Court Opinion

ID: 9691833
Source: CourtListenerOpinion
Date Created: 2023-08-25 15:16:39.89912+00
Date Added: 2024-06-11T18:19:26.255295
License: Public Domain

LEISURE, District Judge:
The United States Football League and certain of its member clubs (collectively referred to as the “USFL”), have sued the National Football League, its commissioner and certain of its member clubs (hereinafter collectively referred to as the “NFL”), to obtain declaratory and injunctive relief and to recover damages resulting from alleged violations of Sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. §§ 1 & 2, and the common law.
The USFL has moved for partial summary judgment on the basis that the NFL’s continuing conduct violates a judicial decree issued in 1953 and construed in 1961. United States v. National Football League, 116 F.Supp. 319 (E.D.Pa.1953), construed, 196 F.Supp. 445 (E.D.Pa.1961), order entered, No. 12808 (E.D.Pa. July 28, 1961). The USFL claims that this decree precludes the NFL from entering into television contracts which tie up more than one network. Summary judgment therefore should be granted in favor of the USFL declaring the NFL’s pooled rights television contracts with the American Broadcasting Company (“ABC”), the Columbia Broadcasting System (“CBS”), and the Na*1159tional Broadcasting Company (“NBC”) to be unlawful and enjoining their further performance. The NFL opposes the motion on the grounds that it has express Congressional sanction in the form of a specific exemption from antitrust laws to enter into pooled rights television contracts with more than one network. For the reasons presented below, the USFL’s motion is denied.

Factual Background

The NFL Network Contracts

The NFL has entered into pooled rights television contracts with the three nationwide television networks. Each of the NFL contracts with ABC, CBS, and NBC is non-exclusive. None of the three networks is precluded from telecasting USFL games. When the contracts terminate, each of the networks can choose to bid, or not to bid, for the rights to continue to telecast NFL games. Each contract is of limited duration and provides the network with the right of first negotiation and the right of first refusal with respect to contract renewals. Each contract provides the network with exclusive bargaining rights for a prescribed period of time.

Litigation History

In 1951, the United States sought to enjoin the enforcement of Article X of the NFL’s By-Laws which governed the telecasting and broadcasting of outside games into the home territories of other teams. Article X provided, inter alia, that no team could broadcast or telecast its games into the “home territory” of another team, whether that team was playing at home or away. The government contended that this By-Law eliminated competition among member clubs in selling the broadcast and telecast rights of their games, thereby restricting the public’s access to broadcasts and telecasts of NFL games. After a trial, the Hon. Allan K. Grim, United States District Judge, applied a rule of reason analysis in holding that the restriction on telecasting outside games in home territories when the home teams play away games constituted an unreasonable and illegal restraint of trade. United States v. National Football League, 116 F.Supp. at 326, 327 (E.D.Pa.1953). The court enjoined enforcement of Article X to the extent it prohibited “outside” game telecasts in a team’s market when the team was playing away. Id. at 330. The court also enjoined all territorial restrictions on the sale of radio broadcast rights. Section V of the final judgment in the case provides for, in pertinent part, the following:
The defendants are jointly and severally ... enjoined ... from directly or indirectly entering into ... any contract, agreement or understanding with the league defendant or any member club of the league defendant, ... having the purpose or effect of restricting the areas within which broadcasts or telecasts of games ... may be made.
United States v. National Football League, No. 12808, Final Judgment, § V (E.D.Pa. Dec. 28, 1953).
In 1961, the NFL entered into a pooled rights television contract with CBS. Concerned that this agreement might violate the terms of Judge Grim’s December 28, 1953 decree, the NFL petitioned the court for a construction of the Final Judgment. The NFL sought a determination as to whether that judgment prevented the NFL member clubs from agreeing to sell their pooled television broadcast rights. Concededly, the contract with CBS provided therein that CBS had the “right to determine, entirely within its own discretion ... which games shall be telecast and where such games be televised.” United States v. National Football League, 196 F.Supp. 445, 447 (E.D.Pa.1961). The court reasoned that this grant of power to CBS to determine which games shall be telecast and where was contrary to Section V of the Final Judgment. Id. at 447. The court held, therefore, that the Final Judgment prohibited execution and performance of the pooled rights contract with CBS. Id.
A subsequent motion by the NFL for a modification or a temporary suspension of the Final Judgment was denied. United States v. National Football League, No. *116012808, order entered (E.D.Pa. July 28, 1961). The July 28, 1961 Order specifically enjoined the execution and performance of the NFL-CBS contract “and of the agreement among defendants for the sale of pooled television rights underlying said contract.” The Order further enjoined the defendants from entering into “any other contract and agreement having a similar purpose or effect;”

