542 F.3d 290 (2nd Cir. 2008), 06-1867, Major League Baseball Properties, Inc. v. Salvino, Inc.

Docket Nº:06-1867-cv.
Citation:542 F.3d 290
Party Name:MAJOR LEAGUE BASEBALL PROPERTIES, INC., Plaintiff-Counterclaim-Defendant-Appellee, v. SALVINO, INC., Defendant-Counterclaimant-Appellant.
Case Date:September 12, 2008
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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542 F.3d 290 (2nd Cir. 2008)

MAJOR LEAGUE BASEBALL PROPERTIES, INC., Plaintiff-Counterclaim-Defendant-Appellee,

v.

SALVINO, INC., Defendant-Counterclaimant-Appellant.

No. 06-1867-cv.

United States Court of Appeals, Second Circuit.

September 12, 2008

Argued: Jan. 23, 2007.

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James T. McKeown, Milwaukee, WI (G. Michael Halfenger, Foley & Lardner, Milwaukee, WI, Gary A. Adler, Bingham McCutchen, New York, NY, on the brief), for Plaintiff-Counterclaim-Defendant-Appellee.

Maxwell M. Blecher, Los Angeles, CA (John E. Andrews, Blecher & Collins, Los Angeles, CA, on the brief), for Defendant-Counterclaimant-Appellant.

Before: KEARSE and SOTOMAYOR, Circuit Judges, and CEDARBAUM, District Judge [*].

Judge SOTOMAYOR concurs, in a separate opinion.

KEARSE, Circuit Judge:

Defendant Salvino, Inc. (“Salvino" ), appeals from so much of a final judgment of the United States District Court for the Southern District of New York, Richard Conway Casey, Judge, as dismissed its counterclaims alleging that the organization and activities of plaintiff Major

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League Baseball Properties, Inc. (“MLBP" ), as the exclusive licensing agent for Major League Baseball (or “MLB" ) clubs' intellectual property, violate § 1 of the Sherman Act, 15 U.S.C. § 1, and asserting “related state law claims" (Salvino brief on appeal at 2). The district court granted MLBP's motion for summary judgment dismissing those claims on the grounds that MLBP's operations should be analyzed under the rule of reason, and Salvino (a) failed to adduce evidence to show that the challenged organization and activities have an actual adverse effect on competition or that MLBP has sufficient market power to inhibit competition market-wide, and (b) failed to offer any evidence to support its state-law claims. On appeal, Salvino challenges the dismissal of its § 1 antitrust claim, contending that the court should not have required evidence with regard to market power or actual adverse effect on competition but should instead have held MLBP's activities either illegal per se or illegal under a “quick-look" analysis. With regard to Salvino's state-law claims, its brief on appeal contains no argument as to why the district court's dismissal was incorrect, and we therefore regard any challenge to the dismissal of those claims as abandoned, see generally Hobbs v. County of Westchester, 397 F.3d 133, 147 (2d Cir.), cert. denied,546 U.S. 815, 126 S.Ct. 340, 163 L.Ed.2d 51 (2005); Day v. Morgenthau, 909 F.2d 75, 76 (2d Cir.1990); Fed. R.App. P. 28(a)(9). For the reasons that follow, we reject Salvino's contentions and affirm the dismissal of its antitrust claim.

I. BACKGROUND

Viewed in the light most favorable to Salvino, as the party against which summary judgment was granted on the claim at issue on this appeal, the following facts are not in dispute.

A. The Parties and the Licensing Dispute

MLBP is a wholly-owned subsidiary of Major League Baseball Enterprises, Inc. (“MLBE" ), an entity in which each of the 30 current MLB clubs (the “Clubs" ) owns an equal interest. MLBP is, with limited exceptions, the exclusive worldwide agent for licensing the use of all names, logos, trademarks, service marks, trade dress, and other intellectual property owned or controlled by the MLB Clubs, MLB's Office of the Commissioner (“BOC" ), and MLBP (collectively “MLB Intellectual Property" ), on retail products. MLBP also acts as agent for the Clubs with respect to, inter alia, trademark protection, quality control, design services, royalty accounting, and auditing.

Salvino is a California corporation that produces, sells, and distributes sports collectibles, including stuffed plush animals that are usually identified with sports celebrities. Between 1989 and 2001, Salvino obtained licenses from MLBP to use Club marks and other MLB marks on figurines of baseball players in uniform. In the license agreements, Salvino promised not to use the marks in any manner other than as licensed.

