Tunica Web Advertising v. Tunica Casino Operators

• Decision Date: 13 August 2007
• Docket Number: No. 06-60305.,06-60305.
• Citation: 496 F.3d 403
• Parties: TUNICA WEB ADVERTISING, et al., Plaintiffs-Appellants, v. TUNICA CASINO OPERATORS ASSOCIATION, INC.; et al., Defendants, Barden Mississippi Gaming LLC; doing business as Fitzgerald's Casino; BL Development Corp., doing business as Grand Casino Tunica; Robinson Property Group L.P., doing business as Horseshoe Casino & Hotel; Tunica Partners II L.P.; Bally's Olympia Limited Partnership, doing business as Bally's Saloon & Gambling Hall; Hollywood Casino Corporation; Boyd Tunica, Inc., doing business as Sam's Town Hotel & Gambling Hall; Sheraton Tunica Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

496 F.3d 403

TUNICA WEB ADVERTISING, et al., Plaintiffs-Appellants, v. TUNICA CASINO OPERATORS ASSOCIATION, INC.; et al., Defendants, Barden Mississippi Gaming LLC; doing business as Fitzgerald's Casino; BL Development Corp., doing business as Grand Casino Tunica; Robinson Property Group L.P., doing business as Horseshoe Casino & Hotel; Tunica Partners II L.P.; Bally's Olympia Limited Partnership, doing business as Bally's Saloon & Gambling Hall; Hollywood Casino Corporation; Boyd Tunica, Inc., doing business as Sam's Town Hotel & Gambling Hall; Sheraton Tunica Corporation, Defendants-Appellees.

No. 06-60305.

United States Court of Appeals, Fifth Circuit.

August 13, 2007.

Joe Bradley Pigott, Pigott, Reeves, Johnson & Minor, Jackson, MS, for Plaintiffs-Appellants.

Robert Mims, Daniel, Coker, Horton & Bell, Oxford, MS, for Barden Mississippi Gaming LLC.

Mark D. Herbert, April DeAnn Reeves, Watkins, Ludlam, Winter & Stennis, Jackson, MS, for BL Development Corp., Robinson Property Group Ltd. Partnership, Tunica Partners II L.P., Bally's Olympia L.P., Boyd Tunica, Inc. and Sheraton Tunica Corp.

Benjamin Elmo Griffith, Griffith & Griffith, Cleveland, MS, for Hollywood Casino Corp.

Appeal from the United States District Court for the Northern District of Mississippi.

Before DAVIS, DENNIS and PRADO, Circuit Judges.

DENNIS, Circuit Judge:

Appellants Cherry Graziosi and Tunica Web Advertising, Inc. ("TWA") appeal the district court's December 19, 2005 decision granting summary judgment in favor of appellees, a number of casinos located in Tunica County, Mississippi,¹ on appellants' federal and state antitrust claims. Appellants claim generally that the casinos and others engaged in a concerted refusal to deal with TWA, and that their conduct is a per se violation of section 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1. For the reasons stated below, we reverse and remand.

I.

In November 1999, Graziosi purchased the domain names "tunicamiss.com" and "tunicamississippi.com" for roughly $140 from the domain name registrar Network Solutions, Inc. Shortly thereafter, Graziosi leased those domain names to Circus Circus Mississippi, Inc., d/b/a Gold Strike Casino Resort ("Gold Strike")² for one year, at a rate of $2,000 per month. No website was established at either of the domain names; rather, a user who entered either of the domain names into his or her internet browser was, under the terms of the lease, automatically redirected to Gold Strike's website, goldstrikemississippi.com. When the lease expired, Gold Strike continued to lease the domain names from Graziosi on an exclusive, month-to-month basis for $5,000 per month.

In 2000, Graziosi formed appellant TWA. Graziosi is the CEO and sole shareholder of TWA. TWA acquired the domain name "tunica.com" from another company for approximately $20,000, and in November 2000, TWA leased "tunica.com" to Gold Strike for 90 days for $3,000 per month. Gold Strike continued to lease "tunica.com" from TWA through April 30, 2001.

The Tunica County Tourism Commission (the "TCTC"), filed a lawsuit against Graziosi. In its suit, the TCTC claimed that Graziosi was a "cybersquatter" — i.e., one who purchases a domain name with the hope of profiting from another person's trademark — and that she had no right to own "tunicamiss.com" or "tunicamississippi.com." The TCTC and Graziosi eventually settled the suit. As part of the settlement, Graziosi transferred her rights in "tunicamiss.com" and "tunicamississippi.com" to the TCTC, and the TCTC relinquished all claims to the domain name "tunica.com."

