Regents of University of California v. American Broadcasting Companies, Inc.

• Citation: 747 F.2d 511
• Decision Date: 09 November 1984
• Docket Number: Nos. 84-6310,84-6322,s. 84-6310
• Parties: 1984-2 Trade Cases 66,279 The REGENTS OF the UNIVERSITY OF CALIFORNIA, The University of Southern California, The Pacific-10 Conference, and The Big Ten Conference, Plaintiffs- Appellees, v. AMERICAN BROADCASTING COMPANIES, INC., ABC Sports, Inc., Entertainment and Sports Programming Network, Inc., The College Football Association, The Board of Regents of the University of Nebraska, and The University of Notre Dame Du Lac, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 511

747 F.2d 511

1984-2 Trade Cases 66,279

The REGENTS OF the UNIVERSITY OF CALIFORNIA, The University of Southern California, The Pacific-10 Conference and The Big Ten Conference, Plaintiffs- Appellees, v. AMERICAN BROADCASTING COMPANIES, INC., ABC Sports, Inc. Entertainment and Sports Programming Network, Inc., The College Football Association, The Board of Regents of the University of Nebraska, and The University of Notre Dame Du Lac, Defendants-Appellants.

Nos. 84-6310, 84-6322.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 4, 1984.

Decided Nov. 9, 1984.

John N. Hauser, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., Byron L. Gregory, McDermott, Will & Emery, Chicago, Ill., for plaintiffs-appellees.

James Loftis, Washington, D.C., for defendants-appellants.

Appeal from the United States District Court for the Central District of California.

Before ANDERSON, FERGUSON and BEEZER, Circuit Judges.

FERGUSON, Circuit Judge:

On June 27, 1984, the Supreme Court held that the National Collegiate Athletic Association's (NCAA's) position as the exclusive bargaining agent for college football television rights violated section one of the Sherman Act. National Collegiate Athletic Association v. Board of Regents of University of Oklahoma (Regents), --- U.S. ----, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984). Immediately thereafter, most universities with football programs began to renegotiate television contracts. Similarly, the television networks, particularly the American Broadcasting Company (ABC) and the Columbia Broadcasting System (CBS), eagerly sought to acquire the broadcasting rights previously disbursed by the NCAA. Less than a month after the Supreme Court's NCAA decision, a large number of college conferences and independent football powers entered into an exclusive

broadcasting contract with ABC under the new banner of the College Football Association (CFA). A much smaller, but nonetheless formidable group of schools, the twenty members of the Pacific-10 and Big Ten Conference, signed with CBS for the 1984 football season. Shortly thereafter this smaller group of colleges, including the Regents of the University of California, the University of Southern California, the Pacific-10 Conference, and the Big Ten Conference, filed this antitrust suit against the defendants ABC, the CFA, and two CFA member institutions. The plaintiffs, mainly pressing their antitrust claims, sought and obtained a narrow preliminary injunction prohibiting Nebraska and Notre Dame from refusing to consent to the broadcast of one of their fall games solely on the basis of the exclusivity terms of their contract with the remaining defendants. By its terms, the preliminary injunction does not require the individual defendant schools to consent to the plaintiffs' broadcast offers. Instead, it merely bars the two universities from withholding consent solely on the terms of the contract between the CFA and ABC. After the district court denied the defendants' application for a stay of the preliminary injunction, which would have had the practical effect of barring live television coverage of the Nebraska-UCLA and Notre Dame-USC games, the defendants appealed. We affirm.

I. FACTS

The history of the college football television market is chronicled in the Supreme Court's NCAA decision, --- U.S. ----, 104 S.Ct. 2948, 2954-57, 82 L.Ed.2d 70 (1984), and need not be repeated here. Under both long and short term contracts, the defendant ABC and its sports broadcasting subsidiaries were the principal beneficiaries of the NCAA's former control over college football broadcast rights. In the wake of the Supreme Court's NCAA decision, ABC can lay claim to the broadcasting rights for the 63 major college football programs which make up the CFA. ¹ An integral part of ABC's broadcasting contract with the CFA requires member schools to maintain, on pain of CFA sanctions, ABC's position as the exclusive network for member television coverage. The broadcast restraints posited by the ABC contract come in several forms. The particular restraint which triggered the preliminary injunction and precipitated this appeal is called the "crossover restriction." In essence, the crossover restriction contained in the ABC-CFA contract bars the broadcast of CFA member games on other networks even when the opposing team is not a member of the CFA.

