DocketNumber： 93-2153
Filed Date： 6/6/1994
Status： Precedential
Modified Date： 9/21/2015
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-2153
CHARLES W. SULLIVAN,
Plaintiff, Appellant,
v.
PAUL TAGLIABUE, ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
___________________
____________________
Before
Breyer,* Chief Judge,
___________
Coffin, Senior Circuit Judge,
____________________
and Torruella, Circuit Judge.
_____________
____________________
Joseph L. Alioto with whom Angela M. Alioto, Frederick P. Furth,
________________ _________________ ___________________
Bruce J. Wecker, Michael P. Lehmann and Alan R. Hoffman were on brief
________________ __________________ _______________
for appellant.
John Vanderstar with whom Sonya D. Winner, Ethan M. Posner,
________________ _________________ ________________
Jeremiah T. O'Sullivan, Sarah Chapin Columbia, Joseph W. Cotchett and
______________________ ______________________ __________________
Susan Illston were on brief for appellees.
_____________
____________________
June 6, 1994
____________________
____________________
*Chief Judge Stephen Breyer heard oral argument in this matter but did
not participate in the drafting or the issuance of the panel's
opinion. The remaining two panelists therefore issue this opinion
pursuant to 28 U.S.C. 46(d).
COFFIN, Senior Circuit Judge. Plaintiff Charles Sullivan
_____________________
brought this action individually and as assignee of the assets of
Stadium Management Corporation (SMC) challenging, as an illegal
restraint in trade, a National Football League (NFL) Rule
prohibiting the sale of shares in an NFL franchise to any company
not engaged in the business of professional football, in
violation of Sections 1 and 2 of the Sherman Act.1 See 15
___
U.S.C. 1, 2. The district court held that plaintiff lacked
standing to bring this claim and granted summary judgment for
defendants.2 After a review of the record, we affirm.
____________________
1Sullivan also alleged supplemental state law claims of breach of
fiduciary obligations, interference with prospective advantageous
contract, unfair trade practices, and intentional infliction of
emotional distress. When the district court granted summary
judgment on the federal antitrust claims, it declined to exercise
supplemental jurisdiction over the state law claims. See
___
Sullivan v. Tagliabue, 828 F. Supp. 114, 120 n.6 (D. Mass. 1993).
________ _________
2Defendants named in this action are the NFL, current NFL
Commissioner Paul Tagliabue and his predecessor Pete Rozelle.
Paragraph 7 of the complaint also names the following 21
organizations owning NFL franchises: The Five Smiths, Inc.:
Indianapolis Colts, Inc.; Buffalo Bills, Inc.; Chicago Bears
Football Club, Inc.; Cincinnati Bengals, Inc.; Cleveland Browns,
Inc.; Dallas Cowboys Football Club, Ltd.; PDB Sports, Ltd.; The
Detroit Lions, Inc.; Green Bay Packers, Inc.; Houston Oilers,
Inc.; Los Angeles Rams Football Co.; Minnesota Vikings Football
Club, Inc.; New Orleans Saints LP; New York Jets Football Club,
Inc.; B & B Holdings, Inc.; Pittsburgh Steelers, Inc.; Tampa Bay
Area NFL Football, Inc.; Pro-Football, Inc.; Chargers Football
Co.; and Seattle Professional Football Club, Inc.
The caption of plaintiff's complaint names a slightly
different set of defendants. It fails to include either the Los
Angeles Rams Football Co. or the Charges Football Co. as
defendants, and adds the New York Football Giants, Inc. to the
list.
-2-
I. Factual Background.
__________________
Charles Sullivan (plaintiff or Sullivan) is the former
owner and sole stockholder of SMC, which owned the stadium where
the New England Patriots play their games. His father, William
Sullivan, was the Patriots' owner at all relevant times.
In 1987, William Sullivan sought to sell a 49% interest in
the Patriots to an investment banking firm not in the business of
football, which, in turn, was to sell the shares to the public.
Through this transaction, plaintiff, through SMC, expected to
obtain financing for his stadium.
Under the terms of the NFL Constitution and By-Laws, member
teams are not permitted to sell shares to the public unless
three-fourths of the members approve. William Sullivan was
unable to persuade the other NFL owners to allow his proposed
deal, and in October 1988, he instead sold the team to a private
buyer. In February 1988, SMC filed a Chapter 11 petition in
bankruptcy, and the stadium subsequently was sold for the
"bargain basement price" of $25 million.
In May 1991, William Sullivan sued the NFL, alleging that
its policy against public ownership violated the federal
antitrust laws because it unreasonably restrained trade in
ownership interests in NFL teams.3 Charles Sullivan filed this
lawsuit several months later against the NFL and other parties
____________________
3On October 22, 1993, a jury awarded William Sullivan $38
million, which was reduced by the district court upon motion by
the defendants to $17 million, before trebling. The NFL
defendants have appealed this verdict.
