Toscano v. Pga Tour, Inc.
| Citation | 201 F.Supp.2d 1106 |
| Decision Date | 02 May 2002 |
| Docket Number | No. CIV-S-97-1238 DFL PAN.,CIV-S-97-1238 DFL PAN. |
| Parties | Harry TOSCANO, Plaintiff, v. PGA TOUR, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
Thomas August Casazza, Esq., Sacramento, CA, for Plaintiff: Harry Toscano.
Pamela J. Palmieri, Esq., Littler, Mendelson, Sacramento, CA, William J. Maledon, Esq., Diane M. Johnsen, Esq., Osborn, Maledon, Phoenix, AZ, Cary M. Adams, Esq., Murphy, Austin, Adams, Schoenfeld, LLP, Sacramento, CA, for Defendants: Professional Golfers' Assoc., a Maryland nonprofit Corp., dba: Senior PGA Tour; Jim Colbert; Bruce Devlin; Terry Dill; Dale Douglass; Raymond Floyd; Gibby Gilbert; Bob Goalby; Mike Hill; Ken Still; American Express Co.; Ameritech Corp.; BankBoston Corp.; Banc One Corp.; Bell Atlantic Corp.; Bellsouth Corp.; Boone Valley, a business entity; Brickyard Crossing, a business entity; Bruno's Inc.; Burnet, a business entity; Chrysler Corp.; Country-wide Credit Industries, Inc.; Diners Club International, a business entity; Eveready Battery Co.; First of American; FHP Health Care; Ford Motor Co.; Franklin Quest Co.; General Motors, Corp.; The Gillette Co.; GTE Corp.; Hyatt Corp.; The Kroger Co.; Liberty Mutual Group; Mercedes-Benz of North America, Inc.; Nationwide Insurance Ent.; NYT Magazine Group; Paine Webber Group, Inc.; Quicksilver; RJ Reynolds Tobacco Corp.; Raley's Corp.; Ralph's Grocery Co.; Royal Carribean Cruise Line; SBC Communications Inc.; The Scotts Co.; Toshiba Corp.; Toyota Motor Corp.; Transamerican Corp.; Truegreen-Chemlawn; Wendy's Int. Inc.; PGA Tours Inc.; Dave Stockton; Deane R. Beman; Timothy W. Finchem; Ojai Golf Charities; Gold Rush Classics; Centinela Hospital Medical Center; Classic Charities of Orange County; Grand Slam Charities; Grand Slam Charities.
Plaintiff Harry Toscano ("Toscano"), a senior professional golfer, brings this antitrust action against defendants Professional Golfers Association ("PGA") Tour, Inc., the PGA Tour's player-directors, and the PGA Tour's current and past commissioners.1 Toscano contends that the Tour used its media rights and conflicting events rules to prevent the formation of competing senior professional golf events and tours. Having monopolized the market for senior professional golf, the Tour allegedly adopted restrictive eligibility rules to protect the player directors and other Tour members from competition from other senior golfers. As a result, Toscano alleges that he was: (1) excluded from competing in and winning prize money at Senior Professional Golf Tour Association tournaments; (2) denied the opportunity to earn money through endorsements; and (3) denied the opportunity to earn prize money by participating in golf tournaments organized by would-be Tour competitors. Defendants now move for summary judgment on the alternative grounds that: (1) Toscano lacks antitrust standing to challenge the media rights and conflicting events rules; (2) the eligibility rules are not anticompetitive and do not violate antitrust law; (3) Toscano's claim for damages is overly speculative; and (4) the player directors and the current and past commissioners are not proper defendants.
1.
The Senior PGA Tour is a separate division of the PGA that co-sponsors professional golf tournaments for players over the age of 50. (Complaint at ¶ 50). Though substantially similar, Senior PGA Tour tournaments differ in several important respects from traditional PGA Tour tournaments. First, Senior Tour tournaments consist of three rounds of play instead of four. (Moorhouse Aff. at ¶ 22). Second, Senior Tour tournaments include a field of 78 golfers in contrast to a traditional 144-player field. (Id. at ¶ 23). Third, barring injury or illness, all 78 golfers who start a tournament on Friday are allowed to play through to its completion on Sunday while in traditional PGA Tour events there is a "cut" such that the 144-player field is "pared by fifty percent half-way through the tournament." (Id.) The Senior Tour's "no-cut" policy is designed to ensure that "the `marquee' players who enter the tournament — the players the fans particularly want to see — will be playing during weekend tournament days, when most spectators will attend." (Id.) Moreover, according to the PGA, limiting Senior Tour events to 78 players is central to preserving the no-cut format because: (1) it would be impractical to accommodate additional players and still have all players start from the first tee; and (2) in the rare situations in which Senior Tour events start from two tees, it would be impossible to accommodate more than 78 players. (Id. at ¶ 26-27). The "no-cut" rule further ensures that every player who enters a tournament will receive some prize money. (Id.)
