Garber et al v. Office of the Commissioner of Baseball, Major League Baseball Enterprises Inc et al - Document 1
COMPLAINT against Athletics Investment Group, LLC, Chicago National League Ball Club, LLC, Chicago White Sox, Ltd., Colorado Rockies Baseball Club, Ltd., Comcast Corp., Comcast Sportsnet Bay Area, L.P., Comcast Sportsnet Chicago, L.P., Comcast Sportsnet Philly, L.P., Directv LLC, Directv Sports Networks LLC, MLB Advanced Media L.P., New York Yankees Partnership, Office of the Commissioner of Baseball, lVlajor League Baseball Enterprises Inc, Pittsburgh Baseball, Inc, Root Sports Northwest, Root Sports Pittsburgh, Root Sports Rocky Mountain, San Francisco Baseball Associates, L.P., The Baseball Club of Seattle, L.P., The Phillies, L.P., Yankees Entertainment and Sports Networks, LLC. (Filing Fee $ 350.00, Receipt Number 1037774)Document filed by Robert Silver, Fernanda Garger, Marc Lerner, Derek Rasmussen.(mro) (Entered: 05/10/2012)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Fernanda Garber, Marc Lerner, Derek
Rasmussen, and Robert Silver,
representing themselves and all others
Civil Action No',
Office of the Commissioner of Baseball,
lVlajor League Baseball Enterprises Inc.,
MLB Advanced Media L.P., Directv LLC, .
Directv Sports Networks LLC, Root
Sports Pittsburgh, Root Sports Rocky
l\tlountain, Root Sports Northwest,
Comcast Corp., Comcast Sportsnet
Philly, L.P., Comcast Sportsnet Bay
Area, L.P., Comcast Sportsnet Chicago,
L.P., Yankees Entertainment and Sports
Networks, LLC, Athletics Investment
Group, LLC, The Baseball Club of
Seattle, L.P., Chicago National League
Ball Club, LLC, Chicago White Sox, Ltd.,
Colorado Rockies Baseball Club, Ltd.,
New York Yankees Partnership, The
Phillies, L.P., Pittsburgh Baseball, Inc.,
and San Francisco Baseball Associates,
CLASS ACTION COMPLAINT
JURY TRIAL DEMANDED
Plaintiffs Fernanda Garber, Marc Lerner, Derek Rasmussen, and Robert
Silver, by and through their attorneys, file this Complaint against Defendants and
allege as follows:
NATURE OF THE ACTION
Major League Baseball ("MLB" or "League") is comprised of thirty
separately owned and operated major league men's baseball clubs in the
States and Canada. The MLB clubs, like other sports leagues, have structured their
governance to permit major decisions regarding on~field sporting competition and
off-field business competition to be made by the club owners themselves. In so
doing, the owners act in their own economic self-interest, including entering into a
series of agreements that eliminate, restrict, and prevent off-field competition.
These anti-competitive agreements go far beyond any cooperation reasonably
necessary to provide major league men's professional baseball contests that increase
fan appeal or respond to consumer preferences.
This action challenges-and seeks to remedy-the defendants' use of
the illegal cartel that results from these agreements to eliminate competition in the
distribution of games over the Internet and television. Defendants have
accomplished this by agreeing to divide the live-game video presentation market
into exclusive territories, which are protected by anticompetitive blackouts. Not
only are such agreements not necessary to producing baseball contests, they are
directed at reducing competition in the live-game video presentation market,
involving and protecting third parties who operate only in that separate market.
In a 1998 complaint against the League and other clubs, the New York
Yankees conceded that the League is a cartel that has exceeded the boundaries of
necessary cooperation. (New York Yankees Partnership and Adidas America, Inc. v.
Major League Baseball Enterprises, Inc., et al., Case No. 98-civ-0129 (S.D.N.Y.),)
The Yankees sued when the League interfered with the Yankees' individual
licensing agreement with Adidas. As the Yankees stated in their complaint:
"Defendants operate a horizontal cartel, through which the Major League Clubs
have agreed not to compete with each other and thereby to fix prices and to reduce
output below competitive levels in the (i) professional baseball retail licensing
markets; and (ii) the professional baseball sponsorship markets." Id. at ~153. The
restraints articulated in the present complaint are no less anticompetitive or
justified as the restraints set forth in the Yankees' case against the
Yankees and the League reached a confidential agreement before any briefing on
the merits of the Yankees' suit.)