-3-
allegedly responsible for enforcing the challenged rule. He
claims that, had the public offering of Patriots' stock been
permitted, SMC would have received a $40 million dollar loan from
the investment banking firm that would have been used to pay off
debts and to make significant renovations to the stadium. In
addition, in 1987, the stadium held a lease with the Patriots
which extended until 2002, which Sullivan alleges would have been
extended for 20 years had the sale of the Patriots stock gone
through. Finally, he claims, the NFL policy prevented the
Patriots from making their own investment in the maintenance of
the stadium, thus undermining SMC's ability to keep the Patriots
from breaking their lease with SMC and moving to another
location.4
As damages, plaintiff claims the amount of the enhanced
market value of the stadium that would have resulted from the
planned renovations and the lease extension.
____________________
4During the bankruptcy proceedings, plaintiff received an
assignment of all SMC's causes of action in consideration of the
release of claims against SMC by plaintiff.
The NFL argues that Sullivan, as SMC's assignee, is
precluded from pursuing its antitrust claims against the NFL
defendants because SMC did not disclose these claims during the
course of the bankruptcy proceedings. They contend that, at
least by October, 1990, when he entered into a stipulation with
the bankruptcy trustee resolving claims by and against him,
Sullivan was fully aware of all of the facts upon which his
complaint is based and that his antitrust claims should have been
raised in the bankruptcy proceedings. In their view, SMC is
therefore estopped from bringing a legal action to enforce the
claims against the NFL defendants.
For the purposes of this decision, we assume, without
deciding, that SMC is not estopped from bringing a legal action
to enforce these claims.
-4-
The district court granted summary judgment for defendants,
holding that Sullivan lacked antitrust standing. The court
reached this conclusion by determining that the materials
submitted indisputably showed that the injury plaintiff suffered
was not within the type contemplated by the antitrust laws; that
its impact was too indirect; and that the damages claimed were
too speculative. Plaintiff now appeals.
Our review of a grant of summary judgment is plenary.
Mendes v. Medtronic, Inc., 18 F.3d 13, 15 (1st Cir. 1994).
______ _______________
II. General Principles of Antitrust Standing
________________________________________
Sullivan asserts that under Section 4 of the Clayton Act, 15
U.S.C. 15(a) (1994), he has standing both individually and on
behalf of SMC to maintain a private damage action against the
NFL. Under Section 4, "[A]ny person who shall be injured in his
business or property by reason of anything forbidden in the
antitrust laws may sue therefor in any district court of the
United States in the district in which the defendant resides or
is found . . . without respect to the amount in controversy, and
shall recover threefold the damages by him sustained, and the
cost of the suit, including a reasonable attorney's fee."5
This statutory language is broad, conferring the right to
sue on "any person" claiming an injury causally related to an
____________________
5It is unquestioned that the requirements of antitrust standing
exceed those of standing in a constitutional sense. See
___
Associated General Contractors, Inc. v. California State Council
____________________________________ _________________________
of Carpenters, 459 U.S. 519, 535 n.31 (1977); see also Daniel
_____________ ___ ____
Berger & Roger Bernstein, An Analytical Framework for Antitrust
______________________________________
Standing, 86 Yale L.J. 809, 813 n.11 (1977).
________
-5-
antitrust injury. However, the class of persons entitled to
recover damages under Section 4 has been limited by caselaw
through the doctrine of "antitrust standing." See Associated
___ __________
General Contractors of California, Inc. v. California State
___________________________________________ _________________
Council of Carpenters, 459 U.S. 519, 529-35 (1983); Blue Shield
_____________________ ____________
of Virginia v. McCready, 457 U.S. 465, 472-73 (1982).
___________ ________
In Associated General Contractors, the Supreme Court
_________________________________
outlined a series of factors to be evaluated on a case-by-case
basis to determine whether a plaintiff has standing to bring an
antitrust action.6 These factors are: (1) the causal connection
between the alleged antitrust violation and harm to the
plaintiff; (2) an improper motive; (3) the nature of the
plaintiff's alleged injury and whether the injury was of a type
that Congress sought to redress with the antitrust laws
("antitrust injury"); (4) the directness with which the alleged
market restraint caused the asserted injury; (5) the speculative
____________________
6Prior to Associated General Contractors, circuit courts had
_______________________________
crafted a variety of tests to determine whether a party injured
by an antitrust violation had standing to bring an action for
treble damages under Section 4 of the Clayton Act. The two most
commonly stated tests focused on the "directness of the injury"
to the alleged antitrust violation, and whether a plaintiff was
in the "target area" of the antitrust conspiracy. See Associated
___ __________
General Contractors, 459 U.S. at 535-36 & n.33 (citations
____________________
omitted); Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law,
_____________
334.1 (1993 Supp.). A third test considered whether the injury
was "``arguably within the zone of interests protected by the
antitrust laws.'" Associated General Contractors, 459 U.S. at
_______________________________
536 n.33 (citation omitted). In Associated General Contractors,
______________________________
the Court, noting that it was "virtually impossible to announce a
black-letter rule that will dictate the result in every case,"
459 U.S. at 536, drew on these tests to outline a series of
factors to guide courts in deciding whether a private plaintiff
should have standing to pursue an antitrust action in a
particular case. See id. at 536-46.
