Opinion ID: 76493
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: 13 Before discussing the antitrust issues in this case, it is important to note what this case is not about. Contrary to the arguments of Morris and its amici curiae, this case is not about copyright law, 6 the Constitution, the First Amendment, 7 or freedom of the press in news reporting. This case is a straight-forward antitrust case involving a product and a defendant's assertion of a valid business justification as its defense to anticompetitive actions, if any. Also important to note is that this case is being decided based upon the facts presented, not a hypothetical situation, no matter how probable its actualization. 8 Accordingly, the only real issue before us is whether PGA's restrictions and prohibitions regarding Morris's ability to sell compiled real-time golf scores to third parties violates § 2 of the Sherman Act. We do not address Morris's right of access to and internal dissemination of compiled real-time golf-scores, as permitted by the PGA. 9
14 Section 2 of the Sherman Act provides that [e]very person who shall monopolize, or attempt to monopolize, ... any part of the trade or commerce among the several States, ... shall be deemed guilty of a felony.... 15 U.S.C. § 2. The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966). 15 The first element, monopoly power, is the power to control prices in or to exclude competition from the relevant market. United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391, 76 S.Ct. 994, 1005, 100 L.Ed. 1264 (1956). The second element requires predatory or exclusionary acts or practices that have the effect of preventing or excluding competition within the relevant market. See United States v. Microsoft, 253 F.3d 34, 58 (D.C.Cir.2001). In order for a practice to be exclusionary, it must harm the competitive process and thereby harm consumers. Id. [H]arm to one or more competitors will not suffice for a § 2 violation. Id.; see also Consultants & Designers, Inc. v. Butler Serv. Group, Inc., 720 F.2d 1553, 1562 (11th Cir.1983) (The relevant inquiry is not whether [a company's] present attempt to exclude adversely impacts competition but rather whether its acquisition of the power to exclude competitors had a sufficiently adverse impact on competition to constitute a [Sherman Act] violation.).
16 Two theories exist upon which to predicate a unilateral refusal to deal claim: (1) the intent test and (2) the essential facility test. Mid-Texas Communications Sys., Inc. v. AT&T, 615 F.2d 1372, 1387 n. 12 (5th Cir.1980). 12 Under the intent test, it is unlawful for a monopolist to maintain or extend its monopoly power by intentionally engaging in conduct that unnecessarily excludes competitors and impairs competition. See id. at 1388; see also Eastman Kodak Co. v. S. Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1927). 17 Under the essential facility test, a company that has exclusive control over a facility essential to effective competition may not deny potential competitors access to that facility on reasonable terms and conditions if to do so would create or maintain monopoly power in the relevant market. Covad Communications Co. v. BellSouth Corp., 299 F.3d 1272, 1285 (11th Cir.2002), cert. granted and judgment vacated on other grounds, 540 U.S. 1147, 124 S.Ct. 1143, 157 L.Ed.2d 1040 (2004); MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1132-33 (7th Cir.1983); see also Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 124 S.Ct. 872, 881, 157 L.Ed.2d 823 (2004) (The indispensable requirement for invoking the doctrine is the unavailability of access to the `essential facilities'; where access exists, the doctrine serves no purpose.). The plaintiff has the burden of proving that the defendant controls an essential facility that cannot be practically or economically duplicated. See Covad Communications, 299 F.3d at 1285. 18 In the absence of any purpose to create or maintain a monopoly, however, a company may deal or refuse to deal with whomever it pleases. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 601-02, 105 S.Ct. 2847, 2857, 86 L.Ed.2d 467 (1985) (quoting United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992 (1919)). Even a company with monopoly power has no general duty to cooperate with its business rivals and may refuse to deal with them if valid business reasons exist for such refusal. See Mid-Texas Communications, 615 F.2d at 1388. 19 Ordinarily, when determining whether a defendant has violated § 2 of the Sherman Act, we first determine the relevant market and then decide whether the defendant possessed monopoly power in that market. In this case, however, we do not pursue such an inquiry because we agree with the district court that even if PGA possessed monopoly power in the relevant market, Morris's § 2 claims cannot prevail because PGA has a valid business justification for its actions. Therefore, even if PGA is monopolistic, and even if PGA refused to deal with Morris, it has not violated § 2 of the Sherman Act. 20
