Court Opinion

ID: 9497514
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:53:05.694454+00
Date Added: 2024-06-11T17:58:14.348981
License: Public Domain

GIBBONS, Circuit Judge,
concurring.
I concur in the decision to reverse the judgment of the district court, but I would decide this case based on the plaintiffs’ failure to establish that they have suffered an antitrust injury. Antitrust standing is a threshold matter that should be addressed before proceeding to other issues presented by an antitrust claim. In Hy-Point Technology, Inc. v. Hewlett-Packard Co., this court reasoned that, in view of the Supreme Court’s articulation of the antitrust laws in numerous cases,
it is appropriate to turn first to the issue of antitrust standing before weighing the issues of relevant market, market share, etc. In other words, before discussing the claims made in this case regarding relevant market and market power, we must determine if HyPoint has antitrust standing to assert claims under the Supreme Court’s precedents.
949 F.2d 874, 876-77 (6th Cir.1991). See also Indeck Energy Servs., Inc. v. Consumers Energy Co., 250 F.3d 972, 979 (6th Cir.2000) (finding no error in the district court’s decision to dismiss claims because the plaintiff failed to meet its “standing threshold”); Malamud v. Sinclair Oil Corp., 521 F.2d 1142, 1146 (6th Cir.1975) (noting that the district “court subsequently certified for appeal the threshold question of the standing of these investment firms to sue” under antitrust law) (emphasis added); Campus Ctr. Disc. Den, Inc. v. Miami Univ., 114 F.3d 1186, 1997 WL 271742, at *1 (6th Cir. May 21, 1997) (“As a threshold matter, proper assertion of an antitrust violation requires the demonstration of an antitrust injury.”).
Here, in my view, it is unnecessary to consider whether the plaintiff promoters have met their burden of proving that a relevant market exists for Division I men’s college basketball games. Assuming that such a market does exist, the Two in Four Rule does not interfere with the promoters’ ability to compete in it. I have no doubt the Two in Four Rule is bad for the plaintiffs’ business in the sense that it limits an advantage they have had over the promoters of non-certified events and the member institutions themselves, but the NCAA’s decision to limit what is in effect a subsidy for these promoters is not the type of injury the antitrust laws were designed to prevent.
This court has said that “[a]ntitrust standing to sue is at the center of all antitrust law and policy. It is not a mere technicality. It is the glue that cements each suit with the purposes of the antitrust laws, and prevents abuses of those laws.” HyPoint Tech., Inc., 949 F.2d at 877. A private plaintiff may not recover damages or seek injunctive relief under the antitrust laws merely by showing an “injury causally linked to an illegal presence in the market.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). To obtain relief, the antitrust plaintiff must prove “antitrust injury,” which is to say, “injury of the type the antitrust laws were intended to prevent and that flows from that which makes [the defendant’s] acts unlawful.” Id. The antitrust laws were intended to prevent injuries to competition. “Thus, antitrust injuries include only those injuries that result from interference with the freedom to compete.” Johnson v. Univ. Health Servs., Inc., 161 F.3d 1334, *9651338 (11th Cir.1998). The antitrust injury element of standing ensures that a plaintiff can recover only for those losses that stem from the competition-reducing aspects of a defendant’s behavior. Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 344, 110 S.Ct. 1884, 109 L.Ed.2d 333 (1990). Focusing on whether , a plaintiff has established antitrust injury forces courts to connect the alleged injury to the purposes of the antitrust laws. Id. at 342, 110 S.Ct. 1884; Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law, § 337, at 306 (2000).
In this case, no one has interfered with the promoters’- freedom to compete in the market for Division I men’s college basketball games. In Count I of their complaint, the promoters allege that the NCAA has conspired to restrain trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1 (1994), by “setting the prices” for college basketball games and by “promulgating regulations with the purpose and effect of restricting , or eliminating” plaintiffs’ events. In essence, plaintiffs claim that the Two in Four Rule impedes their ability to field a competitive mix of teams for their tournaments, which reduces their attractiveness and causes financial harm to the plaintiffs’ business. Of course, antitrust plaintiffs do not suffer antitrust injury merely because they are in. a worse position than they would have been had the challenged conduct not occurred. See Brunswick, 429 U.S. at 486-87, 97 S.Ct. 690. The antitrust laws were enacted to protect competition, not competitors, Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), and unless the plaintiffs can connect their alleged injury to the purposes of the antitrust laws, they do not have standing to seek antitrust relief.
