Moccio v. Cablevision Systems Corp.

Decision Date14 June 2002
Docket NumberNo. 02CV2138TCPEBT.,02CV2138TCPEBT.
Citation208 F.Supp.2d 361
PartiesSalvatore MOCCIO, Rose Moccio, Robert Grossman, Norman Levinsohn and Howard Winston, As Individuals and as Class Representatives, Plaintiffs, v. CABLEVISION SYSTEMS CORPORATION, the Yankeesnets, Inc. d/b/a New York Yankees, Yankees Entertainment and Sports Network, LLC and MSG Network, Inc., Defendants.
CourtU.S. District Court — Eastern District of New York

Lenard Leeds, John F. Wirenius, Leeds, Morelli & Brown, P.C., Carle Place, NY, for Howard Winston, Norman Levinsohn, Robert Grossman, Rose Moccio, Salvatore Moccio.

Dolores Fredrich, Farrell Fritz, PC, Uniondale, NY, for Cablevision Systems Corp., MSG Network, Inc.

Kenneth L. Steinthal, Weil, Gotshal & Manges LLP, New York City, for Yankees Entertainment and Network, LLC.

Alan Vickery, Boies, Schiller & Flexner LLP, New York City, for Yankeenets, Inc., Yankees Entertainment and Sports Network, LLC.

MEMORANDUM AND ORDER

PLATT, District Judge.

Defendants Cablevision Systems Corporation ("Cablevision") and MSG Network, Incorporated ("MSGN") cross-move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss Plaintiffs' Amended Class Action Complaint.

Cablevision and MSGN also move pursuant to Rule 11 of the Federal Rules of Civil Procedure to impose sanctions on Plaintiffs' attorneys.

For the reasons stated below: (1) Cablevision's and MSGN's Cross-Motion to Dismiss Plaintiffs' Amended Class Action Complaint is GRANTED; and (2) Cablevision's and MSGN's sanctions motion is DENIED.

BACKGROUND

This is a class action lawsuit1 wherein Plaintiffs allege that Defendants conspired to defraud Cablevision subscribers in the New York area by forcing them to purchase cable television services at artificially inflated prices. Plaintiffs have asserted claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and the Sherman Antitrust Act. Plaintiffs have also interposed various State law claims.

A. The Parties

The Plaintiffs are Cablevision subscribers who reside in Nassau and Rockland Counties in New York State. (Am. Compl. ¶¶ 5-9.) Plaintiffs are all long-time fans of the New York Yankees baseball team, and all heretofore subscribed to premium Cablevision cable television services in order to receive televised broadcasts of New York Yankees baseball games. (Am. Compl. ¶ 10.)

Defendant Cablevision is a New York Corporation with its principal place of business in Bethpage, New York. (Am. Compl. ¶ 11.) Cablevision provides cable television services to approximately three million subscribers in, among other places, Nassau and Rockland Counties. (Am. Compl. ¶¶ 9-5, 59-60.)

Defendant MSGN is also a New York Corporation with its principal place of business in New York, New York. (Am. Compl. ¶ 12.) MSGN is a Cablevision subsidiary and heretofore enjoyed the exclusive right to broadcast New York Yankees baseball games on cable television. (Am. Compl. ¶¶ 12, 36.)

Former Defendant YankeesNets, Incorporated ("YankeesNets") owns the New York Yankees ("Yankees") baseball team. (Am.Compl.¶ 14.) YankeesNets, a New York Corporation, has its principal place of business in Bronx County, New York. (Am.Compl. ¶ 14.)

Former Defendant Yankees Entertainment and Sports Network, L.L.C. ("YES") is a New York limited liability company with its principal place of business in New York, New York. (Am.Compl. ¶ 13.) YES is owned primarily by the Yankees, who created YES in 2001. (Am.Compl. ¶¶ 14, 35.) YES currently holds the exclusive right to broadcast 130 Yankees games on cable television during this season. (Am. Compl. ¶¶ 35-36, 43.)

B. Plaintiffs' Allegations
1. The Contract Dispute Between Cablevision and YES

Before 1988, the Yankees sold the right to broadcast Yankees baseball games to various public television stations around the nation. (Am.Compl. ¶¶ 17-18.) Accordingly, Yankees fans who lived in areas where public television stations had contracted with the Yankees could watch televised broadcasts of Yankees baseball games without paying for any special services. (Am.Compl.¶¶ 18-19.)

In 1988 however, the Yankees stopped contracting with local public television stations for the right to broadcast Yankees baseball games and began contracting with cable television providers to broadcast those games. (Am.Compl.¶ 20.) MSGN was one such cable television station with whom the Yankees contracted. (Am. Compl.¶ 20.) Plaintiffs allege that at some point, MSGN and Cablevision acquired a monopoly over the broadcast rights to Yankees baseball games in an undisclosed area. (Am.Compl. ¶¶ 21, 23.)