Statutory Antitrust Exemption

On September 30, 1961, the NFL secured enactment of the Sports Broadcasting Act of 1961, which relieved the NFL of the effect of Judge Grim’s decision. Pub.L. No. 87-331, § 1, 75 Stat. 732 (codified as amended at 15 U.S.C. § 1291) (“1961 Legislation”). This statute now provides in relevant part, for the following.
The antitrust laws ... shall not apply to any joint agreement ... by which any league of clubs participating in professional football, baseball, basketball, or hockey contests sells or otherwise transfers all or any part of the rights of such league’s member clubs in the sponsored telecasting of the games ... engaged in or conducted by such clubs.
15 U.S.C. § 1291. The 1961 Legislation limited the exemption provided by § 1291 to the extent that telecasts of professional football games on Friday nights and Saturdays during the college football season were forbidden in order to protect college football games from competition with telecasts of professional football games. Pub.L. No. 87-331, § 2 (codified as amended at 15 U.S.C. § 1293). In 1966, when the NFL and the AFL merged, Congress amended § 1291 to provide antitrust immunity to the merger agreement itself. Pub.L. No. 89-800, § 6(b)(1), 80 Stat. 1515 (“1966 Merger Legislation”). At the same time, the restriction on Friday night and Saturday telecasts was expanded to include protection for high school football. Id., § 6(b)(3).

The Contentions of the Parties

Notwithstanding the clear and unambiguous language of § 1291 that the antitrust laws shall not apply to “any joint agreement,” the USFL contends that the exemption is limited to the sale of pooled broadcasting rights to a single network. This contention is based upon the USFL’s interpretation of the statute’s legislative history and the intent of the NFL at that time to enter into a pooled broadcast rights contract with one network only. The USFL contends that principles of collateral estoppel require the Court to hold that the fact of the NFL’s current broadcasting contracts with all three networks amounts to a per se violation of the antitrust laws. It is argued that since the 1961 Legislation overruled Judge Grim’s decision only to the extent that the NFL contracted with one network, the two remaining agreements violate the antitrust laws under Judge Grim’s decision.
The NFL opposes this argument on several grounds. But, as a threshold matter, the NFL contends that the USFL motion places before the Court the basic legal question of whether the antitrust exemption created in 1961 extends to more than one network contract. Stated differently, the motion presents the question whether “the fact that the NFL has contracts with CBS, NBC and ABC is ... in and of itself a violation of the Sherman Act.” Defendants’ Response to Plaintiffs’ Motion for Summary Judgment, at 10. The NFL, in effect, has cross-moved for a declaration that the fact of the three network contracts does not per se violate the antitrust laws.