As to eligibility, the 78 players in a Senior Tour event are drawn from the following categories of golfers in the following order: (1) players with 75 or more first-place finishes in PGA Tour or Senior PGA Tour Tournaments;2 (2) the top 31 available players from the previous year's Senior Tour Money List; (3) the top 31 available players from the All-Time Career Money List (which includes purses won both in Senior PGA Tour tournaments and in PGA tournaments); (4) the top eight players from the Tour's annual National Qualifying Tournament (in order of finishing); (5) a winner of any Senior PGA Tour co-sponsored or approved event within the previous 12 months; (6) the top four scorers in the qualifying round of play held before the tournament at hand; (7) four players designated by the tournament's local sponsor; and (8) on a space available basis, any otherwise non-exempt player who has won a Senior PGA Tour or PGA Tour tournament. (Id. at ¶ 31). Players in the All-Time Victories category, the top 31 players from the previous year's money list, the top 31 from the All-Career Money List, and the eight qualifiers from the National Qualifying Tournament are exempt for the entire year, such that they do not need to qualify for each open event. (Id. at ¶ 32). As a result, "[n]o more than approximately 5% of the places in any Tour open event are available to qualified professionals not playing under an exemption." (Complaint at ¶ 61).
The Senior PGA Tour Tournament Rules and Regulations restrict the ability of Tour members to participate in non-Tour events. Under the "conflicting events" rule, a player who qualifies to play in a Tour event generally may not enter a non-Tour tournament scheduled on the same date unless he first obtains a written release from the Tour Commissioner. (Senior PGA Tour Tournament Regulations and Handbook at 25, Exh. 4 to Maledon Aff.). The Commissioner has discretionary authority to grant a Tour member two releases annually, assuming the member participates in 15 Tour events, and to grant an additional release for every five Tour events above 15. (Id. at 26). The Commissioner may deny a Tour member's request for a waiver if the Commissioner determines that it "would cause [the] Tour to be in violation of a contractual commitment to a tournament or would otherwise significantly or unreasonably harm [the] Tour and such tournament." (Id.) Moreover, under the "television release" or "media rights" rule, Tour members must also seek the Commissioner's approval before participating in a televised tournament that is not co-sponsored or approved by the Tour, whether or not the tournament conflicts with a Tour event. (Id. at 27-28). Exemptions are almost always granted. (Finchem Depo. at 19:1-4). Toscano has never sought an exemption. (Toscano Depo. at 122:1-3).
The Rules and Regulations governing the Senior PGA Tour are controlled by the Tour's Division Board (the "Board"). (Senior PGA Tour Tournament Rules and Regulations at 48, Exh. 3 to Maledon Aff.). The Board is comprised of four player directors, the immediate past President of the PGA, and four independent directors, defined as "four public figures with a demonstrated interest in the game of golf." (Id. at 45). Player directors are elected by voting members of the Tour and hold office for a period of two years. (Id.) Any amendment to the Rules and Regulations must be approved by a majority of the Board, including three player directors, unless a conflict of interest exists. Amendments adopted by the Board may be reversed by a two-thirds vote of all voting members of the Tour.
Although Senior PGA Tour events are highly competitive, the purpose of the Senior Tour is not "to determine which, of all professional golfers age fifty or older, can put together the best three rounds on a particular golf course during a particular weekend." (Moorhouse Aff. at ¶ 36). Rather, "the purpose of the Senior PGA Tour is to provide a commercially viable series of tournaments for senior professional golfers that will be attractive to fans and sponsors by including star players who are over 50 years of age." (Id.) The Tour provides an entertainment product in which primarily well known and popular senior golfers may compete against one another.3
Given these goals, it is fair to say that the Senior PGA Tour has enjoyed considerable success since it was founded in 1980. (Id. at ¶ 10). The Senior Tour has grown from a 5 event schedule in 1981 to a current schedule that includes 43 events. (Id. at ¶ 11). The Tour has had similar success in attracting corporate sponsors, and total tournament prize money has increased from $250,000 in 1980 to $40,800,000 in 1997. (Id. at ¶ 16). Further, the Senior PGA Tour has established itself as the preeminent senior golf tour and controls approximately 95% of the market for senior professional golf tournaments in the United States. (Tollison Decl. at 8).
The Tour contends that the eligibility and media rules are key components to ensuring the commercial viability of the Senior Tour. The Tour relies...
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