PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

No. 16

- 4087

_______________

JOSH FINKELMAN,

on behalf of himself and the Putative class, Appellant

v.

NATIONAL FOOTBALL LEAGUE; NFL VENTURES,
L.P.; NFL PROPERTIES, L.L.C.; NFL VENTURES, INC.; NFL ENTERPRISES, L.L.C.

_____________ __ On Appeal from the United States District Court

for the District of New Jersey

( D.C. No . 3

- 14

- cv

- 00096 ) District Judge: Honorable Peter G. Sheridan

_______________ Argued July 12, 2017

Before: SMITH, Chief Judge , FUENTES, Circuit Judge , and STARK, * Chief District Judge

* Honorable Leonard P. Stark, Chief Judge of the United

States District Court for the District of Delaware, sitting by designation.2 (Opinion Filed: December 15, 2017 )

Greg M. Kohn, Esq. Bruce H. Nagel, Esq. [ARGUED] Nagel Rice

103 Eisen hower Parkway Roseland, NJ 07068

Counsel for Appellant

Karen A. Confoy, Esq.

Fox Rothschild

997 Lenox Drive

Princeton Pike Corporate Center, Buil ding 3 Lawrenceville, NJ 08648

William Feldman, Esq. Jonathan D. Pressment, Esq. [ARGUED] Haynes & Boone

30 Rockefeller Center

26th Floor New York, NY 10112

Counsel for Appellee s

_______________

OPINION OF THE COURT

__________ _____3 FUENTES, Circuit Judge

.

Plaintiff Josh Finkelman had the once

- in

- a

- lifetime opportunity to buy tickets to Super Bowl XLVIII held in his

home state of New Jersey in February 2014

. However, the National Football League (“NFL”) withheld almost all of these

tickets

— 99%

— f rom the general public for league insiders

, offering the remaining 1% to lucky winners of a lottery that all could enter. To get his tickets, Finkelman turned to the secondary market, purchasing two tickets with a face value of $800 eac h for $2000 each

. One month before the Super Bowl

, he filed suit

, alleging that the NFL ’s ticket distribution violated New Jersey law

. Specifically, Finkelman claims that the NFL’s withholding of more than 5% of the available tickets for the Super Bowl vio lated the New Jersey Ticket Law. He has now had two opportunities before our Court to show that he has Article III standing to pursue this claim

. In our first decision on this subject, we found that he did not

. He has since added

claims about how the NFL’s secondary ticket market

functioned and how the NFL’s actions raised ticket prices on the secondary market

. The District Court found that these additional allegations remained insufficient to allege Finkelman’s standing. We disagree. Based on the plausible economic facts pleaded in Finkelman’s amended complaint, we conclude that Finkelman has standing and we there fore have subject matter jurisdiction over this case

. We defer action on the merits of this appeal pending decision by the Supreme

Co urt of New Je rsey on the pending petition for certification of questions of state law.

I. Background4 On February 2, 2014, Super Bowl XLVIII was held in New Jersey, at MetLife Stadium in East Rutherford. Finkelman alleges that the NFL has a policy of withholding almost all Super Bowl tickets

— 99%

— from the general public. Of these 99%, he alleges that 75% of the withheld tickets are split among NFL teams, with 5% going to the host team, 17.5% going to each team playi ng in the Super Bowl, and 35% going to the remaining NFL teams. The remaining 25% of tickets are withheld for companies, broadcast networks, media sponsors, the host committee, and other “league insiders.” The 1% of tickets for public purchase are sold thr ough a lottery system. In order to acquire a ticket in the lottery, a person has to enter by the deadline, be selected as a winner, and choose to actually purchase a ticket.

Finkelman alleges that he purchased two tickets on the secondary market. Although these tickets had a face value of $800 each, he purchased them for $2,000 per ticket. He did not enter the lottery to seek to win the 1% of tickets offered at face

value to lucky members of the public.

In January 2014, Plaintiff Finkelman filed a putativ e class action in the District of New Jersey against the NFL and various affiliated entities, alleging that the Defendants violated New Jersey’s Ticket Law , N.J. Stat. Ann. § 56:8

- 35.1, by5 withholding more than 5% of tickets to the Super Bowl. 1 This law, part of New Jersey’s Consumer Fraud Act (“CFA”), 2

reads:

It shall be an unlawful practice for a person, who has access to tickets to an event prior to the tickets’ release for sale to the general public, to

withhold those tickets from sale to t he general public in an amount exceeding 5% of all

av ailable seating for the event.