Legislative History

In considering the issues presented on this motion, the Court is mindful that “exemptions from the antitrust laws are to be narrowly construed.” Group Life & Health Insurance Co. v. Royal Drug Co., 440 U.S. 205, 231, 99 S.Ct. 1067, 1083, 59 L.Ed.2d 261 (1979) (citations omitted). It appears to the Court that the statutory language in issue has a plain and unambiguous meaning and that the term “any” means that the antitrust exemption applies to all pooled rights contracts that a sports league may enter into. Not one, but all. *1161Nowhere in § 1291 or the subsequent sections of the 1961 Legislation does it state that the exemption limits the NFL to one network.
The NFL contends that this situation renders it unnecessary for the Court to delve into the legislative history of the 1961 Legislation and the 1966 Merger Legislation in order for the Court to rule in its favor. Based upon the plain language of the statute the NFL argues that it is clear that “any” pooled rights agreement is exempt from the antitrust laws.1 Notwithstanding the presence of such unambiguous language, however, the Court may turn to the legislative history as an aid to analysis, recognizing “that only the most extraordinary showing of contrary intentions from that data would justify a limitation on the ‘plain meaning’ of the statutory language.” Garcia v. United States, 469 U.S. 70, 105 S.Ct. 479, 483-84, 83 L.Ed.2d 472 (1984). While a review of the legislative history generally supports the NFL’s position, the legislative history does indicate that the antitrust exemption is not “absolute.” See H.R.Rep. No. 1178, 87th Cong., 1st Sess. 4 (1961).
In support of its “single network” interpretation, the USFL argues that some of the members of the Antitrust Subcommittee of the House Committee on the Judiciary were concerned that under the language of the bill, it might be possible for one league to enter into contracts with all three networks and tie them up so that a rival league, such as the American Football League (“AFL”), would be put at a competitive disadvantage. Telecasting of Professional Sports Contests: Hearings on H.R. 8757 before the Antitrust Subcomm. (Sub-comm. No. 5) of the House Comm, on the Judiciary, 87th Cong., 1st Sess. 35 (1961). During the course of the hearings, it was agreed that under the bill the NFL could, at that time, utilize all three networks. Id. The NFL contended, however, that the objective of the legislation was to give the member clubs “the right to go on a single network.” Id. Indeed, according to the minutes of meetings among NFL owners, the 1961 Legislation was commonly referred to as the “single network plan.”2 However a proposal suggested by subcommittee counsel, Herbert Maletz, to amend the bill so that it would “specifically prohibit a league from entering into a package contract with more than one network” was not acted upon, in part because the NFL felt that such a clause was unnecessary *1162since it had no intention of using more than one network. Id. But Commissioner Pete Rozelle predicted that in 20 years the “single network may no longer be desirable, and it may become much better for the public and the league to use more than one network.” Id.
Commissioner Joe Foss of the AFL also was concerned about possible anticompetitive effects if a league were able to enter into pooled rights telecast contracts with more than one network.
Theoretically, ... it might be possible for the members of one league to reach an agreement with a number of purchasers, possibly all three networks, with the intent or effect of excluding a competitor league from any telecasting. Thus, this law might very well be utilized to suppress competition and destroy a competing league.
Id. at 46 (emphasis added). Commissioner Foss suggested that minor changes in the language of the bill or the inclusion of “some clear language in the committee report” would insure that there would be no doubt that “such activities are not exempted.” Id. at 47.
It is my belief that the legitimate objective of this bill should be to exempt the member clubs and the league in each sport from the antitrust laws solely to the extent that those laws would prohibit the pooling of television revenues and rights (i.e., a package contract), and not provide an exemption for actions which might be embodied in a contract with a purchaser or purchasers of the television rights which might be designed to suppress competition outside rather than inside the particular league.
Id. at 47. Commissioner Foss’s suggestions found their way into the House Report.
Some concern has been expressed that the language of this section might be considered to give an absolute exemption for the antitrust laws for any kind of television arrangements entered into by a league, and particularly an arrangement which might involve several networks and might thus exclude a competing league from all television coverage. This is not the intent of H.R. 9096 which is designed to permit the sale of television rights by a league and its member clubs to a single network. The committee does not intend that an exemption from the antitrust laws should be made available to a league or its members where the intent or effect of a joint agreement is to exclude a competing league or its members from the sale of any of their television rights.
H.R.Rep. No. 1178, 87th Cong., 1st Sess. 4 (1961) (emphasis added).
Concern was also expressed on the House floor about ensuring that football telecasts should not be subject to output limitations. National Collegiate Athletic Ass’n v. Board of Regents, 468 U.S. 85, -n. 35, 104 S.Ct. 2948, 2964 n. 35, 82 L.Ed.2d 70 (1984). The following colloquy indicates that multi-network telecasts were expected to prevent such limitations.
Mr. GARY. On yesterday I had the opportunity of watching three different games. There were three different games on three different channels____
