Garber Et Al v. MLB Et Al
Garber Et Al v. MLB Et Al
Garber Et Al v. MLB Et Al
5/2010
12 CIV 3^04
CIVIL COVER SHEET
The JS-44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of
pleadings or other papers as required by taw, except as provided by local rules of court. This form, approved by the
Judicial Conference of the United States in September 1974, is required for use of the Clerk of Court for the purpose of initiating the civil docket sheet.
PLAINTIFFS
DEFENDANTS
Office of the Commissioner of Baseball, Major League Baseball Enterprises, Inc., etal.
ATTORNEYS (IF KNOWN)
Pomerantz Haudek Grossman & Gross LLP, 100 Park Ave., 26th Fir., New York, NY 10017, (212) 661-1100
CAUSE OF ACTION (CITETHE U.S. CIVIL statute under which you are filing and write a brief statement OF CAUSE)
(DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY)
Has this or asimilar case been previously filed in SDNY at any time? No? Yes? [7] Judge Previously Assigned Honorable Kimba M. Wood
If yes, was this case Vol.D Invol. D Dismissed. No0 Yes d
(PLACE AN [x] IN ONE BOX ONLY)
NATURE OF SUIT
TORTS
BANKRUPTCY
OTHER STATUTES
[ ] 422 APPEAL
28 USC 158
[1400 STATE
REAPPORTIONMENT
[ [ [ [
[ ]362
[ ]365
PERSONAL INJURY MED MALPRACTICE PERSONAL INJURY PRODUCT LIABILITY ASBESTOS PERSONAL INJURY PRODUCT LIABILITY
[ ]423 WITHDRAWAL
28 USC 157
X1410
[ [ [ [
ANTITRUST
[ ] 368
PROPERTY RIGHTS
1430 BANKS & BANKING ]450 COMMERCE ]460 DEPORTATION 1470 RACKETEER INFLU
ENCED & CORRUPT ORGANIZATION ACT
[ I 330
FEDERAL
[ ] 150 RECOVERY OF
OVERPAYMENT &
EMPLOYERS'
LIABILITY
ENFORCEMENT OF
|
I
JUDGMENT
[ ] 151 MEDICARE ACT
PERSONAL PROPERTY
[ [ [ [
LIQUOR LAWS
RR & TRUCK AIRLINE REGS OCCUPATIONAL SAFETY/HEALTH
OTHER
i
i
[] 152 RECOVERY OF
DEFAULTED
[ ]690
[ [ [ [
(RICO) 1 480 CONSUMER CREDIT 1490 CABLE/SATELLITE TV ]810 SELECTIVE SERVICE ]850 SECURITIES/
COMMODITIES/ EXCHANGE
STUDENT LOANS
I |
i
(EXCL VETERANS)
[ ]360
[ ]385
I
!
[ [ [ [ [
HIA(1395ff) BLACK LUNG (923) DIWC/DIWW (405(g)) SSID TITLE XVI RSI (405(g))
[ 1875
CUSTOMER
|
j
*
[ ]196 FRANCHISE
ACTIONS UNDER STATUTES
CIVIL RIGHTS
LIABILITY
[ J 740 [ I 790
PRISONER PETITIONS
REPORTING & FEDERAL TAX SUITS DISCLOSURE ACT RAILWAY LABOR ACT [ ]870 TAXES (U.S. Plaintiff OTHER LABOR LITIGATION EMPL RET INC SECURITY ACT
or
[ 1893 ENVIRONMENTAL
MATTERS
[ I 894 ENERGY
ALLOCATION ACT
[ ]791
REAL PROPERTY
[ )895 FREEDOM OF
INFORMATION ACT
|
i
[ ]510
I
! t
J
I
[ [ [ [ [
[ ]462 ]530 HABEAS CORPUS 1535 DEATH PENALTY ]540 MANDAMUS & OTHER []463 ]550 CIVIL RIGHTS ]555 PRISON CONDITION [1465
[ ]950 CONSTITUTIONALITY
OF STATE STATUTES
REAL PROPERTY
DO YOU CLAIM THIS CASE IS RELATED TO A CIVIL CASE NOW PENDING IN S.D.N.Y.?
DEMAND $_
NO
Please submit at the time of filing an explanation of why cases are deemed related.