___ ___
-6-
nature of the damages; and (6) the risk of duplicative recovery
or complex apportionment of damages. 459 U.S. at 537-45; See
___
also Lovett v. General Motors Corp., 975 F.2d 518, 520 (8th Cir.
____ ______ ____________________
1992) (listing factors).
Though Associated General Contractors outlined a
___________________________________
comprehensive approach to the question of antitrust standing, it
gives little guidance as to how to weigh the various factors, and
whether the absence of a particular factor would be fatal to
standing in every instance. In Associated General Contractors
_______________________________
itself, the Court found that two factors, the causal connection
between the Union's alleged injuries and the violation of the
antitrust laws, and the allegation of improper motive, supported
a grant of standing, 459 U.S. at 537, but that a consideration of
the remaining relevant factors weighed heavily against standing,
id. at 545. The Court concluded that, in the circumstances of
___
that case, these latter factors were controlling, and denied
standing to the plaintiffs. Id. at 545-46.
___
We draw from the Court's discussion in Associated General
__________________
Contractors the requirement that courts consider the balance of
___________
factors in each case in an effort to guard against "engraft[ing]
artificial limitations on the 4 remedy." McCready, 457 U.S. at
________
472. See also Los Angeles Memorial Coliseum v. NFL, 791 F.2d,
_________ ______________________________ ___
1356, 1363 (9th Cir. 1986) ("Most cases will find some factors
tending in favor of standing . . . , and some against . . . , and
a court may find standing if the balance of factors so
instructs."); accord Southaven Land Co. v. Malone & Hyde, Inc.,
______ ___________________ ____________________
-7-
715 F.2d 1079, 1085-86 (6th Cir. 1983); Ashmore v. Northeast
_______ _________
Petroleum Corp. of Cape Cod, 843 F. Supp. 759, 765 (D. Me. 1994).
___________________________
III. Application to Claims Brought on Behalf of SMC
______________________________________________
A. Factors Supporting Standing
___________________________
Sullivan argues that the district court was correct when,
evaluating the relevant factors as they applied to claims brought
on behalf of SMC, it found that plaintiff had alleged, and
presented evidence of, a causal connection between the alleged
antitrust violation and the harm to the plaintiff, and an
improper motive on the part of defendants; and when it found no
significant risk of duplicate recoveries or danger of complex
apportionment in this case. He maintains, however, that the
court erred in its determination that the absence of the
remaining Associated General Contractors factors required the
________________________________
court to deny standing. He contends that he has satisfied the
remaining factors, and that the court should have granted him
standing to press his antitrust suit, both individually and on
behalf of SMC.
We agree that the district court correctly found that
Sullivan's complaint met three of the Associated General
___________________
Contractors factors. Sullivan alleged, and presented evidence,
___________
of a causal connection between the application of the NFL Rule
and SMC's inability to refinance the stadium because the sale of
Patriots' stock to the public was prohibited. Sullivan also
alleged an improper motive on the part of defendants in that they
"sought to restrain and monopolize interstate commerce in
-8-
professional football" and took the actions they did in
furtherance of that goal. In addition, Sullivan indicated that
defendants intended to block the refinancing of the stadium by
their actions, or, at the very least, that such a harm was a
foreseeable consequence of the application of the Rule to the
Patriots.7 Nor does there appear to be a significant risk of
duplicate recovery or danger of complex apportionment in this
case, as the injuries of which Sullivan complains are
sufficiently distinct from those alleged by William Sullivan, the
only other plausible litigant in this case.8
B. Factors Defeating Standing
__________________________
We are not persuaded, however, by Sullivan's argument that
he satisfies the remaining Associated General Contractors'
_________________________________
factors. The existence of antitrust injury is a central factor
in the standing calculus.9 In this case, its absence, together
____________________
7Of course, as the Supreme Court has noted, the presence of an
improper motive on the part of the defendants is not, by itself,
determinative of antitrust standing. See Associated General
___ __________________
Contractors, 519 U.S. at 537 & n.37 (noting that "[t]he
___________
availability of the 4 remedy to some person who claims its
benefit is not a question of the specific intent of the
conspirators") (quoting McCready, 457 U.S. at 479).
