Sports v. Nat'l Collegiate Athletic Ass'n

• Decision Date: 20 August 2010
• Docket Number: No. 09-1395.,09-1395.
• Citation: 623 F.3d 281
• Parties: WARRIOR SPORTS, INCORPORATED, Plaintiff-Appellant, Athlete's Connection, Plaintiff, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

623 F.3d 281

WARRIOR SPORTS, INCORPORATED, Plaintiff-Appellant,Athlete's Connection, Plaintiff,

v.NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Defendant-Appellee.

No. 09-1395.

United States Court of Appeals,Sixth Circuit.

Argued: April 28, 2010.

Decided and Filed: Aug. 20, 2010. ^*

ARGUED: John J. Bursch, Warner Norcross & Judd LLP, Grand Rapids, MI, for Appellant. Robert J. Wierenga, Miller, Canfield, Paddock and Stone, P.L.C., Ann Arbor, MI, for Appellee. ON BRIEF: John J. Bursch, Charles N. Ash, Aaron D. Lindstrom, Warner Norcross & Judd LLP, Grand Rapids, MI, William R. Jansen, Michael G. Brady, Warner Norcross & Judd LLP, Southfield, MI, for Appellant. Robert J. Wierenga, Gregory L. Curtner, David R. Grand, Kimberly K. Kefalas, Miller Canfield, Paddock and Stone, P.L.C., Ann Arbor, MI, for Appellee.

Before: BATCHELDER, Chief Judge; MOORE, and COOK, Circuit Judges.

COOK, Circuit Judge.

Warrior Sports filed suit claiming that, by changing the rule that governs the size of lacrosse stick heads approved for use in NCAA-sanctioned play, the NCAA violated the Sherman Act and tortiously interfered with Warrior's business. After denying Warrior's preliminary injunction request, the district court granted judgment on the pleadings in favor of the NCAA. Warrior appeals, and we affirm.

I.

Defendant-Appellee the National Collegiate Athletic Association (NCAA) sets the rules that govern intercollegiate athletic competitions involving its member schools, including the play and equipment rules for men's lacrosse matches. Other league governing bodies, including the National Federation of High School Sports, adopt and follow the rules set by the NCAA, giving those rules particularly strong influence on the market for lacrosse equipment. Plaintiff-Appellant Warrior Sports, Inc. manufactures and distributes lacrosse sticks.

Prior to 2006, the rule governing the allowable dimensions of lacrosse stick heads (Playing Rule 1-17) remained unchanged for thirty years, setting the width of the head at a minimum of 6.5? at its widest point and 10? from top to bottom. Traditional heads were triangular in shape, but because the rule did not specify a minimum width for the base (or “channel”) of the head, manufacturers began producing heads with a more pinched shape. According to the NCAA, the pinched design made it more difficult for a player to dislodge the ball from an opponent's stick during play, which prompted players to use increasing amounts of force when attempting to do so, leading to more injuries. To address this and other issues, in 2006, the NCAA initiated its rule-changing process. The NCAA Lacrosse Rules Committee met with equipment manufacturers (Warrior among them) to address potential rule changes, including the addition of a minimum width requirement for the channel, aimed at resolving the dislodgement problem. On September 7, 2006, the Rules Committee announced proposed changes to Rule 1-17 instituting minimum width requirements for the channel of the stick head. The 2006 Rule Change (intended to go into effect on January 1, 2009) would have rendered the vast majority of all men's stick heads, including 14 of the 15 models marketed by Warrior, illegal for NCAA play. Warrior responded by filing a lawsuit in the Eastern District of Michigan challenging the 2006 Rule Change, but dismissed the action after the NCAA agreed to reconsider the proposed change.

The NCAA solicited additional input from all concerned manufacturers, including Warrior, about how to improve the new specifications. To address the dislodgement issue, Warrior suggested incorporating a “flare” design-a design on which it held a patent, though it failed to disclose that fact to the NCAA at the time. In September 2007, the Rules Committee adopted a new rule (the 2007 Rule Change) intended to go into effect January 1, 2010. Much like the 2006 Rule Change, the 2007 Rule Change would have rendered the majority of stick heads on the market illegal, including all 15 of those marketed by Warrior. Significantly, the measurements incorporated into the 2007 Rule Change promoted a flared head design and closely tracked the design patented (but at the time not being marketed) by Warrior. When the NCAA learned of Warrior's patent after adopting the change, it sent Warrior a letter asking whether and under what terms the company would be willing to license its intellectual property rights to other lacrosse equipment manufacturers. Viewing this correspondence as a veiled threat by the NCAA to change the rules again if Warrior refused to negotiate licenses with its competitors, Warrior responded that it perceived the NCAA's letter as inappropriate and would not consider licensing its rights in the abstract because it did so only on a case-by-case basis.