Attachment A
Defendants
Office of the Commissioner of Baseball, 245 Park Avenue, New York, New York (New York County) Major League Baseball Enterprises Inc., 245 Park Avenue, New York, New York (New York County)
MLB Advanced Media L.P., 75 Ninth Avenue, New York, New York (New York
County)
DirecTV LLC, 2230 East Imperial Highway, El Segundo, California (Los Angeles
County)
DirecTV Sports Networks LLC, 2230 East Imperial Highway, El Segundo, California (Los Angeles County)
Root Sports Pittsburgh, 2230 East Imperial Highway, El Segundo, California (Los
Angeles County)
Root Sports Rocky Mountain, 2230 East Imperial Highway, El Segundo, California (Los Angeles County)
Root Sports Northwest, 2230 East Imperial Highway, El Segundo, California (Los
Angeles County)
Comcast Sportsnet Philly, L.P., 3601 South Broad Street, Philadelphia, Pennsylvania (Philadelphia County)
Comcast Sportsnet Bay Area, L.P., 370 3rd Street, 2nd Floor, San Francisco, California (San Francisco County)
Comcast Sportsnet Chicago, L.P., 350 N. Orleans Street, Suite S1-100, Chicago,
Illinois (Cook County)
Yankees Entertainment and Sports Networks, LLC, 405 Lexington Avenue, 36th Floor, New York, New York (New York County) Athletics Investment Group, LLC, 7000 ColiseumWay, Oakland, California (Alameda County) The Baseball Club of Seattle, L.P., 1250 First Avenue South, Seattle, Washington (King County) Chicago National League Ball Club, LLC, 1060 West Addison Street, Chicago, Illinois (Cook County)
Chicago White Sox, Ltd., 333 West 35th Street, Chicago, Illinois (Cook County)
Colorado Rockies Baseball Club, Ltd., 2001 Blake Street, Denver, Colorado (Denver County)
New York Yankees Partnership, Yankee Stadium, One East 161st Street, Bronx, New York (Bronx County) The Phillies, L.P., Citizens Bank Park, One Citizens Bank Way, Philadelphia, Pennsylvania (Philadelphia County)
Pittsburgh Baseball, Inc., 115 Federal Street, Pittsburgh, Pennsylvania (Allegheny County)
San Francisco Baseball Associates, L.P., 24 Willie Mays Plaza, San Francisco, California (San Francisco County)
12 CJV 3704
Civil Action No:
ro CO
Fernanda Garber, Marc Lerner, Derek Rasmussen, and Robert Silver, representing themselves and all others similarly situated, Plaintiffs,
^*
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Office of the Commissioner of Baseball, Major League Baseball Enterprises Inc., MLB Advanced Media L.P., Directv LLC, Directv Sports Networks LLC, Root Sports Pittsburgh, Root Sports Rocky Mountain, Root Sports Northwest, Comcast Corp., Comcast Sportsnet Philly, L.P., Comcast Sportsnet Bay Area, L.P., Comcast Sportsnet Chicago, L.P., Yankees Entertainment and Sports Networks, LLC, Athletics Investment Group, LLC, The Baseball Club of Seattle, L.P., Chicago National League Ball Club, LLC, Chicago White Sox, Ltd., Colorado Rockies Baseball Club, Ltd., New York Yankees Partnership, The Phillies, L.P., Pittsburgh Baseball, Inc., and San Francisco Baseball Associates, L.P.,
Defendants.
Of
en
Silver, by and through their attorneys, file this Complaint against Defendants and allege as follows:
1.
separately owned and operated major league men's baseball clubs in the United
States and Canada. The MLB clubs, like other sports leagues, have structured their
governance to permit major decisions regarding on-field sporting competition and off-field business competition to be made by the club owners themselves. In so
doing, the owners act in their own economic self-interest, including entering into a
series of agreements that eliminate, restrict, and prevent off-field competition. These anti-competitive agreements go far beyond any cooperation reasonably
necessary to provide major league men's professional baseball contests that increase
fan appeal or respond to consumer preferences. 2. This action challengesand seeks to remedythe defendants' use of
the illegal cartel that results from these agreements to eliminate competition in the
distribution of games over the Internet and television. Defendants have
only are such agreements not necessary to producing baseball contests, they are
directed at reducing competition in the live-game video presentation market, involving and protecting third parties who operate only in that separate market.
3. In a 1998 complaint against the League and other clubs, the New York
Yankees conceded that the League is a cartel that has exceeded the boundaries of
necessary cooperation. (New York Yankees Partnership and Adidas America, Inc. v.
Major League Baseball Enterprises, Inc., et al., Case No. 98-civ-0129 (S.D.N.Y.).)
The Yankees sued when the League interfered with the Yankees' individual
"Defendants operate a horizontal cartel, through which the Major League Clubs
have agreed not to compete with each other and thereby to fix prices and to reduce output below competitive levels in the (i) professional baseball retail licensing markets; and (ii) the professional baseball sponsorship markets." Id. at f 153. The
restraints articulated in the present complaint are no less anticompetitive or justified as the restraints set forth in the Yankees' case against the league. (The Yankees and the League reached a confidential agreement before any briefing on
the merits of the Yankees' suit.)
4.
Clubs in other sports leagues have also sued their respective leagues
here. In 2007, Madison Square Garden, L.P., which owns the New York Rangers Club, sued the National Hockey League to eliminate anticompetitive restraints that
are similar to those alleged in this complaint. The Rangers' complaint flatly conceded that the NHL was a "cartel" and acknowledged that the League's televising and streaming restrictions were anti-competitive and unlawful. (Madison
Square Garden, L.P. v. National Hockey League, et al., Case No. 07-8455 (S.D.N.Y.),
Amended Complaint ("MSG Complaint"), t 6). After the Rangers defeated the League's motion to dismiss the complaint, the League and the Rangers settled the
lawsuit.
5.
NHL, the Coyotes stated, "The NHL and its members have conspired to create
exclusive television and radio broadcast rights within designated territories through
contracts with individual NHL members, thereby maintaining monopoly power
within each team's 'home territory' by preventing others from broadcasting events
within those territories." Second Amended Complaint, Coyotes Hockey LLC v. NHL,
Adv. No. 09-494 (Bankr. D. Ariz. June 5, 2009). That action was ultimately resolved
when the League obtained ownership of the Phoenix Coyotes through the club's
bankruptcy.
