Hairston v. Pacific 10 Conference, 95-35309

• Decision Date: 19 December 1996
• Docket Number: No. 95-35309,95-35309
• Citation: 101 F.3d 1315
• Parties: 1996-2 Trade Cases P 71,633, 114 Ed. Law Rep. 771, 96 Cal. Daily Op. Serv. 8710, 96 Daily Journal D.A.R. 14,419, 96 Daily Journal D.A.R. 15,209 Russell HAIRSTON; Frank Garcia; Jaime Weindl; Jovan McCoy; Kyle Roberts; Scoreboard, Inc., a Washington corporation; Team Spirit, Inc., a Washington corporation; Graham S. Anderson, Plaintiffs-Appellants, v. PACIFIC 10 CONFERENCE, an unincorporated association; National Collegiate Athletic Association, an unincorporated association, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1315

101 F.3d 1315

1996-2 Trade Cases P 71,633, 114 Ed. Law Rep. 771,

96 Cal. Daily Op. Serv. 8710,

96 Daily Journal D.A.R. 14,419,

96 Daily Journal D.A.R. 15,209

Russell HAIRSTON; Frank Garcia; Jaime Weindl; Jovan

McCoy; Kyle Roberts; Scoreboard, Inc., a Washington

corporation; Team Spirit, Inc., a Washington corporation;

Graham S. Anderson, Plaintiffs-Appellants, v. PACIFIC 10 CONFERENCE, an unincorporated association;

National Collegiate Athletic Association, an

unincorporated association, Defendants-Appellees.

No. 95-35309.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Feb. 6, 1996.

Decided Dec. 3, 1996.

As Amended Dec. 19, 1996.

James L. Magee, Graham & Dunn; and Michael D. Hunsinger, Neubauer & Hunsinger, Seattle, WA, for plaintiffs-appellants.

Richard J. Wallis (Al Van Kampen and John A. Tondini on the briefs), Bogle & Gates, Seattle, WA, for defendants-appellees.

Appeal from the United States District Court for the Western District of Washington, Barbara J. Rothstein, District Judge, Presiding. D.C. No. CV-93-01763-BJR.

Before: WRIGHT, HALL and TROTT, Circuit Judges.

Opinion by Judge HALL; Separate Concurrence by Judge TROTT.

CYNTHIA HOLCOMB HALL, Circuit Judge:

Plaintiffs-appellants Russell Hairston, Frank Garcia, Jovan McCoy and Kyle Roberts appeal the district court's order granting summary judgment in favor of defendant-appellee, the Pacific-10 Conference ("Pac-10"). The district court had jurisdiction over this matter pursuant to 15 U.S.C. §§ 15 and 26, and 28 U.S.C. § 1367. We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291. We affirm.

I.

Appellants are former and current University of Washington ("UW") football players. Appellee, the Pacific-10 Conference ("Pac-10"), is an unincorporated association of ten universities situated in California, Arizona, Oregon and Washington, ¹ formed for the purpose of "establishing an athletic program to be participated in by the members."

On November 5, 1992, the Seattle Times reported that UW's star quarterback, Billy Joe Hobert, had received three loans totalling $50,000 from an Idaho businessman. After investigating the allegations, UW officials suspended Hobert and declared him permanently ineligible to play amateur football. One month later, the Los Angeles Times published a series of articles alleging that UW's football program had violated several NCAA rules. At this time, UW, in conjunction with Pac-10 officials, began investigating these alleged irregularities.

After conducting an eight-month investigation into the allegations of recruiting improprieties, the Pac-10 placed the UW football team on probation for recruiting violations. The levied sanctions included: (1) a two-year bowl ban covering the 1993 and 1994 seasons; (2) a one-year television revenue ban; (3) a limit of 15 football scholarships each for the 1994-95 and the 1995-96 academic years; (4) a reduction in the number of permissible football recruiting visits from 70 to 35 in 1993-94 and to 40 in 1994-95; and (5) a two-year probationary period.

The imposition of penalties on the UW Huskies devastated both the players and their fans. In an effort to have the sanctions rescinded, appellants filed a complaint against the Pac-10. In their complaint, appellants alleged antitrust violations under Section One of the Sherman Act, 15 U.S.C. § 1, and breach of contract. They argued that the penalties were "grossly disproportionate to the University's violations" and evidence of a conspiracy engineered by UW's Pac-10 competitors to sideline UW's football program and thereby improve their own records and odds of winning a post-season bowl game berth. Besides injunctive relief ² appellants also sought damages, which would include the cost of air fare, lodging, meals and expenses related to a trip to play in a post-season bowl game.

The Pac-10 responded by filing a motion to dismiss all claims. In its motion, the Pac-10 contended that the players lacked constitutional and antitrust standing. The Pac-10's motion was granted in part as to certain plaintiffs not included in this appeal, but denied as to the issue of the players' standing. Hairston v. Pacific-10 Conference, 893 F.Supp. 1485 (W.D.Wash.1994) ("Hairston I"). The district court found that because the players had demonstrated direct antitrust injury, they could pursue their antitrust claims. Id. at 1491-92. However, the court dismissed the players' breach of contract claim because it found that the players were not intended third-party beneficiaries of the contract between and among Pac-10 member schools. Id. at 1494.