II. Procedural History

A. First District Court Decision

In the first round of this case, Defendants moved to

dismiss Finkelman’s first amended complaint under Rule

1 Originally, this suit also included a second plaintiff, Ben

Hoch

- Parker, who alleged that he wanted to buy Super Bowl tickets but did not because of the high prices on the secondary

market. The District Court found that he had no Article III standing to sue, and we affirmed that dismissal. See Finkelman

v. Nat ’ l Football League , 810 F.3d 187, 195 (3d Cir. 2016). Thus, he is no longer in the case. Plaintiff originally also brought an unjust enrich ment claim, but t he operative complaint no longer includes this claim.

2 The CFA permits private plaintiffs to sue any person who violates the Act and causes them ascertainable damages. N.J. Stat. Ann. § 56:8

- 19.6 12(b)(6) a nd the District Court granted the motion. 3 Without addressing Article III standing, the District Court reasoned that Defendants never “withheld” tickets within the meaning of the Ticket Law because they did not keep tickets in their custody. Instead, they “allocated” 100% of all available tickets by giving 99% of them to NFL teams and other League insiders and holding a lottery to sell the remaining 1% of tickets. The District Court also concluded that Finkelman failed to plead

causation under the CFA because he never entered the ticket lottery.

B. First Decision of Our Court

On appeal, we concluded that Finkelman did not

establish Article III standing

. 4 In doing so, w e considered two

theories Finkelman pleaded to prove standing. First, we

c onsidered whether Finkelman had standing because the NFL’s ticket withholding prevented him from buying a ticket

at face value. We found that he had not shown a causal

connection between the NFL’s actions and the injury framed

in this way , because Finkelman failed to enter the lottery to buy face value tickets. So, any harm that Finkelman suffered was properly attributed not to the NFL, but rather to his own decision not to enter the ticket lottery. Thus, Finkelman failed to allege standing on this theory. 5

3 Finkelman v. Nat ’ l Football League , D.C. No. 3:14

- cv

00096, Dkt. 54 ; App. Vol III 281. See also App. Vol. III 233

- 80 (transcript of oral argument and opinion).

4 Finkelman , 810 F.3d at 197

. We omit a discussion of Hoch

Parker’s standing since he is no longer in the case.

5 Id. at 197

- 99.7 Second, we considered whether Finkelman had standing because the NFL’s ticket withholding policy increased the cost of the tickets that he purchased on the secondary market

. Under this theory , his damages would not be the difference between

the t icket’s face value and the price that he paid, but instead the difference between what he paid on the secondary market and what the tickets would have cost on the secondary market had the NFL not withheld tickets in alleged violation of the Ticket

Law

.

H owever
, we found that Finkelman had not pleaded specific enough allegations to demonstrate that the NFL’s withholding actually did increase the price he paid for tickets on the secondary market. We noted the basic econom ic theory that limiting supply increases price . Thus, one could assume

that the NFL’s restriction o n the availa bility of Super Bowl tickets to the public increased the price that Finkelman paid for

his tickets . Unfortunately for Finkelman, this mere assumpti on was not enough to prove his standing. U nder the scheme Finkelman pleaded, it was also possible that NFL insiders that

had obtained non

- public tickets were willing to resell to the public, so that supply was not artificially limited and the price

inflate d in th e secondary market . Moreover, we posited that if

some of those NFL insiders did not have to pay for their tickets originally, they might be willing to resell their tickets on the secondary market for less than a member of the public who paid face va lue would have done . So, the NFL’s withholding

could have even lowered ticket prices on the secondary market.8 We explained that t o establish Article III standard based

on this theory, u nder the familiar Tw o mbly

- Iqbal standard

, 6

Finkelman needed to plead facts specific enough to allege that the NFL’s ticket withholding caused the price he paid for tickets on the secondary market to rise. Because we could only speculate as to the effects the NFL withholding had on secondary ticket prices, t he allegations were insufficient to establish Article III standing. We remanded to allow the

District Court to exercise its discretion as to whether

Finkelman should be granted leave to amend. 7

C. Second Amended Complaint

The District Court granted Finkelman ’s motion to amend the complaint

, 8 and Finkelman filed a Second Amended Complaint. 9 In it, Finkelman pursued only the second theory of standing, mapped out in our first opinion. To do so,

Finkelman added facts alleged by Daniel Rascher, an

economi st who spec ializes in sports and ticketing on the workings of secondary ticket markets in events like the Super

Bowl. 10 Rascher concludes that the NFL’s withholding resulted in fewer tickets being available on the secondary market and higher prices for thos e tickets that were available.

