2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-11-2012

Deutscher Tennis Bund v. ATP Tour Inc

Precedential or Non-Precedential: Non-Precedential

Docket No. 09-4361

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________

No. 09-4361

_______________

DEUTSCHER TENNIS BUND, German Tennis Federation; 

ROTHENBAUM SPORTS GMBH; QATAR TENNIS FEDERATION 

v.

ATP TOUR INC.; ETIENNE DE VILLIERS; CHARLES PASARELL; 

GRAHAM PEARCE; JACCO ELTINGH; PERRY ROGERS; IGGY JOVANOVIC;

JOHN DOE 7; JOHN DOE 8; JOHN DOE 9

ATP Tour Inc.,

 Appellant

_______________

On Appeal from the United States District Court

for the District of Delaware

(D.C. No. 1-07-cv-00178)

District Judge: Honorable Gregory M. Sleet

Argued November 17, 2011

Before: RENDELL, AMBRO, and NYGAARD, Circuit Judges

(Opinion Filed: May 11, 2012)

Tiffany Geyer-Lydon, Esquire

Carolyn S. Hake, Esquire

Philip Trainer, Jr., Esquire

Ashby & Geddes

500 Delaware Avenue

P. O. Box 1150, 8th Floor

Wilmington, DE 19899
2

Jordan B. Leader, Esquire

Bradley I. Ruskin, Esquire (Argued)

Jennifer R. Scullion, Esquire

Proskauer Rose

Eleven Times Square

New York, NY 10036-8299

Counsel for Appellant

Hamish S. Cohen, Esquire

Stanley C. Fickle, Esquire

Robert D. MacGill, Esquire (Argued)

Peter J. Rusthoven, Esquire

Jennifer W. Adams, Esquire

Barnes & Thornburg

11 South Meridian Street, Suite 1313

Indianapolis, IN 46204

Comrie B. Flinn, Esquire

James L. Higgins, Esquire

Pilar G. Kraman, Esquire

Young, Conaway, Stargatt & Taylor

1000 West Street, P. O. Box 391

17th Floor, Brandywine Building

Wilmington, DE 19801

Timothy H. McCarten, Esquire

Stephen M. Nickelsburg, Esquire

Erin L. Palmer, Esquire

Clifford Chance US

2001 K Street N.W.

Washington, DC 20006

Counsel for Appellees

_________________

OPINION 

_________________

PER CURIAM

ATP Tour, Inc., appeals the order of the United States District Court for the 

District of Delaware denying ATP’s post-trial motion for attorneys’ fees, costs, and 
3

expenses after successfully defending against a suit brought by ATP member federations 

Deutscher Tennis Bund and Qatar Tennis Federation, and Rothenbaum Sports GMBH. 

For the reasons stated below, we vacate the order of the District Court and remand the 

case for further proceedings consistent with this opinion. 

I.

ATP is a not-for-profit Delaware membership corporation that governs an 

international men’s professional tennis tour. Members consist of tennis tournament 

federations and individual professional players. Two federation members, Deutscher and 

Qatar, who jointly own the German Open in Hamburg, Germany, sued ATP and certain 

individual Board members over its decision to restructure the ATP Tour, resulting in a 

change in the schedule and rules for tournaments on the tour.

1

Because of ATP’s restructuring, a plan known as the “Brave New World” (the 

“Plan”), the German Open lost its top-tier status, reducing the number of points 

participating players earned toward their world ranking. The Plan also moved the 

tournament from its slot just before the French Open, which had made it easier to attract

to the German Open highly ranked players, media coverage, and lucrative sponsorships. 

 

Deutscher and Qatar alleged that the Plan created a favored class of tournaments 

and systematically disadvantaged the rest of ATP’s tournaments from competing by 

controlling, inter alia, access to top players, prize money, broadcast rights, and the 

schedule. In so doing, Deutscher and Qatar asserted that ATP and its individual Board 

 1 Appellant Rothenbaum Sports GMBH, owned by Deutscher Tennis Bund and non-party 

Qatarian Tennis Federation Germany GMBH, operates the German Open. 
4

members violated sections 1 and 2 of the Sherman Act (15 U.S.C. § 1 et seq.) (Counts IIV), and under Delaware law breached fiduciary duties (Counts V-VII), tortiously 

interfered with contractual and business interests (Count VIII), and converted their 

membership rights (Count IX). They sought compensatory damages, treble damages, and 

an injunction to stop implementation of the Plan. 

