North Am. Soccer League v. NAT. FOOTBALL LEAGUE

• Decision Date: 17 November 1980
• Docket Number: No. 78 Civ. 4560-CSH.,78 Civ. 4560-CSH.
• Citation: 505 F. Supp. 659
• Parties: NORTH AMERICAN SOCCER LEAGUE; Orange County Pro Soccer; Chicago World Soccer Inc.; Caribous of Colorado, Inc.; Michigan Soccer, Limited; Houston Professional Soccer Club, Ltd.; Aztec Professional Soccer Club; Memphis Soccer Club, Inc.; Minnesota Soccer, Inc.; Lipton Professional Soccer, Inc.; Cosmos Soccer Club, Inc.; Oakland Stompers, Ltd.; Philadelphia Soccer Associates; Oregon Soccer, Inc.; Blue & Gold, Ltd.; San Diego Professional Soccer Club; San Jose Earthquakes, Limited; Tampa Bay Soccer Club, Inc.; Pro Soccer, Ltd.; Tulsa Roughnecks, Ltd.; Vancouver Professional Soccer Club, Ltd.; and Washington Diplomats Soccer Club, Inc., Plaintiffs, v. NATIONAL FOOTBALL LEAGUE; San Francisco 49ers; Oakland Raiders; New England Patriots Football Club, Inc.; Minnesota Vikings Football Club, Inc.; The Five Smiths, Inc.; Baltimore Football, Inc.; Highwood Service, Inc.; Chicago Bears Football Club, Inc.; Cincinnati Bengals, Inc.; Cleveland Browns, Inc.; Dallas Cowboys Football Club, Inc.; Empire Sports, Inc., The Detroit Lions, Inc.; Greenbay Packers, Inc.; Houston Oilers, Inc.; Los Angeles Rams Football Co.; New Orleans Saints; New York Football Giants, Inc.; New York Jets Football Club, Inc.; Leonard H. Tose, d/b/a Philadelphia Eagles Football Club; Pittsburgh Steelers Sports; Chargers Football Company; Chicago Cardinals Football Club; Pro-Football, Inc.; and Tampa Bay Buccaneers, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

505 F. Supp. 659

NORTH AMERICAN SOCCER LEAGUE; Orange County Pro Soccer; Chicago World Soccer Inc.; Caribous of Colorado, Inc.; Michigan Soccer, Limited; Houston Professional Soccer Club, Ltd.; Aztec Professional Soccer Club; Memphis Soccer Club, Inc.; Minnesota Soccer, Inc.; Lipton Professional Soccer, Inc.; Cosmos Soccer Club, Inc.; Oakland Stompers, Ltd.; Philadelphia Soccer Associates; Oregon Soccer, Inc.; Blue & Gold, Ltd.; San Diego Professional Soccer Club; San Jose Earthquakes, Limited; Tampa Bay Soccer Club, Inc.; Pro Soccer, Ltd.; Tulsa Roughnecks, Ltd.; Vancouver Professional Soccer Club, Ltd.; and Washington Diplomats Soccer Club, Inc., Plaintiffs, v. NATIONAL FOOTBALL LEAGUE; San Francisco 49ers; Oakland Raiders; New England Patriots Football Club, Inc.; Minnesota Vikings Football Club, Inc.; The Five Smiths, Inc.; Baltimore Football, Inc.; Highwood Service, Inc.; Chicago Bears Football Club, Inc.; Cincinnati Bengals, Inc.; Cleveland Browns, Inc.; Dallas Cowboys Football Club, Inc.; Empire Sports, Inc., The Detroit Lions, Inc.; Greenbay Packers, Inc.; Houston Oilers, Inc.; Los Angeles Rams Football Co.; New Orleans Saints; New York Football Giants, Inc.; New York Jets Football Club, Inc.; Leonard H. Tose, d/b/a Philadelphia Eagles Football Club; Pittsburgh Steelers Sports; Chargers Football Company; Chicago Cardinals Football Club; Pro-Football, Inc.; and Tampa Bay Buccaneers, Inc., Defendants.