Clubs in other sports leagues have also sued their respective leagues
on antitrust grounds, including challenges to the regional blackout system at issue
here. In 2007, Madison Square Garden, L.P., which owns the New York Rangers
Club, sued the National Hockey League to eliminate anticompetitive restraints that
are similar to those alleged in this complaint. The Rangers' complaint flatly
conceded that the NHL was a "cartel" and acknowledged that the League's
televising and streaming restrictions were anti-competitive and unlawful. (Madison
Square Garden, L.P. v. National Hockey League, et az', Case No. 07-8455 (S.D.N.Y.),
Amended Complaint ("MSG Complaint"),
6). After the Rangers defeated the
League's motion to dismiss the complaint, the League and the Rangers settled the
In an action brought by the Phoenix Coyotes hockey club against the
1'.llIL, the Coyotes stated, "The NHL and its members have conspired to create
exclusive television and radio broadcast rights within designated territories through
contracts with individual NHL members, thereby maintaining monopoly power
within each team's 'home territory' by preventing others from broadcasting events
within those territories." Second Amended Complaint, Coyotes Hockey LLC v. NHL,
Adv. No. 09-494 (Bankr. D. Ariz. June 5, 2009). That action was ultimately resolved
when the League obtained ownership of the Phoenix Coyotes through the club's
Similarly, the Chicago Bulls sued the National Basketball Association,
"characterizing the NBA as a cartel that has slapped a limit on the output of
broadcast games, something that is illegal under the antitrust laws." Chicago
Professional Sports Ltd. Partnership v. National Basketball Ass'n, 961 F.2d 667,
669 (7th Cir. 1992). That case settled after the League agreed to allow the Bulls to
televise a greater number of games outside of its local territory.
In American Needle, Inc. v. National Football League, 130 S. Ct. 2201
(2010), the United States Supreme Court unanimously rejected the NFL's claim
that an agreement regarding the joint marketing of club-owned intellectual
property was the decision of a "single entity"-the league-not subject to section 1
of the Sherman Act. The Court reaffirmed lower court decisions that sports leagues
are subject to the antitrust laws and that league owners must refrain from
agreements that unreasonably restrain trade, The Court also reaffirmed its own
decision in NCAA v. Board of Regents, 468 U.S. 85 (1984), which held that the
hallmark of an unreasonable restraint is one that raises price, lowers output, or
renders output unresponsive to consumer preference. The Court's decision extended
a long line of precedents that recognize that sports leagues are subject to the
antitrust laws. Indeed, the United States District Court for the Eastern District of
Pennsylvania found over a half-century ago that television blackout agreements of
the very kind at issue in this case amount to "an unreasonable and illegal restraint
of trade." United States v. Nat'l Football League, 116 F. Supp. 319, 327 (E.D. Pa.
The distribution of video presentations of baseball games is subject to
the antitrust laws. See Henderson Broadcasting Corp. v. Houston Sports Ass'n, Inc.,
541 F. Supp. 263 (D.C. Tex. 1982). Agreements with third parties to restrain
competition in the television and internet industry are well outside the narrow
exemption to the antitrust laws recognized in Flood v. Kuhn, 407 U.S. 258 (1972).
Nothing about these agreements reflect anything unique to baseball; they are
essentially identical to those in other major sports, and baseball itself has long
understood that broadcasting does not fall within the exemption, as has Congress.
Despite these clear precedents, MLB's member clubs continue to agree
to divide the live-game video presentation market by assigning an exclusive
territory to each team and its television partners. In exchange for being granted
anticompetitive protections in its own home market, the team and its partners
expressly agree not to compete in the other teams' exclusive territories. The stated
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purpose of these policies is to create regional monopolies that protect the partners
from competition in their respective local areas.
The only way consumers can watch video presentations of other teams
is through one of two exclusive "out-of-market" packages: "MLB.TV," which is
available through the Internet, or "MLB Extra Innings," a product similar to
MLB.TV, which the League offers through cable and satellite providers. For both
packages, the "in-market" games are blacked out to protect the local television
partner. Thus, a New York Mets fan living in New York cannot watch the }\Irets play
through the internet or television package. The fan must own a
subscribe to a cable package that includes the channels that carry Mets' games.
In addition, the Defendants have colluded to sell the "out of market"
packages only through the League. The League Defendants are then able to exploit
their illegal monopoly by charging supra-competitive prices. As a result of this
monopoly, moreover, the League is able to require purchasers of MLB.TV or MLB
Extra Innings to buy all "out-of-market" games of all the League's teams even if the
fan is. only interested in a particular team or a particular game. Thus, a Detroit
Tigers fan living in New York cannot watch the Tigers play, except occasional
games on network television, unless he purchases the entire package of League
games from the MLB's exclusive MLB.TV or 1vILB Extra Innings products.