6 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ; Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)

.

7 Finkelman , 810 F.3d at 199

- 203.

8 Finkelman , D.C. No. 3:14

- cv

- 00096, Dkt. 82; App. Vol

. III

294.

9 Finkelman , D.C. No. 3:14

- cv

- 00096, Dkt. 83; App. Vol. III

295

- 336

.

10 These factual allegations can be found at S AC ¶¶ 40

- 43, App. Vol. III at 30 8

- 17

.9 In support of this conclusion, he explains that under the NFL’s current system, NFL insiders sell their tickets to a concentrated group of brokers, who in turn charge more for tickets on the secondary market. Without the NFL withholding, he posits that

there would be more fan

- to

- fan direct sales of tickets, cutting out more brokers and allowing for lower prices. He explains that NFL insiders are more likely to use brokers to resell their tickets than fans would be, either because the insiders are not technically allowed to sell their tickets or because they seek to avoid unwanted publicity from the sales. Rascher also states that the NFL’s initial withholding adds an additional lay er in the supply chain (insider

- to

- broker sales), which results in higher prices for customers. He cites research by himself and other economists in support of these allegations.

D. Second District Court Opinion

Defendants again moved to dismiss, 11 and the District Court granted the motion. 12 The District Court found that Finkelman had not proved standing because he did not enter the NFL’s ticket lottery and because the additional facts

Finkelm an al leged regarding causation we re too conclusory. Furthermore, in the alternative, the District Court reasoned that

even if Finkelman did have standing, Finkelman had not properly alleged a violation of the Ticket Law , reiterating its interpretation of the Ticket Law from its first decision

.

11 Finkelman , D.C. No. 3:14

- cv

- 00096, Dkt. 92; App. Vol. III

337

- 38.

12 Finkelman , D.C. No. 3:14

- cv

- 00096, Dkt. 104; App. Vol. I

3

- 18.10 III. Jurisdiction and Standard of Review

This is a diversity suit over which the District Court had jurisdiction pursuant to the Class Action Fairness Act. 13 This Court has jurisdiction over the final judgment of the District Court under 28 U.S.C. § 1291.

The Court’s review of a decision dismissing a complaint, as well as over questions of statutory interpretation, is plenary. 14

IV. Discussion

Finkelman appeals the District Court’s judgment which

followed our remand , argu ing that he has properly pleaded Article III standing and has properly pleaded a claim under the

Ticket Law to overcome Defendants’ Rule 12(b)(6) motion to

dismiss.

13 See 28 U.S.C. § 1332(d)(2)(A) (“The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000,
exclusive of interest and costs, and is a class action in

which

. . . any member of a class of plaintiffs is a c itizen of a State different from any defendant”).

14 Pearson v. Sec’y Dep’t of Corr. , 775 F.3d 598, 601 (3d Cir. 2015); United States v. Berberena , 694 F.3d 514, 519 n. 7 (3d Cir. 2012).11 Because “[w]ithout jurisdiction the court cannot proceed at all i n any cause,” 15 we first consider whether

Finkelman has alleged facts sufficient to establish Article III standing at this stage in the litigation. To establish Article III standing, a plaintiff must allege “ (1) an injury

- in

- fact, (2) a

sufficient causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision. ” 16

First , to state an injury

- in

- fact, a plaintiff must allege “the invasion of a concrete and particularized legal ly protected interest resulting in harm that is actual or imminent, not conjectural or hypothetical. ” 17 In turn, “[a] harm is particularized if it affects the plaintiff in a personal and individual way. It is concrete if it is de facto ; that is, it must

act ually exist rather than being only abstract.” 18 “ While it is difficult to reduce injury

- in

- fact to a simple formula, economic injury is one of its paradigmatic forms.” 19

To show causation, the alleged injury must be “ fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before

15 Steel Co. v. Citizens for a Better Env ’ t , 523 U.S. 83, 94 (1998).

16 In re Nickelodeon Consumer Privacy Litig ., 827 F.3d 262, 272 (3d Cir. 2016) (internal citations omitted).

17 Id. (internal citations and quotations omitted).

18 Id. (internal citations, quotations, and alterations omitted).

19 Danvers Motor Co. v. Ford Motor Co. , 432 F.3d 286, 291 (3d Cir. 2005).12 the court.” 20 Causation in this context is akin to ‘ but

- for ’

causation in tort and “ may be satisfied even where the condu ct in question might not have been a proximate cause of the

harm.” 21 To satisfy it, “an indirect ca usal relationship will suffice, provided that there is a fairly traceable connec tion between the alleged injury

- in

- fact and the all eged conduct of

the defendant.” 22

To show redressability, a plaintiff must show that it is “likely, as opposed to merely speculative, that the alleged injury will be redressed by a favorable decision.” 23

The plaintiff bears the burden of proving standing. 24
“[E]ach element mus t be supported in the same way as any other matter on which the plaintiff bears the burden of proof,
i.e., with the manner and degree of evidence required at the successive stages of the litigation.” 25 Thus, at this stage of the

20 Finkelman , 810 F.3d at 193 (internal citation omitted).

21 Id. (internal citations and quotations omitted).

22 Id. at 193

- 94 (internal citations and quotations omitted).