________
8We recognize that there is a risk of duplicate recovery and
complex apportionment of damages as between Sullivan, in his
individual capacity, and SMC, in light of their seemingly
overlapping injuries. We think that this can be avoided,
however, given that plaintiff brings this single action for
damages suffered by both.
9Some courts have concluded that a consideration of antitrust
injury is of threshold significance in the Section 4 standing
inquiry. See, e.g., Balaklaw v. Lovell, 14 F.3d 793, 797-98 &
___ ____ ________ ______
n.9 (2d Cir. 1994); Todorov v. DCH Healthcare Authority, 921 F.2d
_______ ________________________
1438, 1449 (11th Cir. 1991); see also State of South Dakota v.
___ ____ ______________________
-9-
with the indirectness of the injury to Sullivan, and the
speculative nature of the claimed damages, outweighs the
remaining factors. We therefore conclude that plaintiff lacks
standing to pursue the claims brought on behalf of SMC.
1. The Nature of the Injury: Is it Antitrust Injury?
_________________________________________________
Sullivan contends that he has suffered "antitrust injury,"
that is, the type of injury that the antitrust laws were designed
to prevent. He relies principally on McCready, 457 U.S. at 465,
________
and Los Angeles Coliseum, 791 F.2d at 1356, to support this
_____________________
claim.
The Supreme Court first articulated the concept of
"antitrust injury" in Brunswick Corp. v. Pueblo Bowl-O-Mat, 429
_______________ _________________
U.S. 477 (1977). In Brunswick, several small bowling centers
_________
brought suit, challenging the acquisition of several of their
competitors by the much larger Brunswick Corporation as an
anticompetitive merger under Section 7 of the Clayton Act, 15
U.S.C. 18, and seeking treble damages under Section 4 for
____________________
Kansas City Southern Industries, 880 F.2d 40, 46 (8th Cir. 1989)
________________________________
(noting primacy of antitrust injury requirement). Cf. Cargill,
___ ________
Inc. v. Montfort of Colorado, Inc., 479 U.S. 104, 110, n.5 (1986)
____ __________________________
(pointing out, in the course of considering antitrust injury
requirement for private plaintiffs seeking an injunction under
Section 16 of the Clayton Act, that a showing of antitrust injury
was a necessary (though not always sufficient) element of
standing to sue for damages under Section 4).
We agree that the absence of antitrust injury weighs heavily
against a grant of standing. We need not consider, however,
whether this should be fatal to standing in every instance,
because in the circumstances of this case, we conclude that the
balance of factors as a whole weighs against a grant of standing.
-10-
profits they would have made had the acquired centers gone out of
business. Id. at 480-81.
___
Although plaintiffs had alleged that Brunswick had engaged
in predatory practices designed to lessen competition in the
markets it had entered, they could prove only that Brunswick's
acquisitions had deprived them of profits they would have made
had the acquired firms closed. Id. at 488, 490 & nn.15, 16. The
___
Court noted that, in essence, plaintiffs were not complaining
that Brunswick's actions had reduced competition, but preserved
it, thereby depriving plaintiffs of the benefits of increased
concentration. Id. at 488. Rejecting the lower court's holding
___
that any loss "causally linked" to "the mere presence of the
violator in the market" was compensable, id. at 486-87, the Court
___
found that plaintiffs' injury was not of "``the type the
[antitrust laws] were intended to forestall,'" 429 U.S. at 487-88
(citation omitted). The Court held that to recover treble
damages under Section 4, a plaintiff must prove "antitrust
_________
injury, which is to say injury of the type the antitrust laws
were intended to prevent and that flows from that which makes
defendants' acts unlawful." Id. at 489 (emphasis in original).
___
In Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982),
_______________________ ________
the first case explicitly to address antitrust standing, the
Court incorporated a focus on "antitrust injury" into its Section
4 standing inquiry. The plaintiff in McCready was a subscriber
________
of Blue Shield, a health insurance plan that did not provide
reimbursement for psychotherapy treatment rendered by
-11-
psychologists (unless "prescribed" by and billed through a
medical doctor), while providing reimbursement for the same
treatment if given by a psychiatrist. McCready was treated by a
psychologist, and Blue Shield refused to reimburse her for this
treatment. McCready brought suit, alleging that Blue Shield and
an association of psychiatrists had engaged in an unlawful
conspiracy "``to exclude and boycott clinical psychologists from
receiving compensation under'" the Blue Shield plans, and that
Blue Shield's failure to reimburse was in furtherance of this
conspiracy. McCready, 457 U.S. at 470.