After forming YES in 2001, the Yankees renegotiated its regional cable broadcast licences and licensed the exclusive right to broadcast Yankees baseball games on cable television to YES. (Am.Compl. ¶¶ 35-36.) YES, however, is not currently available on the Cablevision cable television system. (Am.Compl. ¶ 38.) Accordingly, approximately three million Cablevision subscribers cannot currently watch 130 cable broadcast Yankees baseball games on Cablevision during this season. (Am. Compl. ¶¶ 38, 43.)

Cablevision does not currently offer YES as a channel on its cable television system because YES and Cablevision have been unable to agree on which Cablevision service tier in which to include YES. (Am. Compl. ¶¶ 38, 43.) Cablevision wishes to offer YES as a premium channel that Cablevision subscribers would have to pay extra fees (above those paid to receive basic cable television services) to receive. (Am.Compl. ¶ 39.) Cablevision would purportedly allow YES to set the cost of those extra fees. (Am.Compl. ¶ 39.)

YES allegedly wishes to have Cablevision offer it as part of Cablevision's basic service plan so that Cablevision subscribers could obtain YES by paying only for basic Cablevision service. (Am. Compl. ¶ 40.) YES purportedly wishes to have Cablevision pay it $72,000,000.00 for the privilege of carrying YES as a basic channel, or approximately $24.00 per Cablevision subscriber. (Am.Compl. ¶ 40.) Cablevision would supposedly have to charge all of its subscribers an additional $2.00 per month to accommodate YES' plan. (Am.Compl. ¶ 41.)

Cablevision allegedly rejected YES' offer on grounds that not all Cablevision subscribers should have to pay to receive programming that only a few subscribers might wish to view. (Am.Compl. ¶ 41.) YES supposedly rejected Cablevision's proposal on grounds that not all Cablevision subscribers would have access to Yankees baseball games if Cablevision offered YES as a premium channel. (Am. Compl. ¶ 42.)

2. Plaintiffs' Claims Against Cablevision and MSGN Individually

Plaintiffs aver that Cablevision and MSGN have: (1) exploited their monopoly positions over Yankees baseball games;2 (2) conspired to raise Cablevision subscription rates by abusing their monopoly positions; (3) tied receipt of MSGN programming to receipt of other premium Cablevision channels which certain Yankees fans and Cablevision subscribers do not wish to receive; and (4) conspired to exclude YES from Cablevision's cable television system. (Am.Compl.¶¶ 21, 23-27, 29-33.)

Plaintiffs aver that Cablevision has tied receipt of those premium channels to MSGN by making it economically irrational to purchase MSGN separately from the allegedly tied channels. (Am.Compl. ¶¶ 23-24, 83.) Specifically, Plaintiffs contend that Cablevision charges subscribers $54.60 per month to receive basic cable television service with MSGN. (Am. Compl. ¶ 25.) Cablevision allegedly charges subscribers only $49.55, however, to receive its Optimum Plan service, which includes not only MSGN, but also several other premium channels.3 (Am. Compl. ¶¶ 25-26.)

Plaintiffs further allege that Cablevision and MSGN have exploited their monopoly positions4 to limit YES' market penetration in an undisclosed market. (Am. Compl. ¶¶ 29, 33.) Finally, Plaintiffs contend (albeit nebulously) that Cablevision and MSGN have vertically conspired to exclude YES from Cablevision's basic cable television service and have treated it differently from other similarly situated cable television sports networks as part of a group boycott or concerted refusal to deal. (Am. ¶¶ 29, 31-34.)

3. Plaintiffs' Claims Against the Yankees and YES Individually

Plaintiffs have alleged that YES and the Yankees enjoy a monopoly over the broadcast rights to Yankees baseball games and that YES and the Yankees have also engaged in illegal tying practices. (Am. Compl.¶¶ 44-46, 84.) Specifically, Plaintiffs contend: (1) that YES and the Yankees show programing on YES that is unrelated to Yankees baseball games; (2) that many YES viewers wish to watch only Yankees baseball games; and (3) that those viewers are forced to purchase YES' non-game programming in order to see Yankees baseball games. (Am. Compl.¶¶ 45-47.) YES and the Yankees purportedly initiated that alleged tying arrangement to extort exorbitant subscription fees from cable television subscribers who wish to watch Yankees baseball games. (Am.Compl.¶ 46.)

Plaintiffs also allege that YES and the Yankees have intentionally fomented an artificial contract impasse with Cablevision and MSGN in order to obtain "greater market power over MSGN in other markets." (Am.Compl. ¶ 50.) Plaintiffs further aver that YES and the Yankees have insisted on being placed in Cablevision's basic subscription tier in an effort to deliberately and impermissibly inflate YES' market share (in an undefined market), thereby disadvantaging MSGN. (Am. Compl.¶¶ 52-53.)

4. Plaintiffs' State Law Claims

Plaintiffs allege that Cablevision and MSGN materially misled Plaintiffs through their sales and marketing techniques and that those sales and marketing tactics violate New York General Business Law § 349. (Am.Comp.¶¶ 88-91.) Plaintiffs further aver that Cablevision breached its subscription contracts by failing to broadcast Yankees baseball games as it...

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