Board of Regents of University of Oklahoma v. National Collegiate Athletic Ass'n

• Decision Date: 12 May 1983
• Docket Number: No. 82-2148,82-2148
• Citation: 707 F.2d 1147
• Parties: 1983-1 Trade Cases 65,366 The BOARD OF REGENTS OF the UNIVERSITY OF OKLAHOMA, a public body corporate, and the University of Georgia Athletic Association, a non-profit corporation, Plaintiffs-Appellees, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1147

707 F.2d 1147

1983-1 Trade Cases 65,366

The BOARD OF REGENTS OF the UNIVERSITY OF OKLAHOMA, a public

body corporate, and the University of Georgia

Athletic Association, a non-profit

corporation, Plaintiffs-Appellees, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellant.

No. 82-2148.

United States Court of Appeals, Tenth Circuit.

May 12, 1983.

Rehearing Denied June 23, 1983.

Frank H. Easterbrook, Chicago, Ill. (Robert H. Harry of Davis, Graham & Stubbs, Denver, Colo., George H. Gangwere and Richard K. Andrews of Swanson, Midgley, Gangwere, Clarke & Kitchin, Kansas City, Mo., and James D. Fellers of Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Okl., with him on the briefs), for defendant-appellant.

Andrew Coats and Clyde A. Muchmore, Oklahoma City, Okl. (Harvey D. Ellis, Jr., of Crowe & Dunlevy, Oklahoma City, Okl., and Stanley M. Ward, Chief Legal Counsel, University of Oklahoma, Norman, Okl., with them on the brief), for plaintiffs-appellees.

Abbott B. Lipsky, Jr., Acting Asst. Atty. Gen. and Barry Grossman and Neil R. Ellis, Attys., Dept. of Justice, Washington, D.C., filed a brief for the United States of America, as amicus curiae.

Lionel Kestenbaum, Larry D. Sharp, and Gary J. Smith, of Bergson, Borkland, Margolis & Adler, Washington, D.C., filed a brief for ABC Sports, Inc., as amicus curiae.

J. Laurent Scharff, Philip L. Verveer, Judith L. Harris, Jack N. Goodman, and John L. McGrew, of Pierson, Ball & Dowd, Washington, D.C., filed a brief for Ass'n of Independent Television Stations, Inc., as amicus curiae.

Herbert O. Reid, Howard University School of Law, Washington, D.C., and Alvin O. Chambliss, Oxford, Miss., filed briefs for Nat. Ass'n for Equal Educ. Opportunity, Inc., Nat. Black Media Coalition, Inc., Nat. Conference of Black Lawyers, Viewers of the South, and Black Mississippians Council on Higher Educ., as amicus curiae.

Gerald A. Caplan and Alexander Halpern of Caplan & Earnest, Boulder, Colo., filed a brief for the Nat. Federation of State High School Associations, as amicus curiae.

Before BARRETT, LOGAN, and SEYMOUR, Circuit Judges.

LOGAN, Circuit Judge.

This is an appeal from a district court judgment holding the football television regulations of the National Collegiate Athletic Association to be in violation of sections 1 and 2 of the Sherman Act and invalidating contracts entered into between the NCAA and ABC Sports, Inc., CBS Sports, Inc., and Turner Broadcasting System, Inc. The plaintiffs-appellees are The Board of Regents of the University of Oklahoma and The University of Georgia Athletic Association. They want to be free to contract for the sale of broadcast rights to the football games of their universities. After a nonjury trial, the district court held that under section 1 of the Sherman Act the NCAA's television plan and the contracts are invalid per se because they constitute price fixing and group boycotts, and are also unlawful under rule of reason analysis. The court held that the NCAA violated section 2 by monopolizing the intercollegiate football broadcasting market. 546 F.Supp. 1276 (W.D.Okl.1982).

To resolve this appeal we consider: (1) whether the plaintiffs suffer antitrust injury and have standing to sue; (2) whether the television plan and contracts constitute price fixing unlawful per se; (3) whether the television plan and contracts are unlawful under rule of reason analysis; (4) whether the plan and contracts constitute group boycotts illegal per se; and (5) whether the relief granted below is overly broad.