________
The defendants argued that McCready had not suffered
"antitrust injury" because her injury did not reflect the anti-
competitive effect of the alleged antitrust violation. Id. at
___
481-82. McCready had not paid inflated fees for psychotherapy to
psychiatrists, the supposed beneficiaries of the conspiracy; nor
had she alleged that her psychologists' bills were higher than
they would have been had the conspiracy not existed. Id. at 481.
___
The Court, however, refused to so limit recovery. While not
a competitor of the conspirators, the injury McCready suffered --
sanction in the form of the unreimbursed psychologists' services
-- "was inextricably intertwined with the injury the conspirators
sought to inflict" on the market. Id. at 483-84. McCready
___
suffered injury by virtue of the role she played in Blue Shield's
anticompetitive scheme. Denying reimbursement to patients of
psychologists was the "very means" by which Blue Shield coerced
-12-
her to choose between becoming an unwilling participant in its
illegal campaign to boycott the services of psychologists, or to
pay the costs of treatment for the therapist of her choice from
her own pocket. The harm to McCready was thus a "necessary step
in effecting the ends of the alleged illegal conspiracy." Id. at
___
479. The Court therefore found that McCready's injury "``flow[ed]
from that which makes defendants' acts unlawful,' within the
meaning of Brunswick," falling "squarely within the area of
_________
congressional concern." Id. at 484.
___
Sullivan argues that the logic of McCready supports his
________
standing. In Sullivan's view, the NFL rule at issue affected
competition in the market for football stadia by preventing SMC
from obtaining refinancing to pay for renovations that would have
led the Patriots to extend their lease, and by interfering with
the Patriots' capacity to invest money in the maintenance of
their stadium, thus undermining SMC's ability to keep the
Patriots from breaking their lease with SMC and moving to another
location. Further, the injury to SMC was "inextricably
intertwined" with that to the owner of the New England Patriots,
since SMC expected to benefit from a joint proposal to conduct a
public offering of a minority ownership in the team; and was an
"integral aspect" of the conspiracy against the owner of the
Patriots and was likely to result from the implementation of that
conspiracy.
Like McCready, Sullivan claims, neither the fact that SMC
stood in a vertical relationship to the intended victim of the
-13-
alleged antitrust violation (purchasers of NFL franchises), nor
the fact that SMC's injuries might be characterized as "indirect"
deprive SMC of standing. Likewise, Sullivan's failure to show an
increase in price or a lessening of supply in the stadia market,
and the fact that Sullivan's personal losses might be derivative
of those suffered by SMC are not dispositive. Sullivan points
out that McCready's losses, for example, were at least in part
derivative of those suffered by her employer, who as the direct
purchaser of the group health insurance from Blue Shield,
presumably did not get the benefit of its bargain with Blue
Shield.
We disagree that McCready favors Sullivan's right to sue.
________
Sullivan is correct that McCready did stand, in part, for the
________
Court's refusal to limit recovery to those whose injuries result
from the anti-competitive effect of the violation, and to extend
available recovery at least to some parties who stand in vertical
relationship (such as customers) to the direct victim of an
antitrust violation.10 Thus, the fact that SMC was not a
competitor in the market for professional football teams, the
direct victim of the alleged antitrust violation, but in the
related market for football stadia, does not by itself mean that
____________________
10In this respect, we disagree with defendants' argument that
SMC, merely by virtue of its status as the Patriots' landlord, is
necessarily barred from bringing suit for injury to its tenant.
Whether a landlord has standing to sue for injury to its tenant
depends, in part, on the relationship of the landlord to the
relevant market and to the antitrust violation. For example, a
landlord may have standing to sue for injuries to a tenant based
on its status as a competitor in an adjacent market, see Los
___ ___
Angeles Coliseum, 791 F.2d at 1363-65.
________________
-14-
he lacks standing here. See McCready at 472 (refusing to engraft
___ ________
artificial constraints on Section 4, stating that "``the statute
does not confine its protection to consumers, or to purchasers,
or to competitors, or to sellers'") (internal citation omitted).
