Hecht v. Pro-Football, Inc.

• Decision Date: 27 April 1971
• Docket Number: No. 24446.,24446.
• Parties: Norman F. HECHT, Harry Kagan, Marc A. Miller, Appellants, Washington Federals, Inc., et al. v. PRO-FOOTBALL, INC., et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

444 F.2d 931 (1971)

Norman F. HECHT, Harry Kagan, Marc A. Miller, Appellants, Washington Federals, Inc., et al. v. PRO-FOOTBALL, INC., et al.

No. 24446.

United States Court of Appeals, District of Columbia Circuit.

Argued January 27, 1971.

Decided April 27, 1971.

Mr. William Joseph H. Smith, Washington, D. C., for appellants.

Mr. Bernard I. Nordlinger, Washington, D. C., with whom Mr. Robert B. Frank, Washington, D. C., was on the brief, for appellee Pro-Football, Inc.

Mr. Ted D. Kuemmerling, Asst. Corporation Counsel for the District of Columbia, with whom Messrs. Hubert B. Pair, Acting Corporation Counsel at the time the brief was filed, and Richard W. Barton, Asst. Corporation Counsel, were on the brief, for appellee D. C. Armory Board.

Mr. James C. McKay, Washington, D. C., with whom Messrs. Hamilton Carouthers and Paul J. Tagliabue, Washington, D. C., were on the brief, for appellee National Football League.

Before WILKEY, Circuit Judge, VAN PELT,^* Senior United States District Judge for the District of Nebraska, and GIGNOUX,^** United States District Judge for the District of Maine.

WILKEY, Circuit Judge.

Appellants brought this action under §§ 1, 2, and 3 of the Sherman Act, alleging that a restrictive covenant in the lease between appellee Pro-Football, Inc., and appellee District of Columbia Armory Board, which prohibits the use of Robert F. Kennedy Stadium by any professional football team other than the Washington Redskins for a period of thirty years, violates the prohibition against contracts in restraint of trade.

Appellant-plaintiffs are three local businessmen, who over a period of time sought to obtain either an American or Continental Football League franchise for Washington, D. C. The appellee-defendants are Pro-Football, Inc., the corporate name of the Washington Redskins, the National Football League, an unincorporated association of owners of professional football teams of which appellee Pro-Football, Inc., is a member, and the District of Columbia Armory Board, an unincorporated instrumentality of the District of Columbia which operates Robert F. Kennedy Stadium.

Count 1 of appellants' complaint alleges that the restrictive covenant in the Redskins' lease on Kennedy Stadium constitutes a contract in restraint of the business of professional football in the District of Columbia, thus violating §§ 1 and 3 of the Sherman Act. Count 2 alleges that the Redskins are engaged in an attempt to monopolize and have monopolized the business of professional football in violation of §§ 2 and 3. Count 3 joins the National Football League and two individuals not parties to this appeal with the Redskins in an alleged unlawful combination and conspiracy to restrain and monopolize the business of professional football in violation of §§ 1, 2, and 3 of the Sherman Act.

On cross-motions for summary judgment, the U. S. District Judge, 312 F. Supp. 472, granted the appellee-defendants' motions for summary judgment on all three counts, reasoning:

Thus, the leasing of the stadium was pursuant to the mandate of the Act and was governmental action. As such it was * * * exempt from the antitrust laws * * *. No violation of the Act can be made out even where there is a restraint upon trade or monopolization if it resulted from valid governmental action. Eastern R. Conf. v. Noerr Motors, 365 U.S. 127, 136, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961).

In the manner the cross-motions for summary judgment were submitted to the District Court, this was the only issue before it. The District Judge did not purport to decide, and indicated that before doing so he would need to hear evidence, whether the restrictive covenant in the lease does constitute a contract in restraint of the business of professional football, or whether this restrictive covenant effectuates any monopoly of professional football by the Redskins, or whether the restrictive covenant furthers the conspiracy to restrain and monopolize the business of professional football as alleged.

Nor do we decide these issues on this appeal. For reasons set forth below, we conclude that the District Judge erred in his holding recited above, and that the cause must be remanded for trial upon the issues left undecided by the grant of appellee-defendants' motion for summary judgment.