No. 78 Civ. 4560-CSH.

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

November 17, 1980.

COPYRIGHT MATERIAL OMITTED

Weil, Gotshal & Manges, New York City, for plaintiffs; Ira M. Millstein, James W. Quinn, Irwin H. Warren, Jeffrey L. Kessler, Kenneth L. Steinthal, New York City, of counsel.

Sullivan & Cromwell, New York City, for The National Football League and Certain NFL Teams; William E. Willis, James H. Carter, Jr., Howard D. Burnett, New York City, of counsel.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

INTRODUCTION

This is a private antitrust suit, tried to the Court without a jury. Plaintiff North American Soccer League (the "NASL") is an unincorporated association of 24 professional soccer clubs located throughout the United States and Canada. The other plaintiffs are 21 of those 24 member organizations. Defendant National Football League (the "NFL") is an unincorporated association of 28 professional football clubs located throughout the United States. The other defendants are 25 of those 28 member organizations.

In October, 1978, the NFL scheduled a meeting to vote upon a proposed amendment to its by-laws which reads as follows:

"Amend Article IX, by adding a new Section 9.4 as follows:

"9.4(A) No person (1) owning a majority interest in a member club, or (2) directly or indirectly having substantial operational control, or substantial influence over the operations, of a member club, or (3) serving as an officer or director of a member club, nor (4) any spouse or minor child of any such person, may directly or indirectly acquire, retain, or possess any interest in another major team sport (including major league baseball, basketball, hockey and soccer).

"(B) The prohibition set forth in subsection (A) hereof shall also apply to relatives of such persons (including siblings, parents, adult children, adult and minor grand children, nephews and nieces, and relatives by marriage) (1) if such person directly or indirectly provided or contributed all or any part of the funds used to purchase or operate the other sports league entity, or (2) if there exists between such person and any such relative a significant community of interest in the successful operation of the other sports league entity.

"(C) The Commissioner shall investigate, to the extent he deems necessary or appropriate, any reported or apparent violation of this Section and shall report his findings to the Executive Committee prior to imposition of disciplinary action by the Committee.

"(D) Beginning on February 1, 1980, any person who, after notice and hearing by the Executive Committee, is found to have violated subsection (A) or (B) above will be subject to fines of up to $25,000 per month for each of the first three months of violations; up to $50,000 per month for each of the next three months; and up to $75,000 per month thereafter. In addition, violations of more than six months' duration may be dealt with by the Executive Committee pursuant to Article VIII, Section 8.13(B).

"(E) If such person does not pay such fine to the League Treasurer within 20 days of its assessment, the unpaid amount thereof may be withheld, in whole or in part, by the Commissioner from available funds in possession of the League Office belonging to the member club with which the person in violation is affiliated."

This proposed by-law will hereafter be referred to as the "cross-ownership ban."

Plaintiffs allege that the cross-ownership ban, if enacted by defendants, would violate Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Their complaint, invoking Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, sought to preliminarily and permanently enjoin implementation of the by-law. Plaintiffs also prayed for a declaratory judgment pursuant to 28 U.S.C. § 2201, declaring the proposed cross-ownership ban, together with other actual and threatened conduct by defendants, violative of the Sherman Act, and for treble damages. Jurisdiction lay under 28 U.S.C. §§ 1331 and 1337, and venue under 28 U.S.C. § 1391 and 15 U.S.C. §§ 15 and 22.

Defendants denied the allegations of the complaint, and asserted two counterclaims against plaintiffs, alleging Sherman Act violations on their part.

At the outset I granted plaintiffs a preliminary injunction, restraining defendants from enacting the proposed by-law or otherwise implementing the cross-ownership ban. 465 F.Supp. 665. The case then proceeded through discovery, preparation of a joint pre-trial order, and trial. I wish particularly to compliment counsel for both sides for meticulous preparation and able advocacy.