The circuits are split, however, over the question of
whether a plaintiff must be either a consumer or competitor in
the market harmed by the antitrust violation at issue in order to
establish antitrust injury. Some courts have held that a
plaintiff may establish antitrust injury by proof that he was a
consumer or competitor in the relevant market, or by showing that
__
his injury was "inextricably intertwined" with the injury to
competition, in that the plaintiff was "``manipulated or utilized
by [d]efendant as a fulcrum, conduit or market force to injure
competitors or participants in the relevant product and
geographic market.'" Province v. Cleveland Press Pub. Co., 787
________ _________________________
F.2d 1047, 1052 (6th Cir. 1986) (quoting Southaven, 715 F.2d at
_________
1086); see Ostrofe v. H.S. Crocker Co., Inc., 740 F.2d 739, 745-
___ _______ ______________________
46 (9th Cir. 1984) (though neither a consumer nor competitor in
the relevant market, fact that injury to plaintiff was a
necessary means to achieve the conspirators' illegal end
sufficient to establish antitrust injury); Ashmore v. Northeast
_______ _________
Petroleum Division of Cargill, 843 F. Supp. 759, 769-70 (same);
_____________________________
-15-
Donahue v. Pendleton Woolen Mills, 633 F. Supp. 1423, 1435-39
_______ _______________________
(S.D.N.Y. 1986) (following Ostrofe).11
_______
Other courts have interpreted Supreme Court caselaw and the
antitrust laws more narrowly, holding that a plaintiff must be a
market participant in order to establish antitrust injury. See
___
Bichan v. Chemetron Corp., 681 F.2d 514, 519 (7th Cir. 1982)
______ ________________
(Section 4 protects only parties injured as customers or
competitors in a defined market, or in a discrete area of the
economy); see also Winther v. DEC International, Inc., 625 F.
___ ____ _______ ________________________
Supp. 100, 102-03 (D. Colo. 1985). We need not resolve this
conflict, because even under a broad reading of McCready, SMC
________
cannot support its claim of antitrust injury.
Read broadly, McCready extends antitrust standing to parties
________
who can establish that their injury was a "necessary step" and
the "means" employed by the conspirators to achieve their illegal
ends, regardless of the parties' direct market participation.
See McCready, 457 U.S. at 479, 484 n.21; Ostrofe, 740 F.2d at
___ ________ _______
745-46; Ashmore, 843 F. Supp. at 768-70 & nn.16, 18. Unlike
_______
McCready and her co-plaintiffs, neither Sullivan nor SMC were
"necessary" instruments to effectuate the alleged conspiracy.
Denying stadium refinancing was not a "necessary step" in
____________________
11These courts reason that the injury suffered by a plaintiff
used as a means to effect an antitrust violation is within the
core of Congressional concern underlying the antitrust laws,
which is "to create a private enforcement mechanism that would
deter violators and deprive them of the fruits of their illegal
actions and would provide ample compensation to the victims of
antitrust violations." Ashmore, 843 F. Supp. at 770 (quoting
_______
McCready, 457 U.S. at 472); see also Ostrofe, 740 F.2d at 746-47.
________ ___ ____ _______
-16-
restraining competition in the market for professional football
franchises, nor the "very means" by which the defendants sought
to do so. Indeed, according to plaintiff's own complaint, the
purpose of the NFL policy was to "exclude competitive entry into
the business of professional football by . . . television
companies, motion picture producers, investment bankers, owners
of other professional sports teams, home entertainment companies,
and entertainment companies generally." The policy is not
alleged to have a similar anticompetitive effect on stadia.
Moreover, the instruments of the alleged conspiracy were the NFL
and member club owners, not Sullivan or SMC.
Nor does the Ninth Circuit's holding in Los Angeles Coliseum
____________________
bolster Sullivan's claim that he suffered antitrust injury. In
that case, the Los Angeles Coliseum and the Oakland Raiders
attempted to negotiate a deal to relocate the Raiders to Los
Angeles to play in the Coliseum (the Rams' old home field),
following the Rams' move to Anaheim. In its effort to block this
move, the NFL invoked a league rule requiring three-fourths of
the member teams to approve a team's relocation into another
team's league territory. The Coliseum and the Raiders brought
suit, claiming that this was an unlawful restraint of trade, in
violation of Section 1 of the Sherman Act, 15 U.S.C. 1. A jury
found that the NFL rule violated the antitrust laws, and awarded
damages to both the Coliseum and the Raiders.
In holding that the Coliseum had standing to bring this
antitrust action, the court found that the Coliseum had suffered
-17-
"antitrust injury," because the NFL had "restrained competition .
. . among football stadia by restraining the Raiders['] attempt
to move and operate in Los Angeles." 791 F.2d at 1364 (emphasis
_______
in original). Had the Raiders been permitted to move to Los
Angeles, the Coliseum would have been able to bid effectively to
have them as a tenant. The rule restraining such a move, the
court held, was precisely of the type that the antitrust laws
were designed to prevent. Id.
___
The rule at issue here posed no similar restraint on SMC's
capacity to compete for a pro football team's tenancy. In fact,
in 1987, the year of the attempted sale, SMC and the Patriots had
a lease that ran until the year 2002, regardless of the team's
ownership.
-18-
2. Directness of the Injury
________________________
Sullivan argues that SMC suffered direct harm as a result of
the NFL's restraints on the stadia market. He maintains that Los
___
Angeles Coliseum supports this claim, and compares SMC's status
________________
to that of the Coliseum.