6.
"characterizing the NBA as a cartel that has slapped a limit on the output of
broadcast games, something that is illegal under the antitrust laws." Chicago
Professional Sports Ltd. Partnership v. National Basketball Ass'n, 961 F.2d 667,
669 (7th Cir. 1992). That case settled after the League agreed to allow the Bulls to televise a greater number of games outside of its local territory.
7. In American Needle, Inc. v. National Football League, 130 S. Ct. 2201
(2010), the United States Supreme Court unanimously rejected the NFL's claim that an agreement regarding the joint marketing of club-owned intellectual
of the Sherman Act. The Court reaffirmed lower court decisions that sports leagues
are subject to the antitrust laws and that league owners must refrain from
agreements that unreasonably restrain trade. The Court also reaffirmed its own
decision in NCAA v. Board of Regents, 468 U.S. 85 (1984), which held that the
a long line of precedents that recognize that sports leagues are subject to the
antitrust laws. Indeed, the United States District Court for the Eastern District of
8.
the antitrust laws. See Henderson Broadcasting Corp. v. Houston Sports Ass'n, Inc.,
541 F. Supp. 263 (D.C. Tex. 1982). Agreements with third parties to restrain
competition in the television and internet industry are well outside the narrow
exemption to the antitrust laws recognized in Flood v. Kuhn, 407 U.S. 258 (1972). Nothing about these agreements reflect anything unique to baseball; they are essentially identical to those in other major sports, and baseball itself has long
understood that broadcasting does not fall within the exemption, as has Congress. 9. Despite these clear precedents, MLB's member clubs continue to agree
to divide the live-game video presentation market by assigning an exclusive territory to each team and its television partners. In exchange for being granted anticompetitive protections in its own home market, the team and its partners
expressly agree not to compete in the other teams' exclusive territories. The stated
purpose of these policies is to create regional monopolies that protect the partners
from competition in their respective local areas.
10.
The only way consumers can watch video presentations of other teams
MLB.TV, which the League offers through cable and satellite providers. For both
packages, the "in-market" games are blacked out to protect the local television
partner. Thus, a New York Mets fan livingin New York cannot watch the Mets play
through the internet or television package. The fan must own a television and
subscribe to a cable package that includes the channels that carry Mets' games.
11. In addition, the Defendants have colluded to sell the "out of market"
packages only through the League. The League Defendants are then able to exploit
their illegal monopoly by charging supra-competitive prices. As a result of this
monopoly, moreover, the League is able to require purchasers of MLB.TV or MLB
Extra Innings to buy all "out-of-market" games of all the League's teams even if the fan is only interested in a particular team or a particular game. Thus, a Detroit
Tigers fan living in New York cannot watch the Tigers play, except occasional
games on network television, unless he purchases the entire package of League
games from the MLB's exclusive MLB.TV or MLB Extra Innings products.
12. As one set of commentators has put it, "Absent the exclusive territorial
their own games to be available out-of-market. . . . Fans wishing to see only their
favorite team now pay for more games than they want, so sports leagues are
currently using their monopoly power to effectuate a huge wealth transfer. Another
significant group of less fanatic consumers would be willing to pay a more modest
sum for their favorite teams' games only. As to these fans, the current scheme
reduces output." Stephen F. Ross & Stefan Szymanski, Fans of the World Unite!
(Stanford Univ. 2008).
13.
the NHL: "There are no legitimate, procompetitive justifications for these 'exclusive'
agreements and other competitive restraints, which have harmed consumers in
various ways ...." (MSG Complaint, J 46). In particular, as MSG stated, these restraints result in "reduced output, diminished product quality, diminished choice
and suppressed price competition." (Id. at f 45).
14.
competitive balance within the League that fans prefer, or to maintain the viability
of franchises. To the extent that competition among teams for internet or television
15.
Plaintiffs are individuals who were, and continue to be, harmed by the
PARTIES
A.
The Plaintiffs
16.
2009 through March 2011, she subscribed to Comcast cable service in Oakland,
California. Her service included Comcast Sportsnet California and Comcast
Sportsnet Bay Area. She was charged supra-competitive prices for her service due
to Defendants' conduct.
17.
subscribed to the MLB.tv Internet streaming package in July 2011 for the 2011
season. His favorite team is the New York Yankees. He would prefer not to be
required to purchase a full "out-of-market" package to get New York Yankees games, and would prefer not to have to subscribe to pay television to be able to
watch New York Yankees games involvingthe St. Louis Cardinals, Cincinnati Reds,
and Atlanta Braves, all ofwhich are blacked out on MLB.tv in Oxford, Mississippi.
He was charged supra-competitive prices for his service due to Defendants' conduct.
18.
subscribed to the MLB.tv Internet streaming package during the 2011 season. His
Milwaukee Brewers games are blacked out in Fort Wayne when they play the
Detroit Tigers, Chicago Cubs, Chicago White Sox, and Cincinnati Reds. He was
charged supra-competitive prices for his service due to Defendants' conduct.
19.
20.
association also doing business as Major League Baseball ("MLB" or "the League") and has as its members the Major League Baseball Clubs. MLB's principal place of business at 245 Park Ave, New York, New York. It is the most significant provider
of major league men's professional baseball games in the world.
