Nat. Football League v. Governor of State of Del.

• Decision Date: 11 August 1977
• Docket Number: Civ. A. No. 76-273.
• Citation: 435 F. Supp. 1372
• Parties: NATIONAL FOOTBALL LEAGUE, an unincorporated association, and its twenty-eight constituent member clubs, to wit, et al., Plaintiffs, v. GOVERNOR OF the STATE OF DELAWARE, et al., Defendants.
• Court: U.S. District Court — District of Delaware

435 F. Supp. 1372

NATIONAL FOOTBALL LEAGUE, an unincorporated association, and its twenty-eight constituent member clubs, to wit, et al., Plaintiffs, v. GOVERNOR OF the STATE OF DELAWARE, et al., Defendants.

Civ. A. No. 76-273.

United States District Court, D. of Delaware.

August 11, 1977.

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E. Norman Veasey, Richard J. Abrams, Roderick R. McKelvie and Thomas L. Ambro of Richards, Layton & Finger, Wilmington, Del., Townley & Updike, New York City, for plaintiffs.

James M. Mulligan, Jr., Andrew G. T. Moore, II, and James S. Green of Connolly, Bove & Lodge, Richard R. Wier, Jr., Atty. Gen. of State of Del., Wilmington, Del., for defendants.

OPINION

STAPLETON, District Judge:

In August 1976, the Office of the Delaware State Lottery announced a plan to institute a lottery game based on games of the National Football League ("NFL"). Immediately thereafter, the NFL and its twenty-eight member clubs filed suit in this Court against the Governor and the Director of the State Lottery seeking preliminary and permanent injunctive relief barring such a lottery scheme. The State of Delaware intervened, and the complaint was amended to add a request that the Court create a constructive trust on behalf of the NFL clubs of all revenues derived from such a lottery. Finding no threat of immediate irreparable injury to the NFL, the Court denied the prayer for a temporary restraining order.¹

During the week of September 12, 1976, the football lottery games commenced. Upon defendants' motion, the Court dismissed plaintiffs' claims that the games violated the Equal Protection Clause of the Fourteenth Amendment and the Commerce Clause of the Constitution. With respect to twelve other counts, defendants' motion to dismiss or for summary judgment was denied. The lottery games continued through the season.

In late Fall, a six day trial on the merits was held. That was followed by extended briefing. The matter is now ripe for disposition. This Opinion constitutes the Court's findings of fact and conclusions of law on the questions presented.

FACTUAL BACKGROUND

The Delaware football lottery is known as "Scoreboard" and it involves three different games, "Football Bonus", "Touchdown" and "Touchdown II". All are weekly games based on regularly scheduled NFL games. In Football Bonus, the fourteen games scheduled for a given weekend are divided into two pools of seven games each. A player must mark the lottery ticket with his or her projections of the winners of the seven games in one or both of the two pools and place a bet of $1, $2, $3, $5 or $10. To win Football Bonus, the player must correctly select the winner of each of the games in a pool. If the player correctly selects the winners of all games in both pools, he or she wins an "All Game Bonus". The amounts of the prizes awarded are determined on a pari-mutuel basis, that is, as a function of the total amount of money bet by all players.

In Touchdown, the lottery card lists the fourteen games for a given week along with three ranges of possible point spreads. The player must select both the winning team and the winning margin in each of three, four or five games. The scale of possible bets is the same as in Bonus and prizes are likewise distributed on a pari-mutuel basis to those who make correct selections for each game on which they bet.

Touchdown II, the third Scoreboard game, was introduced in mid-season and replaced Touchdown for the remainder of the season. In Touchdown II, a "line" or predicted point spread on each of twelve games is published on the Wednesday prior to the games. The player considers the published point spread and selects a team to "beat the line", that is, to do better in the game than the stated point spread. To win, the player must choose correctly with respect to each of from four to twelve games. Depending upon the number of games bet on, there is a fixed payoff of from $10 to $1,200. There is also a consolation prize for those who beat the line on nine out ten, ten out of eleven or eleven out of twelve games.

Scoreboard tickets are available from duly authorized agents of the Delaware State Lottery, usually merchants located throughout the State. The tickets list the teams by city names, e. g., Tampa or Cincinnati, rather than by nicknames such as Buccaneers or Bengals. Revenues are said to be distributed pursuant to a fixed apportionment schedule among the players of Scoreboard, the State, the sales agents and the Lottery Office for its administrative expenses.

