Coniglio v. Highwood Services, Inc.

• Decision Date: 17 April 1974
• Docket Number: No. 738,Docket 73-2448.,738
• Parties: Angelo F. CONIGLIO, Plaintiff-Appellant, v. HIGHWOOD SERVICES, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

495 F.2d 1286 (1974)

Angelo F. CONIGLIO, Plaintiff-Appellant, v. HIGHWOOD SERVICES, INC., et al., Defendants-Appellees.

No. 738, Docket 73-2448.

United States Court of Appeals, Second Circuit.

Argued March 27, 1974.

Decided April 17, 1974.

David Berger, Philadelphia, Pa. (H. Laddie Montague, Jr., Joel C. Meredith, Steven J. Greenfogel, Philadelphia, Pa., Irving M. Shuman and Gross, Shuman, Wiltse & Laub, Buffalo, New York City, on the brief), for plaintiff-appellant.

Frank G. Raichle, Buffalo, New York City (Raichle, Banning, Weiss & Halpern, Buffalo, New York City, on the brief; Ralph L. Halpern, David C. Diefendorf, New York City, of counsel), for defendant-appellee Highwood Service Inc.

Paul J. Tagliabue, Washington, D. C. (Hamilton Carothers, Washington, D. C., on the brief; Covington & Burling, Washington, D. C., of counsel), for defendants-appellees National Football League and Pete Rozelle.

Before KAUFMAN, Chief Judge, and SMITH and ANDERSON, Circuit Judges.

IRVING R. KAUFMAN, Chief Judge:

Whatever else might be said about professional football in the United States, it does seem to breed a hardy group of fans who do not fear litigation combat. No fewer than five lawsuits have been instituted by football aficionados from Dallas to New England, each claiming that the respective defendant National Football League (NFL) team had violated the Sherman Act by requiring an individual who wishes to purchase a season ticket for all regular season games to buy, in addition, tickets for one or more exhibition or preseason games. In each case, including the instant one, the response of the district court has been the same: To dismiss the complaint upon the defendant's motion for summary judgment.¹ Without passing upon the wisdom or desirability of this ticket sale modus operandi, we find the practice to be outside the ambit of even the broad reach of the Sherman Act. Accordingly, we affirm.

I.

Angelo F. Coniglio is a resident of Amherst, New York, a suburb of Buffalo. An employee of the New York State Power Authority, Coniglio's vocation is hydraulic engineering; his avocation — avid football fan and ardent rooter for the Buffalo Bills football team (Bills).

The Bills, owned and operated by Highwood Service, Inc. (Highwood), was a charter member of the American Football League (AFL), playing its inaugural season in 1960. From its inception, the Bills has been the only professional football team in Buffalo, indeed, filling a void of more than one decade's duration since the demise of the All American Conference in 1949.

Although Coniglio regularly attended the Bills home games from 1960 onward, he did not become a season ticket holder until 1964. With this new status, he gained a number of advantages over those who purchased tickets on an individual game basis, such as, preferential seat selection, preferential call on post-season playoff tickets, and preferential seat selection for the following season. Coniglio repeated his season ticket purchase in 1965.

The year 1966 produced two events of some significance to Bills fans. First, the American Football League and its arch rival, the older National Football League, tentatively agreed to merge into one league, provided congressional approval, obviating a possible antitrust violation, could be obtained. Second, the Bills altered its season ticket sale policy by requiring the purchaser of a season ticket to also buy a ticket for one exhibition game.

In 1968, the Bills increased the number of exhibition games included in the season ticket package to two. And, two years later, in 1970, the season ticket holders were required to purchase tickets for three exhibition games. Whether because of this or perhaps because of the congressionally sanctioned² merger between the AFL and the NFL,³ which was also consummated in 1970, the Bills that year saw the end of Coniglio as a season ticket purchaser. The record does reflect, however, that in 1971 Coniglio attended five of the seven regular season home games played by the Bills at Buffalo's War Memorial Stadium, by purchasing individual tickets for each game, and that Coniglio, in fact, had chosen not to attend the two remaining home games that year.

