Laumann v. Nat'l Hockey League

• Citation: 56 F.Supp.3d 280
• Decision Date: 04 August 2014
• Docket Number: 12–cv–3704 SAS.,Nos. 12–cv–1817 SAS,s. 12–cv–1817 SAS
• Parties: Thomas LAUMANN, Robert Silver, Garrett Traub, and David Dillon, representing themselves and all other similarly situated, Plaintiffs, v. NATIONAL HOCKEY LEAGUE, et al., Defendants. Marc Lerner, Derek Rasmussen, and Garrett Traub, representing themselves and all other similarly situated, Plaintiffs, v. Office of the Commissioner of Baseball, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

56 F.Supp.3d 280

Thomas LAUMANN, Robert Silver, Garrett Traub, and David Dillon, representing themselves and all other similarly situated, Plaintiffs

v.NATIONAL HOCKEY LEAGUE, et al., Defendants.

Marc Lerner, Derek Rasmussen, and Garrett Traub, representing themselves and all other similarly situated, Plaintiffs

v.Office of the Commissioner of Baseball, et al., Defendants.

Nos. 12–cv–1817 SAS

12–cv–3704 SAS.

United States District Court, S.D. New York.

Signed Aug. 4, 2014.

Filed Aug. 8, 2014.

Edward A. Diver, Esq., Howard I. Langer, Esq., Peter E. Leckman, Esq., Langer Grogan & Diver, P.C., Robert LaRocca, Esq., Kohn, Swift & Graf, P.C., Philadelphia, PA, Kevin M. Costello, Esq., Gary E. Klein, Esq., Klein Kavanagh Costello, LLP, Boston, MA, Michael Morris Buchman, Esq., John A. Ioannou, Esq., Pomerantz Haudek Block Grossman & Gross LLP, Alex Schmidt, Esq., Mary Jane Fait, Esq., Wolf Haldenstein Adler Freeman & Herz LLP, J. Douglas Richards, Esq., Jeffrey Dubner, Esq., Cohen, Milstein, Sellers & Toll, PLLC, New York, NY, for Plaintiffs.

Bradley I. Ruskin, Esq., Carl Clyde Forbes, Esq., Helene Debra Jaffe, Esq., Jennifer R. Scullion, Esq., Robert Davis Forbes, Esq., Proskauer Rose LLP, Thomas J. Ostertag, Esq., Senior Vice President and General Counsel, Office of the Commissioner of Baseball, New York, NY, for Defendants Office of the Commissioner of Baseball, Major League Baseball Enterprises Inc., MLB Advanced Media L.P., MLB Advanced Media, Inc., Athletics Investment Group, LLC, The Baseball Club of Seattle, L.L.P., Chicago White Sox, Ltd., Colorado Rockies Baseball Club, Ltd., The Phillies, Pittsburgh Baseball, Inc., and San Francisco Baseball Associates, L.P.

Shepard Goldfein, Esq., James A. Keyte, Esq., Paul M. Eckles, Esq., Matthew M. Martino, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, Four Times

Square, New York, NY, for Defendants National Hockey League, NHL Enterprises, L.P., NHL Interactive Cyberenterprises, LLC, Chicago Blackhawk Hockey Team, Inc., Comcast–Spectacor, L.P., Hockey Western New York LLC, Lemieux Group, L.P., Lincoln Hockey LLC, New Jersey Devils LLC, New York Islanders Hockey Club, L.P. and San Jose Sharks, LLC.

Andrew E. Paris, Esq., Joann M. Wakana, Esq., Louis A. Karasik, Esq., Alston & Bird LLP, Los Angeles, CA, for Defendants DIRECTV, LLC, DIRECTV Sports Networks, LLC, DIRECTV Sports Net Pittsburgh, LLC a/k/a Root Sports Pittsburgh, DIRECTV Sports Net Rocky Mountain, LLC a/k/a Root Sports Rocky Mountain, and DIRECTV Sports Net Northwest, LLC a/k/a Root Sports Northwest.

Arthur J. Burke, Esq., James W. Haldin, Esq., Davis Polk & Wardwell, New York, NY, for Defendants Comcast Corporation, Comcast SportsNet Philadelphia, L.P., Comcast SportsNet Mid–Atlantic L.P., Comcast SportsNet California, LLC, and Comcast SportsNet Chicago, LLC.

Jonathan D. Schiller, Esq., Alan Vickery, Esq., Christopher Duffy, Esq., Boies, Schiller & Flexner LLP, New York, NY, for Yankees Entertainment and Sports Networks, LLC and New York Yankees Partnership.

Stephen R. Neuwirth, Esq., Richard I. Werder, Jr., Esq., Ben M. Harrington, Esq., Quinn Emanuel Urquhart Oliver and Sullivan LLP, New York, NY, for Defendants The Madison Square Garden Company and New York Rangers Hockey Club.

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge:

I. INTRODUCTION

Plaintiffs bring these putative class actions against the National Hockey League (“NHL”) and various individual clubs in the league (the “NHL Defendants”); Major League Baseball (“MLB”) and various individual clubs in the league (the “MLB Defendants”) (together the “League Defendants”); multiple regional sports networks (“RSNs”) that produce and distribute professional baseball and hockey programming;¹ two multichannel video programming distributors (“MVPDs” or “distributors”), Comcast and DIRECTV (together with the RSNs, the “Television Defendants” or “broadcasters”); Madison Square Garden Company and the New York Rangers Hockey Club (the “MSG Defendants”); and New York Yankees Partnership and Yankees Entertainment & Sports Network, LLC (“YES”) (together the “Yankee Defendants”). Plaintiffs allege violations under Sections 1 and 2 of the Sherman Antitrust Act (the “Sherman Act”).

