KJERSTI FLAA, ET AL V. HOLLYWOOD FOREIGN PRESS ASSOC., ET AL, No. 21-55347 (9th Cir. 2022)
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The Hollywood Foreign Press Association (HFPA) is a California non-profit mutual benefit corporation whose members are involved in reporting for media outlets outside of the United States. The members are offered advantages such as access to Hollywood talent granted by movie studios. The HFPA strictly limits the admission of new members
The Ninth Circuit affirmed the district court’s dismissal of an antitrust action brought by two entertainment journalists who challenged the membership policies of HFPA. The panel affirmed the dismissal of the journalists’ antitrust claims. The journalists alleged that the HFPA’s exclusionary membership practices violated section 1 (restraint of trade) and section 2 (monopolization) of the Sherman Act, as well as California’s Cartwright Act. The panel held that the journalists also failed to state a claim that the HFPA’s practices were unlawful under a rule of reason analysis.
The panel held that the journalists did not state a claim of per se liability based on a horizontal market division agreement because this theory was inconsistent with statements in the complaint that the HFPA’s members do not participate in the same product market. The panel held that, under a rule of reason analysis, the journalists failed to allege that the HFPA had market power in any reasonably defined market. The panel also affirmed the dismissal of the journalists’ claim based on California’s right of fair procedure, which protects, in certain situations, against arbitrary decisions by private organizations.
Court Description: Antitrust. The panel affirmed the district court’s dismissal of an antitrust action brought by two entertainment journalists who challenged the membership policies of the Hollywood Foreign Press Association. The HFPA is a California non-profit mutual benefit corporation whose members are involved in reporting for media outlets outside of the United States. The members are offered advantages such as access to Hollywood talent granted by movie studios. The HFPA strictly limits the admission of new members. The panel affirmed the dismissal of the journalists’ antitrust claims. The journalists alleged that the HFPA’s exclusionary membership practices violated section 1 (restraint of trade) and section 2 (monopolization) of the Sherman Act, as well as California’s Cartwright Act. The panel held that the journalists did not establish a per se restraint of trade under section 1 on either a theory that the HPFA’s membership practices have produced an anti-competitive group boycott of all non- member foreign entertainment journalists, or a theory that the HFPA members have unlawfully agreed to divide the foreign entertainment news market among themselves. The panel held that the journalists also failed to state a claim that the HFPA’s practices were unlawful under a rule of reason analysis. The panel held that a group boycott may be per se unlawful when the group of competitors cuts off access to a supply, facility, or market necessary to enable the boycotted firm to compete; when the group possesses a dominant position in the relevant market; or when the criticized practice is not justified by plausible arguments that it is intended to enhance overall efficiency and make markets more competitive. The panel concluded that the HFPA’s admissions practices possessed none of these characteristics. The panel held that the journalists did not state a claim of per se liability based on a horizontal market division agreement because this theory was inconsistent with statements in the complaint that the HFPA’s members do not participate in the same product market. The panel held that, under a rule of reason analysis, the journalists failed to allege that the HFPA had market power in any reasonably defined market. The panel also affirmed the dismissal of the journalists’ claim based on California’s right of fair procedure, which protects, in certain situations, against arbitrary decisions by private organizations. The panel held that the right of fair procedure did not apply because, under California law, the HFPA was not a quasi- public organization. Finally, the panel affirmed the district court’s dismissal for lack of subject-matter jurisdiction of the journalists’ claim seeking a declaration that the HFPA’s bylaws were inconsistent with its federal tax-exempt status. The panel held that this claim fell within the Declaratory Judgment Act’s jurisdictional bar to declaratory relief related to federal tax controversies.
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