Championsworld, LLC v. U.S. Soccer Fed'n, Inc.

• Decision Date: 17 August 2012
• Docket Number: Case No. 06 C 5724.
• Citation: 890 F.Supp.2d 912
• Parties: CHAMPIONSWORLD, LLC, Plaintiff, v. UNITED STATES SOCCER FEDERATION, INC., Major League Soccer, LLC and Does 1 through 10, Defendants.
• Court: U.S. District Court — Northern District of Illinois

890 F.Supp.2d 912

CHAMPIONSWORLD, LLC, Plaintiff,

v.UNITED STATES SOCCER FEDERATION, INC., Major League Soccer, LLC and Does 1 through 10, Defendants.

Case No. 06 C 5724.

United States District Court,

N.D. Illinois,

Eastern Division.

Aug. 17, 2012.

Ronald Hanley Balson, Stone, Pogrund & Korey LLC, Chicago, IL, Maryaneh Simonian, William Laurence Charron, Pryor Cashman L.L.P., Jamie M. Brickell, New York, NY, for Plaintiff.

Casandra Leann Thomson, Adam Wright, Charles H. Samel, Michael Elisofon, Russell F. Sauer, Jr., Latham & Watkins, L.L.P., Los Angeles, CA, Christopher S. Yates, San Francisco, CA, Livia McCammon Kiser, Timothy Bunker Hardwicke, Catherine J. Spector, Sheri D. Davis, Steven Ross Gilford, Chicago, IL, Bradley I. Ruskin, Jennifer R. Scullion, Jordan B. Leader, Scott Arthur Eggers, Proskauer Rose LLP, New York, NY, Colin R. Kass, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

I. INTRODUCTION

Before the Court is Defendant U.S. Soccer Federation's Petition to Confirm an Arbitral Award; Plaintiff's Motion for Partial Summary Judgment; Defendants' Motion to Exclude the Expert Opinion of Rodney Fort; and Defendants' Motions for Summary Judgment on Plaintiff's Antitrust, RICO, and State Law Claims. For the reasons stated herein, the arbitral award is confirmed; Plaintiff's Motion for Partial Summary Judgment is denied; Defendants' Motions to Exclude and for Summary Judgment on the Antitrust claim are granted; and Defendants' Motion for Summary Judgment on the RICO and State Law Claims is granted in part and denied in part.

II. BACKGROUND

A. Parties and Related Entities

Due to the size and complexity of this case, the following background is necessarily incomplete. Nonetheless, the Court provides a brief summary of the case, generally noting where there is a significant dispute (such a notation does not, however, constitute a ruling on what is or is not properly disputed under Local Rule 56.1).

Plaintiff ChampionsWorld was formed in 2000 by Carmelo “Charlie” Stillitano (“Stillitano”), its CEO throughout its existence. From 2001 through 2005, ChampionsWorld organized and promoted soccer matches between prominent international men's professional soccer teams, played (with a few exceptions) on U.S. soil.

The Fédération Internationale de Football Association (“FIFA”) is the international governing body for soccer, and is responsible for such international competitions as the World Cup. FIFA is not a party to this litigation.

Defendant United States Soccer Federation, Inc. (“USSF”) is a membership organization. USSF is the FIFA National Association member for the United States, and claims to have held that role since the early 20th century. It is a member of the Confederation of North, Central American and Caribbean Association Football (“CONCACAF”), and is the national governing body for soccer recognized by the United States Olympic Committee (“USOC”). USSF is governed by a National Council comprised of elected representatives from USSF's constituent groups, and also has a Board of Directors, similarly comprised. USSF maintains that its sanction is required for any match played on U.S. soil involving foreign, FIFA-affiliated teams; it also charges substantial sanctioning fees.

Defendant Major League Soccer, LLC (“MLS”) is the Division I professional men's soccer league based in the United States, and a member of USSF. It has an unusual structure for a sports league, with a joint Board of Governors and several investor-operators responsible for various teams (the parties sometimes refer to these as the MLS “owners.”) For additional history, seeFraser v. Major League Soccer, L.L.C., 284 F.3d 47, 47–55 (1st Cir.2002).

In 2002, a group consisting of most of the MLS investors formed Soccer United Marketing (SUM), a marketing and promotion entity which now, among others, represents MLS and USSF.

A few more introductions are in order. Sunil Gulati (“Gulati”) is, since 2006, President of USSF. Before that, he was USSF Vice President, and is the President of Kraft Soccer, evidently the company through which the Kraft family became MLS investors and operators of the New England Revolution MLS team. Gulati frequently represented the Kraft family and/or Kraft Soccer at MLS and SUM proceedings.

Don Garber (“Garber”) is the MLS Commissioner and CEO of SUM; he also sits on USSF's Board of Directors. Garber and Gulati communicated fairly often about soccer matters. Charles “Chuck” Blazer (“Blazer”) is a FIFA Executive Committee member, and was at all relevant times CONCACAF General Secretary.

