Midwest Communications v. Minnesota Twins, Inc.

• Decision Date: 16 January 1986
• Docket Number: No. 84-5065,84-5065
• Citation: 779 F.2d 444
• Parties: , 1985-2 Trade Cases 66,886 MIDWEST COMMUNICATIONS, INC., Appellant, v. MINNESOTA TWINS, INC.; Northstar Hockey Partnership; TwinStar Enterprises, a general partnership; Minnesota Subscription Television, Inc., d/b/a Spectrum; and Sports Channel, a Minnesota joint venture, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 444

779 F.2d 444

54 USLW 2366, 1985-2 Trade Cases 66,886

MIDWEST COMMUNICATIONS, INC., Appellant, v. MINNESOTA TWINS, INC.; Northstar Hockey Partnership;

TwinStar Enterprises, a general partnership; Minnesota

Subscription Television, Inc., d/b/a Spectrum; and Sports

Channel, a Minnesota joint venture, Appellees.

No. 84-5065.

United States Court of Appeals,

Eighth Circuit.

Submitted Feb. 15, 1985.

Decided Dec. 12, 1985.

Rehearing and Rehearing En Banc Denied Jan. 16, 1986.

Leon R. Goodrich, St. Paul, Minn., for appellant.

Peter S. Hendrixson, Marianne Short, Kevin Rouse, Minneapolis, Minn., for appellees.

Before ROSS and BOWMAN, Circuit Judges, and SCHATZ, ^* District Judge.

BOWMAN, Circuit Judge.

Appellant Midwest Communications, Inc. (WCCO) sued the Minnesota Twins (Twins), the Northstar Hockey Partnership (North Stars), TwinStar Enterprises (Twinstar), Minnesota Subscription Television (Spectrum), and Sports Channel for alleged violations of federal and state antitrust laws, breach of contract, and tortious interference with a contract. The case arises from WCCO's unsuccessful bid for telecast rights to Twins and North Stars games, which the Twins and North Stars had agreed to market jointly. In Counts I, II, and III, WCCO asserted that appellees violated the Sherman Act section 1, 15 U.S.C Sec. 1, by participating in illegal pooling, product tying, and resale price maintenance agreements. WCCO reiterated these allegations in parallel Counts VI, VII, and VIII, claiming that such actions also violated the Minnesota Antitrust Act of 1971, Minn.Stat.Ann. Secs. 325D.49-325D.66 (West 1981). WCCO sought treble damages and injunctive relief under the Clayton Act, sections 4 and 16, 15 U.S.C. Secs. 15 & 26, and under the Minnesota Antitrust Act of 1971, Minn.Stat.Ann. Secs. 325D.57 & 325D.58 (West 1981). In addition, WCCO unsuccessfully sought a temporary restraining order and a preliminary injunction to preclude joint marketing of telecast rights. Midwest Communications, Inc. v. Minnesota Twins, Inc., No. 3-82-1729 (D.Minn. Jan. 19, 1983) (Memorandum and Order denying motion for preliminary injunction).

The remaining two counts asserted state law claims concerning a contract between the Twins and Midwest Federal Savings and Loan (Midwest Federal), which is not a party to this action. In Count IV, WCCO contended it had acquired Midwest Federal's contractual right of first refusal for certain pay telecast rights to Twins games. WCCO asserted that the Twins had violated the contract by failing to accept Midwest Federal's offer to buy the pay telecast rights. ¹

Appellees denied WCCO's allegations and counterclaimed for intentional interference with contractual relations, intentional interference with prospective business dealings, deliberate injury, and violations of federal and state antitrust laws.

Before trial, the District Court ² dismissed the resale price restriction claim arising under federal antitrust law (Count III). Midwest Communications, Inc. v. Minnesota Twins, Inc., No. 3-82-1729 (D.Minn. June 30, 1983) [hereinafter cited as June 30, 1983 Order]. The court concluded that WCCO did not have standing to pursue the claim because WCCO was not within the target area of the economy endangered by the alleged breakdown of competition due to vertical price restraints. Id. at 4.

The case was tried before a jury which, by way of a twenty-nine question special verdict, found that appellees had conspired in violation of the Sherman Act. The jury found that the Twins and North Stars had entered into an unlawful tying arrangement and had injured WCCO by requiring it to purchase the telecast rights of both teams in order to obtain the rights to either team. The jury also found that appellees had conspired to pool telecast rights, but that WCCO had not suffered any injury as a result of the pooling arrangement. In addition, the jury determined that Midwest Federal and the Twins had not intended their contract to be assignable insofar as Midwest Federal's right of first refusal for pay television rights was concerned. The jury found that appellees had not tortiously interfered with the contract between Midwest Federal and the Twins. On appellees' counterclaims, the jury found that WCCO had not intentionally interfered with any of appellees' prospective business dealings or current contractual relations, and also found against appellees on the claims of deliberate injury and violations of federal and state antitrust laws.