21.
baseball games and facilitate competition on the field, but the clubs compete offthe
field in their businesses. The clubs compete with each other for the acquisition of
players, coaches, and management personal. They set their own prices for the sale
oftickets for attending games in person. The clubs also compete in the developing,
licensing, and marketing of their respective marks for various purposes.
22.
Enterprises") is a New York corporation with its principal place of business in New
York, New York.
23.
partnership, and MLB Advanced Media, Inc., a Delaware corporation, have their
principal place of business at 75 Ninth Avenue, New York, New York ("MLB
24.
25.
The member clubs of the MLB that are named as defendants are:
a.
b.
c.
d.
e.
10
f.
g.
h.
owns and operates the Pittsburgh Pirates. Pittsburgh Baseball, Inc. is a subsidiary
of Pittsburgh Baseball Holdings, Inc. i. San Francisco Baseball Associates, L.P. is a California limited
26.
a.
b.
c.
Corporation and own and operates the Atlanta Braves. The Atlanta National
d.
11
e.
f.
g.
h.
i.
k.
and operates the Los Angeles Dodgers. On or about May 1, 2012, it was purchased
by Guggenheim Baseball Management, L.P., a Delaware limited partnership.
1. Milwaukee Brewers Baseball Club, Inc., is a Wisconsin
corporation and owns and operates the Milwaukee Brewers. m. Minnesota Twins, LLC, is a Minnesota corporation and owns
n.
12
o.
p.
q.
r.
operates the New York Mets. Sterling Mets, L.P. is a subsidiary of Sterling
Equities, Inc.
s.
t.
u.
27.
and its subsidiaries provide satellite television service ("DBS") throughout the
United States.
13
28.
29.
Pittsburgh LLC," Defendant Root Sports Rocky Mountain, a/k/a "Directv Sports Net
Rocky Mountain LLC," and Defendant Root Sports Northwest a/k/a "Directv Sports
Net Northwest LLC," are Delaware limited liability companies whose principal
place of business is 2230 East Imperial Highway, El Segundo, California. Root
Sports Pittsburgh, Root Sports Rocky Mountain, and Root Sports Northwest are
wholly-owned subsidiaries of, and are controlled by, Directv and/or Directv Sports
Networks LLC. Root Sports Pittsburgh is a regional sports network that produces and distributes video presentations for the Pittsburgh Pirates. Root Sports Rocky
Mountain produces and distributes video presentations for the Colorado Rockies.
Root Sports Northwest produces and distributes video presentations for the Seattle
Mariners.
30.
31.
include:
14
a.
Street, Philadelphia, Pennsylvania, a Regional Sports Network ("RSN"), which produces and distributes video presentations for the Philadelphia Phillies;
b. Comcast Sportsnet Bay Area, L.P., located at 370 3rd Street,
2nd Floor, San Francisco, California, which produces and distributes video
presentations for San Francisco Giants and Oakland Athletics through Comcast
Sportsnet Bay Area and Comcast Sportsnet California;
c. Comcast Sportsnet Chicago, L.P., located at 350 N. Orleans
Street, Suite SI-100, Chicago, Illinois, which produces and distributes video presentations for the Chicago Cubs and Chicago White Sox.
32.
is located at 405 Lexington Ave, 36th Floor, New York, New York. YES produces and
presents New York Yankees games.
F. Other Relevant Entities
33.
a.
Fox Sports West and Prime Ticket are RSNs that carry Los
b.
c.
d.
e. f. g.
h.
Fox Sports Houston carries Houston Astros games. Fox Sports Detroit carries Detroit Tigers games. Fox Sports Florida carries Florida Marlins games,
Fox Sports North carries Minnesota Twins games.
i. j.
Fox Sports Arizona carries Phoenix Diamondbacks games, Fox Sports Kansas City carries Kansas City Royals games,
k.
1. m.
n.
Fox Sports San Diego carries San Diego Padres games beginning
c.
d.
35.
One of these is WGN-TV, a local Chicago television station that carries a minority of
both Chicago White Sox and Chicago Cubs games. These games are carried
16
nationwide on the WGN "superstation." WGN is the last of the superstationslocal channels distributed nationwide through cable and satelliteto carry Major League
Baseball games. Major League Baseball demands payment of a fee to the league, which is distributed to the other teams, to compensate them for facing this limited
competition. WGN presentations are typically blacked out in the local market of the
other (non-Chicago) team. 36. Turner Broadcast System ("TBS") is a nationwide cable and satellite
television channel that carries Major League Baseball games nationwide. In the
regular season, those presentations are typically blacked out in the local markets of
the teams involved in the game being presented.
37. ESPN is a nationwide cable and satellite television channel that
carries Major League Baseball games nationwide. Certain of its video presentations are exclusive for a given period of time, during which other networks may not show any other game, regardless of location. Other games are not exclusive, with blackout rules governed by Defendants' agreements designed to limit competition in
the market.
38.
carries Major League Baseball games nationwide. Most of these games are subject to a nationwide exclusivity for a given period of time, which prevents the presentation of any non-Fox games in any market.
17
III.
