Dr. Noll criticizing NBA for not addressing competitive balance).


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act as a selling agent for any school, but simply used naked restrictions on output to preclude

most games from being broadcast anywhere, including locally.29 Here, clubs grant local rights to

certain broadcasters and the Leagues license games nationally for the clubs, with virtually all

games telecast everywhere through combined cable, satellite, telco, and Internet distribution.

VI. PLAINTIFFS OFFER NO EFFECTIVE LESS RESTRICTIVE ALTERNATIVE

Plaintiffs claims also necessarily fail because they have not offered any less restrictive

alternative that would achieve the Leagues legitimate procompetitive justifications. See Virgin

Atlantic, 257 F.3d at 264-65.30 Other than suggesting that some of the harms of unfettered

competition could be addressed through additional revenue sharing, Plaintiffs do not even

attempt to posit a less restrictive alternative that would address any of the Leagues justifications,

much less all of them. Nor do they posit any alternative that would preserve the balance of local

and national interests the Leagues have achieved through the intricate system of rights negotiated

among clubs, with local and national broadcasters, and with the Leagues players associations.

VII. PLAINTIFFS FAIL TO OFFER ANY EVIDENCE OF ACTUAL HARM

Plaintiffs claim of anticompetitive harm is premised entirely upon Dr. Nolls opinion that

the prices the Leagues charge for their [OOM] packages are more than twice what they would be

in a competitive market. Opp. at 31-32. But that opinion is premised upon the model

Dr. Noll constructed based on bald, unsupported assumptions.

First, Dr. Noll assumes RSNs will continue to produce the same number of games in a new

world in which the Leagues will compete with RSNs to sell the exact same telecasts of the exact

same games to the exact same MVPDs. The undisputed testimony is not merely that networks

29 542 F.3d at 325 (distinguishing NCAA and BMI); see also MSG, 2007 WL 3254421, at *7 (distinguishing NCAA); NHL Br. at 19-21. 30 The cases Plaintiffs cite are inapposite. In Capital Imaging, the plaintiff failed to carry its initial burden; there was no need to consider alternative restraints. 996 F.2d at 547. Similarly, SESAC did not even reach the issue of procompetitive justifications because the movant there presented no evidence on those points. 2014 WL 812795 at *34.


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would pay less for non-exclusive rights, but that they may not continue licensing at all.31

Without RSN game telecasts, there is no League OOM package in any formatTV or Internet.

Second, Dr. Noll further assumes that (i) RSNs would continue to provide live game feeds to

the Leagues for inclusion in a League-wide package in a new world in which the League package

is now a competitor to the RSNs, (ii) RSNs would continue to do so for free, and (iii) all teams

would want to participate in such a League package that competes directly with the RSNs. Dr.

Noll offers no factual basis for these assumptions, which defy both logic and the evidence.32

Third, Dr. Noll assumes MVPDs would carry telecasts of every teams games everywhere

independent of the League package. The evidence is uncontroverted that, even if some teams

would be able to obtain ubiquitous distribution on their own, other teams would not. Tully 33;

Feeney 9; Bettman 17; Leonsis 7. Plaintiffs concede RSNs would distribute games only

where there is sufficient demand (Opp. at 7), but adduced no data showing sufficient

demand for every team everywhere. Put differently, Plaintiffs offer no facts to plausibly show

that, in their but-for world, virtually every game of every team would be made available to

fans everywhere in the U.S., as is the case today under the Leagues structures. 33

Finally, Dr. Nolls assumption that the bundled League packages would continue in his

31 Jones 21 (If the Fox RSNs were unable to obtain the exclusive rights and protections described above, it would materially impact the Fox RSNs valuation of such rights, or whether they would continue licensing MLB and NHL game telecasts at all.); accord Crumb 15 (DSN would have little or no incentive to pay for and produce almost all games if League package competed with RSN using RSNs telecasts) (emphases added); Litner 21 (competition by League package with RSN using RSNs telecasts would substantially dampen the incentive of the RSNs to invest in high quality programming because investment would be just as likely to benefit a competitive outlet as it would be to benefit the RSNs.). 32 Plaintiffs response that the League can mandate certain conduct ignores that the League is necessarily a creature of agreement. Clubs can vote to alter internal league agreements, and have done so on telecasting. MLB SUF 87-91. The status quo cannot be presumed or mandated if a longstanding, core structure such as television territories is eliminated. 33 Dr. Noll also assumes teams would continue to agree to allow every visiting team to license its own telecast of the same game the home team licenses to its RSN. Noll at 114. But when teams agree to such reciprocity, they also ensure that the two telecasts will not overlap, and thereby destroy the same game content exclusivity Plaintiffs concede is standard in the television industry. Opp. at 4, 45, 49. Dr. Noll, however, assumes all telecasts will overlap everywhere.


