Mickelson et al v. PGA Tour, Inc., No. 5:2022cv04486 - Document 63 (N.D. Cal. 2022)
Court Description: ORDER DENYING 2 PLAINTIFFS TALOR GOOCH, HUDSON SWAFFORD, AND MATT JONES'S MOTION FOR TEMPORARY RESTRAINING ORDER. Signed by Judge Beth Labson Freeman on 8/10/2022. (blflc4, COURT STAFF) (Filed on 8/10/2022)
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Mickelson et al v. PGA Tour, Inc. Doc. 63 Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 1 of 14 1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 PHIL MICKELSON, et al., Plaintiffs, 8 9 v. 10 PGA TOUR, INC., United States District Court Northern District of California 11 12 Case No. 22-cv-04486-BLF Defendant. ORDER DENYING PLAINTIFFS TALOR GOOCH, HUDSON SWAFFORD, AND MATT JONES’S MOTION FOR TEMPORARY RESTRAINING ORDER [Re: ECF No. 2] 13 Three elite golfers who joined LIV Golf, accepting lucrative signing deals, now seek this 14 Court’s protection from tournament suspensions imposed by PGA TOUR under the terms of the 15 TOUR regulations the golfers previously agreed to. That emergency request is DENIED. 16 17 18 19 Before the Court is Plaintiffs Talor Gooch, Hudson Swafford, and Matt Jones’s (collectively, “TRO Plaintiffs”) motion for temporary restraining order in this antitrust and breach of contract case against Defendant PGA Tour, Inc. (“PGA TOUR”). TRO Plaintiffs are three of the eleven Plaintiffs, who are all professional golfers and PGA TOUR members. Plaintiffs are suing PGA TOUR for its 20 21 conduct related to Plaintiffs’ involvement with LIV Golf, a recently established competing golf league financed by Saudi Arabia’s sovereign wealth fund that has held events in and outside of the 22 United States. PGA TOUR allegedly used its regulations to exclude LIV Golf from the elite 23 professional golf market and keep players from contracting with LIV Golf, including via 2-year 24 suspensions from PGA TOUR events and threats of lifetime bans from the PGA TOUR. Plaintiffs 25 assert claims under (1) Section 1 of the Sherman Act, 15 U.S.C. § 1, based on PGA TOUR’s alleged 26 27 group boycott alongside the DP Tour (the “European Tour”) of LIV Golf and its players; (2) Section 2 of the Sherman Act, 15 U.S.C. § 2, based on PGA TOUR’s unlawful maintenance of 28 Dockets.Justia.com Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 2 of 14 1 a monopsony over elite professional golf; and (3) California’s Cartwright Act, Cal. Bus. & Profs. 2 C. §§ 16720(a), 16726. Plaintiffs further assert a breach of contract claim, arguing that PGA TOUR 3 violated its own regulations by suspending Plaintiffs and declining to stay their suspensions pending 4 their appeal through PGA TOUR’s internal disciplinary process. TRO Plaintiffs seek an order 5 enjoining PGA TOUR from continuing to suspend TRO Plaintiffs pending the appeal of their 6 suspensions so that TRO Plaintiffs can play in the PGA TOUR’s FedExCup Playoffs, which begin 7 on August 11, 2022. See Motion, ECF No. 2. PGA TOUR opposes TRO Plaintiffs’ motion. See 8 Opposition, ECF No. 50. The Court held a hearing on TRO Plaintiffs’ motion on August 9, 2022. Based on the below reasoning, the Court hereby DENIES TRO Plaintiffs’ motion 9 10 United States District Court Northern District of California 11 WITHOUT PREJUDICE to filing a motion for preliminary injunction. I. BACKGROUND 12 A. 13 PGA TOUR is a Maryland 501(c)(6) non-profit corporation that sponsors an annual series 14 of golf tournaments primarily in the United States from September to September each year called 15 the PGA Tour. The PGA Tour is the largest professional golf tour in the world, and prior to LIV 16 Golf’s entry, it was the only tour for elite golfers in the United States. See Leitzinger Decl., 17 ECF No. 2-13 ¶ 18. PGA TOUR golfers are independent contractors who pay their own expenses 18 and are compensated through prize money. See, e.g., Gooch Decl., ECF No. 2-11 ¶ 40. Plaintiffs 19 are some of the world’s top-ranked golfers and members of PGA TOUR. Mr. Gooch is currently 20 ranked 20th in the 2022 FedExCup season standings; Mr. Jones is ranked 62nd; and Mr. Swafford 21 is ranked 63rd. See Brass Decl., ECF No. 2-2, Ex. 40. PGA TOUR, Plaintiffs, and LIV Golf 22 The PGA TOUR regular season culminates in the FedExCup Playoffs in August, for which 23 the top 125 players qualify to compete. See Brass Decl., ECF No. 2-2, Ex. 39. The top 30 players 24 in the FedExCup Playoffs qualify to play in the Majors—a series of four prestigious championship 25 events (Masters, PGA Championship, U.S. Open, and The Open)—the following year. See id. The 26 top 75 players in the FedExCup Playoffs qualify for the following years’ PGA Tour Invitationals. 27 See id. This year’s FedExCup Playoffs begin on August 11, 2022. TRO Plaintiffs—along with four 28 other Plaintiffs who do not seek a temporary restraining order (Jason Kokrak, Abraham Ancer, 2 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 3 of 14 1 Carlos Ortiz, and Pat Perez)—qualified for this year’s FedExCup Playoffs. See Levinson Decl., 2 ECF No. 50-4 ¶ 97. 3 LIV Golf was established with plans to set up a rival golf league to the PGA TOUR with 48 4 of the world’s top golfers. See Khosla Decl., ECF No. 2-12 ¶ 8. LIV Golf touts that its events offer 5 an “extremely fan-friendly” change from the established PGA TOUR model, including larger 6 rewards or “purses;” a team-based tournament format; and no “cut,” such that all golfers receive a 7 monetary reward for participating in events. See id. ¶¶ 8, 11–17; Brass Decl., ECF No. 2-2, 8 Exs. 41–42. In 2022, LIV Golf scheduled its first series of events—the LIV Golf Invitational Series, 9 a series of eight events starting in June 2022. See Khosla Decl., ECF No. 2-12 ¶ 16. The first event 10 was held in London from June 9–11, 2022; the second was held in Portland, Oregon from June 30 11 to July 2, 2022; and the third was held in Bedminster, New Jersey from July 29–31, 2022. See id. 12 At present, golfers do not earn Official World Golf Ranking (“OWGR”) points—which are used to 13 qualify in a variety of elite golf events—by participating in LIV Golf events, although this may 14 change in the future. See, e.g., Leitzinger Decl., ECF No. 2-13 ¶ 69. 15 B. 16 PGA TOUR golfers are required to comply with the TOUR’s regulations (the “PGA TOUR 17 Regulations”). See PGA TOUR Regulations, ECF No. 1-1. The “Media Rights Regulation”— 18 Section V.B.1.b—prohibits participating in any live or recorded golf program not sponsored by PGA 19 TOUR without the prior written approval of the Commissioner. See id. § V.B.1.b. The “Conflicting 20 Events Regulation”—Section V.A.2–3—prohibits PGA TOUR members from (1) playing in any 21 other golf tournament in North America during any week when PGA TOUR sponsors or co-sponsors 22 an event and (2) playing in any events outside of North America during any week when PGA TOUR 23 sponsors or co-sponsors an event unless the PGA TOUR Commissioner grants a release—three of 24 which a player can request per year. See id. §§ V.A.2–3. Further, the PGA TOUR Regulations 25 prohibit “conduct unbecoming a professional golfer.” See id. § VII.C. PGA TOUR Regulations 26 For PGA TOUR members who violate the Regulations, the Regulations outline a 27 disciplinary process. See id. § VII. The Regulations define three classes of penalties—minor, 28 intermediate, and major—and indicate that any member subject to intermediate or major penalties 3 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 4 of 14 1 shall first be notified in writing. See id. § VII.A. Members are required to submit to the 2 Commissioner facts or evidence of mitigating circumstances within 14 days of the notification, and 3 the Commissioner will notify the member of the imposition of any penalty within an additional 4 14 days. See id. Upon