39.
action under the provisions ofRule 23(a), (b)(2) and (b)(3) ofthe Federal Rules of
Civil Procedure on behalf of all persons in the United States (excluding Defendants,
their present and former parents, subsidiaries, affiliates, and Co-Conspirators, the
named Plaintiffs, and government entities) who fall within the following classes:
a. Television Class: All individuals who purchased television
service from Directv and/or Comcast, or their subsidiaries, at any time within four
years prior to the filing of this complaint and until the effects of the anti
competitive conduct end, that included channels carrying video presentations oflive major league baseball games that were not available through a sponsored telecast (as that term is used by the Sports Broadcasting Act, 15 U.S.C. 1291, et seq).
b. Internet Class: All individuals who purchased MLB.tv in the
United States directly from any of the League Defendants or their subsidiaries at
any time within four years prior to the filing ofthis complaint and until the effects
of the anti-competitive conduct end.
40. Due to the nature of the trade and commerce involved, Plaintiffs
believe that each class consists of at least many thousands of members, the exact
number and their identities being known to Defendants and their co-conspirators. 41. The Classes are so numerous and geographically dispersed that joinder
18
42.
There are questions of law and fact common to the Class, including:
a. Whether MLB Defendants and their Co-Conspirators engaged in
stabilize prices of video presentations of live MLB games by blacking out potentially
competing presentations of MLB games;
b. Whether Defendants and their co-conspirators engaged in a
stabilize prices of MLB Extra Innings by preventing any competitor from offering
competing products; c. Whether Defendants and their co-conspirators engaged in a
d.
MLB Extra Innings in the United States during the class period;
e. The effect of Defendants' conspiracy on the prices pay television
packages that include MLB games that are not available on a sponsored telecast;
f. The identity of the participants of the conspiracy;
g.
19
i.
j.
alleged in this complaint, caused injury to the Plaintiffs and the other members of
the Classes;
k. 43.
pay television service provided by Comcast, which included channels carrying MLB
games that are not available on a sponsored telecast. Her claims are typical of the
claims of the Television Class members, and Ms. Garber will fairly and adequately
provided by Directv, which included channels carrying MLB games that are not
available on a sponsored telecast. His claims are typical of the claims of the
Television Class members, and Mr. Silver will fairly and adequately protect the
interests of the Television Class.
45.
MLB.TV. Their claims are typical of the claims of the Internet Class members, and
they will fairly and adequately protect the interests of the Class.
46. Plaintiffs are represented by counsel who are competent and
20
47.
violated the antitrust laws (including, but not limited to, substantial expert witness
costs and attorneys' fees), a class action is the only economically feasible means for any plaintiffs to enforce his or her statutory rights.
48.
establishing incompatible standards of conduct for Defendants. 49. The questions of law and fact common to the members of the Classes
predominate over any questions affecting only individual members, including legal
and factual issues relating to liability and damages.
50.
A class action is superior to other available methods for the fair and
efficient adjudication of this controversy. The Classes are readily definable and is
one for which records should exist. Prosecution as a class action will eliminate the
51.
(15 U.S.C. 26), for a violation of Section 1 of the Sherman Act, 15 U.S.C. 1. This
21
Court has subject matter jurisdiction over that claim pursuant to 28 U.S.C. 1331
and 1337.
52.
Defendants transact business in this district, and are subject to personal jurisdiction in this district. 53. Class members were injured in this district.
V. TRADE AND COMMERCE
54.
attractive to sports fans that set it apart from other sports or leisure activities.
Close substitutes do not exist. Watching (or participating as a fan in) major league
55.
relevant product/service market. This market is characterized by high barriers to entry. Major League Baseball has market power as it is the only and dominant, provider of this product/service. MLB, acting through and in combination with the separate and independent clubs, also exercises market power through the exclusive
license agreements and the other unnecessary and unjustified restraints on each club's competitive activities that are the subject of this complaint. 56. Most importantly for this action, there is a relevant market for live
video presentations of major league baseball games over media such as cable and
satellite television and the Internet. MLB's dominance in the production of major
22
league baseball games in the United States gives it the ability, together with its
television partners, to exercise market power in the market for live video
presentations of MLB games.
57.
the United States. Various geographic submarkets also may exist. 58. Defendants' conduct complained of herein has taken place in and
affected, and directly, substantially, and foreseeably restrained, the interstate and
foreign trade and commerce of the United States, by, inter alia, the interstate and
foreign distribution of video of MLB games.
VI.
A. 59.
The Anticompetitive Exclusive License Agreements. It has been long recognized that MLB clubs, like the member clubs of
all professional sports leagues, must cooperate to define, schedule, and produce
league contests. That limited cooperation is fully consistent with the antitrust laws.
But the member clubs continue to exist as separate businesses with separate
operations, the clubs compete in business matters that are separate and distinct
from the facilitation of baseball games.
60.
the League has obtained centralized control over distribution of live video
programming of MLB games. As described more fully below, as a result of these
23
agreements, the clubs have agreed not to compete in business matters related to the
video presentation of live major-league professional baseball games.