I. The Statute and the Lease

The Robert F. Kennedy Stadium was constructed pursuant to an Act of Congress of 1957, with amendments in 1958 and 1959.¹ By this statute the Armory Board was authorized to construct, maintain and operate the stadium "in order to provide the people of the District of Columbia with a stadium suitable for holding athletic events and other activities and events of a nature requiring such a facility."² The Secretary of the Interior was authorized to acquire "by gift, purchase, condemnation, or otherwise," the property and to contract with the Armory Board for the construction, maintenance and operation of the stadium for a term not exceeding thirty years.³ Another section of the statute, strongly relied upon by the appellees here, provided:

In order to carry out the purposes of this subchapter, the Board is hereby authorized without regard to any other provision of law, but subject to any contract entered into with the Secretary of the Interior under section 2-1721 for the use of the Stadium site —

(1) to determine all questions concerning the use of the stadium for the purposes of this subchapter;

* * * * * *

(8) to rent or lease from time to time for any of the purposes of this sub-chapter, all or any part or parts of the stadium including any or all structures, equipment or facilities of the stadium, at such rental values and for such periods of time as the Board shall determine; * * *.⁴ (Emphasis supplied by appellees in brief.)

Pursuant to this statute the stadium was constructed and the lease between the Armory Board and the Redskins entered into 24 December 1959 for a term of thirty years, commencing with the football season in 1961. There is no contention made here that there was any fraud, misrepresentation, or overreaching on either side. There was arm's-length, hard bargaining between the two parties for approximately a year and a half before the lease agreement was signed. The restrictive covenant complained of reads:

The Lessor shall have the right to lease or otherwise permit the use and occupancy of the Stadium during any period exclusive of such specific dates referred to herein for any purpose or purposes, (except provided in subsection (a) of this Paragraph IX), including (but not limited to) school, college or other amateur or professional baseball, football and basketball games and, also, for such other use or purpose as the Lessor may determine, provided that at no time during the term of this Lease Agreement shall the Stadium be let or rented to any professional football team other than the Washington Redskins. (Emphasis supplied.)

It is alleged and not contradicted that Kennedy Stadium is in fact the only suitable place for professional football in the District of Columbia. It is undisputed that it has many unique advantages. In 1965, appellants on behalf of themselves and others with a financial interest in their venture submitted an offer to the Armory Board to lease Kennedy Stadium on those Sundays, Friday nights, and Saturdays, and other times the stadium was not being used by the Redskins, for a minimum guaranteed rent or the same percentage of the gross receipts paid by the Redskins. The Armory Board replied that under the terms of the lease with the Redskins it was prohibited from leasing the stadium to them or to anyone for the use of another professional football team. After reiterations of the offer, the Armory Board continued to adhere to its position that the restrictive covenant of the lease prohibited it from leasing Kennedy Stadium to another football team without the consent of the Redskins.⁵ Thus, appellants were not able to secure the use of the stadium at any time during the year for professional football purposes, and they allege that for this reason their efforts to obtain franchises in the two professional football leagues fell through.

The District Court emphasized in its opinion that the legislative history of the Stadium Act shows that "there would have been no stadium unless a long-term lease could be negotiated by the Armory Board with the Redskins." The District Court also placed great emphasis on the fact that the Secretary of Interior's contract with the Armory Board for the construction, maintenance, and operation of the stadium was for a term of not more than thirty years, and that Congress authorized the Armory Board to issue bonds for the construction of the stadium with the principal payable not later than thirty years from the date of issuance.

In the District Court's opinion all of this added up to governmental action which created an immunity from the normal application of the antitrust laws. We can agree that most of this was governmental action, that governmental action was sensibly intermeshed and coordinated over the same time span, and that there might have been no stadium unless there could have been a long-term lease with the Redskins professional football team (as well as the Washington professional baseball team), but there is no finding by the District Court that there would have been no lease with the Redskins without the restrictive covenant complained of and that Congress knew this, nor is there any finding that Congress directly authorized such a restrictive covenant.

II. The Applicability of the United States Antitrust Laws to "Valid Governmental Action"

The rationale of the trial court and the theory of the appellees in sustaining its decision set forth as "the execution of the * * * lease * * * constituted valid governmental action which is immune from application of the antitrust laws." In support of this appellees state, "The key, undisputed fact is that the Armory...