imposition of any penalty, a member can appeal to the Commissioner within 5 14 days, and the Commissioner may transfer the appeal to the Appeals Committee if he “deems it 6 in the best interest of PGA TOUR.” See id. § VII.E. The Regulations provide that “[a]n appeal 7 shall operate to stay the effective date of any penalty, except suspension from a tournament then in 8 progress or scheduled for the calendar week in which the alleged violation occurred, until after the 9 final decision on the appeal.” See id. § VII.E.2. The Regulations further provide that a member can 10 be placed on probation for an infraction, such that if the member violates any rule during the 11 probation period, “irrespective of whether that violation carries with it a penalty designated minor, 12 intermediate or major . . . the Commissioner may immediately suspend the member’s playing 13 privileges.” See id. § VII.C. 14 C. 15 While remaining PGA TOUR members, TRO Plaintiffs signed contracts to join LIV Golf’s 16 newly established league in 2022. See Peters Decl., ECF No. 50-1, Exs. 2–4. Before participating 17 in the first LIV Golf Invitational Series in London, TRO Plaintiffs Gooch and Jones requested a 18 release under the Conflicting Events Regulation, but the requests were denied on May 10, 2022. 19 See Gooch Decl., ECF No. 2-11 ¶ 19; Jones Decl., ECF No. 2-10 ¶ 19. TRO Plaintiffs nonetheless 20 participated in the first three events of the LIV Golf Invitational Series. 21 ECF No. 50-1, Exs. 2–4; Gooch Decl., ECF No. 2-11 ¶¶ 29–30; Jones Decl., ECF No. 2-10 ¶¶ 28, 22 31; Swafford Decl., ECF No. 2–9 ¶¶ 28, 31. TRO Plaintiffs’ Alleged Infractions and Disciplinary Process See Peters Decl., 23 On June 1, 2022, PGA TOUR sent TRO Plaintiffs a letter indicating that it considered them 24 in violation of the Conflicting Events Regulation based on their upcoming participation in the first 25 LIV Golf Invitational Series event. See, e.g., Jones Decl., ECF No. 2-10, Ex. B. On June 1 and 2, 26 2022, Mr. Gooch communicated with a Tour representative who told him that if a player chooses to 27 play in LIV Golf events, “he should not expect to be welcomed back.” See Gooch Decl., ECF No. 28 2-11, Ex. C. On June 3, 2022, PGA TOUR sent TRO Plaintiffs a letter indicating that they were 4 Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 5 of 14 1 “being placed on probation until further notice” under Article VII, Section C of the PGA TOUR 2 Regulations based on TRO Plaintiffs’ violation of the Conflicting Events Regulation. See, e.g., 3 Swafford Decl., ECF No. 2-9, Ex. A. On June 9, 2022, shortly after TRO Plaintiffs teed off in the 4 first LIV Golf Invitational Series event in London, PGA TOUR notified TRO Plaintiffs that they 5 had violated the Media Rights Regulation while on probation and were suspended immediately from 6 playing in PGA TOUR events “until further notice” under Article VII, Section C of the PGA TOUR 7 Regulations. See, e.g., Gooch Decl., ECF No. 2-11 ¶ 29. At the start of the second LIV Golf 8 Invitational Series event in Portland, Oregon, PGA TOUR sent TRO Plaintiffs another disciplinary 9 notice regarding their participation in the Portland event. See, e.g., Gooch Decl., ECF No. 2-11, United States District Court Northern District of California 10 Ex. I. 11 On June 30, 2022, PGA TOUR notified TRO Plaintiffs that based on their participation in 12 the first LIV Golf Invitational Series event, the PGA TOUR would suspend TRO Plaintiffs from 13 playing in PGA TOUR events through March 31, 2023. See, e.g., Gooch Decl., ECF No. 2-11, 14 Ex. G. On July 13, 2022, TRO Plaintiffs appealed the June 30, 2022 disciplinary action, indicating 15 that their suspensions should be stayed pending appeal under Section VII.E.2 of the PGA TOUR 16 Regulations. See, e.g., Gooch Decl., ECF No. 2-11, Ex. J. On July 23, 2022, PGA TOUR notified 17 TRO Plaintiffs that they were