61.
entered into by the individual clubs with separate entities, primarily RSNs,
including Root Sports, various regional Comcast Sportsnets, and others. 62. A smaller number of presentations are produced pursuant to national
agreements between the League and a national entity, including ESPN and TBS, which require a subscription to a pay-television service, and Fox Broadcasting, an over-the-air network. The League also owns its own channel, the MLB Network, which televises nationally through certain cable and satellite providers. 1. 63. Regional Blackout System
programming market are the regional blackout agreements. The purpose and effect
of these agreements is to divide the market geographically, permitting only the video presentations of a local team's television partner to be shown in that team's
"exclusive territory." The member clubs, through the League, have agreed that they
will not permit their television partners to compete with other member clubs' partners. Each team's partner has a monopoly in its exclusive territory, except in
those cities where two teams are located. Only in one the four such locationsNew York Cityare there two independent RSNs carrying major league baseball games. 64. The purpose of these restrictions is to restrain competition by
protecting the local television telecasters of each MLB game in the local markets of
24
http://support.directv.com/app/answers/detail/a_id/17231723.
65. Defendants Comcast and Directv have joined the conspiracy by
market division. In the absence of a separate out-of-market package or a national telecast (both are discussed below), a consumer of video presentations of live major league baseball is required to purchase the video presentation provided by the
consumers' local team.
67.
video from teams throughout the United States and Canada. The availability of
multiple sources of major-league professional baseball programming would result in competition among the Defendants, which would lower prices and increase choice
for consumers.
2.
Implementation of the Blackout System through Agreements Restraining Competition Among Sports Networks
68.
system of agreements with regional networks. These agreements require the networks to agree not to compete with other regional networks in the presentation
of televised MLB games.
69.
requirements knowing that other networks must agree not to compete in their
25
territories. The result is a horizontal division of the market that is enforced by the
horizontal agreement between the Defendants. 70. In each case, the local television network (and the entity that controls
that network) agrees with the League and member clubs that it will not permit its presentations of the games to be shown in areas outside of its exclusive territory,
knowing that other networks will likewise agree not to compete in their exclusive
home territory. The League and the network also agree that the network will not
carry games of other teams outside their territory.
71.
72.
The result is that each local network has a monopoly on live televised
baseball games in its exclusive territory. (This is true even in Chicago, Los Angeles,
and the Bay Area, each of which has two teams that are carried by the RSNs with
the same owners. Only New York is not a pure monopoly, as RSNs carrying the New York Yankees and New York Mets operate as a duopoly in that market). In certain cases, the outer areas of a team's territory may overlap with another team's
or teams' territories, permitting a viewer to watch either team's games, if they are
available, and subjecting the viewer to local blackouts of all such teams games. 73. These express restrictions on competition have made local sports
26
of their exclusive control of sports programming. See, e.g., In reAT&T Servs., Inc.,
FCC 11-168, 2011 WL 5534853, *3 (Nov. 10, 2011). In upholding FCC rules
designed to ensure that RSNs are not used to unfairly harm competition in the
MVPD market, the Court of Appeals for the District of Columbia Circuit agreed that
this control of sports programming made RSNs "'must have' and nonreplicable."
Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 702 (D.C. Cir. 2011).
74. These restrictions have the purpose and effect of creating a series of
regional monopolies in order to increase the price that can be charged by the teams,
the television networks, and television distributers like Comcast and Directv.
Plaintiffs and all purchasers of video programming that include these networks
consequently pay higher prices for television services that include presentations of
major league professional baseball games.
B. "Out-of Market" Packages
75.
games, there are only two options, both of which, as a consequence of agreements by
and among the member clubs, are controlled by the League: MLB.TV, which is streamed over the Internet and is available only through the league; and MLB Extra Innings, which is a similar service available only through cable and other
television distributors, including Directv.
76.
27
consumer. For 2011, the cost for MLB.TV was $99.99 for the season ($19.99 on a
78.
For most games, MLB.TV offers both the "home" and "away" feedsa
feature the League actively marketsbut the other team's feed is never available in
a game involving a local team. These "in-market" games are blacked out. Nationally
televised games are blacked out in the United States as a whole, and viewers
located in a team's exclusive territory are blacked out from all presentations of a
game involving the local team or teams.
79.
As the League explains on its website: "All live games on MLB.TV and
available through MLB.com Gameday Audio are subject to local blackouts. Such live
games will be blacked out in each applicable Club's home television territory,
regardless of whether that Club is playing at home or away. If a game is blacked out
in an area, it is not available for live game viewing."
http://mlb.mlb. com/mlb/help/faq_subscriptions.jsp#q10
80.
must buy all out-of-market games for all teams even if they are only interested in
watching the games of a particular team. They must choose to purchase at least one
month's games at a time.
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81.
82.
the exclusive territory of that team, with only very limited exceptions. No one in
New York, for example, has access to any live presentation of a contest involving the Mets over the Internet, despite the fact that Mets' contests are routinely
streamed over the Internet to consumers elsewhere, and no additional cost would be
incurred by permitting Mets' games to be viewed by New York baseball fans. The sole reason for this restriction is to interfere with competition.
83. By agreement of the clubs, MLB.TV is the exclusive distributer of
nearly all live and recorded MLB games in the United States.
84.
ESPN has streamed certain games over its own Internet service, but
only where it already had the exclusive right to distribute that game, preventing
such streaming from competing with any other provider. 85. Teams are prohibited from streaming their own games, even within
their own exclusive territories, unless they enter into a separate agreement with the league that prevents any potential competition with other providers. 86. The New York Yankees, through its television partner, the YES
Network, provide in-market streams, but only to consumers who already subscribe
to the YES Network through their television provider, and consumers are required
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to pay an additional fee for this service. These restrictions serve to prevent any
competitive effects.