The challenged NCAA regulations are found in the "1982-1985 NCAA Football Television Plan." Under the network television contracts entered into pursuant to the plan, ABC and CBS share exclusive first rights to negotiate with NCAA member institutions regarding the live broadcast of football games. In return for these negotiation rights ABC and CBS each guarantees to pay a "minimum aggregate compensation" of $131,750,000 over the four year contract period. ¹ The contracts essentially eliminate competition between ABC and CBS for broadcast rights to the same games. See 546 F.Supp. at 1292-93. Both ABC and CBS are to broadcast 14 "exposures" per season--seven or eight exposures are one- or two-game national or seminational telecasts and the rest are three- to six-game regional exposures. Within the 14 exposures at least 70 teams are to appear on each network. At least 82 different schools must be featured on each network over the course of two seasons; the goal is to feature 115 different teams between the two networks. Although the contracts contemplate that most telecasts will be of "major" university (Division I-A) games, they obligate the networks to telecast a few small-college games and Division I-AA, II, and III championship playoff games. The television plan limits schools to six appearances every two years, with a maximum of four appearances the first year and five the second. These appearances must be divided evenly between ABC and CBS. During 1982 and 1983 Turner Broadcasting System, Inc. is permitted to select and cablecast over its Atlanta station games not selected by ABC or CBS. For 19 games each season Turner pays a minimum aggregate compensation of $17,696,000 over the two year contract period. Schools may sell the broadcast rights to their games to ABC, CBS, and Turner only. ²

I

Relying on Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977), the NCAA asserts that the plaintiffs lack standing to assert antitrust violations because they allege injuries that are not of the type the antitrust laws were designed to redress. The violation claimed by the plaintiffs is that the television plan constitutes a marketwide horizontal price fixing conspiracy. They allege that to facilitate the pricing arrangement individual schools are precluded from exercising independent judgment with regard to output and price. Furthermore, they allege that the NCAA will expel and boycott institutions that violate the television plan. ³

In Brunswick, the Court stated "[T]hey must prove more than injury causally linked to an illegal presence in the market. Plaintiffs 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 defendant's acts unlawful."

Id. at 489, 97 S.Ct. at 697. The television plan at issue here restricts the plaintiffs' revenues, market share, and output; the plan "cripple[s] the freedom of traders and thereby restrain[s] their ability to sell in accordance with their own judgment." Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 213, 71 S.Ct. 259, 260, 95 L.Ed. 219 (1951). This effect is potentially inconsistent with the Sherman Act's mandate of free competition and is virtually identical to injuries redressable in the vertical restraint context. Furthermore, compliance with the television plan is coerced by the threat of expulsion and boycott, sanctions which clearly have anticompetitive potential.

Although many of the injuries alleged by the plaintiffs are in the nature of vertical restraint injuries rather than the allocative efficiency/deadweight loss classically attributed to cartelization, we think the plaintiffs have standing to challenge the plan as a horizontal pricing conspiracy. The standing limitation expressed by Brunswick does not apply with full rigor to the instant case. Brunswick was an action for treble damages; here the plaintiffs seek injunctive relief only. ⁴ Section 16 of the Clayton Act states that "[a]ny person, firm, corporation, or association shall be entitled to sue for and have injunctive relief ... against threatened loss or damage by a violation of the antitrust laws." 15 U.S.C. Sec. 26. The plaintiffs allege antitrust injury inextricably intertwined with a horizontal price fixing conspiracy. See Blue Shield of Virginia v. McCready, --- U.S. ----, ----, 102 S.Ct. 2540, 2548-52, 73 L.Ed.2d 149 (1982). Inasmuch as the plaintiffs may challenge the clauses of the television plan that injure the members of the conspiracy, no valid reason appears why they should be foreclosed from challenging clauses that injure the victims of the conspiracy. The statute evinces no such limitation, and we are not inclined to engraft one upon it. To do so would hinder the congressional policy of eliminating artificial restraints from the marketplace. See Jeffrey v. Southwestern Bell, 518 F.2d 1129, 1132 (5th Cir.1975); In re Multidistrict Vehicle Air Pollution Litigation, 481 F.2d 122, 130-31 (9th Cir.), cert. denied, 414 U.S. 1045, 94 S.Ct. 551, 38 L.Ed.2d 336 (1973); 2 P. Areeda & D. Turner, Antitrust Law Sec. 335e (1978). Cf. Hawaii v. Standard Oil Company of California, 405 U.S. 251, 260-61, 92 S.Ct. 885, 890-91, 31 L.Ed.2d 184 (1972) (State of Hawaii as parens patriae).

We are not persuaded by the NCAA's contention that the plaintiffs are merely seeking a "bigger slice of the [cartel] pie" or are seeking to "promote internal cartel management" by reforming the cartel "so that the cartel members may obtain their benefits while avoiding their burdens." See Appellant's Brief at 53. In Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968), similar arguments were made and rejected. In that case, the plaintiffs were Midas franchisees who alleged that certain clauses in the franchise agreement were illegal. The Court stated:

"Although petitioners may be subject to some criticism for having taken any part in respondents' allegedly illegal scheme and for eagerly seeking more franchises and more profits, their participation was not voluntary in any meaningful sense. They sought the franchises enthusiastically but they did not actively seek each and every clause of the agreement. Rather, many of the clauses were quite clearly detrimental to their interests, and they alleged that they had...