In Los Angeles Coliseum, the Coliseum had been engaged in a
____________________
bidding struggle with a rival stadium for the tenancy of the
Oakland Raiders when the NFL's invocation of its restrictive
relocation rule foreclosed further negotiations, thus depriving
the Coliseum of expected revenue for leasing the facility to the
Raiders for their games. 791 F.2d at 1365. The Ninth Circuit
concluded that the NFL's illegal territorial restraints directly
and foreseeably restrained competition in the stadia market, in
which the Coliseum participated, and that the harm it suffered
was a direct result of the NFL's illegal territorial restraints.
Id.
___
In an attempt to limit the reach of this holding, the court
stated that it was "confident that [this] ruling will not be
misinterpreted as being a broad endorsement of antitrust standing
for all parties who might have contracted with the Raiders had
they not been restrained in their relocation plans. Football
stadia constitute a special market distinguished from those
comprised by, say, hotels, laundering establishments, or
limousine services, by their indispensable and intimate
connection with professional football and football teams. An
injury such as that suffered by the Coliseum in the present case
-19-
cannot be characterized fairly as an indirect ``ripple effect.'"
Id. at 1365.
___
Sullivan seems to argue that since SMC, like the Coliseum,
is a participant in the market for football stadia, it enjoys
similar distinguished status by virtue of its "indispensable and
intimate connection with professional football and football
teams," and should be able likewise to recover. The injury to
SMC, and its relation to the rule at issue in this case, are,
however, clearly distinguishable.
The rule at issue in Los Angeles Coliseum affected where a
____________________ _____
team could be located. In precluding a team from relocating in a
particular area, the rule necessarily restrained competition in
the related market for football stadia. Once the NFL invoked its
rule to block the Raiders from moving into the Rams' territory,
the Coliseum (and, indeed, all other stadia in that location) was
barred from competing with other stadia for the Raiders' tenancy.
The rule at issue in this case had no similar direct effect
on SMC, nor on the market in which it was a participant.
Plaintiff claims that the NFL rule restricting public ownership
of NFL teams was the "but for" cause of the loss of his stadium,
injuring SMC as follows: the NFL rejected William Sullivan's plan
to sell 49% of his stock to an investment bank, which, in turn,
would sell the stock to the public; as a result, SMC did not get
refinancing; SMC therefore could not pay its debts, nor complete
renovations; SMC could not get an extension on its lease (which
was contingent on the sale of Patriots' stock), and was forced to
-20-
file for bankruptcy. We think that any injury suffered by SMC as
a result of the NFL rule was indirect, and a consequence of the
direct injury inflicted on the Patriots' owner.
In addition, the fact that William Sullivan, the party most
directly harmed by the alleged violation, has pursued (and
indeed, obtained a verdict in) his own antitrust action
diminishes another possible rationale for allowing Sullivan to
proceed in this case. See Associated General Contractors, 459
___ _______________________________
U.S. at 542 (existence of an identifiable class of persons whose
self-interest likely to motivate them to vindicate the public
interest in antitrust enforcement diminishes the justification
for allowing a more remote party to sue).12
3. Speculative Nature of the Damages
_________________________________
____________________
12Contrary to plaintiff's assertion, the district court's finding
that there was no significant risk of duplicative recoveries or
danger of complex apportionment of damages is not at odds with
its determination that the fact that William Sullivan was
pursuing his own antitrust action weighed against a grant of
standing. In considering the risk of duplicativeness and complex
apportionment of damages, courts are concerned with keeping
antitrust actions within judicially manageable limits by
curtailing litigation involving apportionment of damages among an
array of parties claiming injury. See Associated General
___ ___________________
Contractors, 459 U.S. at 543-45 & nn.50-51; see also Southaven,
___________ ___ ____ _________
715 F.2d at 1087. In considering directness, courts are
concerned with the question of which among the affected parties
are most likely to be motivated to pursue an antitrust action.
While in the usual case, this would be those most directly
affected by the antitrust violation, in some cases, more remote
parties might be more likely to detect and pursue an antitrust
action. See Associated General Contractors, 459 U.S. at 542; see
___ ______________________________ ___
also Ashmore, 843 F. Supp. at 766-67 (appropriate to grant
____ _______
standing to employees discharged for refusal to implement
discriminatory pricing system, because purchasers, though
directly damaged by anticompetitive effect of violation, are
least likely to discover it).
-21-
The district court found that "[g]iven that an extended
chain of independent events would have had to have occurred to
give credence to the Plaintiff's damages claim on behalf of SMC,"
the damages claims were "at best, highly speculative." 828 F.
