Court Opinion

ID: 4353589
Source: CourtListenerOpinion
Date Created: 2018-12-21 21:01:06.705275+00
Date Added: 2024-06-11T14:44:59.932694
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       DEC 21 2018
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

KELSEY K., individually and on behalf of        No.    17-16508
all others similarly situated,
                                                D.C. No. 3:17-cv-00496-WHA
                Plaintiff-Appellant,

 v.                                             MEMORANDUM*

NFL ENTERPRISES, LLC; et al.,

                Defendants-Appellees.

                   Appeal from the United States District Court
                     for the Northern District of California
                    William Alsup, District Judge, Presiding

                          Submitted December 19, 2018**
                             San Francisco, California

Before: CALLAHAN, N.R. SMITH, and MURGUIA, Circuit Judges.

      Plaintiff-Appellant Kelsey K. was employed as a cheerleader for the San

Francisco 49ers’ cheerleading squad, the Gold Rush Girls, from May or July 2013

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
through February 2014.1 Kelsey filed a complaint alleging violations of the

Sherman Act, 15 U.S.C. § 1, and California’s Cartwright Act, Cal. Bus. & Prof.

Code § 16720, against twenty-seven of the National Football League teams (the

“NFL Member Teams”) who, during the proposed class period, employed

cheerleaders, and seeking certification of a class of current and former NFL

cheerleaders allegedly harmed by those violations. Kelsey alleges that the NFL

Member Teams conspired to suppress cheerleaders’ wages and to prevent

cheerleader recruitment. Kelsey appeals the district court’s: (1) dismissal of the

complaint for failure to state a claim; (2) denial of leave to amend as futile; and (3)

denial of discovery. We have jurisdiction under 28 U.S.C. § 1291, and we affirm

the district court’s rulings.2

       A dismissal for failure to state a claim under Federal Rule of Civil Procedure

12(b)(6) is reviewed de novo. Dougherty v. City of Covina, 654 F.3d 892, 897 (9th

Cir. 2011). All allegations of material fact are taken as true and construed in the

light most favorable to the nonmoving party. AE ex rel. Hernandez v. Cty. of

Tulare, 666 F.3d 631, 636 (9th Cir. 2012). Denial of leave to amend is improper

unless, upon de novo review, it is clear that the complaint could not be saved by

       1
              Kelsey’s complaint alleges both date ranges.
       2
             The facts and procedural history are familiar to the parties and are
restated here only as necessary to resolve the issues.
                                           2
any amendment. Id. Discovery rulings are reviewed for abuse of discretion.

Childress v. Darby Lumber, Inc., 357 F.3d 1000, 1009 (9th Cir. 2004).

      Section 1 of the Sherman Act prohibits unreasonable restraints on trade. See

Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988). To prove per

se illegality, a plaintiff must allege “evidentiary facts which, if true, will prove: (1)

a contract, combination or conspiracy among two or more persons or distinct

business entities; (2) by which the persons or entities intended to harm or restrain

trade or commerce . . . ; (3) which actually injures competition.” Kendall v. Visa

U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008) (citations omitted).

      Kelsey’s complaint alleges the existence of two agreements amongst the

defendants that she argues are per se illegal, namely a no-poaching agreement and

a wage fixing agreement. Kelsey fails to plausibly allege per se illegality of either

agreement. Her assertions of direct evidence are deficient for two reasons.

      First, Kelsey fails to plausibly allege the existence of an agreement or

conspiracy to restrain trade. Her allegations largely center on an anti-tampering

provision that has been in the NFL’s constitution and bylaws for decades (which

broadly prevents NFL teams from tampering with other teams’ employees while

they are under contract), and the fact that NFL executives and team owners re-

ratified that provision annually. However, those allegations “just as easily suggest

rational, legal business behavior,” as they do the existence of an agreement among

                                            3
the defendants to restrain trade. Name.Space, Inc. v. Internet Corp. for Assigned

Names & Nos., 795 F.3d 1124, 1130 (9th Cir. 2015) (citations omitted).

      Second, Kelsey failed to allege any facts showing that the NFL Member

Teams intended to harm or restrain trade. Kelsey asserts that NFL executives’

meeting at annual events, including the Super Bowl, evince conspiratorial intent.

However, the mere fact that these meetings occurred, at most, shows opportunity,

not intent. These allegations, again, suggest rational, legal business behavior, not a

violation of the antitrust laws. Id.

      Similarly, Kelsey’s assertions of circumstantial evidence are inadequate to

sustain a claim for relief. To plead a conspiracy through circumstantial evidentiary

facts, a plaintiff must allege both (i) actual parallel conduct and (ii) additional

“plus factors” to “nudge[] the[] claims across the line from conceivable to

plausible[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “[P]lus factors

are economic actions and outcomes that are largely inconsistent with unilateral

conduct but largely consistent with explicitly coordinated action.” In re Musical

Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1194 (9th Cir. 2015) (citation

omitted).

      Kelsey alleges that during her employment as a cheerleader for the 49ers,

she was paid $125.00 per game, not paid for time spent rehearsing, and was paid

for working at mandatory community outreach events only in limited

                                            4
circumstances. She alleges the “low, flat fee” was parallel to that paid by four

other teams, and asserts several “plus factors.” However, her alleged “plus

factors” are largely consistent with unilateral conduct rather than explicitly

coordinated action among the teams. Without something more plausibly asserting

“a meeting of the minds,” Twombly, 550 U.S. at 557, Kelsey has not alleged a

conspiracy or agreement to restrain trade.

      Kelsey’s claim under California’s Cartwright Act fails for the same reasons

because the requirements to plead a claim under California’s Cartwright Act are

“patterned after section 1 of the Sherman Act.” Dimidowich v. Bell & Howell, 803
F.2d 1473, 1476–77 (9th Cir. 1986) (citations omitted). Accordingly, we affirm

the district court’s ruling that the complaint fails to plausibly allege conspiracy

under the Cartwright Act.

      Furthermore, the amendments that Kelsey proposes would not cure these

defects. See Chappel v. Lab. Corp. of Am., 232 F.3d 719, 725–26 (9th Cir. 2000).3

Accordingly, the district court did not abuse its discretion when it denied leave to

amend.

      3
              Kelsey also suggests that leave to amend should be granted to permit
her an opportunity to include facts sufficient to allow her claims to be analyzed
under the rule of reason. Kelsey concedes that her present complaint may not
allege sufficient facts to establish liability under the rule of reason. As allegations
relevant to a rule of reason analysis could have been pled but were not, and, as no
explanation has been given for that omission, there is no merit in this suggestion.
                                           5
      Finally, the district court properly denied discovery. The Supreme Court in

Twombly noted that “proceeding to antitrust discovery can be expensive” and

prescribed that “a district court must retain the power to insist upon some

specificity in pleading before allowing a potentially massive factual controversy to

proceed.” 550 U.S. at 558 (citations omitted). Here, the district court’s conclusion

that no plausible claim for relief has been pled justifies the denial of discovery “to

avoid the potentially enormous expense of [antitrust] discovery” cautioned against

in Twombly. Id. at 559. Thus, we affirm the district court’s denial of discovery.

      AFFIRMED.

                                           6