On July 27, 2012, the defendants jointly moved to dismiss the Complaints in both actions, Garber v. Office of the Commissioner of Baseball (“Garber”) and Laumann v. National Hockey League (“Laumann”). In an Opinion and Order dated December 5, 2012, I granted the motion in part and denied it in part.² Plaintiffs Fernanda Garber and Peter Herman were dismissed from both cases, and plaintiff Robert Silver was dismissed from the Garber case, for lack of antitrust standing. Additionally, I dismissed plaintiffs' claims under Section 2 of the Sherman Act against the Television Defendants.³

On August 19, 2013, Comcast and its affiliated RSNs (the “Comcast Defendants”) filed a motion to compel arbitration against Garrett Traub, Silver, Vincent Birbiglia, Thomas Laumann, and Derek Rasmussen, and to stay the claims of David Dillon and Marc Lerner pending resolution of the arbitration. Comcast's motion was granted as to Traub, Laumann, and Rasmussen, but denied as to Silver, Birbiglia, Dillon, and Lerner. The same day, DIRECTV and its affiliated RSNs (the “DIRECTV Defendants”) filed a motion to compel arbitration against Lerner. DIRECTV'S motion was denied in full.⁴

The Comcast Defendants, the DIRECTV Defendants, the NHL Defendants, and the MLB Defendants now move for summary judgment on the remaining claims.⁵ For the reasons that follow, all four motions are DENIED in full.

II. BACKGROUND

NHL is an unincorporated association of thirty major league professional ice hockey clubs, nine of which are named as defendants in Laumann.⁶ MLB is an unincorporated association of thirty professional baseball clubs, nine of which are named as defendants in Garber.⁷ The clubs within each League are competitors—both on the field and in the contest to broaden their fan bases. However, the clubs must also coordinate in various ways in order to produce live sporting events, including agreeing upon the game rules and setting a schedule of games for the season.⁸ Both leagues divide their member teams into geographic territories and assign each team a home television territory (“HTT”) for broadcasting purposes.⁹ Neither the Comcast Defendants nor the DIRECTV Defendants played a role in the initial creation of the Leagues' HTTs.¹⁰

The structure of the territorial broadcasting system is largely uncontested. By League agreement, each club agrees to license its games for telecast only within its designated HTT.¹¹ The clubs then contract with RSNs through Rights Agreements. ¹²

The Rights Agreements generally provide each RSN the exclusive right to produce a club's games and telecast them in the HTT.¹³ The Agreements do not permit the RSNs to license telecasts for broadcast outside the HTTs.¹⁴ The Rights Agreements also require the RSNs to provide their telecasts to the Leagues without charge for use in the out-of-market packages (“OOM packages”).¹⁵ The clubs keep the revenue from their respective Rights Agreements. There are significant differences in the economic value of the various HTTs.¹⁶

In order to produce the telecasts of live games, the RSNs invest in equipment, production facilities, and a large staff.¹⁷ They also produce “shoulder” programming such as pre-game and post-game shows.¹⁸ The RSNs then sell their programming to MVPDs like Comcast and DIRECTV through Affiliation Agreements, and the MVPDs televise the programming through standard packages sold to consumers within the HTT.¹⁹ Even when an MVPD agrees to carry a RSN, it does not always distribute that RSN throughout its entire territory.²⁰ The MVPDs acquire the rights to broadcast the games subject to the territorial restrictions in the RSNs' agreements with the Leagues.²¹ The MVPDs black out games in unauthorized territories in accordance with those restrictions.

Fans can watch out-of-market games in one of two ways. First, some games are televised nationally through contracts between the Leagues and national broadcasters like ESPN and Fox.²² The clubs have agreed to allow the Leagues to negotiate national contracts on their behalf. The Leagues' agreements with national broadcasters contain provisions requiring the Leagues to preserve the HTTs.²³ The revenues from national broadcasts are shared equally among the clubs.²⁴

Second, the Leagues produce OOM packages in both television and Internet format. The television packages—NHL Center Ice and MLB Extra Innings—are available for purchase through MVPDs, including Comcast and DIRECTV.²⁵ The Internet packages—NHL GameCenter Live and MLB.tv—are available for purchasedirectly from the Leagues.²⁶ The OOM packages are comprised of local RSN programming from each of the clubs.²⁷ As with the national broadcasts, revenues from the OOM packages are shared equally among the clubs.²⁸

Each of the OOM packages requires the purchase of the full slate of out-of-market games, even if a consumer is only interested in viewing the games of one team. The OOMs exclude in-market games to “avoid diverting viewers from local RSNs that produce the live game feeds that form the OOM packages.”²⁹

In sum, each RSN is the sole producer of its club's games³⁰ and the sole distributor of those games within the HTT aside from limited nationally broadcasted games. The OOM packages do not show in-market games to avoid competition with the local RSN. Additionally, the territorial broadcast restrictions allow each RSN to largely avoid competing with out-of-market games produced by other RSNs.

Internet streaming rights are owned by the Leagues and/or the clubs.³¹ The RSNs have no right to license their programming for Internet streaming directly. The Internet OOM packages are the primary way for fans to view games on the Internet. Additionally, some MVPDs have negotiated with the Leagues to provide Internet streaming of out-of-market games to subscribers of the...