As one set of commentators has put it, "Absent the exclusive territorial
arrangements agreed to by league owners, individual teams would ... arrange for
their own games to be available out-of-market.... Fans wishing to see only their
favorite team now pay for more games than they want, so sports leagues are
currently using their monopoly power to effectuate a huge wealth transfer. Another
significant group of less fanatic consumers would be willing to pay a more modest
sum for their favorite teams' games only. As to these fans, the current scheme
reduces output." Stephen F. Ross & Stefan Szymanski, Fans of the World Unite!
(Stanford Univ. 2008).
As MSG/New York Rangers stated in its antitrust complaint against
the NHL: "There are no legitimate, procompetitive justifications for these 'exclusive'
agreements and other competitive restraints, which have harmed cons~mers in
various ways .... " (MSG Complaint, ,-r 46). In particular, as MSG stated, these
restraints result in "reduced output, diminished product quality, diminished choice
and suppressed price competition." (ld. at ,-r45).
These restraints are not reasonably necessary to maintain a level of
competitive balance within the League that fans prefer, or to maintain the viability
of franchises. To the extent that competition among teams for internet or television
rights would result in revenue disparities that preclude a fan-optimal level of
competitive balance, agreements that require revenue sharing, if set at levels that
do not restrict output, is an obvious and well-recognized less restrictive alternative,
and one that baseball already employs.
Plaintiffs are individuals who were, and continue to be, harmed by the
Defendants' anti-competitive agreements. They have either (1) purchased a cable
package that includes a network that is protected from competition and therefore is
overpriced or (2) purchased an "out-of-market" package (either online or through
their television provider) that is overpriced because of these unlawful agreements.
The Plaintiffs seek to restore off-field competition among and between the clubs and
their partners by ending the Defendants' collusive distribution agreements.
Plaintiff Fernanda Garber now lives in Burlingame, California. From
2009 through March 2011, she subscribed to Comcast cable service in Oakland,
California. Her service included Comcast Sportsnet California and Comcast
Sportsnet Bay Area. She was charged supra-competitive prices for her service due
to Defendants' conduct.
Plaintiff Marc Lerner lives in Oxford, IVlississippi. Mr. Lerner
subscribed to the J\1LB.tv Internet streaming package in July 2011 for the 2011
season. His favorite team is the New York Yankees. He would prefer not to be
required to purchase a full "out-of-market" package to get New York Yankees
games, and would prefer not to have to subscribe to pay television to be able to
watch New York Yankees games involving the St. Louis Cardinals, Cincinnati Reds,
and Atlanta Braves, all of which are blacked out on MLB.tv in Oxford, Mississippi.
He was charged supra-competitive prices for his service due to Defendants' conduct.
Plaintiff Derek Rasmussen lives in Fort Wayne, Indiana. He
subscribed to the JlvlLB.tv Internet streaming package during the 2011 season. His
favorite team is the Milwaukee Brewers. He would prefer not to be requil'ed to
purchase a full
package to get Milwaukee Brewers games.
Milwaukee Brewers games are blacked out in Fort Wayne when they play the
Detroit Tigers, Chicago Cubs, Chicago White Sox, and Cincinnati Reds. He was
prices for his service due to Defendants' conduct.
Plaintiff Robert Silver lives in Philadelphia, Pennsylvania. Until 2010,
he subscribed to Directv satellite service and received channels carrying live
professional baseball games not available on a sponsored telecast. He was charged
supra-competitive prices for his service due to Defendants' conduct.
The League Defendants
The Office of the Commissioner of Baseball is an unincorporated
association also doing business as Major League Baseball ("MLB" or "the League")
and has as its members the 1Vlajor League Baseball Clubs. MLB's principal place of
business at 245 Park Ave, New York, New York. It is the most significant provider
of major league men's professional baseball games in the world.
Each team, or club, that is a member of the MLB is a separate and
independent business with a separate and independent owner and significant
autonomy in its business operations. The teams cooperate to schedule and produce
baseball games and facilitate competition on the field, but the clubs compete off the
field in their businesses. The clubs compete with each other for the acquisition of
players, coaches, and management personal. They set their own prices for the sale
of tickets for attending games in person. The clubs also compete in the developing,
licensing, and marketing of their respective marks for various purposes.
Defendant Major League Baseball Enterprises, Inc. ("MLB
Enterprises") is a New York corporation with its principal place of business in New
York, New York.
