Nishimura v. Dolan
| Decision Date | 19 October 1984 |
| Docket Number | Civ. A. No. 83-0085. |
| Citation | 599 F. Supp. 484 |
| Parties | James Y. NISHIMURA, et al., Plaintiffs, v. Charles F. DOLAN, et al., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
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Jay E. Ricks, P.C., David J. Saylor, Harry T. Jones, Jr., Hogan & Hartson, Washington, D.C., for plaintiffs James Y. Nishimura, Communication Systems Corp., Huntington TV Cable Corp., Home Entertainment Productions, Inc.
Sullivan & Cromwell, New York City, for Cablevision and individual defendants; Michael A. Cooper, Yvonne S. Quinn, James W. Dabney, Steven H. Reisberg, New York City, Joseph F. Carlino, P.C., Mineola, N.Y., of counsel.
Paul, Weiss, Rifkind, Wharton & Garrison, a partnership including P.C., New York City, for defendant Meadowlands Basketball Associates; Moses Silverman, Michael A. Lampert, New York City, of counsel.
Arthur H. Christy, David S. Machlowitz, Christy & Viener, New York City, for defendant Nassau Sports.
This case involves a dispute between two cable television companies in Huntington, Long Island, in competition for subscribers to sports programs covering the games of the Yankees, the Mets, the Islanders, and the Nets. Huntington is a town of 54,000 homes, presenting an unusual situation in the cable television systems industry in that two "overbuilt" television systems have franchises and are competing head-to-head for subscribers to their respective systems. Plaintiffs, owning one of the systems, invoke the antitrust laws in challenging the conduct of its competitor-defendant in obtaining exclusive rights to cablecast the games of these four well-known New York professional sports teams. In doing so, the complaint joins the teams as well as the competing cable system operator in violating the antitrust laws. Specifically, the plaintiffs seek treble damages, under § 4 of the Clayton Act, 15 U.S.C. § 15, for violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, allegedly arising from various conspiracies to restrain and monopolize competition for the provision of cable television services in Huntington, New York.
The parties having completed extensive "first wave" discovery, defendants presently move for partial summary judgment, Fed.R.Civ.P. 56(b), dismissing the defendant sports teams from the action on the counts of the complaint predicated upon alleged conspiracies to deny plaintiffs access to "essential" cable television sports programming.
At this stage of the litigation, the court is called upon to decide, in essence, whether the teams belong in this lawsuit. The defendants, in making this motion, argue that there are no genuine issues of material fact to be tried upon this issue and that the uncontradicted evidence shows no team participation in the allegedly anticompetitive conspiracies. In contrast, the plaintiffs vigorously argue that triable issues of material fact do exist and, alternatively, that further discovery is required in order to adequately support their position. Fed. R.Civ.P. 56(f).
The individual plaintiff, James Y. Nishimura, is the alter-ego of the three corporate plaintiffs: Communication Systems Corp. ("CSC"), Huntington TV Cable Corp. ("HTVC"), and Home Entertainment Productions, Inc. ("HEP"). He and members of his family own 100% of CSC's outstanding stock, while CSC in turn is the sole parent company of HTVC and HEP. Nishimura is also president and a director of all three corporate plaintiffs. Since 1967 plaintiff HTVC has had a franchise in Huntington, New York, for the operation of a cable television system. In addition to offering its subscribers "basic" cable television service1 HTVC offers several packages or tiers of "premium" programming services for an additional monthly fee. Plaintiff HEP was organized by Nishimura to purchase premium programming services from third parties for resale to HTVC and its subscribers.
Defendant Charles F. Dolan can similarly be described as the alter-ego of the ten defendant corporations and partnerships listed in the margin.2 For the sake of convenience and except where otherwise noted, these ownership-affiliated and commonly managed entities will be collectively referred to as "Cablevision." Its businesses include the operation of numerous cable television systems in the New York metropolitan area and the original production of television programming for cable television distribution to its own systems and non-Cablevision systems. The three remaining individual defendants—Lawrence Meli, Robert J. Sullivan, and John Tatta—are officers of one or more of the Cablevision entities.