The District Court entered judgment on the jury verdict for WCCO on its tying claims (Counts II and VII). The court enjoined the Twins and the North Stars from concerted activity to market, sell, or distribute telecast rights for the games of one team on the condition that the purchaser also acquire the telecast rights for the games of the other team. The court also directed the parties to confer and advise the court within ten days about the scheduling of discovery and trial on WCCO's damages with respect to its tying claims. Midwest Communications, Inc. v. Minnesota Twins, Inc., No. 3-83-1729, at 2 (D.Minn. Sept. 13, 1983) [hereinafter cited as September 13, 1983 Order and Memorandum]. Pursuant to the findings of the jury, the District Court dismissed Counts I, IV, V, VI, and VIII, and appellees' counterclaims.

In response to the parties' post-trial motions, the District Court reconsidered the judgment and withdrew the order granting the injunction. The court granted appellees' post-trial motion for a judgment notwithstanding the verdict on Counts II and VII, and dismissed those counts with prejudice. The basis for this dismissal was the court's decision that WCCO lacked standing to bring its tying claims. Midwest Communications, Inc. v. Minnesota Twins, Inc., No. 3-82-1729 (D.Minn. Mar. 30, 1984) (Memorandum and Order) [hereinafter cited as March 30, 1984 Memorandum and Order]. Correspondingly, the court denied WCCO's attempts to broaden the scope of injunctive relief through motions for judgment notwithstanding the verdict on Counts I, IV, V, and VI, and for a new trial on several of the special verdict questions.

On appeal, WCCO contends that the District Court erred in dismissing its antitrust claims on standing grounds. WCCO attacks the jury's finding that it has not suffered injury from the pooling agreement, and argues that it is entitled to injunctive relief. In addition, WCCO asserts that it is entitled to recover its damages resulting from the tying violation, as well as injunctive relief. Although WCCO initially sought both damages and injunctive relief for the alleged vertical price restrictions, on appeal WCCO is seeking only injunctive relief. Further, WCCO attacks the jury's verdict that Midwest Federal could not assign the right of first refusal for pay telecast rights to Twins games. Finally, WCCO claims that the Twins are estopped from contesting the assignment, an issue that the court, without objection, did not submit to the jury.

We affirm the District Court's dismissal of Counts I, II, III, VI, VII, and VIII on the basis that WCCO lacked standing to sue under either federal or state antitrust laws. Because we affirm the District Court's dismissal on standing grounds, we do not consider the merits of the claimed antitrust violations. We also affirm the dismissal of Count IV on the basis of the jury's finding that the contract between Midwest Federal and the Twins was nonassignable. We do not reach the estoppel issue, as it is not properly before us.

I.

We first describe the parties and then sketch the background of the case.

A.

Appellant WCCO is the local CBS network affiliate for the Minneapolis and St. Paul area. Broadcasting by radio since the 1920's and by television since the late 1940's, WCCO carries network shows and creates its own television programs. One of its subsidiaries, Midwest Cable and Satellite, concentrates on developing the pay television market. The WCCO radio station broadcasts the Twins games, while the television station broadcasts various other athletic events.

Appellees are closely related sporting and broadcasting organizations. The Twins are a professional, major-league baseball team headquartered in Minneapolis. The North Stars are a professional, major-league hockey team that plays its home games in Bloomington, Minnesota. Spectrum is a pay television company serving the Minneapolis and St. Paul area. Subscribers pay a monthly fee for a decoding device that unscrambles the signal that Spectrum broadcasts through the air. After agreeing to Spectrum's offer to telecast their games, the Twins and the North Stars carried out their original plans to create a company--TwinStar--to market and control the broadcast rights of the teams' home and away games. The teams jointly control TwinStar, which holds the exclusive telecast rights for each team's games for twenty years. TwinStar and Spectrum then agreed to form Sports Channel, which televises the Twins and North Stars games in metropolitan Minneapolis and St. Paul. Sports Channel televised its first game, featuring the North Stars, in November 1982.

B.

Midwest Federal began buying the broadcast rights to Twins games in 1971, and sublicensed the television rights to a local television station and the radio rights to WCCO's radio station. In January 1980, the Twins agreed to sell Midwest Federal the exclusive television and radio broadcast rights to certain Twins games for five years. While the television rights were limited primarily to away games, the radio rights encompassed the entire regular season, both home and away games. In addition, the agreement gave Midwest Federal the right of first refusal with respect to buying the pay television rights to Twins games. ³

In 1981, the North Stars began exploring the pay television market as a means of increasing their income by expanding the number of games broadcast without jeopardizing their ticket sales at home games. At that...