The plaintiffs here cannot make that connection. These promoters enjoy a subsidy provided by virtue of the NCAA’s decision to exempt games that are played in certified events from the normal length of season rules, and the NCAA’s decision to limit that subsidy has not caused the promoters to suffer an injury of the type the antitrust laws were designed to prevent. The fact that these tournaments are subsidized by the NCAA is demonstrated by how they began. In the 1960s, the NCAA started exempting participation in certain in-season tournaments from its maximum games limitation in response to concerns about the inability of teams in Alaska and Hawaii to schedule regular season games. In order to encourage teams to travel from the mainland to those states to play, the NCAA decided to allow the games to be played for “free,” meaning that they would not count toward the total number of - games teams were allowed to play each season. Exempt events initially had to be played outside of the continental United States, but in 1985 the NCAA began conferring exempt status on mainland tournaments like the Preseason NIT. In 1996, the NCAA started requiring tournaments seeking exempt status to go through an annual certification process, hence the name “certified tournament.” Participation in a certified tournament now counts as one game for purposes of a team’s maximum games limitation. This means that teams participating in certified events can play up to three or four games for the price of one, a feature that makes certified events especially attractive to teams. That is of course what the NCAA hoped to accomplish initially by exempting certain contests from its normal length of season rules. Certification and exemption also give the promoters of certified tournaments a substantial advantage when they are competing with the promoters of non-certified tournaments and the member institutions to schedule teams to play.
The Two in Four Rule is one of the ways the NCAA has tried to limit this subsidy that has encouraged an increase in the *966number of certified events. The rule prohibits teams from playing in more than one certified event during a given academic year and more than two certified events every four years. The promoters argue that the rule impedes competition in the market for college basketball games because it prohibits them from scheduling high profile teams like Connecticut, Duke, and Kentucky, teams that would otherwise be able to participate in their events every year.
Plaintiffs have not argued that a relevant market exists for certified events. As both parties agree, the relevant market is the market for college basketball games. Nothing about the Two in Four Rule prohibits these promoters from continuing to compete in that market. It does not deny the plaintiffs access to the necessary resources to compete in the market for college basketball games. Those resources are still available. If the promoters want Kentucky, they can get Kentucky every year (provided Kentucky wants to come), by promoting non-certified tournaments or a series of single-game events similar to the ACC-Big Ten Challenge. To do that, they would have to give up the advantage the subsidized format provides them and thus it may be more difficult for the promoters to schedule high profile teams, but forcing the promoters to make this choice has not caused them to suffer antitrust injury. If anything, the Two in Four Rule increases competition in the relevant market because it limits an advantage the promoters of certified events have had over the promoters of non-certified events and member institutions, and injury resulting from an increase in competition is certainly not the type of injury the antitrust laws were designed to prevent. See Brunswick, 429 U.S. at 487-88, 97 S.Ct. 690.
At bottom, the only injury the plaintiffs have suffered here results from the NCAA’s decision to limit a benefit. In Johnson v. University Health Services, the Eleventh Circuit held that the plaintiff physician had not suffered antitrust injury as a result of the hospital’s decision to deny her a loan guarantee and subsidies that were necessary to start an independent medical practice: “The only ‘injury’ that Dr. Johnson alleges is that [University Health Services] failed to confer an extraordinary benefit upon her.... Its decision not to subsidize [her] proposed practice is not the type of injury that the antitrust laws were intended to prevent.” 161 F.3d at 1338. Similarly, plaintiffs in this case are arguing that the NCAA has caused them injury by failing to confer an extraordinary benefit upon them as often as they would like. This benefit is not required to be able to compete in the relevant market. In fact, the type of injury the plaintiffs are claiming here would be the same without regard to the amount of competition in the market. Antitrust injuries encompass “only those injuries that result from interference with the freedom to compete.” Id. In this case, the plaintiffs have failed to establish that their alleged injuries are a result of the NCAA’s interference with their freedom to compete in the market for college basketball games. They remain just as free to compete in that market now as they were before the adoption of the Two in Four Rule. The antitrust injury requirement demands that we consider whether these particular plaintiffs have suffered the type of injury the antitrust laws were designed to prevent. Because I believe they have not, I agree with the decision to reverse the judgment of the district court.