Would this bill prevent them from broadcasting three different games at one time and permit the league to enter into a contract so that only one game would be permitted?
Mr. CELLER. The bill does not prevent what the gentleman saw yesterday.
107 Cong.Rec. 20,060 (1961). Representative Celler also assured Representative Gary that the bill would not prohibit the television audience from seeing games that otherwise would be telecast. Id.
The Senate Judiciary Committee Report that favorably recommended passage of the 1961 Legislation states that the legislation’s purpose is to “overrule the effect” of Judge Grim’s decision. S.Rep. No. 1087, 87th Cong., 1st Sess. (1961), reprinted in 1961 U.S.Code Cong. & Ad.News 3042, 3042. The report states that the legislation would enable the member clubs of a professional sports league
*1163to pool their separate rights in the sponsored telecasting of their games and to permit the league to sell the resulting package of pooled rights to a purchaser, such as a television network, without violating the antitrust laws.
Id. (emphasis added). The report explains that the legislation was necessary to permit a league “to make ‘package’ sales of the television rights of its member clubs to assure the weaker clubs of the league continuing television income and television coverage.” Id. at 3043. Paraphrasing the statement of AFL Commissioner Foss, the report stated that the package contract would enable the league to exercise control over the telecasting of league games “to prevent too great disparity in the television income of the various clubs.” Id. Otherwise, the financial problems of the weaker teams would imperil the continued operation of the league. Id. The report also discusses at some length the need to restrict the dates and times during which professional football games may be telecast so that they do not impair college football gate receipts. Id. at 3044. The Senate Report does not discuss whether the exemption is limited to one network contract per league other than to state, in conclusion, that the public interest would be served “with minimal sacrifice of antitrust principles by exempting joint agreements under which a league sells or transfers pooled television rights of its member clubs to a purchaser. ” Id. (emphasis added).
The 1961 Legislation as passed was not amended to add the suggested specific restriction on the right of a sports league to contract with more than one network for the sale of pooled telecast rights. This contrasts with the treatment accorded to certain Friday night and Saturday broadcasts. As discussed, the Senate Report indicates that concern was expressed that Friday night and Saturday telecasts of NFL games would adversely affect attendance at college football games. See Id. at 3043-44. Although Commissioner Rozelle testified that the NFL had no intent to telecast games at those times, he did not give permanent assurances to that effect. Telecasting of Professional Sports Contests: Hearings on H.R. 8757 before the Antitrust Subcomm. (Subcomm. No. 5) of the House Comm, on the Judiciary, 87th Cong., 1st Sess. 36-37 (1961). Both the House and the Senate insisted on such an amendment. See S.Rep. No. 1087, 87th Cong., 1st Sess. 3 (1961), reprinted in 2 1961 U.S.Code Cong. & Ad.News at 3043-44. The 1961 Legislation as passed therefore included a provision that conditioned the antitrust exemption on the NFL not telecasting its games on Friday nights and Saturdays during the college season. See 15 U.S.C. § 1293.
The hearings on the NFL-AFL merger provide a further indication that the 1961 Legislation was not intended to limit the NFL from selling pooled telecast rights to more than one network. During the course of hearings on the merger bill, Commissioner Rozelle testified “that because of the logistics of handling perhaps 13 or 14 games on a Sunday afternoon, it would require at least 2 networks.” Professional Football Merger: Hearings on S. 3817 Before the Antitrust Subcomm. (Subcomm. 5) of the House Comm, on the Judiciary, 89th Cong., 2d Sess. 64 (1966). Subcommittee counsel asked Commissioner Rozelle whether the people of New York City would be able to see professional football on television when the other club is playing a home game. Commissioner Rozelle responded that the league would try to do so, “which is why I feel we will probably have to go to two networks, to assure that each of the 26 or 28 teams has all of its road games brought back to its home city.” Id. at 66. Furthermore, a memorandum submitted by the NFL and the AFL to the subcommittee addressed the concern that the merger would result in reduced telecasts of football games over free television.
Because a single network cannot practicably establish as many as twenty-eight regional networks and because the expanded league desires to maintain its present level of club television income, the plan contemplates the continued use *1164of two networks by the expanded league, e.g., on a conference or other divisional basis. Thus, both during the period prior to the expiration of the existing television contracts and afterwards, it is contemplated that there will be continued home viewer access to duplicate broadcasts, including telecasts of other league games into home cities on days when the home team is playing at home.
Id. at 119 (emphasis added). In the face of these plain statements of intent that the merged leagues would continue to use more than one network, no concern was expressed that such conduct would extend beyond the scope of the 1961 exemption. Finally, in response to requests from representatives of high school football groups, the 1966 Merger Legislation expanded the restriction on Friday night and Saturday telecasts of professional football games to include an explicit statement that such broadcasts should not compete with high school football games as well.