I now enter the following Findings of Fact, Discussion, and Conclusions of Law. Rule 52(a), F.R.Civ.P.

FINDINGS OF FACT

These findings adopt, in substantial measure, the helpful statement of agreed facts prepared by the parties in connection with the pre-trial order.

I. THE PARTIES

No. 1: Plaintiff North American Soccer League (the "NASL") is an unincorporated association of twenty-four (24) professional soccer clubs located throughout the United States and Canada.

No. 2: The NASL was organized in 1968 upon the merger of two predecessor soccer leagues for the purpose of promoting major league professional soccer in North America and is engaged in interstate commerce in the business of operating a professional soccer league.

No. 3: The other plaintiffs (or their successors) are 21 of the NASL member organizations (each of which is a corporation except where noted) which, at the time suit was filed, owned and operated professional soccer clubs for profit under the names and in the cities set forth below:

                                        State or Province
                                        of Organization       Club Name
                Plaintiff Team Owner    or Incorporation        (City)  
                Orange County Pro       California, U.S.A.    California Surf
                Soccer (limited                               (Anaheim)
                partnership)
                Chicago-World Soccer,   Illinois, U.S.A.      Chicago Sting
                Inc
                Atlanta Professional    Georgia, U.S.A.       Atlanta Chiefs
                Soccer, Ltd
                (limited partnership)
                Michigan Soccer         Michigan, U.S.A.      Detroit Express
                Limited (limited
                partnership)
                Houston Professional    Texas, U.S.A.         Houston Hurricane
                Soccer Club, Inc
                Aztecs Professional     California, U.S.A.    Los Angeles Aztecs
                Soccer Club
                (limited partnership)
                

                                        State or Province
                                        of Organization       Club Name
                Plaintiff Team Owner    or Incorporation        (City)  
                Memphis Rogues, Ltd.    Tennessee, U.S.A.     Memphis Rogues
                (limited partnership)
                Minnesota Soccer, Inc.  Minnesota, U.S.A.     Minnesota Kicks
                                                              (Minneapolis)
                Lipton Professional     Delaware, U.S.A.      New England Tea
                Soccer, Inc.                                  Men (Boston)
                Cosmos Soccer Club,     New York, U.S.A.      New York Cosmos
                Inc
                Edmonton NASL Soccer    Alberta, Canada       Edmonton Drillers
                Enterprises, Ltd
                (limited company)
                Philadelphia Soccer     Pennsylvania,         Philadelphia Fury
                Associates (limited     U.S.A.
                partnership)
                Louisiana-Pacific       Delaware, U.S.A.      Portland Timbers
                Corporation
                Blue & Gold Limited     New York, U.S.A.      Rochester Lancers
                San Diego Professional  California, U.S.A.    San Diego Sockers
                Soccer Club, Inc.
                San Jose Earthquakes    California, U.S.A.    San Jose
                Limited (limited                              Earthquakes
                partnership)
                Tampa Bay Soccer        Florida, U.S.A.       Tampa Bay
                Club, Inc.                                    Rowdies
                Prosoccer Limited       Ontario, Canada       Toronto Blizzard
                (limited company)
                Tulsa Roughnecks, Ltd.  Oklahoma, U.S.A.      Tulsa Roughnecks
                (limited partnership)
                Vancouver Professional  British Columbia,     Vancouver
                Soccer Club, Ltd.       Canada                Whitecaps
                (limited company)
                MSG Soccer, Inc.        New York, U.S.A.      Washington
                                                              Diplomats
                

The NASL and these NASL member clubs are hereinafter referred to collectively as the NASL plaintiffs (while this opinion was in preparation, the Philadelphia Fury was sold to Molson Breweries of Montreal, and the Philadelphia NASL franchise transferred to the latter city).

No. 4: Defendant National Football League (the "NFL") is an unincorporated association of 28 professional football teams which is engaged in interstate commerce in the business of operating a major professional football league in the United States.

No. 5: The other defendants are 25 of the NFL...