Hicks v. PGA Tour, Inc.
| Decision Date | 27 July 2018 |
| Docket Number | No. 16-15370,16-15370 |
| Citation | 897 F.3d 1109 |
| Parties | Williams Michael HICKS; Kenneth Harms, as Class Representative Plaintiffs and Individual Plaintiffs; Matthew Achatz; Brandon Antus; Chad Antus; Andrew Barnes ; Chris Berry; Michael Bestor; Duane Bock; David Brooker ; Mark Carnes; Steven Catlin ; Bruce Clendenen ; Graeme Courts; Michael Darby ; Henry Diana; Don Donatello; Michael Doran; James Edmondson; Dean Elliott; Joseph Etter; Brent Everson; Micah Fugitt; Damon Green ; Jay Haas, Jr.; Steven Hale; Matthew Hauser; Adam Hayes ; William Heim ; Jonathan Jakovac; Tom Janis; Jimmy Johnson; Chris Jones; Nick Jones ; Steve Kay ; Anthony Knight; Shay Knight; Mitch Knox; Kurtis Kowaluk; Ronald Levin; John Limanti; Brennen Little; Scott Martin, Esquire, Attorney; Rich Mayo, Jr.; Daniel Mcquilken; Eric Meller, Esquire, Attorney; Matthew Minister ; Charles Mohr; Todd Montoya; Tony Navarro ; Donald Nelson; Travis Perkins ; Joseph Pyland; Brian Reed; Chad Reynolds ; Miguel Rivera; David Robinson; Scott Sajtinac; Andrew Sanders; Fred Sanders; Corby Segal; Shawn Segars; Brian Smith; Russel Stark; Brad Swearingen ; Paul Tesori; Robert Thompson; Scott Tway; Steve Underwood; Mark Urbanek; Rusty Uresti; Brett Waldman; Neil Wallace ; Aaron Wark; Jeffery Willett; Barry Williams; Michael Mazzeo ; John Yarbrough ; Justin York ; Dennis Turning; Stephen Williams; Terry R. Engleman; Thomas Fletcher ; Alan Bond; Edward E. Willis; Robert J. Mcfadden; Peter Ambrosetti; Kenneth A. Tolles ; Joseph Duplantis; Bradley Whittle; Peter Jordan; Weston Scott Watts; Joshua E. Dickinson; David B. Parsons; Peter Vanderriet; Mark Crunden; John M. Buchna; Colin Byrne ; Linn Strickler; Chad Rosenak; Matthew Bednarski; Martin Courtois; Kenny Butler; Jeff Dolf; Marcel Labas; Russell Craver; James Walters; James Smith; Patrick V. Esway, Jr.; Mark Huber; Jon Custer; Lewis B. Puller III; Jim Thomas; Mark E. Miller, Esquire, Attorney; Matthew Hall ; Eric Schwarz; John R. Adcox; John Venn; John Egan ; Matthew Tritton; James Springer, Esquire, Attorney; Terry Travis; Richard J. Motacki; Robert Dickerson; Tim Goodell; Robert Vail ; Todd Newcomb ; Greg W. Martin; Noah Zelnik; Brent Henley; Christopher S. Fiedler; Philip Lowe; David Patterson; Kevin Mcarthur; Richard M. Schlaack; David H. Rawls; Bob Burns; Michael J. Waite ; Harry Brown; David A. Kerr; Brian H. Sullivan; Andrew Davidson; Allan Mellan; David Woosley; Ronald Mccann ; Daniel Schlimm; Steve Greenwood ; Anthony Wilds; Michael Maroney; Andrew Martinez; Kyle Kolenda; David Lawson; John L. Smith; Michael Middlemo; Spencer Seifert; Ladden Cline; Thomas G. Williams; Michael Carrick; Calvin Henley; George Assante; Walter Worthern, Jr.; Timothy J. Thalmueller; William Poore; Norman R. Blount, Jr.; William Spencer; Mark Hamilton; Christian Heath Holt; Damian Lopez, Plaintiffs-Appellants, v. PGA TOUR, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Arthur R. Miller (argued), The Lanier Law Firm P.C., New York, New York; Benjamin T. Major (argued), Kevin P. Parker, Richard D. Meadow, and W. Mark Lanier, The Lanier Law Firm P.C., Houston, Texas; for Plaintiffs-Appellants.
Jeffrey A. Mishkin (argued) and Anthony Dreyer, Skadden Arps Slate Meagher & Flom LLP, New York, New York; Raoul D. Kennedy, Skadden Arps Slate Meagher & Flom LLP, Palo Alto, California; for Defendant-Appellee.
