Caddy Shock: PGA Claim Out of Bounds

     SAN FRANCISCO (CN) – Claims that the PGA tour violates antitrust laws by forcing caddies to wear corporate logos at tournaments will be dismissed, a federal judge said Thursday.
     U.S. District Judge Vince Chhabria found 83 caddies incorrectly defined the market in a class action accusing the PGA Tour of illegally restricting competition for golfer and caddie endorsements.
     “I think your argument depends on this really artificial definition of the market that you’ve concocted,” Chhabria said during a hearing Thursday.
     Class attorney Chris Gaduroy argued that the market for endorsements displayed during live tournaments is more valuable and distinct from other forms of endorsements, such as TV commercials or print ads in golf magazines.
     That’s because viewers’ eyeballs are fixed on the screen during live play, as opposed to commercials, which can be tuned out or ignored, he said.
     “A commercial can be fast-forwarded through on DVR these days,” Gaduroy said. “You’re not going to fast forward through a putt.”
     Chhabria acknowledged the differences between the various forms of endorsements but found the plaintiffs failed to explain how live-play endorsements are so distinct they form a separate market.
     The caddies must plausibly show that advertisers won’t turn to other forms of endorsements, such as TV commercials or golf magazine ads, if placing logos on golfers’ and caddies’ shirts during tournaments becomes too expensive, the judge said.
     “I think you’ve kind of gerrymandered the market to try to shoehorn this dispute into an antitrust claim,” Chhabria said.
     Eugene Egdorf, also representing the caddies, cited a number of rulings that defined narrow markets for antitrust claims, including 1959 U.S. Supreme Court case Int’l Boxing Club of N.Y. Inc. v. U.S., which found the promotion of championship boxing was a relevant market distinct from the promotion of all professional boxing.
     “It’s not an artificial definition,” Egdorf said of the market. “In fact, it’s broader than other markets that have been accepted.”
     Egdorf called allegations of market gerrymandering a common tactic for antitrust defendants, which courts have rejected time after time.
     PGA attorney Jeffery Mishkin called the plaintiffs’ market definition bogus , saying advertisers have a number of other avenues through which they can reach the PGA Tour’s audience of typically older, affluent males.
     Although the tour requires caddies to wear bibs with logos during live play, the caddies can appear in television ads or wear other PGA-approved corporate emblems on their chest or shoulders during tournaments, Mishkin said.
     “This is the clearest case you’re ever going to see of endless, reasonable alternatives,” Mishkin said. “It’s not a plausible, relevant market.”
     Chhabria asked the plaintiffs’ attorneys why they chose not to distinguish between logos worn by golfers and those worn by caddies.
     Egdorf said that choice was made to avoid creating an overly narrow market.
     Turning to claims that the tour violated the caddies’ rights to publicity, Mishkin said the caddies agreed to wear the prescribed uniform at tournaments when they signed contracts with the PGA Tour.
     The PGA’s player endorsement policy makes all endorsements subject to PGA approval, limits the size and placement of logos on clothing, and bans golfers and caddies from endorsing certain products, such as tobacco, liquor or gambling.
     The caddies claim the contract illegally restricts their media rights, giving the PGA Tour the right to profit from their images and likenesses. They say their consent to the rules was invalid because it was obtained by “coercion or other unlawful means.”
     The caddies accused the PGA Tour of breach of contract because the agreement does not specifically require them to wear bibs as part of their uniform and because it contains contradictory statements.
     Chhabria asked the plaintiffs to submit a 5-page briefing on what law applies to their breach of contract claim within one week and for the defendant to submit a 5-page reply within seven days after that.
     Despite the objections of the plaintiffs’ attorneys, Chhabria made clear he would dismiss the antitrust claims, finding the market was improperly defined.

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