Defendants MLB Advanced Media, L.P., a Delaware limited
partnership, and MLB Advanced Media, Inc., a Delaware corporation, have their
principal place of business at 75 Ninth Avenue, New York, New York ("MLB
Advanced Media"). MLB Advanced Media is ultimately owned and controlled by
IVILB and the MLB member clubs.
MLB, MLB Enterprises, and MLB Advanced Media are cop-ectively
referred to herein as "the !ViLB Defendants" or "the League."
The MLB Club Defendants
The member clubs of the MLB that are named as defendants are:
Athletics Investment Group, LLC, is a California limited
partnership and owns and operates the Oakland Athletics .
The Baseball Club of Seattle, L.P., is a Washington limited
partnership and owns and operates the Seattle Mariners.
Chicago National League Ball Club, LLC, is a Delaware
corporation and owns and operates the Chicago Cubs.
Chicago White Sox, Ltd., is an illinois limited partnership and
owns and operates the Chicago White Sox.
Colorado Rockies Baseball Club, Ltd., is a Colorado limited
partnership and owns and operates the Colorado Rockies.
New York Yankees Partnership is an Ohio limited partnership
and owns and operates the New York Yankees.
The Phillies, L.P., is a Pennsylvania limited partnership and
owns and operates the Philadelphia Phillies.
Pittsburgh Baseball, Inc. is a Pennsylvania corporation and
owns and operates the Pittsburgh Pirates. Pittsburgh Baseball, Inc. is a subsidiary
of Pittsburgh Baseball Holdings, Inc.
San Francisco Baseball Associates, L.P. is a California limited
partnership and owns and operates the San Francisco Giants.
The defendants identified in the preceding paragraph are collectively
referred to as "the Clubs" or "MLB Club Defendants."
Other MLB Clubs
L.P., is a California corporation and owns and
operates the Los Angeles Angels.
Arizona Diamondbacks is a Delaware limited partnership and
owns and operates the Arizona Diamondbacks.
Atlanta National League Baseball Club, Inc., is a Georgia
Corporation and own and operates the Atlanta Braves. The Atlanta National
League Baseball Club is a subsidiary of Liberty Media LLC, which in turn is a
subsidiary of Liberty Media Corporation.
Baltimore Orioles, L.P., is a Maryland partnership and owns
and operates the Baltimore Orioles,
Boston Red Sox Baseball Club, L. P., is a Massachusetts limited
partnership and owns and operates the Boston Red Sox.
Cleveland Indians Baseball Company, Inc., is an Ohio
corporation and owns and operates the Cleveland Indians.
Detroit Tigers, Inc., is a Michigan corporation and owns and
operates the Detroit Tigers.
Florida Marlins, L.P., is a Florida limited partnership and owns
and operates the Florida Marlins.
Houston McLane Company, Inc. is a Texas corporation and owns
and operates the Houston Astros.
Kansas City Royals Baseball Corporation is a Missouri
corporation and owns and operates the Kansas City Royals.
Los Angeles Dodgers, Inc., is a Delaware corporation and owns
and operates the Los Angeles Dodgers. On or about May 1, 2012, it was purchased
by Guggenheim Baseball Management, L.P., a Delaware limited partnership.
Milwaukee Brewers Baseball Club, Inc., is a Wisconsin
corporation and owns and operates the IVlilwaukee Brewers.
Minnesota Twins, LLC, is a IYlinnesota corporation and owns
and operates the Minnesota Twins.
Padres, L.P., is a Delaware limited partnership and owns and
operates the San Diego Padres.
Rangers Baseball Express LLC is a Delaware corporation and
owns and operates the Texas Rangers.
Reds Baseball Partners, LLC, is an Ohio corporation and owns
and operates the Cincinnati Reds.
St. Louis Cardinals, L.P., is a Missouri corporation and owns
and operates the St. Louis Cardinals.
Sterling Mets, L.P., is a Delaware corporation and owns and
operates the New York Mets. Sterling Mets, L.P. is a subsidiary of Sterling
Tampa Bay Devil Rays, Ltd., is a Florida limited partnership
and owns and operates the Tampa Bay Rays.
Toronto Blue Jays Baseball Club is a subsidiary of Rogers
Communications Inc., a Canadian corporation, and is located at 1 Blue Jays Way,
Rogers Centre, Toronto, Ontario.
Washington Nationals, L.P., is a Delaware partnership and
owns and operates the Washington Nationals.