THE PARTIES' CLAIMS

The core of plaintiffs' objections to Scoreboard is what they term a "forced association with gambling". They complain that the football lottery constitutes an unlawful interference with their property rights and they oppose its operation on a host of federal, state and common law grounds. Briefly stated, their complaint includes counts based on federal and state trademark laws, the common law doctrine of misappropriation, the federal anti-gambling laws, the Civil Rights Act of 1871 (42 U.S.C. § 1983), the Delaware Constitution and the Delaware lottery statute.

The defendants deny that the state-run revenue raising scheme violates any federal, state or common law doctrine. Further, they have filed a counterclaim for treble damages under the Sherman and Clayton Acts for federal antitrust law violations charging, inter alia, that the plaintiffs have brought this litigation for purposes of harassment and that they have conspired to monopolize property which is in the public domain.

For the reasons which follow, I have determined that the plaintiffs are entitled to limited injunctive relief, in the nature of a disclaimer on all Scoreboard materials disseminated to the public. The Touchdown II game will also be invalidated. In all other respects, their claims for relief are denied. The defendants' claim for treble damages is likewise denied.

I. MISAPPROPRIATION

Plaintiffs have proven that they have invested time, effort, talent and vast sums of money in the organization, development and promotion of the National Football League. They have also convincingly demonstrated the success of that investment. The NFL is now a national institution which enjoys great popularity and a reputation for integrity. It generates substantial revenue from gate receipts, broadcasting rights, film rights, and the licensing of its trademarks.

There also can be no dispute that the NFL popularity and reputation played a major role in defendants' choice of NFL games as the subject matter of its lottery. Defendants concede that in making this election they expected to generate revenue which would not be generated from betting on a less popular pastime.

Based on these facts, plaintiffs assert that defendants are misappropriating the product of plaintiffs' efforts — or in the words of the Supreme Court, that the State of Delaware is "endeavoring to reap where it has not sown". International News Service v. Associated Press, 248 U.S. 215, 239, 39 S.Ct. 68, 72, 63 L.Ed. 211 (1918) ("INS"). Thus, plaintiffs maintain the lottery must be halted and the ill-gotten gains disgorged.

This Court has no doubt about the continuing vitality of the INS case and the doctrine of misappropriation which it spawned.² I conclude, however, that plaintiffs' argument paints with too broad a brush.

The only tangible product of plaintiffs' labor which defendants utilize in the Delaware Lottery are the schedule of NFL games and the scores. These are obtained from public sources and are utilized only after plaintiffs have disseminated them at large and no longer have any expectation of generating revenue from further dissemination. This fact distinguishes the situation in INS.³ In that case the Court recognized the right of INS to protection against misappropriation of the news it had collected for so long as that "product" still retained commercial value to AP. The court was careful to note that the injunction issued by the District Court limited the protection granted only until the time when "the commercial value as news to . . . AP and all of its . . . customers had passed away". 248 U.S., at 245, 39 S.Ct., at 75. I do not believe the INS case or any other case suggests use of information that another has voluntarily made available to the public at large is an actionable "misappropriation".

Plaintiffs insist, however, that defendants are using more than the schedules and scores to generate revenue for the State. They define their "product" as being the total "end result" of their labors, including the public interest which has been generated.

It is undoubtedly true that defendants seek to profit from the popularity of NFL football. The question, however, is whether this constitutes wrongful misappropriation. I think not.

We live in an age of economic and social interdependence. The NFL undoubtedly would not be in the position it is today if college football and the fan interest that it generated had not preceded the NFL's organization. To that degree it has benefited from the labor of others. The same, of course, can be said for the mass media networks which the labor of others have developed.

What the Delaware Lottery has done is to offer a service to that portion of plaintiffs' following who wish to bet on NFL games. It is true that Delaware is thus making profits it would not make but for the existence of the NFL, but I find this difficult to distinguish from the multitude of charter bus companies who generate profit from servicing those of plaintiffs' fans who want to go to the stadium or, indeed, the sidewalk popcorn salesman who services the crowd as it surges towards the gate.

While courts have recognized that one has a right to one's own harvest, this proposition has not been construed to preclude others from profiting from demands for collateral services generated by the success of one's business venture. General Motors' cars, for example,...