ATP and the individual Board members prevailed at trial on every claim. The 

District Court granted judgment as a matter of law to ATP and the individual defendants 

on all of the state law counts, and to the individual defendants on the antitrust claims. A 

jury concluded that ATP was not liable for any antitrust violations. We affirmed the 

judgment, Deutscher Tennis Bund v. ATP Tour, Inc., 610 F.3d 820 (3d Cir. 2010), and 

the Supreme Court denied the federations’ petition for certiorari, Deutscher Tennis Bund 

v. ATP Tour, Inc., 131 S.Ct. 658 (2010).

ATP timely filed a post-trial motion, pursuant to Federal Rule of Civil Procedure

54(d), seeking attorneys’ fees, costs, and expenses arising from the litigation. It cited one 

of its by-laws, Article 23.3, as its basis to make this claim. Article 23.3 states:

In the event that (i) any [current or prior member or Owner or 

anyone on their behalf (“Claiming Party”)] initiates or asserts 

any [claim or counterclaim (“Claim”)] or joins, offers 

substantial assistance to or has a direct financial interest in 

any Claim against the League or any member or Owners 

(including any Claim purportedly filed on behalf of the 

League or any member), and (ii) the Claiming Party (or the 

third party that received the substantial assistance from the 

Claiming Party or in whose Claim the Claiming Party had a 

direct financial interest) does not obtain a judgment on the 

merits that substantially achieves, in substance and amount, 

the full remedy sought, then each Claiming Party shall be 

obligated jointly and severally to reimburse the League and 
5

any such member or Owners for all fees, costs, and expenses 

of every kind and description (including, but not limited to, 

all reasonable attorneys’ fees and other litigation 

expenses)(collectively, “Litigation Costs”) that the parties 

may incur in connection with such Claim. 

The ATP Board unilaterally drafted and promulgated Article 23.3 at 

approximately the same time that it was presenting the Plan to its members. ATP asserts 

that the federations agreed to be bound by the by-laws when they applied for 

membership. The District Court, however, denied ATP’s motion principally because 

such an award would be contrary to the underlying policy of the federal antitrust laws. 

The Court, relying primarily on our decision in Byram Concretanks, Inc. v. Warren 

Concrete Products Co. of New Jersey, 374 F.2d 649, 651 (3d Cir. 1967) (holding that, “in 

the absence of specific legislative authorization[,] attorneys’ fees may not be awarded to 

defendants in private anti-trust litigation”), refused to give effect to Article 23.3. It 

reasoned that federal law preempts the enforcement of fee-shifting agreements when 

antitrust claims are involved. See Dist. Ct. Op. at 5-8. As for the state law claims, the 

Court reasoned that because they “all related to the anticompetitive actions alleged in the 

four [antitrust] claims and were both incidental to and inextricably factually intertwined 

with the [antitrust] claims,” id. at 8 n.5, and because the “issues relating to the four 

[antitrust] claims predominated,” id., the fee-shifting provision in Article 23.3 is 

unenforceable as well with respect to the non-federal claims. ATP appeals.

2

 2 We review a district court’s denial of attorneys’ fees for an abuse of discretion. 

Krueger Associates, Inc. v. American Dist. Telegraph Co. of Pennsylvania, 247 F.3d 61, 

69 (3d Cir. 2001). “However, if the District Court denied the fees based on its 

 
6

II.

The question we address first is one that was not raised by the parties: whether 

federal preemption is ripe for decision when there has been no determination of whether 

Article 23.3 is valid (therefore, enforceable) under state law. As no preemption issue 

exists here without a valid and enforceable by-law, the question answers itself. 

Moreover, courts “have held that federal preemption of state law is a constitutional 

question because it is premised on the Supremacy Clause of the United States 

Constitution.” Columbia Venture, LLC v. Dewberry & Davis, LLC, 604 F.3d 824, 828 

(4th Cir. 2010) (citing Bell Atl. Md., Inc. v. Prince George’s Cnty., 212 F.3d 863, 865 

(4th Cir. 2000), and H & R Block E. Enter., Inc. v. Raskin, 591 F.3d 718, 723-24 (4th Cir. 

2010)). When there exist alternative independent state law grounds for disposing of a 

case, “courts should not decide the constitutional question of preemption before 

considering the state law grounds.” Id.; see also H & R Block, 591 F.3d at 723-24 

(remanding case for consideration of whether state statute applied to the plaintiff before 

deciding whether it was preempted). “In this context, ‘an independent state law ground is 

one that allows us to avoid deciding a constitutional question.’” Columbia Venture, 604 

F.3d at 828 (quoting MediaOne Grp., Inc. v. Cnty. of Henrico, 257 F.3d 356, 361 (4th 

Cir. 2001)). 