suspended through March 31, 2024 based on their participation in the 18 second LIV Golf Invitational Series event. See, e.g., Gooch Decl., ECF No. 2-11, Ex. B. On July 19 27, 2022, PGA TOUR Commissioner Jay Monahan notified TRO Plaintiffs that he was referring 20 TRO Plaintiffs’ appeals to the Appeals Committee. See Gooch Decl., ECF No. 2-11 ¶ 35. On 21 August 1, 2022, Mr. Gooch asked a PGA TOUR representative if his suspension would be stayed 22 pending his appeal. See Gooch Decl., ECF No. 2-11, Ex. L. On August 2, 2022, PGA TOUR and 23 its counsel notified Mr. Gooch that his July 13, 2022 appeal does not effectuate a stay of his 24 suspension under Article VII, Section C of the PGA TOUR Regulations, because any “interim 25 suspension under Section C is separate and distinct from any ‘penalty’ that may be imposed by the 26 Commissioner,” and only such penalties are stayed pending appeal. 27 ECF No. 2-11, Exs. M–N. 28 5 See Gooch Decl., Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 6 of 14 1 D. Filing of Action and Motion for Temporary Restraining Order The above-captioned action and TRO Plaintiffs’ motion was filed on August 3, 2022. See 2 ECF Nos. 1–2. TRO Plaintiffs seek an order enjoining PGA TOUR from prohibiting them from 3 playing in the FedExCup Playoffs starting August 11, 2022. See Proposed Order, ECF No. 56 ¶ 2. 4 First, TRO Plaintiffs argue that the Court should grant the TRO based on their breach of 5 contract claim. TRO Plaintiffs allege that PGA TOUR is in breach of Article VII, Section E of the 6 PGA TOUR Regulations by failing to stay their suspensions pending appeal. See Motion, 7 ECF No. 2 at 11–12. 8 Second, TRO Plaintiffs argue that the Court should grant the TRO based on their antitrust 9 claims. Plaintiffs’ Sherman Act § 2 claim for unlawful maintenance of monopoly is based on PGA 10 TOUR’s alleged efforts to maintain its position as a monopsonist—a buy-side monopolist—for the 11 United States District Court Northern District of California services of professional golfers for elite golf events. Relying on a declaration from their expert 12 Jeffrey Leitzinger, PhD, see ECF No. 2-13, TRO Plaintiffs argue that PGA TOUR’s monopsony 13 power is supported by evidence that PGA TOUR has increased player pay in response to LIV Golf’s 14 entry, indicating that it has been paying PGA TOUR members sub-competitively. See Motion, 15 ECF No. 2 at 12–14 (citing Leitzinger Decl., ECF No. 2-13 ¶¶ 54–61). TRO Plaintiffs further argue 16 that PGA TOUR has unlawfully maintained its monopsony through its Media Rights and 17 Conflicting Events Regulations, which limit golfer output and threaten the viability of competitors 18 like LIV Golf by restricting the availability of elite golfer talent. See id. at 14–17. Additionally, 19 TRO Plaintiffs argue that the unlawfulness of these provisions is evidenced by how PGA TOUR 20 has arbitrarily denied releases for Tour members to play in LIV Golf events and has otherwise used 21 penalties and threats of penalties based on these provisions as a cudgel to dissuade PGA TOUR 22 member attrition to LIV Golf. See id. at 15–16. TRO Plaintiffs argue that there is no procompetitive 23 justification for PGA TOUR’s conduct, including because such conduct degrades PGA TOUR’s 24 product by forcing golfers to sit on the sidelines. See id. at 17–19. 25 26 Plaintiffs’ Sherman Act § 1 claim alleges that PGA TOUR has entered a “strategic alliance” with the European Tour to refuse to deal with LIV Golf and its players. See Motion, ECF No. 2 27 at 19–20 (citing Brass Decl., ECF No. 2-2, Ex. 22). TRO Plaintiffs assert that such conduct is a per 28 6 Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 7 of 14 1 se violation of the Sherman Act. See id. At the hearing on August 9, 2022, TRO Plaintiffs also 2 argued that PGA TOUR’s group boycott conduct constituted a rule of reason violation, as briefed 3 in a footnote in TRO Plaintiffs’ motion. See Motion, ECF No. 2 at 19 n.7. 