The Television Defendants
Defendant Directv, LLC, is a Delaware corporation whose principal
place of business is 2230 East Imperial Highway, El Segundo, California. Directv
and its subsidiaries provide satellite television service ("DBS") throughout the
Defendant Directv Sports Networks LLC, a wholly owned subsidiary
controlled by Directv, is a Delaware limited liability company, whose principal place
of business is 2230 East Imperial Highway, EI Segundo, California.
Defendant Root Sports Pittsburgh, alk/a "Directv Sports Net
Pittsburgh LLC," Defendant Root Sports Rocky Mountain, alkla "Directv Sports Net
Rocky Mountain LLC," and Defendant Root Sports Northwest alk/a "Directv Sports
Net Northwest LLC," are Delaware limited liability companies whose principal
place of business is 2230 East Imperial Highway, EI Segundo, California. Root
Sports Pittsburgh, Root Sports Rocky Mountain, and Root Sports NortI:-west are
wholly-owned subsidiaries of, and are controlled by, Directv and/or Directv Sports
Networks LLC. Root Sports Pittsburgh is a regional sports network that produces
and distributes video presentations for the Pittsburgh Pirates. Root Sports Rocky
1\lountain produces and distributes video presentations for the Colorado Rockies.
Root Sports Northwest produces and distributes video presentations for the Seattle
Defendant Comcast Corporation ("Comcast") is a Pennsylvania
corporation whose principal place of business is 1701 John F. Kennedy Boulevard,
Philadelphia, Pennsylvania. Comcast owns and operates cable systems throughout
the United States.
Comcast owns and controls Comcast Sportsnet Defendants, which
Comcast Sportsnet Philly, L.P, located at 3601 South Broad
Street, Philadelphia, Pennsylvania, a Regional Sports Network ("RSN'), which
produces and distributes video presentations for the Philadelphia Phillies;
Comcast Sportsnet Bay Area, L.P., located at 370 3rd Street,
2nd Floor, San Francisco, California, which produces and distributes video
presentations for San Francisco Giants and Oakland Athletics through Comcast
Sportsnet Bay Al'ea and Comcast Sportsnet California;
Comcast Sportsnet Chicago, L.P., located at 350 N. Orleans
Street, Suite Sl-100, Chicago, Illinois, which produces and distributes video
presentations for the Chicago Cubs and Chicago White Sox.
Defendant Yankees Entertainment and Sports Networks, LLC ("YES")
is located at 405 Lexington Ave, 36th Floor, New York, New York. YES produces and
presents New York Yankees games.
Other Relevant Entities
Fox Sports Net, Inc., a subsidiary of News Corporation, owns and
controls a number of regional sports networks engaged in producing and presenting
Major League Baseball games and which are part of the conspiracy to divide the live
baseball video market:
Fox Sports West and Prime Ticket are RSNs that carry Los
Angeles Angels and Los Angeles Dodgers games.
Fox Sports Ohio carries Cincinnati Reds games.
Fox Sports Southwest carries Texas Rangers games.
Fox Sports South and SportSouth carry Atlanta Braves games.
Fox Sports Houston carries Houston Astros games.
Fox Sports Detroit carries Detroit Tigers games.
Fox Sports Florida carries Florida Marlins games.
Fox Sports North carriesl\iinnesota Twins games.
Fox Sports Ariwna carries Phoenix Diamondbacks games.
Fox Sports Kansas City carries Kansas City Royals games.
Fox Sports Midwest carries St. Louis Cardinals games.
Fox Sports Wisconsin carries Milwaukee Brewers games.
Sun Sports carries Tampa Bay Rays games.
Fox Sports San Diego carries San Diego Padres games beginning
in 2012 (previously Channel 4 San Diego carried these games).
Other RSNs carrying professional baseball games in the United States
New England Sports Network ("NESN"); which carries Boston
Red Sox games;
Mid-Atlantic Sports Network ("MASN'), which carries Baltimore
Orioles and Washington Nationals games;
Sportsnet New York, which carries New York 1\1ets games;
Sportstime Ohio, which carries Cleveland Indians games.
A few games of some teams are carried by local, over-the-air channels.
One of these is WGN-TV, a local Chicago television station that carries a minority of
both Chicago White Sox and Chicago Cubs games. These games are carried
nationwide on the WGN "superstation." WGN is the last of the superstations-Iocal
channels distributed nationwide through cable and satellite-to carry Major League
Baseball games. Major League Baseball demands payment of a fee to the league,
which is distributed to the other teams, to compensate them for facing this limited
competition. WGN presentations are typically blacked out in the local market of the
other (non-Chicago) team.