Because a determination that Article 23.3 is invalid under Delaware law would 

allow us (and the District Court) to avoid the constitutional question of preemption, it is 

 

conclusions on questions of law, our review is plenary.” P.N. v. Clementon Bd. of Educ., 

442 F.3d 848, 852 (3d Cir. 2006). 
7

an independent state law ground. Consequently, the by-law validity issue needs to be

addressed, and a finding of validity must be made, before the constitutional issue of 

preemption can be considered. 

However, as the District Court points out, “a number of other material factual 

issues would need to be resolved before” a determination can be made on the validity of 

Article 23.3 under Delaware law. Dist. Ct. Op. at 7 n.4. As an appellate court, we are 

not in a position to make factual findings and thus do not decide this issue. We note, 

though, that (like the District Court) we are aware of no case in which a Delaware court 

has addressed the legal validity of a by-law—adopted as an internal dispute was 

brewing—that requires an organization’s member to pay potentially large fees to the 

organization if the member files suit against the organization and loses.3

The District Court recognized that determining whether Article 23.3 provides a 

basis for fee-shifting might require analysis of the possibility that it was adopted 

specifically to deter members from suing the organization. See id. We concur. We also 

believe that other aspects of the by-law itself, and the circumstances of its adoption, 

might lead Delaware courts to refuse to enforce it.

 

4

 3 In Sternberg v. Nanticoke Memorial Hospital, Inc., a defendant requested attorneys’ 

fees pursuant to an organizational by-law. C.A. No. 07C-10-011(TGH), 2009 WL 

3531791, at *32 (Del. Super. Ct. Sept. 18, 2009), aff’d in part and rev’d in part, 15 A.3d 

1225 (Del. 2011). The Superior Court, however, awarded the defendant attorneys’ fees 

pursuant to statute and expressly declined to answer whether those fees could be awarded 

pursuant to the by-law. Id.

Indeed, we have doubts that 

4 It is interesting to note that the by-law provision here imposes fees on a plaintiff who 

“does not obtain a judgment on the merits that substantially achieves, in substance and 

amount, the full remedy sought.” (Emphasis added.) This is not your average fee-
8

Delaware courts would conclude that Article 23.3 imposes a legally enforceable burden 

on Deutscher and Qatar. But this issue, as well as various underlying factual questions,

must be resolved by the District Court in the first instance.5

Accordingly, we vacate the order of the District Court and remand the case so that 

it can examine, in the first instance, whether Article 23.3 of ATP’s by-laws creates an 

enforceable obligation under state law on Deutscher and Qatar to pay ATP’s attorneys’ 

fees.6

 

shifting provision. Its language seems to suggest that a plaintiff would have to pay the 

defendant’s fees even if the plaintiff receives a favorable settlement, because the plaintiff 

in such a case failed to “obtain a judgment on the merits.” (Emphasis added.) Further, if 

a plaintiff prevailed at trial and won $10,000,000, but sought $20,000,000, this by-law 

theoretically could require the plaintiff to pay the defendant’s fees because the judgment 

the plaintiff received arguably did not “substantially achieve[], in substance and amount, 

the full remedy sought.” We presume that if Delaware treats corporate by-laws as 

contracts, as ATP suggests, then the same factors that lead courts not to enforce 

contracts—e.g., unconscionability or public policy considerations—could apply to 

preclude enforcement of a by-law. Cf. Lincoln Nat’l Life Ins. Co. v. Joseph Schlanger 

2006 Ins. Trust, 28 A.3d 436, 441 (Del. 2011) (“Under Delaware common law, contracts 

that offend public policy or harm the public are deemed void, as opposed to voidable.”)

(emphasis in original); Tulowitzki v. Atl. Richfield Co., 396 A.2d 956, 960 (Del. 1978) 

(analyzing franchise agreement for unconscionability).

 This panel will consider any future appeal in this matter.

5 The District Court’s statement that “ATP cites no case in which a court held that a 

board-adopted corporate bylaw can form the basis for the recovery of attorney’s fees 

from members who sue the corporation” may have indicated that it did not believe that 

Delaware courts would enforce this by-law against the federations. Id. at 5. However, it 

is not clear whether it was holding the by-law unenforceable as a matter of Delaware law 

or simply recognizing an absence of clear authority in support of ATP’s position. 

6 We offer no opinion here on the merits of the parties’ other legal arguments.