4 PGA TOUR opposes TRO Plaintiffs’ motion, arguing that TRO Plaintiffs have not 5 established any of the elements necessary to meet the standard for a temporary restraining order. 6 See Opposition, ECF No. 50. United States District Court Northern District of California 7 II. LEGAL STANDARD 8 The standard for issuing a temporary restraining order is identical to the standard for issuing 9 a preliminary injunction. Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush & Co., 240 F.3d 832, 10 839 n.7 (9th Cir. 2001); Lockheed Missile & Space Co. v. Hughes Aircraft, 887 F. Supp. 1320, 1323 11 (N.D. Cal. 1995). An injunction is a matter of equitable discretion and is “an extraordinary remedy 12 that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. 13 Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008). A plaintiff seeking emergency 14 injunctive relief must establish “[1] that he is likely to succeed on the merits, [2] that he is likely to 15 suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in 16 his favor, and [4] that an injunction is in the public interest.” Winter, 555 U.S. at 20. “[I]f a plaintiff 17 can only show that there are serious questions going to the merits—a lesser showing than likelihood 18 of success on the merits—then a preliminary injunction may still issue if the balance of hardships 19 tips sharply in the plaintiff’s favor, and the other two Winter factors are satisfied.” Friends of the 20 Wild Swan v. Weber, 767 F.3d 936, 942 (9th Cir. 2014) (internal quotation marks and citations 21 omitted). 22 III. DISCUSSION 23 A. 24 The Court first considers whether TRO Plaintiffs have adequately shown irreparable harm. 25 Winter, 555 U.S. at 20. TRO Plaintiffs argue that they will suffer irreparable harm based on their 26 suspension from participating in the FedExCup Playoffs, because the Playoffs are professional 27 golf’s “Super Bowl.” If TRO Plaintiffs are not allowed to participate in the FedExCup Playoffs, 28 then they will lose the opportunity to qualify for the 2023 Majors and other premier tournaments; Irreparable Harm 7 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 8 of 14 1 lose opportunities to accumulate OWGR points; lose income earning opportunities; and suffer losses 2 to goodwill, reputation, and brand. See Gooch Decl., ECF No. 2-11 ¶¶ 42–46; Swafford Decl., 3 ECF No. 2-9 ¶¶ 41–46; Jones Decl., ECF No. 2-10 ¶¶ 41–46. At the August 9, 2022 hearing, 4 TRO Plaintiffs further emphasized that the FedExCup Playoffs come with particularly significant 5 income opportunities, including up to around $20 million in individual earnings. TRO Plaintiffs 6 cite to cases in which courts have found irreparable harm where a sports player was prevented from 7 playing professionally or playing as he or she saw fit. See Jackson v. NFL, 802 F.Supp. 226, 231–35 8 (D. Minn. 1992); O.M. by & through Moultrie v. Nat’l Women’s Soccer League, LLC, 9 544 F.Supp.3d 1063, 1077 (D. Or. 2021); Gilder v. PGA Tour, Inc., 936 F.2d 417, 423 (9th Cir. 10 1991); Denver Rockets v. All-Pro Mgmt., Inc., 325 F.Supp. 1049, 1057 (C.D. Cal. 1971); Linseman 11 v. World Hockey Ass’n, 439 F.Supp. 1315, 1319–20 (D. Conn. 1977). 12 August 9, 2022 hearing, TRO Plaintiffs argued that they did not delay seeking relief, because 13 August 2, 2022—the day before TRO Plaintiffs filed their motion—was the first time PGA TOUR 14 asserted that it was not staying TRO Plaintiffs’ suspensions pending appeal. Additionally, at the 15 In response, PGA TOUR argues that TRO Plaintiffs’ delay in seeking relief undermines their 16 claim of irreparable harm. See Opposition, ECF No. 50 at 12. PGA TOUR argues that TRO 17 Plaintiffs failed to seek a TRO until two months after they were notified of their suspensions. See 18 id. Further, PGA TOUR argues that TRO Plaintiffs’ asserted irreparable