Turner Broadcast System ("TBS") is a nationwide cable and satellite
television channel that carries Major League Baseball games nationwide. In the
regular season, those presentations are typically blacked out in the loca,l markets of
the teams involved in the game being presented.
ESPN is a nationwide cable and satellite television channel that
carries Major League Baseball games nationwide. Certain of its video presentations
are exclusive for a given period of time, during which other networks may not show
any other game, regardless oflocation. Other games are not exclusive, with
blackout rules governed by Defendants' agreements designed to limit competition in
Fox Broadcasting Company is an over-the-air television network that
carries Major League Baseball games nationwide. Most of these games are subject
to a nationwide exclusivity for a given period of time, which prevents the
presentation of any non-Fox games in any market.
CLASS ACTION ALLEGATIONS
Plaintiffs bring this action on behalf of themselves and as a class
action under the provisions of Rule 23(a), (b)(2) and (b)(3) of the Federal Rules of
Civil Procedure on behalf of all persons in the United States (excluding Defendants,
their present and former parents, subsidiaries, affiliates, and Co-Conspirators, the
named Plaintiffs, and government entities) who fall within the following classes:
Television Class: All individuals who purchased television
service from Directv and/or Comcast, or their subsidiaries, at any time within four
years prior to the filing of this complaint and until the effects of the anticompetitive conduct end, that included channels carrying video presentations of live
major league baseball games that were not available through a sponsored telecast
(as that term is used by the Sports Broadcasting Act, 15 U.S.C. § 1291, et seq.).
Internet Class: All individuals who purchased IvILB.tv in the
United States directly from any of the League Defendants or their subsidiaries at
any time within four years prior to the filing of this complaint and until the effects
of the anti-competitive conduct end.
Due to the nature of the trade and commerce involved, Plaintiffs
believe that each class consists of at least many thousands of members, the exact
numher and their identitiesbeing known to Defendants and their co-conspirators.
The Classes are so numerous and geographically dispersed that joinder
of all members is impracticable.
There are questions of law and fact common to the Class, including:
Whether MLB Defendants and their Co-Conspirators engaged in
a contract, combination, or conspiracy among themselves to fIx, raise, maintain or
stabilize prices of video presentations of live MLB games by blacking out potentially
competing presentations of MLB games;
Whether Defendants and their co-conspirators engaged in a
contract, combination, or conspiracy among themselves to fIx, raise, maintain or
stabilize prices of MLB Extra Innings by preventing any competitor from offering
Whether Defendants and their co-conspirators engaged in a
contract, combination, or conspiracy among themselves to fix, raise, maintain or
stabilize prices of presentations ofMLB.tv by preventing any competitor from
offering competing products;
The effect of Defendants' conspiracy on the prices of MLB.tv and
MLE Extra Innings in the United States during the class period;
The effect of Defendants' conspiracy on the prices pay television
packages that include MLB games that are not available on a sponsored telecast;
The identity of the participants of the conspiracy;
The duration of the conspiracy alleged herein and the acts
performed by Defendants and their co-conspirators in furtherance of the conspiracy;
\\llether the alleged conspiracy violated Section 1 of the
Sherman Act, 15 U.S.C. § 1;
Whether the alleged conspiracy violated Section 2 of the
Sherman Act, 15 U.S.C. § 2;
Whether the conduct of Defendants and their co-conspirators, as
alleged in this complaint, caused injury to the Plaintiffs and the other members of
The appropriate class-wide measure of damages.
Plaintiff Fernanda Garber was, during the class period, a subscriber to
pay television service provided by Comcast, which included channels carrying MLB
games that are not available on a sponsored telecast. Her claims are typical of the
claims of the Television Class members, and Ms. Garber will fairly and adequately
protect the interests of that Class.
Plaintiff Robert Silver was a subscriber to pay television service
provided by Directv, which included channels carrying MLB games that are not
available on a sponsored telecast. His claims are typical of the claims of the
Television Class members, and Mr. Silver will fairly and adequately protect the
interests of the Television Class.
Plaintiffs lVlarc Lerner and Derek Rasmussen are direct purchasers of
MLB.TV. Their claims are typical of the claims of the Internet Class members, and
they will fairly and adequately protect the interests of the Class.
Plaintiffs are represented by counsel who are competent and
experienced in the prosecution of antitrust and class action litigation.
Given the high cost of establishing that the Defendants' agreements
violated the antitrust laws (including, but not limited to, substantial expert witness
costs and attorneys' fees), a class action is the only economically feasible means for
any plaintiffs to enforce his or her statutory rights.