Two of those entities play the most important roles in this scenario. Defendant Sports Channel Associates is a partnership (of which defendant Dolan is one of three general partners) engaged in the original production of professional and amateur sporting-events programming. Since March, 1979, SportsChannel Associates has produced, marketed and distributed a premium cable television service, known as "SportsChannel," throughout the metropolitan area, which consists of a variety of television programs on a year-round basis featuring principally sports events participated in by New York area teams. SportsChannel Associates sells "SportsChannel" to cable system operators not controlled by Cablevision as well as to those owned by Cablevision. An important exception and the cause of this action, as will be discussed infra, is the refusal by SportsChannel Associates to sell "SportsChannel" to plaintiff HTVC.
The second Cablevision entity of immediate importance is Cablevision of Huntington which, since December, 1981, has operated a cable television system in direct competition with HTVC in Huntington. Cablevision of Huntington offers "SportsChannel" to its subscribers as a premium service, having acquired the rights to do so from its sibling entity, defendant SportsChannel Associates.
The remaining group of defendants of greatest significance for purposes of this motion consists of four New York area professional sports teams3 (collectively referred to as "the teams"): Nassau Sports Ltd., which stages professional ice hockey games with its team, the New York Islanders ("Islanders"); Meadowlands Basketball Associates, which stages professional basketball games with its team, the New Jersey Nets, formerly known as the New York Nets ("Nets"); Doubleday Sports, Inc., and New York Yankees Partnership, both of which stage professional baseball games with their respective teams, the New York Mets and the New York Yankees ("Mets" and "Yankees"). At least since 1979, each of the teams has had an exclusive contractual relationship with Cablevision permitting a certain number of their games to be cablecast on "SportsChannel."
Plaintiffs' seventeen-count complaint is prolific in its charges and seeks relief under sections 1 and 2 of the Sherman Act (Counts I to XI) and also sets forth pendent state antitrust (Count XII) and common law tort claims (Counts XIII to XVII). Defendants' summary judgment motion addresses Counts I through IX and Count XII; the remaining counts neither involve the teams nor allege unlawful conduct in connection with the denial of access to sports programming. The claims contained in the subject counts will be collectively referred to as the "sports claims."
The complaint contains a number of predicate allegations which are incorporated by reference into each of the sports claims. Among the most important of these, all found in paragraph 39 of the complaint, are that the "ability to cablecast to subscribers games of the ... professional New York teams is essential to successfully compete in the cable television industry in Huntington"; that the games staged by each defendant team constitute "a distinct product for which there is strong demand among cable television subscribers in Huntington"; that these games have no adequate programming substitutes; and that "but for" Cablevision's exclusive control of the sublicensing of rights to cablecast the teams' games, Cablevision of Huntington would not have overbuilt HTVC's system.
Counts I through IV of the complaint charge the defendants with violating §§ 1 and 2 of the Sherman Act by conspiring to restrain and monopolize horizontal competition in the cable television trade in Huntington. The alleged means employed by the defendants were the teams' grant of exclusive production and distribution rights to Cablevision followed by Cablevision's refusal to sublicense the teams' games to HTVC so that its own cable system could cablecast the games exclusively. Counts V through VIII charge various horizontal and vertical conspiracies among the defendants in violation of § 1 of the Sherman Act, the purpose of these conspiracies being the elimination of competition among the teams, and among the teams and Cablevision, in the production and sale of cablecast rights to the teams' games. In furtherance of such conspiracies defendants have allegedly agreed to limit the number of games available for cablecasting; have participated in a tying arrangement comparable to block booking; have agreed to produce and distribute the games through a single entity (Cablevision); and have refused to deal with plaintiffs and others similarly situated. Finally, Count IX alleges that, in violation of §§ 1 and 2, Cablevision conspired with the teams to misuse its monopoly power in its noncompetitive franchise areas within the New York metropolitan area to obtain exclusive production and sublicensing rights and especially to secure exclusive cablecasting rights in Huntington in order to establish a monopoly there.
In late 1967, HTVC and the Town of Huntington entered into a non-exclusive franchise agreement for the construction and operation of a cable television system. When it commenced operating in 1971, HTVC was capable of serving eighty percent...
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