87.
to charge monopoly pricing and limit the choices available to consumers. The
88.
through Directv and Dish Network, as well as through most cable companies
through In Demand, whose majority owner is Comcast. The price for the service for
the 2011 season was approximately $200.
89.
whose exclusive territory encompasses the viewer's location are blacked out from
Extra Innings, regardless of whether the game is being held locally, and regardless
of whether the game is available to the viewer through a different network. The sole
90.
on antitrust grounds, to analogous packages for the National Hockey League, "the clubs' horizontal elimination of competition against that packagegiven the distinct market for professional ice hockey broadcastsproduces higher prices and
reduced consumer welfare." PL Mem. Opp. Mot. Dismiss at 30, Madison Square
Garden, L.P. v. Nat'l Hockey League, No. 07-8455 (S.D.N.Y.). The same is true of
baseball.
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91.
the carrying of games, seeking to control the delivery ofcontent through all media
C.
92.
competition between and among the MLB clubs and the MLB, including in the
commercial exploitation of video presentations of live games where the member
clubs could and would compete with each other. In particular, in the absence of the
exclusive licenses and other competitive restraints, MLB clubs would compete with
each other in the presentation of their teams' games to a much greater extent than
the limited opportunities that are now available. 93. The above-described agreements have adversely affected and
of live MLB games, as well as output of game highlights and footage, is lower, and
prices are higher, than they would be in the absence of the agreements to restrict
competition. Moreover, output is unresponsive to consumer preference to view live
MLB games, including local games, through both Internet and television media.
94. Competition by individual clubs independently acting to exploit the
95.
96.
leagues, have made attempts to compete in the live video market outside of their
prescribed territories. As noted, the Chicago Cubs and Chicago White Sox continue
to carry a number of games on the WGN superstation. The League has waged a
campaign to limit the availability of games carried on a superstation, and has been
largely successful; at one time, at least four other teams' games were available outside of their home markets on superstations. Now, the league levies a
substantial "tax" on superstations to ensure that other teams and their television
partners are compensated for the "harm" they suffer due to facing marketplace
competition.
97.
In the NHL, the parent company of the New York Rangers went so far
such restrictions, "[t]he teams would compete with each other in the broadcasting"
of NHL hockey games. (MSG Complaint, 1 42).
98. The Chicago Bulls sued the National Basketball Association
challenging its rules limiting superstation presentations of live games. That case
ultimately settled when the parties agreed to permit the Bulls to carry a greater,
but still limited, number of games outside of the Chicago area.
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99.
exclusive license agreements and other competitive restraints, which have harmed
consumers in various ways, including in the above-described ways.
D. Plaintiffs' Have Suffered Antitrust Injury.
100. Plaintiffs have been overcharged for the video presentation of live MLB
games.
pricing. Subscribers suffer this overpayment even if they do not watch sports
programming. See, e.g., Brian Stetler and Amy Chozick, Paying a 'Sports Tax,'Even
if You Don't Watch, N.Y. TIMES, Dec. 15, 2011, available at http://www.nytimes.com
/2011/12/16/business/media/for-pay-tv-clients-a-steady-diet-of-sports.html.
102. Subscribers to MLB Extra Innings have been forced and will continue
103. Subscribers to MLB.TV have been forced and will continue to be forced
to overpay for Internet-delivered games and have been and will continue to be
forced to purchase Internet-delivered games in a bundle ofall such games (other
than those blacked out), despite the fact that, in the absence of collusive
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104.
games involving a local team from any source other than the team's RSN partner,
which typically requires the purchase of a full pay-television subscription, including
tens or hundreds of other channels Plaintiffs may not want.
106.
distributing their games through cable, satellite, Internet and otherwise in ways
that they may determine are best suited to reaching their respective and potential
fan bases throughout the country and abroad.
VII.
COUNT ONE
107.
Television Class, incorporate and reallege, as though fully set forth herein, each and
through the present, the exact dates being unknown to Plaintiffs, Defendants and
their co-conspirators entered into a continuing agreement, combination or
conspiracy in restraint of trade with the purpose, intent, and effect of restraining
horizontal competition among the MLB member clubs and their television partners,
and between the clubs and the MLB, with the purpose, intent, and effect of
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restraining trade and commerce in the distribution of major league professional baseball games, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
109. The contract, combination or conspiracy has resulted in an agreement,
understanding, or concerted action between and among the Defendants and their co-conspirators that regular season games will only be carried within a team's
between and among the Defendants in violation of Section 1 of the Sherman Act. It
has led to anticompetitive effects in the relevant markets, as alleged above, and
111.
combinations or agreements by, between and among the Defendants and other unnamed co-conspirators. These other co-conspirators have either acted willingly or,
due to coercion, unwillingly in furtherance of the unlawful restraint of trade alleged
herein.
112.
caused antitrust injury, in the form of higher prices and reduced choice, as set forth
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above. Plaintiffs and other consumers will continue to suffer antitrust injury and other damage unless Defendants are enjoined from continuing to engage in the
foregoing violations of law.
COUNT TWO
113.