The prosecution of separate actions by individual members of the
Classes would also create a risk of inconsistent or varying adjudications,
establishing incompatible standards of conduct for Defendants.
The questions of law and fact common to the members of the Classes
predominate over any questions affecting only individual members, including legal
and factual issues relating to liability and damages.
A class action is superior to other available methods for the fair and
efficient adjudication of this controversy. The Classes are readily definable and is
one for which records should exist. Prosecution as a class action will eliminate the
. possibility of repetitious litigation. Treatment as a class action will permit a large
number of similarly situated persons to adjudicate their common claims in a single
forum simultaneously, efficiently, and without the duplication of effort and expense
that numerous individual actions would engender. This class action presents no
difficulties in management that would preclude maintenance as a class action.
JURISDICTION AND VENUE
Plaintiffs bring this action pursuant to Section 16 of the Clayton Act
(15 U.S.C. §26), for a violation of Section 1 of the Sherman Act, 15 U.S.C. § L This
Court has subject matter jurisdiction over that claim pursuant to 28 U.S.C. §§ 1331
Venue is proper pursuant to 28 U.S.C. § 1391 and 15 U.S.C. § 22. The
Defendants transact business in this district, and are subject to personal
jurisdiction in this district.
Class members were injured in this district.
TRADE AND COMMERCE
Major league men's professional baseball has attributes that are
attractive to sports fans that set it apart from other sports or leisure activities.
Close substitutes do not exist. Watching (or participating as a fan in) major league
baseball cannot be reasonably interchanged with watching (or participating as a fan
in) other sports or other leisure activities.
The provision of major league baseball contests in North America is a
relevant productiservice market. This market is characterized by high barriers to
entry. Major League Baseball has market power as it is the only and dominant,
provider of this product/service. MLB, acting through and in combination with the
separate and independent clubs, also exercises market power through the exclusive
license agreements and the other unnecessary and unjustified restraints on each
club's competitive activities that are the subject of this complaint.
Most importantly for this action, there is a relevant market for live
video presentations of major league baseball games over media such as cable and
satellite television and the Internet. MLB's dominance in the production of major
league baseball games in the United States gives it the ability, together with its
television partners, to exercise market power in the market for live video
presentations of MLB games.
The relevant geographic market consists of North America, including
the United States. Various geographic submarkets also may exist.
Defendants' conduct complained of herein has taken place in and
affected, and directly, substantially, and foreseeably restrained, the interstate and
foreign trade and commerce of the United States, by, inter alia, the interstate and
foreign distribution of video ofMLB games.
FACTS RELEVANT TO PLAINTIFFS' CLAIMS
The Anticompetitive Exclusive License Agreements.
It has been long recognized that MLB clubs, like the member clubs of
all professional sports leagues, must cooperate to define, schedule, and produce
league contests. That limited cooperation is fully consistent with the antitrust laws.
But the member clubs continue to exist as separate businesses with separate
owners that retain significant degrees of autonomy in their operations. In these
operations, the clubs compete in business matters that are separate and distinct
from the facilitation of baseball games.
Pursuant to a series of agreements between and among Defendants,
the League has obtained centralized control over distribution of live video
programming of MLB games. As described more fully below, as a result of these
agreements, the clubs have agreed not to compete in business matters related to the
video presentation of live major-league professional baseball games.
The majority of MLB games are televised pursuant to contracts
entered into by the individual clubs with separate entities, primarily RSNs,
including Root Sports, various regional Comcast Sportsnets, and others.
A smaller number of presentations are produced pursuant to national
agreements between the League and a national entity, including ESPN and TBS,
which require a subscription to a pay-television service, and Fox Broadcasting, an
over-the-air network. The League also owns its own channel, the MLB ,Network,
which televises nationally through certain cable and satellite providers.
Regional Blackout System
At the core of Defendants' restraint of competition in the video
programming market are the regional blackout agreements. The purpose and effect
of these agreements is to divide the market geographically, permitting only the
video presentations of a local team's television partner to be shown in that team's
"exclusive territory." The member clubs, through the League, have agreed that they
will not permit their television partners to compete with other member clubs'
partners. Each team's partner has a monopoly in its exclusive territory, except in
those cities where two teams are located. Only in one the four such locations-New
York City-are there two independent RSNs carrying major league baseball games.
