U.S. Football League v. National Football League
| Decision Date | 10 March 1988 |
| Docket Number | 1430,Nos. 1189,D,s. 1189 |
| Citation | 842 F.2d 1335 |
| Parties | , 1988-1 Trade Cases 67,930, 25 Fed. R. Evid. Serv. 182 UNITED STATES FOOTBALL LEAGUE, Arizona Outlaws, Baltimore Stars Football Associates, Birmingham Stallions, Ltd., Chicago USFL Limited Partnership, Chicago Football Franchise Limited Partnership, Denver Gold Sports, Inc., Houston Gamblers Ltd., IMI Express, Inc., Jax Professionals, Inc., LAEFC, Ltd., Memphis Showboats, Ltd., Football Generals, Inc., Bay Area Football Partners Ltd., Breakers Limited Partnership, South Texas Sports, Inc., and Orlando Football Partners, Inc., Plaintiffs-Appellants, Cross-Appellees, v. NATIONAL FOOTBALL LEAGUE, the Five Smiths, Inc., Indianapolis Colts, Inc., Buffalo Bills, Inc., Chicago Bears Football Club, Inc., Cincinnati Bengals, Inc., Cleveland Browns, Inc., Dallas Cowboys Football Club, Inc., Rocky Mountain Empire Sports, Inc., the Detroit Lions, Inc., Green Bay Packers, Inc., Houston Oilers Inc., Los Angeles Rams Football Company, Minnesota Vikings Football Club, Inc., New England Patriots Football Club, Inc., New Orleans Saints Louisiana Partnership, New York Football Giants, Inc., New York Jets Football Club Inc., the Philadelphia Eagles Football Club, Pittsburgh Steelers Sports, Inc., St. Louis Football Cardinals Co., Chargers Football Company, San Francisco Forty-Niners, Ltd., Tampa Bay Area NFL Football, Inc., Pro-Football Inc., Kansas City Chiefs Football Club, Inc., Miami Dolphins, Ltd., Seattle Professional Football and Alvin R. Rozelle, individually and as Commissioner of the National Football League, Defendants-Appellees, Cross-Appellants. ocket 87-7137, 87-7271. |
| Court | U.S. Court of Appeals — Second Circuit |
Harvey D. Myerson, New York City (Lloyd S. Clareman, Arthur H. Ruegger, Mark E. Segall, Daniel J. Cooper, Douglas R. Pappas, Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, New York City, of counsel), for plaintiffs-appellants, cross-appellees.
Frank Rothman, and Robert B. Fiske, Jr., New York City (William H. Mulligan, Barry H. Garfinkel, Shepard Goldfein, Douglas B. Adler, Seth B. Schafler, Michael H. Roffer, Deborah A. Garza, Skadden, Arps, Slate, Meagher & Flom, and L. Gordon Harriss, Robert M. Buschmann, Davis Polk & Wardwell, New York City, John Vanderstar, Paul J. Tagliabue, L. Jeffrey Pash, Covington & Burling, Washington, D.C., of counsel), for defendants-appellees, cross-appellants.
Before CARDAMONE, PIERCE and WINTER, Circuit Judges.
This appeal follows a highly publicized trial and jury verdict of $1.00. The plaintiff is a now-defunct professional football league that began play in this decade; the defendant is a football league founded nearly seventy years ago. The older of the two leagues, the National Football League, is a highly successful entertainment product. So many Americans watched NFL games between 1982 and 1986 that its twenty-eight teams shared $2.1 billion in rights fees from the three major television networks, and perhaps as much as $1 billion in gate receipts. The newer league, the United States Football League, began play in March 1983 with twelve teams and network and cable television contracts with the American Broadcasting Company ("ABC") and the Entertainment and Sports Programming Network ("ESPN"). After three seasons and losses in the neighborhood of $200 million, the USFL played its last game in July 1985. Meanwhile, in October, 1984, blaming its older competitor for its difficulties, the USFL instituted this litigation. Plans to play in the fall of 1986 were abandoned after the jury's verdict that is the principal subject of this appeal.
The USFL and certain of its member clubs 1 brought this suit in the Southern District of New York against the NFL, its commissioner, Alvin R. "Pete" Rozelle, and twenty-seven of its twenty-eight member clubs. 2 Seeking damages of $1.701 billion 3 and appropriate injunctive relief, the USFL alleged that the NFL violated Sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. Secs. 1 and 2 (1982), and the common law. Forty-eight days of trial before Judge Leisure produced a trial transcript of nearly 7100 pages and thousands of additional pages in exhibits.
