25 F.3d 43 (1st Cir. 1994), 93-2153, Sullivan v. Tagliabue

Docket Nº:93-2153.
Citation:25 F.3d 43
Party Name:Charles W. SULLIVAN, Plaintiff, Appellant, v. Paul TAGLIABUE, et al., Defendants, Appellees.
Case Date:June 06, 1994
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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25 F.3d 43 (1st Cir. 1994)

Charles W. SULLIVAN, Plaintiff, Appellant,


Paul TAGLIABUE, et al., Defendants, Appellees.

No. 93-2153.

United States Court of Appeals, First Circuit

June 6, 1994

Heard March 11, 1994.

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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.

Before BREYER, [*] Chief Judge, COFFIN, Senior Circuit Judge, and TORRUELLA, Circuit Judge.

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. Secs. 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.

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

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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 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.

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. Sec. 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 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.

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519, 529-35, 103 S.Ct. 897, 903-07, 74 L.Ed.2d 723 (1983); Blue Shield of Virginia v. McCready, 457 U.S. 465, 472-73, 102 S.Ct. 2540, 2544-45, 73 L.Ed.2d 149 (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 nature of the damages; and (6) the risk of duplicative recovery or complex apportionment of damages. 459 U.S. at 537-45, 103 S.Ct. at 908-12; 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, 103 S.Ct. at 908, but that a consideration of the remaining relevant factors weighed heavily against standing, id. at 545, 103 S.Ct. at 912. 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, 103 S.Ct. at 912.

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 Sec. 4 remedy." McCready, 457 U.S. at 472, 102 S.Ct. at 2544. 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., 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

  1. 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

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    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 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

  2. Factors Defeating Standing

    We are not persuaded, however, by Sullivan's argument that he satisfies the remaining Associated...

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