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imagined world also is antithetical to the very economic model on which his pricing analysis

purports to be based. While the published model assumes that the economic incentive to offer a

bundled package would disappear in a but-for world of unbundled distribution, Dr. Nolls

model conveniently assumes the exact opposite.34

Significantly, it is Plaintiffs burden to prove up the model of their but-for world, which

cannot be presumed to simply carry the current licensing structure forward.35 Dr. Nolls counter-

factual, unsupported, and implausible model cannot and does not satisfy either Plaintiffs

initial burden to prove an actual, market-wide, anticompetitive effect, or Plaintiffs ultimate

burden to prove consumer harm flowing from the challenged restraint.36

The lack of factual support for Plaintiffs but-for world also compels judgment for failure

to prove any injury-in-fact to these Plaintiffs. MLB Br. at 21. Plaintiffs reference to non-

controversial options that a free market would be expected to offer (Opp. at 78) is unavailing.

Plaintiffs are challenging a fundamental aspect of a complex television distribution model. A

court cannot presume that the remaining elements of the business model will continue if one

aspect is eliminated. Dominguez, 666 F.3d at 1364. Even if single club packages could be

34 Noll at 101 (published model assumes that an a la carte package of unbundled channels fully replaces the bundle. I assume that MLB and the NHL continue to offer the bundled package). Dr. Noll provides no factual basis for his assumption that the bundled package would continue to be offered if individual club packages of the same game telecasts that comprise the bundle were offered in competition with the bundle. Dr. Noll offers no analysis of a but-for world that, like the published model, has no bundled product competing with the a la carte offerings. Notably, the published model concluded consumers could be worse off in an a la carte world. Crawford and Yurukoglu, The Welfare Effects of Bundling in Multichannel Television Markets, 102 Am. Econ. Rev. 643, 645-46, 681 (June 2012) (increase in total costs for licensing, implementation, and marketing in a la carte model, along with prices). 35 Dominguez, 666 F.3d at 1364; MLB Br., 21-23; Bragdon v. Abbott, 524 U.S. 624, 653 (1998) (opinion based on absence of contrary evidence, not positive data raised no triable issue). 36 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 242 (1993) ([w]hen an expert opinion is not supported by sufficient facts to validate it in the eyes of the law, or when indisputable record facts contradict or otherwise render the opinion unreasonable, it cannot support a jurys verdict); Virgin Atl. Airways Ltd. v. British Airways PLC, 69 F. Supp. 2d 571, 578 (S.D.N.Y. 1999) (expert created no triable issue of fact where he cited no supporting [] data to convert his theorizing about the harmful aspects of [] bundling into a factually-grounded opinion).


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licensed nationally, the availability of such packages would depend on, inter alia, the actions of

particular clubs, RSNs, and MVPDs or other distributors. Plaintiffs ignore Dominguez and the

cases requiring proof that parties are willing and able to take assumed action in a but-for

world.37 38

VIII. THE BASEBALL EXEMPTION BARS ANTITRUST CLAIMS CONCERNING MLBS VIDEO RULES AND STRUCTURES

Decades of precedent confirms that the business of baseball, including its telecast

structures and rules, is exempt from antitrust scrutiny. MLB Br. at 9-12. The territorial structure

for live video exhibition of MLB games Plaintiffs attack lies at the heart of the business of

baseball.

Contrary to Plaintiffs assertion, the exemption is not limited to labor and employment

issues. Opp. at 80 and n.81.39 The Supreme Court has said the exemption is an umbrella over

baseball that exists as a matter of stare decisis and positive inaction by Congress, thereby

protecting the [v]ast efforts [that] had gone into the development and organization of baseball

since [the Federal Baseball] decision and enormous capital [that] had been invested in reliance

on its permanence.40 As the Seventh Circuit put it, the Supreme Court intended to exempt the

business of baseball, not any particular facet of that business, from the federal antitrust laws.41