Before: Sidney R. Thomas, Chief Judge, and Michael Daly Hawkins and Kathleen M. O'Malley,* Circuit Judges.
This appeal concerns various antitrust and related state law claims of professional golf caddies ("Caddies") who participate in golf tournaments run by the PGA Tour ("the Tour") arising out of the Tour's requirement that they wear bibs containing advertisements at professional golfing events. The district court dismissed all claims with prejudice. We affirm the dismissal, but remand the case to allow the district court to reconsider whether to grant the Caddies leave to amend their federal antitrust and California unfair competition claims.
Henry Longhurst, the renowned British golf writer and commentator, once wrote: The professional caddie has evolved from simply carrying bags and locating errant shots to providing valuable insights on course topography, club selection, and reading shots. Caddies serve as coaches, strategists, and counselors to professional golfers.
The Tour operates three tours of professional golf tournaments throughout the United States. It requires caddies to wear specified uniforms at the tournaments, including a "bib"—a loose-fitting sleeveless garment on the upper body used for identification. For each tournament, the Tour generally works with a local host ("Local Host"). The Local Hosts and Tour seek to secure and retain sponsors, including title sponsors for the tournaments. Sponsors pay Local Hosts and the Tour to secure advertising space at the tournaments. At issue in this case is the advertising space on the bibs worn by the Caddies during the tournaments.
Local Hosts and the Tour design the bibs. The bibs bear a tournament logo and sponsors' logos, which are often integrated together. With exposure to live tournament, television, and webcast audiences, advertising space on the bibs is valued at approximately $50 million annually. Local Hosts and the Tour receive the entirety of these revenues. The Caddies receive none.
Although individual professional golfers employ the Caddies as independent contractors, the Tour and Local Hosts require the Caddies to wear the bibs. The Caddies must sign a Caddie Registration and Regulations Form ("the Form") in order to participate in any Tour tournament. The Form notes that "[i]n consideration of PGA TOUR's services in cosponsoring the Tournament," the Caddies "grant and assign to PGA TOUR, without limitation, [their] individual television, radio, motion picture, photographic, electronic, ... and all other similar or related media rights with respect to [their] participation in the Tournament."
The Form also provides a list of regulations that the Caddies must adhere to, which in relevant part state:
The Player Endorsement Policy ("Endorsement Policy") referenced in Regulation Four prohibits endorsing specific categories of products, places limitations on the size and location of endorsements, and specifies that "[a]ll sponsorships, endorsements and promotional activities by members, whether during or outside PGA TOUR competitions, are subject to the approval of the PGA TOUR."2
The Tour and Local Hosts have threatened to prevent caddies who refuse to wear the bibs from participating in tournaments. They have also directly contacted golfers to determine whether the golfers would decline to hire caddies who refused to wear the bibs. These tactics, combined with the Tour's requirement that each golfer have a caddy to participate in a tournament, maximize the value of bib advertising during tournament play.
The Caddies contend that the Tour and Local Hosts cannot compel them to wear the bibs. Relatedly, they allege that by requiring the Caddies to wear the bibs, the Tour and Local Hosts have inhibited their endorsement rights under the Endorsement Policy.3 Based on these allegations, the Caddies assert contract, equitable quasi-contract, economic duress, publicity, and unfair competition claims under California law.4 See, e.g. , Cal. Civ. Code § 3344(a) (discussing publicity claims); Cal. Bus. & Prof. Code § 17200 (defining "unfair competition"). They also allege a false endorsement claim under the Lanham Act. 15 U.S.C. § 1125. Finally, the Caddies assert antitrust claims under Sections 1 and 2 of the Sherman Act. 15 U.S.C. §§ 1, 2.
For their antitrust claims, the Caddies allege two relevant product markets: the Endorsement Market and the Live Action Advertising Market. They define the Endorsement Market as "the national market for the endorsement of products and services by participants in professional golf tournaments." Without the Tour's requirement that the Caddies wear bibs, the Caddies and golfers would be the only sellers in this market. Indeed, the Caddies and golfers are the only visible and recognizable individuals who participate in golf tournaments.
According to the Caddies, the Tour's audience is a distinct advertising market given its unique demographic. The majority of Tour fans are older, Caucasian, travel via airplane for business, and are interested in products such as financial planning and vacation traveling. These characteristics allegedly distinguish the average Tour fan from the average fan of other major sports.
Moreover, endorsements from the Caddies and golfers during tournament play are purportedly more effective than...
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