Disenchanted with the Bills's season ticket sale practice, Coniglio commenced an antitrust action against Highwood, the NFL, and its Commissioner, Pete Rozelle, by filing a complaint in the Western District of New York on September 9, 1970. He claimed that for the period, 1966-1970, Highwood's policy of conditioning the purchase of season tickets, to a requirement to buy exhibition game tickets, constituted an unlawful tying arrangement in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Moreover, he charged, it also constituted an abuse of the Bills's monopoly power over professional football in the Buffalo area, in breach of Section 2 of the Sherman Act, 15 U.S.C. § 2. In addition, Coniglio alleged that the unlawful tie between season tickets and exhibition game tickets was the product of a conspiracy between Highwood, the NFL, and Rozelle, and that such conspiracy was a further violation of Section 1 of the Sherman Act.

Coniglio initially sought to maintain this suit as a class action,⁴ on behalf of approximately 750,000 season ticket holders of the Bills as well as a number of other NFL clubs, against a defendant class represented by Highwood. In this latter class Coniglio included all NFL clubs with season ticket policies mandating the purchase of exhibition game tickets. Following more than two years of pretrial discovery during which a substantial number of documents were produced by Commissioner Rozelle, the late Judge Henderson, on September 18, 1972, entered an order upon motion of the defendants limiting the plaintiff class to some 23,000 Bills season ticket holders,⁵ and denying Coniglio's motion to establish a defendant class.⁶

On March 21, 1973, after additional discovery of documentary evidence and the completion of Coniglio's deposition — the only oral deposition taken by either side — the defendants moved for summary judgment. On August 1, 1973, Judge Henderson, in a brief opinion reported only in 1973-2 CCH Trade Cas. ¶ 74,795 (W.D.N.Y.1973), granted the motions and dismissed the complaint.

II.

We proceed directly to a consideration of the law applicable to the alleged Sherman Act violations. In Northern Pacific Railway Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed. 2d 545 (1958), the Court concisely defined a tying arrangement as:

an agreement by a party to sell one product but only on the condition that the buyer also purchase a different or tied product. . . .

Northern Pacific Railway Co. v. United States, supra, 356 U.S. at 5, 78 S.Ct. at 518. The Court further elucidated the subject by describing the basis upon which a tying arrangement would be found to be a violation of Section 1 of the Sherman Act.

Tying arrangements are unreasonable restraints of trade and commerce in and of themselves whenever a party has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product and a "not insubstantial" amount of interstate commerce is affected.

Id. at 6, 78 S.Ct. at 518. Thus, using Northern Pacific as a springboard for our analysis, we can identify four factors essential in determining whether a particular sales practice constitutes an illicit tying arrangement:

(1) two separate and distinct products, a tying product and a tied product;

(2) sufficient economic power in the tying market to coerce purchase of the tied product;

(3) anti-competitive effects in the tied market;

(4) involvement of a "not insubstantial" amount of interstate commerce in the tied market.

It seems clear, at the outset, that the fourth factor is easily satisfied in this instance since, in 1970 alone, the total value of tied exhibition game tickets was approximately $483,000.⁷ In International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947), roughly $500,000 of interstate commerce was deemed sufficient. And see Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969).

We turn next to the second Northern Pacific prerequisite — the power to coerce purchase of the tied product — for the district judge rested his decision on the ground that the Bills lacked sufficient economic power in the season ticket (or tying) market to coerce purchase of exhibition game tickets. Judge Henderson concluded that since more than half of the 46,206 seats at War Memorial Stadium could be purchased on an individual game basis (as Coniglio himself did in 1971), "there is no tying problem even though the seller may offer a package of both season and preseason exhibition game tickets. See Northern Pacific Ry. v. United States, 356 U.S. 1, 6 78 S.Ct. 514, 2 L.Ed.2d 545 (1958)." And see Laing v. Minnesota Vikings Football Club, Inc., supra; Driskill v. Dallas Cowboys Football Club, Inc., supra; Pfeiffer v. New England Patriots Football Club, Inc., supra. But see Laing v. Minnesota Vikings Football Club, Inc., supra, (Lay, J. concurring) (declining to find no coercive power as a matter of law where only 2,500 to 4,000 tickets available on individual game basis). Although the question is indeed a close one, we believe that, despite the relatively large quantity of individual game tickets available here, the district court's conclusion, that as a matter of law the requisite coercive power was absent, is erroneous.

The district judge's reliance on Northern Pacific in the factual context of this case seems to have been misplaced. In Northern Pacific, the Court noted that "where the buyer is free to take either product by itself there is no tying problem even though the seller may also offer the two items as a unit at a single price." Northern Pacific Railway Co. v. United States, supra, 356 U.S. at 6 n. 4, 78 S.Ct. at 518. Here,...