Supp. at 118. Sullivan claims that damages to SMC are measurable
in terms of the enhanced market value of the stadium which would
have resulted from the planned renovations, the extension of the
lease with the Patriots, and the potential for deals with
promoters for other entertainment and sports events. We think
that calculating these damages would "necessitate wide ranging
speculation," Southaven Land Co., 715 F.2d at 1088, about the
___________________
future value of a refinanced, renovated, debt-free stadium with a
new lease. Because the harm to SMC was indirect, and was caused,
in part, by independent intervening factors (notably, its prior
serious indebtedness, as well as its failure to secure additional
sources of commercial financing), we agree with the district
court that SMC's damages claims are "highly speculative," and are
an additional factor weighing against a grant of standing in this
case. See Associated General Contractors, 459 U.S. at 542
___ ________________________________
(finding that damages were speculative because injury was
indirect, and because it may have been produced by independent
intervening factors).
The Ninth Circuit's holding in Los Angeles Coliseum is not
____________________
to the contrary. In that case, the estimated damages claimed by
the Coliseum included claims for lost profits that would have
been earned had luxury stadium boxes been built in the Coliseum
-22-
and rented for the 1980 football season. 791 F.2d at 1366. The
court noted these estimates may have been unfounded due to lack
of proof of causation. Id. Nonetheless, the court upheld the
___
damages award, holding that even without considering the elements
in question (lost profits from would-have-been luxury boxes),
there was sufficient evidence, including attendance and seat
price estimates offered by the Raiders, to uphold the total award
of damages. Id.
___
Los Angeles Coliseum is distinguishable in several important
____________________
respects. As the Ninth Circuit found, the Coliseum suffered
direct harm as a result of the NFL's antitrust violation: but for
the NFL's interference in its negotiations with the Raiders, the
Coliseum likely would have secured their tenancy. Id. at 1365.
___
The damages suffered were therefore intimately connected with the
antitrust violation. Moreover, losses based on attendance and
ticket price estimates were the foreseeable result of these
damages, and are precisely the type of damages courts can
calculate easily. By contrast, the asserted harm here is
indirect, and likely the result, at least in part, of independent
intervening factors; nor is the enhanced market value of a
refinanced, renovated, debt-free stadium with a new lease easy to
calculate. It is the combination of these factors that leads us
to conclude that any damages to SMC as a result of the alleged
antitrust violation are highly speculative. See Associated
___ __________
General Contractors, 459 U.S. at 542.
___________________
-23-
Having considered the relevant Associated General
____________________
Contractors' factors, we conclude that the balance in this case
____________
weighs against a grant of standing. We therefore conclude that
Sullivan may not pursue an antitrust action on behalf of SMC.
IV. Application to Sullivan's Personal Damages Claims
_________________________________________________
Sullivan also claims that the NFL's restrictive rule
directly damaged him in his individual capacity, by charging him
with an array of expenses arising out of the SMC bankruptcy,
including the payment of legal and other professional fees
associated with the bankruptcy proceeding itself, lost
opportunity to purchase debt at a discounted rate, lost
compensation and benefits, and anguish and emotional distress.
In that, as the district court found, these damages "merely flow
from the alleged injuries to SMC," 828 F. Supp. at 120, they are
that much further removed from the injuries claimed on behalf of
SMC. We therefore conclude, consistent with our conclusion that
SMC did not suffer "antitrust injury," and that any damages
suffered were too indirect and speculative to sustain an action
on its behalf, that Sullivan likewise lacks standing to pursue an
antitrust action for damages suffered in his individual capacity.
The decision of the district court is AFFIRMED.
______________________________________________
-24-
Thomas G. Lovett, Trustee of the Bankruptcy Estate of John ... , 975 F.2d 518 ( 1992 )
lee-a-balaklaw-v-robert-m-lovell-wessley-d-stisser-donald-ames-joseph , 14 F.3d 793 ( 1994 )
Associated General Contractors of California, Inc. v. ... , 103 S. Ct. 897 ( 1983 )
Sullivan v. Tagliabue , 828 F. Supp. 114 ( 1993 )
state-of-south-dakota-south-dakota-conservancy-district-an-agency-of-the , 880 F.2d 40 ( 1989 )
Southaven Land Co., Inc. v. Malone & Hyde, Inc. , 715 F.2d 1079 ( 1983 )
Donahue v. Pendleton Woolen Mills, Inc. , 633 F. Supp. 1423 ( 1986 )
Ellen Mendes v. Medtronic, Inc. , 18 F.3d 13 ( 1994 )
Ashmore v. Northeast Petroleum Division of Cargill, Inc. , 843 F. Supp. 759 ( 1994 )
in-re-industrial-gas-antitrust-litigation-robert-c-bichan-v-chemetron , 681 F.2d 514 ( 1982 )