The Pac-10 then filed a motion for summary judgment alleging that appellants had failed to present any evidence of anticompetitive conspiracy among Pac-10 members or between the Pac-10 and the NCAA. The court agreed and granted the Pac-10's motion. Hairston v. Pacific-10 Conference, 893 F.Supp. 1495, 1496 (W.D.Wash.1995) ("Hairston II").

This appeal then followed. ³

II.

A district court opinion granting summary judgment is reviewed de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996).

III.

On appeal, the Pac-10 contends that the motion for summary judgment should be affirmed because appellants lack antitrust standing under Section 4 of the Clayton Act, 15 U.S.C. § 4. Although we are not persuaded by the reasoning in the district court's opinion, Hairston I, 893 F.Supp. at 1490-92, we need not decide whether appellants have met the requirements for antitrust standing, because they have failed to establish any violation of the antitrust laws.

As Professors Areeda and Hovenkamp have observed:

When a court concludes that no violation has occurred, it has no occasion to consider [antitrust] standing.... An increasing number of courts, unfortunately, deny standing when they really mean that no violation has occurred. In particular, the antitrust injury element of standing demands that the plaintiff's alleged injury result from the threat to competition that underlies the alleged violation. A court seeing no threat to competition in a rule-of-reason case may then deny that the plaintiff has suffered antitrust injury and dismiss the suit for lack of standing. Such a ruling would be erroneous, for the absence of any threat to competition means that no violation has occurred and that even suit by the government--which enjoys automatic standing--must be dismissed.

2 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law p 360f, at 202-03 (rev. ed. 1995) (footnotes omitted); accord Levine v. Central Florida Medical Affiliates, Inc., 72 F.3d 1538, 1545 (11th Cir.1996) (declining to reach the issue of standing because appellant had failed to demonstrate existence of antitrust violation); see Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 855 n. 10 (9th Cir.) cert. denied, --- U.S. ----, 116 S.Ct. 170, 133 L.Ed.2d 111 (1995) (choosing not to reach standing issue because appellant had not made out claim of antitrust injury); see also McCormack v. Nat'l Collegiate Athletic Assoc., 845 F.2d 1338, 1343 (5th Cir.1988) (punting on standing issue and reaching merits of antitrust claim). The Sherman Act requires, at a minimum, that appellants prove that the Pac-10's actions had an anticompetitive effect. It is on this showing that appellants' claim fails, and accordingly we decide this case on the merits.

IV.

Section 1 of the Sherman Act prohibits "[e]very contract, combination ... or conspiracy, in restraint of trade or commerce among the several States[.] ..." 15 U.S.C. § 1. In order to establish a claim under Section 1, the players must demonstrate: "(1) that there was a contract, combination, or conspiracy; (2) that the agreement unreasonably restrained trade under either a per se rule of illegality or a rule of reason analysis; and (3) that the restraint affected interstate commerce." Bhan v. NME Hospitals, Inc., 929 F.2d 1404, 1410 (9th Cir.), cert. denied, 502 U.S. 994, 112 S.Ct. 617, 116 L.Ed.2d 639 (1991) (citation omitted).

The first and third elements of this test are not at issue. The Pac-10 members' agreement to sanction UW fulfills the "contract, combination, or conspiracy" prong. See NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85, 99, 104 S.Ct. 2948, 2959, 82 L.Ed.2d 70 (1984) ("NCAA member institutions have created a horizontal restraint-an agreement among competitors on the way in which they will compete against each other."). The parties do not dispute that the agreement affects interstate commerce. Thus, the only issue is whether the sanctions constituted an unreasonable restraint of trade. We analyze this question using the rule of reason analysis. Id. at 103, 104 S.Ct. at 2961.

Under the rule of reason, the fact-finder examines the restraint at issue and determines whether the restraint's harm to competition outweighs the restraint's procompetitive effects. Bhan, 929 F.2d at 1413. The plaintiff bears the initial burden of showing that the restraint produces significant anticompetitive effects within the relevant product and geographic markets. If the plaintiff meets this burden, the defendant must come forward with evidence of the restraint's procompetitive effects. The plaintiff must then show that "any legitimate objectives can be achieved in a substantially less restrictive manner." Id.

Here, the plaintiffs met their initial burden by showing that the Pac-10 members banned UW from participating in bowl games for two years. The Pac-10 replied with evidence showing that there are significant procompetitive effects of punishing football programs that violate the Pac-10's amateurism rules. ⁴ The burden then returned to the athletes to show that the Pac-10's procompetitive objectives could be achieved in a substantially less restrictive manner. The players' burden of proof at the summary judgment stage of the proceedings was not high; all they had to do was present more...