(CN) – From mid-August until the beginning of February, millions of people don their best outfits for a church-like experience: watching Sunday football. That is, of course, if the NFL game is being carried on a local TV station or those devout fans have signed up for a satellite football package.
On Tuesday, a Ninth Circuit panel reversed a federal judge’s dismissal of an antitrust class action against DirecTV by subscribers who claim an arrangement between the National Football League and the satellite provider eliminates competition for live telecasts.
Without the agreement, the putative class claims, competitors could distribute telecasts of NFL games through various cable, satellite, and internet channels.
The Ninth Circuit panel agreed the class has so far stated a cause of action and revived the case.
The agreement between the NFL, the individual teams and DirecTV is just another byproduct of a long history of broadcasting rights that stretches back to the 1950s. Rulings in antitrust lawsuits forced the NFL to “black out” home games to avoid hurting attendance in those markets.
Fast-forward to 1994, when the NFL entered into an agreement with DirecTV. The current shape of the NFL’s broadcast agreement with the 32 individual teams involves two columns: local games broadcast on CBS and Fox affiliates, and NFL-DirecTV’s Sunday Ticket package, which in 2015 cost $251 annually for home viewers. The package cost commercial venues like sports bars anywhere from $2,300 to $120,000 per year, according to the panel’s ruling.
Writing for the majority, U.S. Circuit Judge Sandra Ikuta held the plaintiffs plausibly alleged violations of the Sherman Act and they have standing to challenge the NFL agreements, which they claim locks out others from broadcasting games. These interlocking agreements hampered competition because the teams pooled their rights in telecasting, according to the complaint.
Ikuta wrote this type of arrangement was deemed a violation of the Sherman Act in 1951. She also noted the Supreme Court found the arrangement harmed competition for college football games.
Just like college football teams, NFL teams are restricted on where their games are broadcast argues the plaintiffs. “Independent telecasts are forbidden under the terms of the agreements because they would cause the teams to compete with each other and with DirecTV,” Ikuta wrote.
“Because the complaint alleges that the interlocking agreements in this case involve the same sorts of restrictions that NCAA v. University of Oklahoma concluded constituted an injury to competition, we likewise conclude that the complaint plausibly alleges an injury to competition,” she continued. “Further, because the alleged restrictions on the production and sale of telecasts constitute ‘a naked restriction’ on the number of telecasts available for broadcasters and consumers, the plaintiffs were not required to establish a relevant market.”
Dissenting on the issue of standing regarding antitrust, U.S. Circuit Judge N. Randy Smith wrote the Supreme Court has held indirect purchasers like plaintiffs cannot use a pass-on theory to recover damages and therefore have no legal standing to sue.
Attorney Marc Seltzer says his clients are pleased with the Ninth Circuit’s decision and look forward to the next phase of litigation.
In a statement, DirecTV’s parent company AT&T said, “We respectfully disagree with the court’s ruling. It’s important to note, however, that the court did not rule that the plaintiffs’ allegations were true; only that they had alleged enough to proceed with their case. We will continue to fight this case.”
An email to the NFL for comment was not immediately answered.
U.S. District Judge George Steeh III, sitting by designation from the Eastern District of Michigan, rounded out the panel. Ikuta and Smith are George W. Bush appointees and Steeh was appointed by Bill Clinton.