In the spring of 1998, Salvino developed a line of plush, bean-filled bears that it called “Bammers." Salvino obtained licenses for sports-personality Bammers from, inter alia, National Football League (“NFL" ) Properties, Inc., National Basketball Association (“NBA" ) Properties, Inc., National Hockey League (“NHL" ) Enterprises, L.P., the NHL Players' Association, and companies representing several professional figure skaters, as well as from various individual NBA players, retired NFL players, current and retired MLB players, and drivers in the National Association

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for Stock Car Auto Racing (“NASCAR" ).

Salvino produced baseball Bammers without Club logos for sale to commercial outlets such as hobby shops, Hallmark stores, and other retail chains. In 1998 and/or 1999, it sold Bammers in uniforms bearing Club logos to at least seven MLB Clubs, and sold Bammers with Club logos only on the sales tags to two MLB Clubs, for retail sale in their stadia or for free stadium giveaways. Salvino obtained licenses to use baseball player names and numbers from the Major League Baseball Players' Association, Inc. (“MLB Players' Association" ). However, despite discussing a possible license from MLBP for the use of MLB Club logos on Bammers in early 1999, the only license for a Bammer that Salvino obtained from MLBP was an April 1999 license for a Hank Aaron Bammer commemorating the 25th anniversary of Aaron's breaking Babe Ruth's home run record.

In October 1999, MLBP learned that Salvino had sold Bammers to the Arizona Diamondbacks baseball club with the Diamondbacks logo on them; Salvino had not obtained an MLBP license to use that logo. MLBP sent Salvino a cease-and-desist letter stating that Salvino was in violation of its existing license agreement with MLBP, in which “Salvino [had] represent[ed] and warrant[ed] that it would not, during the license period or any license period thereafter, use the Logos except as licensed under the [license a]greement" (Letter from MLBP to Salvino dated November 3, 1999, at 1). The letter stated that

[i]n addition, the unauthorized use of the trademark constitutes trademark infringement. The Arizona Diamondbacks have informed [MLBP] that, although they reviewed artwork demonstrating the appearance of the proposed product, they never gave express consent to use the Arizona Diamondbacks' logo featured thereon, nor are they being compensated by Salvino (in the form of a royalty or otherwise) for the use of the Logo.

(Id. at 1-2.)

Salvino responded by commencing an action against MLBP and MLBE in federal court in California (the “California action" ), alleging that MLBP's activities violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, as well as § 7 of the Clayton Act, 15 U.S.C. § 18, and various state laws. As it related to the § 1 claim, Salvino's complaint in that action alleged principally that

[b]ecause [MLBP] distributes the income from its exploitation of trademarks equally to each member club-even though a relatively small number of clubs generate[s] the bulk of the revenue-the incentive of many major league clubs to invest in and promote and compete through its [sic ] trademark has been diminished and suppressed. As a result, the [agreement between MLBP and the Clubs] ... has reduced output, diminished the quality of product offered to the public, diminished the choice of product offered to the public, reduced and suppressed price competition leading to higher prices to the public and reduced market efficiency to the detriment of the public.

(Salvino's California action complaint ¶ 13.)

In April 2000, MLBP commenced the present action against Salvino, asserting claims under federal and state law for, inter alia, trademark and trade dress infringement arising out of Salvino's unauthorized use of MLB marks. Salvino's California action was transferred to the Southern District of New York, where it was consolidated with the present action, with Salvino's California action claims becoming

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counterclaims in the present action.

B. MLBP's Motion To Dismiss Salvino's § 1 Counterclaim

Eventually, all of the parties' respective claims, except Salvino's counterclaims against MLBP for alleged violation of § 1 of the Sherman Act and for alleged unfair competition and tortious interference with contract under California and New York law, respectively, were either abandoned or settled. In the meantime, to the extent pertinent to this appeal from the district court's dismissal of Salvino's § 1 counterclaim, MLBP moved, following some three years of discovery, for summary judgment dismissing that claim.

In support of its summary judgment motion, MLBP submitted, pursuant to Rule 56.1 of the Local Rules for the Southern District of New York (“Rule 56.1" or “Local Rule 56.1" ), a statement of facts that it contended were undisputed (“MLBP Rule 56.1 Statement" ). MLBP contended that the undisputed facts, analyzed under the rule of reason, revealed that its conduct did not violate the Sherman Act. In support of its factual assertions, MLBP generally cited documents (filed under seal, and hereby deemed unsealed to the extent described in this opinion), and submitted deposition testimony or sworn declarations to show the admissibility of the cited documents.

Salvino, in its response pursuant to Rule 56.1 (“Salvino Response" ), principally took the position that many of the facts set out by MLBP, while expressly “undisputed," were “not material," apparently on the theory that rule-of-reason analysis was inappropriate. (Salvino also contended that some of the documents cited by MLBP were objectionable on grounds of hearsay and lack of...

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