Court Opinion

ID: 4229361
Source: CourtListenerOpinion
Date Created: 2017-12-15 18:00:22.424192+00
Date Added: 2024-06-11T07:47:57.457667
License: Public Domain

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.
            (Opinion Filed: December 15, 2017)

Greg M. Kohn, Esq.
Bruce H. Nagel, Esq. [ARGUED]
Nagel Rice
103 Eisenhower Parkway
Roseland, NJ 07068

Counsel for Appellant

Karen A. Confoy, Esq.
Fox Rothschild
997 Lenox Drive
Princeton Pike Corporate Center, Building 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 Appellees

                     _______________

                OPINION OF THE COURT
                    _______________

                             2
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%—from 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 each 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 violated 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 therefore
have subject matter jurisdiction over this case. We defer action
on the merits of this appeal pending decision by the Supreme
Court of New Jersey on the pending petition for certification
of questions of state law.

I.     Background

                                3
        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 playing 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 through 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 putative
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, by

                                4
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 the general
      public in an amount exceeding 5% of all
      available 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 enrichment claim, but the 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.

                              5
12(b)(6) and 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, we considered two
theories Finkelman pleaded to prove standing. First, we
considered 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.

                               6
        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 ticket’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.

        However, 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 economic theory
that limiting supply increases price. Thus, one could assume
that the NFL’s restriction on the availability of Super Bowl
tickets to the public increased the price that Finkelman paid for
his tickets. Unfortunately for Finkelman, this mere assumption
was not enough to prove his standing. Under 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
inflated in the 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 value would have done. So, the NFL’s withholding
could have even lowered ticket prices on the secondary market.

                                7
        We explained that to establish Article III standard based
on this theory, under the familiar Twombly-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, the 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
economist who specializes 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 those 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 SAC ¶¶ 40-43,
App. Vol. III at 308-17.

                               8
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 layer 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
Finkelman alleged regarding causation were 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.

                               9
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, arguing 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 citizen 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).

                               10
       Because “[w]ithout jurisdiction the court cannot
proceed at all in 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 legally 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
actually 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).

                                11
the court.” 20 Causation in this context is akin to ‘but-for’
causation in tort and “may be satisfied even where the conduct
in question might not have been a proximate cause of the
harm.” 21 To satisfy it, “an indirect causal relationship will
suffice, provided that there is a fairly traceable connection
between the alleged injury-in-fact and the alleged 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 must 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 quotations omitted).
 24
    Danvers, 432 F.3d at 291.
 25
    Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).

                                12
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 plaintiff
must plead to state a claim—here, the three elements of Article
III standing. Second, we eliminate from consideration any
allegations that, because they are no more than conclusions, are
not entitled to the assumption of truth. Third, where there are
well-pleaded factual allegations, we assume their veracity and
then determine 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 pleadings 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 conclusions” 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.”)).

                                13
        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 federal antitrust 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 caused him an injury-in-
fact, the 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 tickets they
are unable to use.” 31 The 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 market”
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
prohibition would have led to lower ticket prices.

       Here, however, 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.

                               14
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. Specifically, Finkelman alleged that the 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.

                               15
D.C. District Court found that the plaintiff’s allegations
constituted an “attenuated, speculative chain of events[ ] that
relies on numerous independent actors” and dismissed the
complaint. 36

       On appeal, 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
      considering 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).

                                16
The D.C. Circuit found that the plaintiffs’ theory was
“susceptible 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 offer 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

       In this case, too, Finkelman has offered economic facts
that are specific, plausible, and susceptible to proof at trial.
Defendants may be correct that Finkelman will not be able to
prove that the 2014 Superbowl secondary ticket 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 his 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.

                               17
and, at this stage in the litigation, Finkelman has 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.

                              18