23 Id. at 194 (internal citations and quo tations omitted).

24 Danvers , 432 F.3d at 291.

25 Lujan v. Defs. of Wildlife , 504 U.S. 555, 561 (1992).13 litigation, we use the same standard we apply when assessing

a motion to dismiss for failure to state a claim. 26

To do so, “[f] irst, we take note of the elements a plaint iff must plead to state a claim

— here, the three elements of Article III standing. Second, we eliminate from consi deration any allegations that, because they are no more than conclusions, are

not entit led to the assumption of truth. Third, where there are

wel l

- pleaded factual allegations, we assume their veracity and

then de termine whether they plausibly establish the prerequisites of standing.” 27 If Finkelman cannot establish standing, we must dismiss for lack of subject matter jurisdiction. 28

26 Finkelman , 810 F.3d at 194 (internal citation omitted). Plaintiff argues that his pleading s do not have to meet the

standard of Twombly and Iqbal in order to allege standing at this phase. We need not reach this question

— we continue to apply the same standard that we did in the first opinion in this

case. See Finkelman , 810 F.3d at 194 n.5 (“Some of our sister circuits have questioned how well the ‘plausibility’ standard of Iqbal and Twombly maps onto standing doctrine . . . . Without wading too deeply into this particular thicket, we are content to say that, even when reviewing only the bare allegations of a complaint, Iqbal and Twombly teach that standing cannot rest on mere “legal conc lusions” or “naked assertions.”).

27 Id. (internal citations, quotations, and alterations omitted).

28 Id. at 195 (citing Neale v. Volvo Cars of N. Am., LLC , 794 F.3d 353, 362 (3d Cir. 2015) (“[T]he ‘cases or controversies’ requirement is satisfied so long as a class representative has standing.”)).14 In finding that Finkelman had not properly alleged standing in our initial opinion

, we compared this case to Dominguez v. UAL Corp. , in which the D.C. Circuit reversed the district court’s grant of summary judgment in favor of the defendant and found that the plaintiff lacked standing to sue. 29
We noted that in that case, “ [t] he plaintiff

. . . sued United Air

Lines under the fed eral antitr ust laws, asserting that United’ s prohibition on reselling airplane tickets deprived him of a secondary market in which he might have been able to purchase tickets for less money than he paid United. ” 30 To allege that United’s prohibition had cau sed him an injury

- in

fact, t he plaintiff had offered testimony from an expert who had surveyed United customers and concluded that “ a high percentage of respondents would consider using a feature that allowed them to legally sell or give away airline ticke ts they

are unable to use. ” 31 T he D.C. Circuit found this insufficient to show standing because the plaintiff ’ s expert “ did not take into account costs associated with running a secondary marke t”

such as the costs of changing United’ s reservation system, the possible introduction of new, seller

- imposed fees, and other factors that might influence prices in a hypothetical resale

market. 32 Thus, like Finkelman in his earlier complaint , the plaintiff could only speculate as to whether an end to United’s prohib ition would have led to lower ticket prices.

Here, h owever, in his amended complaint, Finkelman has offered specific factual allegations above and beyond those

described in Dominguez

. Finkelman did not just allege that

29 666 F.3d 1359 (D.C. Cir. 2012).

30 Finkelman , 810 F.3d at 201

. 31 Dominguez , 666 F.3d at 1363.

32 Id. at 1363

- 64.15 prices would be lower on the secondary market were it not for the NFL’s withholding. Instead, Finkelman alleged a causal chain justifying why the NFL’s withholding set into motion a series of events that ultimately raised prices on the secondary market. Sp ecifically, Finkelman alleged that t he insiders to whom the NFL presently provides tickets are more likely to re

sell those tickets through third

- party brokers to keep those sales anonymous, and those brokers in turn are more likely to charge higher prices

. But if more tickets were made available to fans initially, fans would be more likely than the NFL insiders are to sell through direct fan

- to

- fan sales, and the prices would likely be lower

. 33

Given Finkelman ’s additional factual allegations, a

different D.C. Circuit case, Osborn v. Visa Inc.