The NCAA adopted a third rule change in February 2008 (the 2008 Rule Change) and scheduled its effective date for January 1, 2010. Like the 2007 Rule Change, the 2008 Rule Change rendered Warrior's entire existing line of stick heads illegal. The specifications adopted in the 2008 Rule Change differed only slightly from those in the 2007 Rule Change-broadening the range of permissible widths. This modification allows stick heads using either straight or flared walls to satisfy the rule, and any head that would have satisfied the 2007 Rule Change necessarily also passes muster under the 2008 Rule Change. Notably, the 2008 Rule Change permits the use of any stick head designed in conformity with Warrior's patent.

Warrior responded to the 2008 Rule Changes by filing suit against the NCAA in the Western District of Michigan accusing the NCAA of violating the Sherman Act and tortiously interfering with its business relationships. ¹ Warrior moved for a preliminary injunction and asked the district court to consider the motion on an expedited basis. Concerned that Warrior was forum shopping, ² the NCAA immediately opposed Warrior's request for expedited consideration of its injunction request and moved to transfer venue to the Eastern District. The court sided with the NCAA, refusing to expedite the injunction request and transferring the case to the Eastern District of Michigan. The NCAA promptly filed an answer and moved for judgment on the pleadings under Rule 12(c). By memorandum opinion dated January 30, 2009, the district court denied Warrior's preliminary injunction motion, Warrior Sports, Inc. v. Nat'l Collegiate Athletic Ass'n, No. 08-14812, 2009 WL 230562 (E.D.Mich. Jan. 30, 2009), and later, in a separate opinion, granted judgment on the pleadings in the NCAA's favor, Warrior Sports, Inc. v. Nat'l Collegiate Athletic Ass'n, No. 08-14812, 2009 WL 646633 (E.D.Mich. Mar. 11, 2009). Warrior appeals.

II.

We review the district court's grant of a motion for judgment on the pleadings de novo using the same standard as for a motion to dismiss under Rule 12(b)(6). EEOC v. J.H. Routh Packing Co., 246 F.3d 850, 851 (6th Cir.2001). “For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.”

JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir.2007) (internal citation and quotation marks omitted).

A.

Warrior alleged that the changes to Rule 1-17-including the 2008 Rule Change, which the NCAA “appears to have” adopted “for improper and anticompetitive reasons under the influence of one or more of [Warrior's] competitors”-violated § 1 of the Sherman Act, which prohibits “[e]very contract, combination ..., or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1. Because “nearly every contract binding parties to an agreed course of conduct amounts to some sort of ‘restraint of trade,’ the Supreme Court has limited the restrictions of section 1 to bar only ‘unreasonable restraints.’ ” Care Heating & Cooling, Inc. v. Am. Standard, Inc., 427 F.3d 1008, 1012 (6th Cir.2005) (quoting Nat'l Hockey League Players' Ass'n v. Plymouth Whalers Hockey Club, 325 F.3d 712, 718 (6th Cir.2003)).

The district court examined all three of the changes to Rule 1-17. It concluded that the 2006 and 2007 Rule Changes were noncommercial and therefore immune from antitrust challenge. Assessing the 2008 Rule Change, the court found that, in light of Warrior's accusation that the NCAA enacted it in collusion with Warrior's competitors, the 2008 Rule Change served a commercial purpose because Warrior's “competitors presumably sought to enact the rule in order to benefit commercially.” Warrior II, 2009 WL 646633, at *4. The court nevertheless rejected Warrior's antitrust claim, finding that the 2008 Rule Change did not restrain trade or commerce because, when compared to the 2007 Rule Change, the 2008 rule expanded the range of stick head designs that could meet the standards for NCAA-approved play. Id.

We agree with the district court's ultimate conclusion, but employ a slightly different analysis. The NCAA dropped the 2006 and 2007 Rule Changes before they ever went into effect, and thus they cannot be challenged because they necessarily did not cause (nor do they threaten to cause) any injury to Warrior or anyone else. See Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 788-89 (6th Cir.2002) (“An antitrust plaintiff bears the burden of showing that the alleged violation was a material cause of its injury, a substantial factor in the occurrence of damage or that the violation was the proximate cause of the damage.”). So although the district court chose to compare the 2008 Rule Change to the 2007 Rule Change to determine whether the 2008 rule restrained trade or commerce, we find that comparison inapt, given that the 2007 rule never took effect. Rather, as the sole rule change ever to take effect, only the 2008 Rule Change matters for purposes of the antitrust analysis.

Although the district court concluded that...