B. Background

1. Historical Background

In 1975, Pres. Gerald Ford formed a Commission on Olympic Sports. The Commission's final report noted, among other things, that: (a) USSF became affiliated with FIFA in 1913; (b) unlike the other sport governing bodies, USSF's members included amateur and professional leagues; and (c) USSF derived income from fees relating to “Foreign Games/Tours.” That report was delivered to Congress before the passage of the Amateur Sports Act of 1978. (The Act was amended in 1998 and renamed the Ted Stevens Olympic and Amateur Sports Act, and is now codified at 36 U.S.C. §§ 220501, et seq.)

As part of its successful bid to host the 1994 FIFA Men's World Cup, USSF agreed to facilitate the development of a Division I professional soccer league in the United States. USSF selected Major League Professional Soccer, Inc. (“MLPS”) (later to become MLS) from among three applicants to become that league (and to become a USSF member). Alan Rothenberg (“Rothenberg”), then-President of USSF, was involved in developing and founding MLPS, although Mark Abbott (“Abbott”) (MLS's 30(b)(6) witness and current President) testified that Rothenberg did not participate substantively in selecting MLPS. Plaintiff contends that process was not genuinely competitive. MLS was formed in 1995, and played its inaugural season the following year.

It appears that the World Cup Organizing Committee lent $5 million to MLPS to get the league running (that loan was later assumed by MLS). After the World Cup, surplus funds, as well as the right to collect on that loan, were transferred to the newly-formed United States Soccer Foundation (“Foundation”). (The parties dispute how independent the Foundation is from USSF.) Instead of repaying the loan in cash, MLS entered into an arrangement whereby the Foundation incrementally forgave the loan in exchange for marketing benefits such as sponsorship placement on an MLS team's jersey and the right to use MLS's marks. See Abbott Dep. 77:11–80:23. Plaintiff disputes that the loan was ever truly repaid.

USSF has repeatedly stated its support for MLS (and the women's professional leagues), and that the leagues' success is important to the good of soccer in the United States. USSF has helped fund stadium development for certain MLS teams (though, Defendants contend, only in exchange for fair consideration). USSF also helped fund Project 40, which has been described in different ways throughout the record, but appears to have been intended to support aspiring professional soccer players.

2. The Background of This Dispute

From 1996 to 2002, MLS promoted over 40 matches between FIFA-affiliated National or club teams, but the games were generally not as well attended as Plaintiff's, nor did they necessarily feature the same caliber teams. After its founding, SUM considered acquiring all or part of ChampionsWorld several times, but talks failed. SUM created SUM International to promote high-caliber international matches, noting in a memorandum that “leaving the field open to ChampionsWorld and other promoters will prove extremely damaging to SUM and MLS.” Pl.'s Resp. to Defs.' Statement of RICO Facts, Ex. EE, at Bates No. MLS 044641–643.

For all or nearly all of ChampionsWorld's matches, Plaintiff entered into contracts or “match agreements” with USSF. The agreements set forth, among other things, Plaintiff's agreement to pay a fee and post a performance bond in return for USSF's agreement to sanction the match.

Although ChampionsWorld eventually went bankrupt, some of its games were successful in drawing large crowds and high gross gate receipts. In 2003, ChampionsWorld's average attendance at U.S. matches was 45,427, and it paid an average sanctioning fee of over $200,000 per match.

USSF claims that it has been sanctioning international games, and charging sanctioning fees, since the early 20th century; Plaintiff objects to USSF's historical evidence and argues that USSF's bylaws did not impose sanctioning fees on non-USSF members until 1999. In any event, USSF's general sanctioning fee is an amount calculated as follows:

• 5.25% of the gross gate receipts for matches involving one foreign club team;

• 9% of the gross gate receipts for matches involving two foreign club teams;

• 11.25% of the first $200,000, and then 15% of the remaining gross gate receipts for matches involving any country's national team (“a National Team”).

See, e.g., Pl.'s Resp. To Def.' Statement of Antitrust Facts, Ex. OOO. (The actual percentages appear to have varied over time.) Promoters are responsible for these fees, regardless of whether they are members of USSF. Throughout its existence, Plaintiff questioned whether USSF had authority to sanction its games and charge these fees.

Although the parties hotly dispute when the policy originated, at all relevant times USSF gave a “discount” to promoters of international matches who put on matches as a part of a doubleheader with an MLS game; that is, the sanctioning fee due for the international match was calculated based on 50% of the gross gate receipts of the doubleheader event (rather than the ordinary 100% of gross gate receipts). (The parties dispute whether the discount applied only to MLS games.) Some of ChampionsWorld's games were doubleheaders.

Similarly, USSF claims that it has required promoters to put up ...