Plaintiffs position also is squarely refuted by the Supreme Courts decision in Toolson,

which affirmed application of the exemption to dismiss a complaint that alleged injury arising 37 E.g., Sunbeam Television, 71 F.3d at 1273; Murray, 1998 WL 205596, at *8. 38 Plaintiffs also suggest they are claiming harm from monthly cable service fees. Opp. at 78 n.80. The attenuated causation that led to dismissal of the claims of the general television plaintiffs at the outset of this case (Laumann, 907 F. Supp. 2d at 484) applies with even greater force to the Out-of-Market Television Plaintiffs now: they have adduced no evidence that eliminating the territorial video rules for MLB and the NHL would result in lower cable, satellite, or telco service fees for these Plaintiffs, let alone market-wide. 39 Plaintiffs cite only one non-controlling case, Piazza v. MLB, 831 F. Supp. 420 (E.D. Pa. 1993), which has been rejected consistently across the country. San Jos, 2013 WL 5609346, *9-10; Butterworth, 181 F. Supp. 2d at 1324 n.4; McCoy v. MLB, 911 F. Supp. 454, 457 (W.D. Wash. 1995); New Orleans Pelicans, 1994 WL 631144, *9; Morsani, 79 F. Supp. 2d at 1335 n.12. 40 Radovich, 352 U.S. at 450-51; Flood, 407 U.S. at 283-84. 41 Charles O. Finley & Co., 569 F.2d at 541.


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from, inter alia, territorial broadcast rules nearly identical to those challenged here. MLB Br.

at 11. Plaintiffs wrongly assert that Toolsons claims were somehow narrowed by the repeal of

certain MLB television rules prior to his appeal. Opp. at 84. None of those changes impacted

Toolsons claims, which were for past damages. Indeed, Toolson petitioned the Supreme Court

to reverse dismissal of his entire complaint, including his claims concerning MLBs telecast

restraints.42 Toolsons single paragraph, per curiam affirmance confirms that the exemption

applies to the business of baseball and does not depend on the particular area at issue. 43

Plaintiffs similarly misread Flood as limiting the exemption to unique aspects of baseball.

Opp. at 80. Flood referenced baseballs unique characteristics and needs in that only baseball

(and not football, boxing, or live theater) had developed free from antitrust laws, with

congressional approval. 407 U.S. at 282. Flood did not suggest the exemption is limited to

unique aspects of baseball. The business of baseball is unique because it is exempt.

Plaintiffs citation to snippets from MLBs lobbying of and statements to Congress in the

1950s and 60s is irrelevant distraction. Plaintiffs ignore that Toolson expressly invited Congress

to take action if it wanted the antitrust laws to apply to the business of baseball. 346 U.S. at

356-57. MLBs decision to lobby Congress post-Toolson to ensure that its exemption was not

revoked and to codify as broad an exemption as possible makes perfect sense and does not reflect

any conclusion that MLBs broadcast rules were not already exempt under Toolson. 44

In the years between Toolson and Flood, MLB also faced pressure from the Justice

Department and private litigants. Given the threat of litigation, MLB adopted a safe approach

and conducted itself on the question of television and radio broadcasting just as if [it] were

42 After describing his complaint (1953 WL 78316, *9), Toolson sought review on one comprehensive question: Are the activities and organization of professional baseball, as set forth in petitioners complaint, subject to the Federal Anti-Trust Laws? 1953 WL 78319, *1. 43 One commentator Plaintiffs cite observed that, in the wake of the clearance provided by Toolson, the major leagues reinstated certain territorial broadcasting rules. Ira Horowitz, Sports Broadcasting, at 280 (1974). 44 In any event, the Noerr-Pennington doctrine precludes use of MLBs statements to Congress to support an antitrust claim. U.S.F.L. v. NFL, 634 F. Supp. 1155, 1179-81 (S.D.N.Y. 1986).


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under the antitrust laws.45 Plaintiffs claim that MLB conceded during this era that the

exemption did not apply to MLBs television territories (Opp. at 84-85) blatantly misrepresents

the record. For example, in testimony to Congress (selectively quoted by Plaintiffs),

Commissioner Frick explained that, in the wake of Toolson, there was a debate between MLBs

lawyers, who argued Toolson exempts baseballs television rules, and the lawyers of the people

who haul us into court all the time, who took the opposite view.46 Such statements only reflect

MLBs cautious approach during a time of threatened litigation and congressional action.