By design, the ABC television contract with the CFA attempts to create an exclusive "network window" from 3:30 to 11:30 P.M. EST on Saturdays wherein two CFA games of ABC's selection will be broadcast. These two games, chosen by ABC or its subsidiary the Entertainment and Sports Programming Network, Inc. (ESPN), are the only two games between CFA members eligible for broadcast during this time period. The ABC contract further provides that this exclusive Saturday afternoon window also extends to games played between CFA members and other colleges not affiliated with the CFA. Hence, the ABC contract prohibits the broadcast of games between CFA and non-CFA teams, called crossover games, during this Saturday time frame through the enforcement of its exclusive broadcasting rights with the CFA. Stated differently, the ABC-CFA contract not only curtails broadcasting competition among member CFA schools, but also seeks to eliminate direct network competition by prohibiting the telecast of crossover games.

The Big Ten and Pac-10 Conferences (hereafter referred to as the Pac-10- The terms of the Pac-10 and Big Ten contract gave CBS similar rights to broadcast Saturday games, selected by CBS, between Pac-10-Big Ten Conference teams. The contract also claimed rights to the crossover games between Pac-10 and Big Ten Conference members and non-Conference teams. ² Not surprisingly, given the rich tradition and perennial prominence of both Conference and CFA teams, two crossover confrontations, a Nebraska-UCLA game and a Notre Dame-USC match, had been previously scheduled for the 1984 season.

Big Ten Conference) declined the opportunity to join the CFA. These two Conferences, with their twenty member schools, struck out on their own and negotiated a contract with CBS on July 18, 1984, several days before ABC entered into the agreement with the CFA. This fact is relevant to our inquiry because the function of a preliminary injunction is to preserve the status quo ante litem. Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 809 (9th Cir.1963). Discerning the status quo ante litem presents little problem in this case because the challenged conduct, the exclusivity provisions of the ABC-CFA contract, came into existence after the plaintiffs had contracted for their broadcasting package with CBS. There has been no counterclaim by the defendants regarding the plaintiffs' contract. Hence, the only matter in controversy is the terms of the ABC-CFA contract. Without question, " 'the last, uncontested status which preceded the pending controversy,' " id. at 809 (quoting Westinghouse Electric Corp. v. Free Sewing Machine Co., 256 F.2d 806, 808 (7th Cir.1958)), is preserved by the preliminary injunction.

The Pac-10-Big Ten Conference desires to broadcast both of these games, only one of which remains at issue, ³ and ABC has attempted to prevent CBS coverage through the enforcement of the CFA crossover restrictions. Based on the complaint and the substantial record placed before it, the district court issued a preliminary injunction prohibiting two CFA members, Notre Dame and Nebraska, from withholding consent to the CBS broadcast of their games against the two PAC-10 teams, USC and UCLA, based solely on the terms of the ABC-CFA crossover restriction. The district court further enjoined the CFA and its members from imposing or threatening to impose any sanctions on either Nebraska or Notre Dame to inhibit these schools from voluntarily consenting to a CBS crossover broadcast. Consequently, at this very early stage in the antitrust litigation, the net effect of the trial court's preliminary injunction is limited to the telecast of the game between Notre Dame and USC on November 24, 1984. Moreover, while the preliminary injunction does insure that ABC and the CFA cannot unilaterally prevent the CBS broadcast of this game, the injunction does not compel Notre Dame to consent to the CBS broadcast of its Thanksgiving weekend game against USC. Instead, the preliminary injunction operates to liberate Notre Dame from the constraints of the crossover restriction while simultaneously permitting the school to make a truly independent decision on whether to accept CBS's Thanksgiving weekend broadcast package.

The premise behind the district court's preliminary injunction, and indeed the principal contention raised in plaintiffs' complaint, is that the ABC-CFA contract violates this nation's antitrust laws. Specifically, the plaintiffs allege that the defendants have violated section 1 of the Sherman

Act which prohibits "[e]very contract, combination ... or conspiracy in restraint of trade...." 15 U.S.C. Sec. 1. The plaintiffs have challenged the exclusivity of the ABC-CFA television contract as to competition among CFA member institutions as well as that between CFA and non-CFA colleges. Although the district court did not reach any final conclusions on the merits of the plaintiffs' case, by necessity the court made some findings on the strength of the plaintiffs' antitrust claims. The only ultimate conclusion reached by the court was to preserve the status quo pending the resolution of the merits of plaintiffs' complaint. Our task, under the appropriate standard, is to review this limited and narrow exercise of the district court's equitable discretion.

II. STANDARD OF REVIEW

The standard of review for the issuance of a preliminary injunction has often been stated and needs no lengthy elaboration here. A trial court's decision in granting or denying a preliminary injunction will only be set aside when...