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Thursday, July 4, 2024 | Back issues
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NFL goes on trial in $21 billion antitrust class action over Sunday Ticket package

Residential and commercial subscribers seek as much as $7 billion in damages, which is subject to mandatory trebling under antitrust law, for "overpaying" to watch out-of-market games.

LOS ANGELES (CN) — The National Football League went on trial Wednesday to defend itself against claims that its Sunday Ticket package, which fans must buy to watch live games outside their own local area, violates U.S. antitrust law.

Jury selection started in downtown Los Angeles for the trial in which residential subscribers, as well as commercial subscribers such as sports bars and hotels, will seek $7 billion in damages, which is subject to mandatory trebling under the law, for having to pay purportedly inflated prices to watch their favorite team play on Sunday afternoon.

The plaintiffs claim that the league's 32 teams eliminate competition among themselves by pooling the rights to telecast their games for which CBS and FOX produce the broadcasts. CBS and Fox show the so-called in-market games free over the air in the teams' local markets, while the live out-of-market broadcasts are only available through purchase of the Sunday Ticket package that includes all those games.

So, while a Miami Dolphins fan in the Miami area can watch their team play for free over CBS or FOX on Sunday afternoon, a Dolphins fan in California will have to buy the entire Sunday Ticket bundle, which started at about $250 back in 2015 when the lawsuit was first filed, whether or not they are interested in any of the other teams.

Large establishments like Las Vegas hotels were paying as much as $120,000 a year for the Sunday Ticket package, according to the amended complaint filed in 2022.

"No other major sports league in America has such a drastic, total elimination of competition in the broadcasting of its games," the plaintiffs argue. "While Major League Baseball, the National Hockey League, and the National Basketball Association have each allocated markets geographically and pooled so-called out-of-market rights, none has agreed to centralize control and sale of all broadcast rights."

The case covers residential and commercial Sunday Ticket subscribers over an almost 12 year period, from June 17, 2011 to Feb. 7, 2023, when U.S. District Judge Philip Gutierrez certified the classes. While DirecTV, which was the exclusive Sunday Ticket distributor during this time, is also a defendant in the case, the judge agreed to send the claims against the satellite TV provider to arbitration.

Three interrelated agreements between the teams and the NFL, between the NFL and CBS and Fox, and between the NFL and DirecTV — and now Google whose YouTube TV since last year exclusively provides the Sunday Ticket package for residential subscribers — reduce choice and increase prices, the plaintiffs claim.

The jury will have to decide whether these agreements unreasonably restrain trade in violation of Section 1 of the Sherman Act and whether they allow the NFL to unlawfully monopolize the market for live video presentation of professional football games in violation of Section 2 of the Sherman Act.

The plaintiffs, represented by veteran litigator Marc Seltzer and Bill Carmody of Susman Godfrey among a bevy of other attorneys, also seek an injunction to stop the allegedly anticompetitive arrangement, which could upend the NFL's exclusive deal with Google. Any such injunction won't be handed down by the jury but will have to come from the judge.

The league, whose defense is spearheaded by Beth Wilkinson of Wilkinson Stekloff, argue that its teams operate a legitimate joint venture for the production and distribution of the games on television, and that it was DirecTV who determined the price and the packaging of the Sunday Ticket bundle during the relevant period.

The NFL will try to persuade the jury that its football game telecasts are "a high-quality and popular entertainment product" based on the combined efforts of the league and its broadcast partners, and that Sunday Ticket "expands output by providing avid fans with a high-quality option to ensure access to live telecasts of all Sunday afternoon NFL games."

The league will also seek to introduce evidence through an expert witness that, contrary to what the plaintiffs claim, its way of showing games provides consumers with more benefits than other professional sports leagues, such as MLB and the NBA, including by showing more free, over-the-air games.

"Plaintiffs are challenging the reasonableness of the NFL’s broadcast system and the jury needs to be able to consider all potential alternatives and how they would affect consumers in plaintiffs’ alleged market of professional football telecasts," the league said in court filings.

The NFL initially won dismissal of the case in 2017 when the judge previously presiding over the case agreed with the league that the subscribers hadn't made a plausible case that the exclusive distribution deal with DirecTV harmed competition. The Ninth Circuit Court of Appeals, however, found differently and reversed that decision.

After the U.S. Supreme Court passed on the opportunity to take up the case in late 2019, the subscribers' claims ended up back in district court.

However, given that the league will inevitable appeal an adverse verdict, the NFL will likely be encouraged by an observation  Justice Brett Kavanaugh made when the Supreme Court decided it wasn't going to weigh in at an early stage of the litigation.

Pointing out that the Supreme Court's denial of certiorari shouldn't necessarily be viewed as agreement with the legal analysis of the Ninth Circuit, Kavanaugh said the plaintiffs' argument that antitrust law may require each NFL team to negotiate an individualized contract for televising only its own games was in "substantial tension" with antitrust principles and precedents.

"The NFL and its member teams operate as a joint venture," Kavanaugh said. "And antitrust law likely does not require that the NFL and its member teams compete against each other with respect to television rights."

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Categories / Law, National, Sports, Trials

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