21 The Sherman Act is ... the `Magna Carta of free enterprise,' but it does not give judges carte blanche to insist that a monopolist alter its way of doing business whenever some other approach might yield greater competition. Verizon Communications, 124 S.Ct. at 883 (internal quotations omitted). To the contrary, Section 2 of the Sherman Act ... seeks merely to prevent unlawful monopolization and unlawful refusals to deal. Id. 22 Unlawful monopoly power requires anticompetitive conduct, which is conduct without a legitimate business purpose that makes sense only because it eliminates competition. Gen. Indus. Corp. v. Hartz Mountain Corp., 810 F.2d 795, 804 (8th Cir.1987); see also LePage's Inc. v. 3M, 324 F.3d 141, 153-54 (3rd Cir.2003) (discussing Conwood Co., L.P. v. United States Tobacco Co., 290 F.3d 768 (6th Cir.2002), cert. denied, 537 U.S. 1148, 123 S.Ct. 876, 154 L.Ed.2d 850 (2003)). Likewise, refusal to deal that is designed to protect or further the legitimate business purposes of a defendant does not violate the antitrust laws, even if that refusal injures competition. See Aspen Skiing, 472 U.S. at 604, 105 S.Ct. at 2858; see also NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 137, 119 S.Ct. 493, 499, 142 L.Ed.2d 510 (1998) (citing Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 225, 113 S.Ct. 2578, 2589, 125 L.Ed.2d 168 (1993), for the proposition that [e]ven an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws); United States Football League v. National Football League, 842 F.2d 1335, 1360 (2d Cir.1988) (concluding that no § 2 liability existed where network's actions were based on desire to obtain $736 million in rights fees, not to exclude competitors). 23 Once the defendant has met its burden to show its valid business justification, the burden shifts to the plaintiff to show that the proffered business justification is pretextual. See U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 1002 (11th Cir.1993); see also Image Technical Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1212 (9th Cir.1997). 24 In this case, PGA met its business justification burden by showing that it seeks to prevent Morris from free-riding on PGA's RTSS technology. See Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 55, 97 S.Ct. 2549, 2560, 53 L.Ed.2d 568 (1977) (stating that prevention of free-riding by competitors is a legitimate business purpose); Consultants & Designers, 720 F.2d at 1559 (concluding that defendant had a legitimate interest in protecting from opportunistic appropriation its investment in acquiring the information necessary to carry on its business). To achieve its business purpose, PGA has refused to grant Morris access to PGA tournaments unless Morris agrees not to sell the product of PGA's proprietary RTSS — compiled real-time golf scores — to non-credentialed third-party Internet publishers. Morris responds that it has a right to sell such product notwithstanding that RTSS was developed and paid for, and is operated by, PGA. 13 We disagree with Morris. The compiled real-time golf scores acquired through RTSS are not a product that Morris has a right to sell because they are a derivative product of RTSS, which PGA owns exclusively. 14 We agree with the district court that PGA has a right to sell or license its product, championship golf, and its derivative product, [compiled] golf scores, on the Internet in the same way the [PGA] currently sells its rights to television broadcasting stations. Morris Communications Corp. v. PGA Tour, Inc., 235 F.Supp.2d 1269, 1282 (M.D.Fla.2002). 25 If Morris wishes to sell PGA's product, it must first purchase it from PGA. See Consultants & Designers, 720 F.2d at 1559 (explaining that plaintiff did not have the right to abrogate defendant's property interest). Section 2 of the Sherman Act does not require PGA to give its product freely to its competitors. See Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1573 (11th Cir.1991) (stating that it is not a function of the antitrust laws to equip plaintiffs with defendants' competitive advantages). PGA is willing to sell its product to its competitors, including Morris, thereby allowing credentialed media organizations like Morris to syndicate compiled real-time golf scores after paying a licensing fee to PGA. Accordingly, we conclude from the record that PGA has satisfied its burden to show a valid business justification.