, 34 is more instructive. In that case, users and operators of non

- bank Automated Teller Machines ( ATMs ) sued Visa, MasterCard, and affiliated banks alleging anticompetitive behavior in pricing ATM access fees. In their complaint, the plaintiffs alleged that in the absence of the defendants’ anticompetitive

behavior , ATM operators would charge MasterCard and Visa

customers higher rates than non

- MasterCard and Visa customers. This, in turn, would drive customers to pressure their banks to offer cards using networks other than MasterCard or Visa, which would make this market more competitive and result in more choice of networks, lower fees for consumers, and greater profits for non

- bank ATM

operators. 35 In granting the defendants’ motion to dismiss, the

33 SAC ¶ 40, App. Vol. III 312

- 14.

34 797 F.3d 1057, 1063 (D.C. Cir. 2015).

35 Id. at 1063.16 D.C. D istrict C ourt found that the plaintiff’s allegations constituted an “attenuated, speculative chain of ev ents[ ] that relies on numerous independent actors” and dismissed the complaint. 36

On ap peal, the D.C. Circuit reversed

. It held that “the District Court was demanding proof of an economic theory that was not required in a complaint.” 37 The Court noted:

At the pleadings stage, a court must accept as true all material allegations of the complaint, an obligation that we have recognized might appear to be in tension with

the Court’ s further admonition that an allegation of injury or of redressability that is too speculative will not suffice to invoke the federal judicial power. But this ostensible tension is reconciled by distinguishing allegations of facts, either historical or otherwise demonstrable, from allegations that are really predictions. Thus, when

c onsidering any chain of allegations for standing purposes, we may reject as overly speculative . . . those types of allegations that are not normally susceptible of labelling as “true” or “false.” 38

36 Id. (quoting Nat’l ATM Council, Inc. v. Visa Inc. , 7 F. Supp. 3d 51, 60 (D.D.C. 2013)). See also id. at 1064 (“ The District Court reasoned that the protracted chain of causation alleged by Plaintiffs fails both because of the uncertainty of several individual links and because of the number of speculative links that must hold for the chain to connect the challenged acts to the asserted particularized injury.”) (internal citations and quotations omitted ) )

.

37 Id. at 1063.

38 Id. at 1064 (internal citations and quotations omitted).17 T he D.C. Circuit found that the plaintiffs’ theory was

“s usceptible to proof at trial.” 39 It noted that the complaint contained “factual details” supporting the “alleged causal link” between the defendants’ behavior and plaintiffs’ economic

harm. 40 The Court acknowledged that the plaintiffs’ allegations did “rely on certain economic assumptions about supply and demand” but noted that “these sorts of assumptions are provable at trial.” 41 Distinguishing Dominguez and other cases decided on summary judgment, the Court noted that the plaintiffs had no obligation to offe r evidence of their theory here, as “[a] Rule 12(b)(1) motion . . . is not the occasion for evaluating the empirical accuracy of an economic theory.” 42
The Court concluded that “[b]ecause the economic facts alleged by the Plaintiffs are specific, plausible, and susceptible to proof at trial, they pass muster for standing purposes at the pleadings stage.” 43

I n this case, too, Finkelman has offered economic facts that are specific, plausible, and susceptible to proof at trial. Defendants may be correct that Fi nkelman will not be able to prove that the 2014 Superbowl secondary tic ket market worked

as he claims. Defendants remain free to bring a factual challenge to jurisdiction disputing just that. But Finkelman is not required to prove his economic theory in hi s complaint

,

39 Id. at 1065.

40 Id.

41 Id

. See also id. (“ Indeed, allegations of economic harm ‘based on standard principles of “ supply and demand ” ’ are

‘ routinely credited by courts in a variety of contexts. ’” ) (quoting Adams v. Watson , 10 F.3d 915, 923 (1st Cir. 1993).

42 Id. at 1065

- 66.

43 Id. at 1066.18 and

, at this stage in the litigation, Finkelman h as alleged sufficient factual allegations to show that Defendants’ withholding raised the price that he paid for tickets on the secondary market. Thus, Finkelman has Article III standing.

V. Conclusion

We reverse the District Court and find that we have subject matter jurisdiction over this matter. We defer action on the merits of this appeal pending a decision by the Supreme Court of New Jersey on a petition for certification of questions

of state law. We shall retain jurisdiction over the appeal pending resolution of the certification.