The purpose of these restrictions is to restrain competition by
protecting the local television telecasters of each MLB game in the local markets of
the teams. "Blackouts protect the local rights holders .... "
Defendants Comcast and Directv have joined the conspiracy by
agreeing to enforce and maintain these anticompetitive restrictions.
The result of these agreements is a classic, horizontal, geographical
market division. In the absence of a separate out-of-market package or a national
telecast (both are discussed below), a consumer of video presentations of live major
league baseball is required to purchase the video presentation provided by the
consumers' local team.
In the absence of these restrictions, fans would have access to live
video from teams throughout the United States and Canada. The availability of
multiple sources of major-league professional baseball programming would result in
competition among the Defendants, which would lower prices and increase choice
Implementation of the Blackout System
through Agreements Restraining
Competition Among Sports Networks
The clubs implement their system of exclusive territories through a
system of agreements with regional networks. These agreements require the
networks to agree not to compete with other regional networks in the presentation
of televised MLB games.
The networks (and their corporate parents) agree to these
requirements knowing that other networks must agree not to compete in their
territories. The result is a horizontal division of the market that is enforced by the
horizontal agreement between the Defendants.
In each case, the local television network (and the entity that controls
that network) agrees with the League and member clubs that it will not permit its
presentations of the games to be shown in areas outside of its exclusive territory,
knowing that other networks will likewise agree not to compete in their exclusive
home territory. The League and the network also agree that the network will not
carry games of other teams outside their territory.
The Regional Sports Networks (RSNs) enter agreements 'Yith
multichannel video programming distributers (MV'"PDs), like defendants Comcast
and Directv, to implement the blackouts. But·for these agreements, the MPVDs
would facilitate "foreign" RSN entry and other forms of competition.
The result is that each local network has a monopoly on live televised
baseball games in its exclusive territory. (This is true even in Chicago, Los Angeles,
and the Bay iuea, each of which has two teams that are carried by the RSNs with
the same owners. Only New York is not a pure monopoly, as RSNs carrying the
New York Yankees and New York Mets operate as a duopoly in that market). In
certain cases, the outer areas of a team's territory may overlap with another team's
or teams' territories, permitting a viewer to watch either team's games, if they are
available, and subjecting the viewer to local blackouts of all such teams games.
These express restrictions on competition have made local sports
networks extremely valuable. The Federal Communications Commission has
repeatedly described RSNs as the clearest example of "must-have" channels because
of their exclusive control of sports programming. See, e.g., In re A.T&T Servs., Inc.,
FCC 11-168, 2011 WL 5534853, *3 (Nov. 10, 2011). In upholding FCC rules
designed to ensure that RSNs are not used to unfairly harm competition in the
rv[VPD market, the Court of Appeals for the District of Columbia Circuit agreed that
this control of sports programming made RSNs "'must have' and nonreplicable."
Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 702 (D.C. Cir. 2011).
These restrictions have the purpose and effect of creating a series of
regional monopolies in order to increase the price that can be charged by the teams,
the television networks, and television distributers like Comcast and Directv.
Plaintiffs and all purchasers of video programming that include these networks
consequently pay higher prices for television services that include presentations of
major league professional baseball games.
"Out-of Market" Packages
With very limited exceptions, for a consumer to obtain out-of-market
games, there are only two options, both of which, as a consequence of agreements by
and among the member clubs, are controlled by the League: MLB.TV, which is
streamed over the Internet and is available only through the league; and MLB
Extra Innings, which is a similar service available only through cable and other
television distributors, including Directv.
The League defines these products as "out-of-market" packages, and
games from outside of a protected territory as "out-of-market" games. "In-market"
and "out-of-market" are terms defined by reference to the anticompetitive
geographical restrictions imposed by Defendants and their co-conspirators.
The League provides MLB.TV over the Internet directly to the
consumer. For 2011, the cost for MLB.TV was $99.99 for the season ($19.99 on a
monthly basis), or $119.99 for a premium subscription ($24.99 monthly), which
allows fans to obtain both home and away broadcasts.
For most games, MLB.TV offers both the "home" and "away" feeds-a
feature the League actively markets-but the other team's feed is never available in
a game involving a local team. These "in-market" games are blacked out. Nationally
televised games are blacked out in the United States as a whole, and viewers
located in a team's exclusive territory are blacked out from all presentations of a
game involving the local team or teams.
As the League explains on its website: "All live games on MLB.TV and
available through MLB.com Gameday Audio are subject to local blackouts. Such live
games will be blacked out in each applicable Club's home television territory,
regardless of whether that Club is playing at home or away. If a game is blacked out
in an area, it is not available for live game viewing."