26 Because PGA has met its burden of showing that its asserted business justification is valid, the burden shifts to Morris to allege facts that support an inference that the proffered justification is merely pretextual, thereby establishing genuine issues of material fact. U.S. Anchor Mfg., 7 F.3d at 1002; see also Image Technical Servs., 125 F.3d at 1212. Morris argues that PGA's only justification for its refusal to deal with Morris on Morris's terms is economic and such sole motivation is not a valid business justification; thus, PGA's justification is pretextual. See LePage's, 324 F.3d at 163 ([D]efendant's assertion that it acted in furtherance of its economic interests does not constitute the type of business justification that is an acceptable defense to § 2 monopolization.). 27 Morris supports its argument with a series of cases which are fundamentally distinguishable from this case. In the cases upon which Morris relies, the plaintiffs alleging antitrust violations had created with their own work and efforts, or purchased with their own money, their very own products that defendants prohibited them from selling. See, e.g., Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 485, 112 S.Ct. 2072, 2092, 119 L.Ed.2d 265 (1992) (plaintiffs invest substantially ... in parts inventory); Aspen Skiing, 472 U.S. at 587-88, 105 S.Ct. at 2850 (plaintiff developed and maintained its own competitive ski resort and ski packages); Lorain Journal Co. v. United States, 342 U.S. 143, 149-50, 72 S.Ct. 181, 184-85, 96 L.Ed. 162 (1951) (injured competitor trying to sell its radio air time for advertisements); Int'l News Serv. v. Associated Press, 248 U.S. 215, 221, 39 S.Ct. 68, 69, 63 L.Ed. 211 (1918) (plaintiff gathers in all parts of the world, by means of various instrumentalities of its own, by exchange with its members, and by other appropriate means, news and intelligence of current and recent events of interest to newspaper readers); LePage's, 324 F.3d at 144 (plaintiff selling its own transparent tape); Microsoft Corp., 253 F.3d at 63 (injured competitors deterred from selling their own computers and browsers); Nat'l Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 854 (2d Cir.1997) (analyzing free-riding issues and noting that plaintiff did not free-ride because it used its own efforts to conduct business); U.S. Anchor Mfg., 7 F.3d at 990 (plaintiff manufactures and supplies anchors); Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186, 187 (2d Cir.1992) (plaintiffs purchased product from defendants). 28 Morris refers to this distinction as PGA's sweat of the brow defense and correctly states that it is not a defense in a copyright case. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 359-60, 111 S.Ct. 1282, 1295, 113 L.Ed.2d 358 (1991) (concluding that sweat of the brow is no defense in a copyright case). [Appellant Br. at 53-55.] This well-established rule of copyright law is irrelevant, however, in this antitrust case. The sweat of the brow product, to which Morris (and the district court) refer, is no different than, for example, the interconnection services in Verizon Communications, 124 S.Ct. at 876, the job shoppers in Consultants & Designers, 720 F.2d at 1555, and the sports jackets in Starter Sportswear, 964 F.2d at 187. 29 Moreover, even if we overlook the fundamental and dispositive distinction between this case and the cases cited by Morris, the case law supports summary judgment in favor of PGA. See Verizon Communications, 124 S.Ct. at 879 ( Aspen Skiing is at or near the outer boundary of § 2 liability); Aspen Skiing, 472 U.S. at 593-94, 105 S.Ct. at 2852-53 (defendant refused to accommodate and cooperate with plaintiff, refused to sell its product to plaintiff, and acted contrary to its own economic interests in order to eliminate plaintiff); Otter Tail Power Co. v. United States, 410 U.S. 366, 370-72, 93 S.Ct. 1022, 1026-27, 35 L.Ed.2d 359 (1973) (defendant was already in the business of selling a service to certain customers and refused to sell the same service to certain other customers); Lorain Journal, 342 U.S. at 148-49, 72 S.Ct. at 183-84 (defendant refused to sell to plaintiff in violation of the Sherman Act); Starter Sportswear, 964 F.2d at 189-91 (holding, in a factually analogous case, that defendant had valid business justification for refusal to deal); Fishman v. Estate of Wirtz, 807 F.2d 520, 562 (7th Cir.1986) (holding defendant liable under § 2 for refusing to lease Chicago Stadium to plaintiff). 30 The relevant law supports our conclusion that Morris's argument is unavailing and does not show that PGA's business justification is pretextual. The prevention of free-riding, which is an inherently economic motivation, provides a valid business justification on the facts presented here. Accordingly, Morris has not raised any issues of material fact and summary judgment in favor of PGA was proper. See Int'l Railways of Cent. Am. v. United Brands Co., 532 F.2d 231, 239-40 (2d Cir.), cert. denied, 429 U.S. 835, 97 S.Ct. 101, 50 L.Ed.2d 100 (1976) (stating that proof of a company's reasonable steps to preserve its business interests does not, without more, raise a genuine issue of material fact under § 2).
31 Relief pursuant to Rule 60(b)(2) is appropriate only if the moving party offers newly discovered evidence that could alter the outcome of the trial. See Wilson v. Thompson, 638 F.2d 801, 804 (11th Cir.1981); Fed. R. Civ. Pro. 60(b)(2). Because we review the district court's decision for abuse of discretion, it is not enough that a grant of the motion might have been permissible or warranted. Fackelman v. Bell, 564 F.2d 734, 736 (5th Cir.1977). After reviewing the record, we conclude that the district court did not err in finding that the new TOS evidence would have failed to alter the outcome of the trial in light of PGA's valid business justification for its regulations. Accordingly, we hold the district court did not abuse its discretion when it denied the Rule 60 motion.