After five days of deliberations, the jury found that the NFL had willfully acquired or maintained monopoly power in a market consisting of major-league professional football in the United States. The jury also found that the NFL's unlawful monopolization of professional football had injured the USFL. 4 The jury awarded the USFL only $1.00 in damages, however, an amount that, even when trebled, was no consolation for the USFL.
The jury rejected the remainder of the USFL's claims. It found that the NFL had neither monopolized a relevant television submarket nor attempted to do so; that the NFL did not commit any overt act in furtherance of a conspiracy to monopolize; that the NFL did not engage in a conspiracy in restraint of trade; that the NFL's television contracts were not unreasonable restraints of trade; that the NFL did not control access to the three major television networks; and that the NFL did not interfere either with the USFL's ability to obtain a fall television contract or with its spring television contracts. The USFL's common law claims were also rejected.
Judge Leisure denied the USFL's motions for judgment notwithstanding the verdict on its claims of monopolization of the television submarket, attempted monopolization, unreasonable restraint of trade by means of the network television contracts and essential facilities, and for a new trial on damages on the monopolization of professional football claim, or in the alternative for a new trial. United States Football League v. National Football League, 644 F.Supp. 1040 (S.D.N.Y.1986) ("Opinion No. 16 "). The district court also denied the USFL's request for injunctive relief.
On this appeal, the USFL claims that a "litany of erroneous opinions, rulings and instructions" by Judge Leisure resulted in a "verdict of confusion" that "sent one of the most egregious violators in the history of the federal antitrust laws on its way with a pat on the back." USFL Br. at 3-4. Specifically, the USFL contends that the NFL could not legally enter into a pooled-rights agreement with all three networks; that Judge Leisure's jury instructions "destroyed" the effectiveness of the USFL's proof of its television claims and set improperly high standards of liability; that he improperly allowed the NFL to introduce evidence that the USFL was mismanaged; that he excluded other evidence critical to establishing the USFL's claims; and that his incorrect rulings and instructions on damages prevented the USFL from receiving appropriate relief. We affirm.
We briefly summarize our principal rulings. The jury's finding of illegal monopolization of a market of major-league professional football was based upon evidence of NFL attempts to co-opt USFL owners, an NFL Supplemental Draft of USFL players, an NFL roster increase, and NFL conduct directed at particular USFL franchises. These activities, however, were hardly of sufficient impact to support a large damages verdict or to justify sweeping injunctive relief. For that reason, the USFL candidly admits that "at the heart of this case" are its claims that the NFL, by contracting with the three major networks and by acting coercively toward them, prevented the USFL from acquiring a network television contract indispensable to its survival. The jury expressly rejected the television claims.
The jury was clearly entitled by the evidence to find that the NFL's fall contracts with the three networks were not an anticompetitive barrier to the USFL's bidding against the NFL to acquire a network contract. Moreover, there was ample evidence that the USFL failed because it did not make the painstaking investment and patient efforts that bring credibility, stability and public recognition to a sports league. In particular, there was evidence that the USFL abandoned its original strategy of patiently building up fan loyalty and public recognition by playing in the spring. The original plan to contain costs by adherence to team salary guidelines was discarded from the start. Faced with rising costs and some new team owners impatient for immediate parity with the NFL, the idea of spring play itself was abandoned even though network and cable contracts were available. Plans for a fall season were therefore announced, thereby making 1985 spring play a "lame-duck" season. These actions were taken in the hope of forcing a merger with the NFL through the threat of competition and this litigation. The merger strategy, however, required that USFL franchises move out of large television markets and into likely NFL expansion cities. Because these moves further eroded fan loyalty and reduced the value of USFL games to television, the USFL thereby ended by its own hand any chance of a network contract.
Notwithstanding the jury's evident conclusions that the USFL's product was not appealing largely for reasons of the USFL's own doing and that the networks chose freely not to purchase it, the USFL asks us to grant sweeping injunctive relief that will reward its impatience and self-destructive conduct with a fall network contract. It thus seeks through court decree the success it failed to achieve among football fans. Absent a showing of some unlawful harm to competition, we cannot prevent a network from showing NFL games, in the hope that the network and fans will turn to the USFL. The Sherman Act does not outlaw an industry structure simply because it prevents competitors from achieving immediate parity. This is particularly so in the case of major-league professional football because Congress authorized a merger of the two leagues existing in 1966 and thus created the industry structure in question.
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