Television Class, incorporate and reallege, as though fully set forth herein, each and every allegation set forth in the preceding paragraphs of this Complaint.
114.
through the present, the exact dates being unknown to Plaintiffs, Defendants and their co-conspirators entered into a continuing agreement, combination or
conspiracy in restraint of trade with the purpose, intent, and effect of restraining
horizontal competition among the MLB member clubs and their television partners,
and between the clubs and the MLB, with the purpose, intent, and effect of
baseball games, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. 115. The contract, combination or conspiracy has resulted in an agreement,
understanding, or concerted action between and among the Defendants and their
co-conspirators that the League will be the exclusive provider of live "out-of-market" games distributed through television providers. The Defendants and their co
conspirators have agreed that no club or television partner will offer a competing
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116.
between and among the Defendants in violation of Section 1 of the Sherman Act. It
has led to anticompetitive effects in the relevant markets, as alleged above, and
caused injury to consumers and competition in those relevant markets and
elsewhere.
117.
unnamed co-conspirators. These other co-conspirators have either acted willingly or, due to coercion, unwillingly in furtherance of the unlawful restraint of trade alleged
herein.
118.
caused antitrust injury, in the form of higher prices and reduced choice, as set forth
above. Plaintiffs and other consumers will continue to suffer antitrust injury and
other damage unless Defendants are enjoined from continuing to engage in the
foregoing violations of law.
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COUNT THREE VIOLATION OF SECTION 1 OF THE SHERMAN ACT On Behalf of the Internet Class
119.
Internet Class, incorporate and reallege, as though fully set forth herein, each and every allegation set forth in the preceding paragraphs of this Complaint.
120.
through the present, the exact dates being unknown to Plaintiffs, Defendants and their co-conspirators entered into a continuing agreement, combination or
conspiracy in restraint of trade with the purpose, intent, and effect of restraining horizontal competition among the MLB member clubs and their television partners,
and between the clubs and the MLB, with the purpose, intent, and effect of
restraining trade and commerce in the distribution of major league professional baseball games, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
121. The contract, combination or conspiracy has resulted in an agreement,
understanding, or concerted action between and among the Defendants and their co-conspirators that the League will be the exclusive provider of live "out-of-market" games over the Internet. The Defendants and their co-conspirators have agreed that
no club or television partner will offer a competing product, or make their
presentation of games over the internet available within another team's exclusive
territory.
122.
between and among the Defendants in violation of Section 1 of the Sherman Act. It
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has led to anticompetitive effects in the relevant markets, as alleged above, and caused injury to consumers and competition in those relevant markets and
elsewhere.
123.
concerted action with the co-conspirators occurred in or affected interstate commerce. The Defendants' unlawful conduct was through mutual understandings, combinations or agreements by, between and among the Defendants and other unnamed co-conspirators. These other co-conspirators have either acted willingly or,
124.
caused antitrust injury, in the form of higher prices and reduced choice, as set forth above. Plaintiffs and other consumers will continue to suffer antitrust injury and
other damage unless Defendants are enjoined from continuing to engage in the foregoing violations of law.
125.
each and every allegation set forth in the preceding paragraphs of this Complaint. 126. Defendants and their co-conspirators, by the above-mentioned conduct,
possess monopoly power over the market for video presentations of major league baseball games and Internet streaming of the same and have used that power for
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127.
and their co-conspirators have willfully acquired and maintained, and unless restrained by the Court, will continue to willfully maintain, that monopoly power by
anti-competitive and unreasonably exclusionary conduct. Defendants and their co conspirators have acted with an intent to illegally acquire and maintain that
monopoly power in the relevant product market, and their illegal conduct has
enabled them to do so, in violation of Section 2 of the Sherman Act, 15 U.S.C. 2. 128. Defendants' anticompetitive conduct has directly and proximately
caused antitrust injury, as set forth above. Plaintiffs and other consumers will
continue to suffer antitrust injury and other damage unless defendants are enjoined from continuing to engage in the foregoing violations of law.
VIII.
A.
class action under Rule 23 of the Federal Rules of Civil Procedure, and that
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B.
furtherance thereof by Defendants and their co-conspirators as alleged in this complaint, be adjudged to have been a violation of Section 1 of the Sherman Act, 15 U.S.C. 1. C. That the Defendants and their co-conspirators actions to illegally
acquire and maintain monopoly power in the relevant product market, be adjudged
to have been in violation of Section 2 of the Sherman Act, 15 U.S.C. 2. D. That judgment be entered for Plaintiffs and members of the Class
against Defendants for three times the amount of damages sustained by Plaintiffs
and the members of the Class as allowed by law, together with the costs of this
E.
judgment interest at the highest legal rate from and after the date of service of this Complaint to the extent provided by law; F. That Defendants and their co-conspirators be enjoined from further
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G.
That Plaintiffs and members of the Class have such other, further or
different relief, as the case may require and the Court may deem just and proper
under the circumstances.
POMERANTZ HAUDEK
GROSSMANiLGROSS LLP
100 Park Avenue, 26th Floor New York, NY 10017 Telephone: (212) 661-1100 Facsimile: (212) 661-8665
Edward Diver
Howard Langer
Peter Leckman
Attorneys for Plaintiffs Fernanda Garber, Marc Lerner, Derek Rasmussen, and Robert Silver
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