Similarly, MLBs involvement in, and the passage of, the Sports Broadcasting Act (SBA) does

not negate MLBs judicial exemption, as Plaintiffs argue. Opp. at 83, 88-89. The SBA states

that it did not affect the nonapplicability of the antitrust laws to baseball. 15 U.S.C. 1294.47

Finally, there is no basis for Plaintiffs claim of judicial estoppel (Opp. at 89) because MLBs

arguments in Toolson and Flood were not inconsistent with its position here.48 Plaintiffs

citation to MLBs arguments in Flood concerning whether broadcasting rendered the business 45 Organized Professional Team Sports, 85th Cong. 101, 139 (1957). 46 Organized Professional Team Sports, 86th Cong. 69 (1959). A memorandum Plaintiffs cite from MLB counsel (Opp. at 85) did not address MLBs television rules. Counsel only acknowledged the riskpre-Floodof further litigation concerning the exemption and advised that, if there were antitrust litigation concerning a potential acquisition of a club by CBS, MLB would ask the parties not to invoke the exemption. Hearings on S. 950, 89th Cong. 160 (1965). 47 Unlike Henderson, this case at its core challenges MLBs internal broadcasting rules, not a teams dealings with third parties. Thus, Henderson was not only wrongly decided (MLB Br. at 12), but is inapposite. The exemption clearly applies to MLBs internal rules, even if they impact third parties. See, e.g., San Jos, 2013 WL 5609346, *5, *10-11 (exemption applied to internal relocation rules notwithstanding purported impact on city); McCoy, 911 F. Supp. 454 (exemption applied to internal labor practices notwithstanding purported impact on fans and businesses). 48 Saybolt v. Schreiber, 407 F.3d 34, 45 (2d Cir. 2005). The arguments Plaintiffs cite in Toolson concerned the impact of broadcasting on the interstate nature of professional baseball. Before Flood confirmed that the enhanced role of interstate radio and television in baseball was irrelevant to the exemption (407 U.S. at 283), MLB repeatedly had to explain that the broadcasting aspects of the business of baseball did not change or affect the inherent character of a baseball game as a local activity and as a sport. 1953 WL 78334, at *21-24. In Flood, MLB argued the exemption applies to MLBs evolving internal structure and rules and urged the Court to reaffirm Toolson, which it did. MLBs position in Flood was thus fully consistent with its position here. MLB mentioned broadcasting in Flood only to refute the plaintiffs argument that the SBA limited the exemption. Br., 1972 WL 125826, at *36.


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of baseball interstate in nature is perplexing. In holding the exemption applied, Flood

confirmed both that the business of baseball is interstate and that the question was irrelevant.49

None of Plaintiffs efforts to avoid or narrow the exemption have any basis in law or fact.

Plaintiffs claims attacking MLBs territorial telecast structure and rules are barred by the

antitrust exemption recognized more than 90 years ago and repeatedly reaffirmed since.

CONCLUSION

For the reasons stated above and in their moving papers, the NHL Defendants and MLB

Defendants respectfully request summary judgment dismissing Plaintiffs claims with prejudice.

Dated: June 24, 2014 Respectfully submitted,

/s/ Shepard Goldfein Shepard Goldfein James A. Keyte Paul M. Eckles Matthew M. Martino

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Four Times Square New York, New York 10036-6522 Telephone: (212) 735-3000 Facsimile: (212) 735-2000 [email protected] [email protected] [email protected] [email protected]

Attorneys for Defendants 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

49 Contrary to Plaintiffs claim (Opp. at 2), MLB asserted the exemption in its Answer 25.


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/s/ Bradley I. Ruskin___ Bradley I. Ruskin Jennifer R. Scullion Jordan B. Leader Jill Streja Jane Wu Stephen Ahron Joelle Milov PROSKAUER ROSE LLP Eleven Times Square New York, New York 10036-8299 Telephone: (212) 969-3000 Facsimile: (212) 969-2900 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Thomas J. Ostertag Senior Vice President and General Counsel Office of the Commissioner of Baseball 245 Park Avenue New York, New York 10167 Telephone: (212) 931-7855 Facsimile: (212) 949-5653 [email protected] Attorneys for Defendants 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 Cubs Baseball Club, LLC, Chicago White Sox, Ltd., Colorado Rockies Baseball Club, Ltd., The Phillies, Pittsburgh Baseball, Inc., and San Francisco Baseball Associates, L.P.


MLB Reply Brief in Support of Motion for Summary Judgment

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Transcript of MLB Reply Brief in Support of Motion for Summary Judgment