Discussion

The 1961 Legislation was intended to overrule the effect of Judge Grim’s decision. See S.Rep. No. 1087, 87th Cong., 1st Sess. 1 (1961), reprinted in 1961 U.S.Code, Cong. & Ad.News 3042, 3042. The resulting statute exempts from the antitrust laws “any joint agreement” that transfers “all or any part of the rights” of a sports league’s member clubs to telecasts of such league’s games. 15 U.S.C. § 1291. The Senate Report’s statements that a league could sell to “a purchaser” do not persuade the Court that the exemption was intended to limit a league to only one network contract at a time. The statements that a league could sell its pooled telecast rights to a purchaser do not amount to the “extraordinary showing of contrary intentions” that justifies a sharp limitation on the plain meaning of the statutory language. See Garcia v. United States, 469 U.S. 70,---, 105 S.Ct. 479, 482-83, 83 L.Ed.2d 472 (1984). The lack of an explicit limiting provision to this effect in the statute must be contrasted to the express limitation on the exemption that was included to protect college and later high school football contests from competition with telecasts of professional games. See 15 U.S.C. § 1293. The only reasonable inference that can be drawn is that Congress did not intend to limit the exemption to one network. This is supported by the legislative history of the 1966 Merger Legislation which contains no indication that it would have been improper for the proposed combined league to telecast its games over more than one network.
Nevertheless, the legislative history demonstrates that it was recognized that there was a danger that one league could tie up all three networks to the competitive detriment of a rival league. But, as discussed, the proposed legislation was not amended to add an explicit restriction to permit only one network contract. Instead, language was added to the House Report emphasizing that the exemption does not extend to situations “where the intent or effect of a joint agreement is to exclude a competing league or its members from the sale of any of their television rights.” H.R.Rep. No. 1178, 87th Cong., 1st Sess. 4 (1961). This language was inserted in the committee report to indicate that the antitrust exemption extends only to the prohibition against the pooling of television rights that had been declared illegal by Judge Grim. Telecasting of Professional Sports Contests: Hearings on H.R. 8757 before the Antitrust Subcomm. (Subcomm. No. 5) of the House Comm, on the Judiciary, 87th Cong., 1st Sess. 47 (1961) (statement of Joe Foss, AFL Commissioner). Thus, the exemption created by the 1961 Legislation does not confer an “absolute exemption” for any kind of television arrangments involving several networks that work to “exclude a competing league from all television coverage.” H.R.Rep. No. 1178, 87th Cong., 1st Sess. 4 (1961).

Conclusion

It is this Court’s determination that the fact of the three NFL network contracts does not by itself constitute a violation of the antitrust laws. Whether the *1165intent or effect of such arrangements are to exclude a competing league, such as the USFL, from selling any of its television rights presents material questions of fact that cannot be decided on a summary judgment motion. These questions will be addressed, presumably, in the upcoming trial in this case. For the purposes of this motion, however, this Court holds that the mere existence of the three NFL-network contracts does not exceed the scope of the antitrust exemption created by the Sports Broadcasting Act of 1961.
Nothing in this opinion should be construed as indicating that an absolute antitrust exemption extends to the circumstances surrounding the three NFL-network contracts. This decision merely holds that the bare fact of the three network contracts does not constitute a violation of the antitrust laws. Having reached that determination, the question whether the principles of collateral estoppel should apply in this case is not presented. The USFL’s motion, for summary judgment is denied.
SO ORDERED.

. During the course of oral argument on this motion, the NFL contended that the exemption is absolute with respect to the sale of broadcast rights only. The NFL concedes that the exemption does not apply to aspects of contracts that contain terms extending beyond the sale of such rights. See Transcript of Proceedings at 40 (April 11, 1986).

. The apparent reason for the label "single network plan” used by the NFL owners was that the legislation allowed the NFL, for the first time, to sell the telecast rights of the individual members clubs’ to one seller. Deposition of Alvin R. Rozelle at 302. "The objective of this legislation is to give us the right to go on a single network.” Telecasting of Professional Sports Contests: Hearings on H.R. 8757 before the Antitrust Subcomm. (Subcomm. No. 5) of the House Comm, on the Judiciary, 87th Cong., 1st Sess. 35 (1961) (statement of Hamilton Carothers, NFL counsel) (emphasis added).
This position has to be contrasted with the situation at the time the first CBS pooled rights contract was made. In 1960, nine teams had contracts with CBS, two teams had contracts with NBC, and two teams, Washington and Cleveland, had contracts with sponsors. United States v. NFL, Transcript of Proceedings, at 69-71 (E.D.Pa. July 27, 1961). The games of a popular team, such as the New York Giants, therefore would be telecast frequently and over a broad area, while the games of a less popular team would be aired less frequently, if at all, and to smaller audiences. Id. at 67. The resultant disparity in television income would upset the league’s competitive balance. Id. Only by selling the telecast rights of the individual clubs in a package to a network could the league "insure that [the] clubs will continue to have the income to enable them to be competitive on the field.” Id.
Judge Grim’s decision prohibited the clubs from entering into such a contract. United States v. NFL, 196 F.Supp. 445 (E.D.Pa.1961). Therefore, the apparent significance to the NFL of the Sports Broadcasting Act of 1961 was that the league would be able to sell the clubs’ telecasting rights as a package to a network, not that the league would be limited to one network.