In May 2001, TWA appeared before the TCTC and proposed to lease "tunica.com" collectively to all of the casinos in Tunica County, Mississippi. Under the terms of TWA's proposal, each casino in Tunica County would pay TWA $2,500 per month, and, in return, all visitors to "tunica.com" would be redirected to the TCTC's website, which already featured information about all of the casinos. The casinos would also collectively have the right of first refusal to purchase "tunica.com." Karen Sock, a TCTC member and the general manager of the Grand Casino Tunica, referred the matter to the Tunica Casino Operators Association (the "TCOA"), a trade association formed by the Tunica casinos. On May 30, 2001, the TCOA held a meeting at which the members discussed "tunica.com" and TWA's proposal. None of the casinos agreed to TWA's proposal, and the casinos apparently reached a consensus to not jointly utilize the "tunica.com" domain name.

Appellants contend that the May 30, 2001 meeting also gave rise to an agreement among the casinos to refuse to deal with TWA on any terms. Shortly after the TCOA meeting, Clyde Callicott, the marketing director for Gold Strike, allegedly told Graziosi that the casinos had entered into a "gentlemen's agreement" to not do business with TWA, either individually or as a group.³ On June 6, 2001, Graziosi received an email from Callicott, stating that he had been instructed to terminate Gold Strike's existing relationship with TWA: "I was informed by my VP/GM (based on that discussion held at the TCOA meeting) to terminate the business relationship we have created with the `tunica.com' site. I wish I could do more but my hands have been officially tied by the TCOA on this issue."

Appellants suggest that the motivation for the casinos' refusal to deal with TWA was to cause the value of "tunica.com" to decline. Graziosi asserts that Callicott told her that, at the May 30, 2001 meeting, Robert McQueen, General Manager of the Horseshoe Casino, stated that the domain name would be worthless if none of the casinos dealt with TWA. This understanding was also apparently confirmed by a conversation between Graziosi and Ellen Duffin, a marketing executive at the Grand Casino Tunica, sometime after the May 30, 2001 meeting.

After the May 30, 2001 meeting, TWA changed its business model. It created a website at "tunica.com" and hoped to generate revenue through casino advertising and/or commissions from online hotel bookings. With this new business model in place, TWA⁴ approached a number of the casinos individually with proposals to advertise on "tunica.com," but none of the casinos chose to advertise on the site.⁵ Appellants contend that the casinos' continued refusal to advertise on "tunica.com" was on account of their earlier agreement to boycott "tunica.com." Appellants also argue that the casinos reaffirmed their boycott of "tunica.com" at a November 2002 TCOA meeting. On November 19, 2002, Callicott, then the marketing director for the Sheraton Casino and Bally's, emailed Graziosi and told her that he understood that the TCOA had recently held a meeting at which the casinos voted to stay away from "tunica.com" "so it could evently [sic] be sold and bought at a later date by them."

Graziosi and TWA filed this action in 2003, asserting state and federal antitrust claims against the casinos, the TCTC, and the TCOA, as well as several state causes of action not relevant here.⁶ On November 24, 2004, the district court dismissed the antitrust claims against the TCTC, holding that the TCTC was immune from antitrust liability under the Local Government Antitrust Act, 15 U.S.C. § 35(a) (the "LGAA"), and the Parker state-action immunity doctrine.⁷ The court rejected the other defendants' claims that they were entitled to immunity from plaintiffs' antitrust claims under the LGAA, the Parker doctrine, and the Noerr-Pennington doctrine.⁸ The TCOA and Gold Strike were later dismissed from the suit by agreement of the parties.

On December 19, 2005, the district court granted summary judgment in favor of the remaining defendants (appellees here) on TWA's antitrust claims.⁹ The district court found that: (1) the casinos' alleged conduct could not amount to a per se violation of section 1 of the Sherman Act; (2) any concerted refusal to deal with TWA arising from the May 30, 2001 TCOA meeting was not an unreasonable agreement in restraint of trade because it was a joint response to a joint proposal and because TWA did not produce sufficient evidence to show any anticompetitive effect; and (3) TWA did not show that the casinos' post-May 30, 2001 refusals to deal with TWA and "tunica.com" were the result of concerted action, in part because TWA did not provide the details of any of its post-May 30, 2001 proposals to the casinos.

II.

This court reviews the district court's grant of summary judgment de novo. Stewart Glass & Mirror, Inc. v. U.S. Auto Glass Discount Ctrs., 200 F.3d 307, 312 (5th Cir.2000). A party is entitled to summary judgment only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). On a motion for summary judgment, the court must view the facts in the light most favorable to the non-moving party and draw all inferences in its favor. See Stewart Glass & Mirror, 200 F.3d at 312.

Section 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1, provides: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." In order to state a claim under section 1 of the Sherman Act, a plaintiff must show that the defendants "(1) engaged in a conspiracy (2) that restrained trade (3) in a particular market." Spectators' Commc'n Network Inc. v. Colonial Country Club, 253 F.3d 215, 220 (5th Cir.2001).¹⁰ A necessary ingredient of any section 1 conspiracy is a showing of concerted action on the part of the defendants. See Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984). To establish concerted action, the plaintiff must present "evidence that reasonably tends to prove that the [defendants] had a...