harm boils down to either 19 easily calculable monetary injury or speculative reputational harm—neither of which is sufficient 20 to show irreparable harm. See id. at 12–14. PGA TOUR argues that tournaments and points are 21 “merely means to earn financial and reputational rewards.” See id. at 12. PGA TOUR asserts that 22 courts regularly award compensation for lost income, including projected future income. See id. 23 at 14. As evidence that the cost of TRO Plaintiffs’ lost opportunities are calculable, PGA TOUR 24 points out that TRO Plaintiffs’ expert opines that golfers have calculated those costs in determining 25 the size of upfront payments necessary to woo them to LIV Golf. 26 ECF No. 2-13 ¶ 9. As to reputational harm, PGA TOUR argues that TRO Plaintiffs have provided 27 only boilerplate claims of harm, which is insufficient. 28 Additionally, PGA TOUR argues that the fact that only three of seven Plaintiffs that qualify for the 8 See Leitzinger Decl., See Opposition, ECF No. 50 at 15. United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 9 of 14 1 FedExCup Playoffs are moving for a temporary restraining order suggests that any injury to TRO 2 Plaintiffs is not irreparable. See id. at 15–16. PGA TOUR supports its contention that TRO 3 Plaintiffs have failed to show irreparable harm with cases in which courts have found a lack of 4 irreparable harm where a professional sports player is barred from playing in one professional sports 5 league but is free to play professionally in a separate league. See Heldman v. United States Lawn 6 Tennis Ass’n, 354 F.Supp. 1241, 1251 (S.D.N.Y. 1973); Elite Rodeo Ass’n v. Prof. Rodeo Cowboys 7 Ass’n, Inc., 159 F.Supp.3d 738, 745 (N.D. Tex. 2016). 8 As to the timeliness of TRO Plaintiffs’ motion, the Court agrees with TRO Plaintiffs. 9 Although the claim would have been ripe upon receipt of the initial suspension on June 9, 2022, 10 TRO Plaintiffs have demonstrated the reasonableness of their decision to withhold filing this motion 11 until PGA TOUR confirmed that it would not grant a stay of the suspensions on August 2, 2022. 12 Since TRO Plaintiffs filed their motion on August 3, 2022—the day after the relevant date—the 13 Court finds that TRO Plaintiffs timely sought relief. 14 As to whether TRO Plaintiffs have adequately shown irreparable harm, the Court agrees 15 with PGA TOUR. TRO Plaintiffs are not barred from playing professional golf against the world’s 16 top players,1 from earning lucrative prizes in some of golf’s highest-profile events, from earning 17 sponsorships, or from building a reputation, brand, and fan following in elite golf. See, e.g., Khosla 18 Decl., ECF No. 2-12 ¶¶ 11–13. The only thing TRO Plaintiffs are barred from is pursuing these 19 goals at PGA TOUR events. Considering the major playing and earning opportunities still open to 20 TRO Plaintiffs as LIV Golf players, the Court finds that the suspension from PGA TOUR events is 21 not enough to show irreparable harm. See, e.g., Heldman, 354 F.Supp. at 1251 (no irreparable harm 22 to tennis player given that “other tournament opportunities may be lost to her” where she “saw a 23 valuable opportunity in [competitor] plaintiff’s contract and opted for it; she has available to her the 24 chance to win large sums of prize money and with that the subsequent opportunities of endorsements 25 that accrue to athletic stars”); Elite Rodeo, 159 F.Supp.3d at 746 (no irreparable harm where 26 plaintiffs “are unable to compete in the PRCA because they own and are competing professionally 27 28 1 PGA presented evidence at the August 9, 2022 hearing that of the top ten PGA TOUR players in 2021, half of them are now LIV Golf players. 9 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 10 of 14 1 in the competing ERA, arguably at a higher level of competition, and which they claim will lead to 2 increased exposure to fans, improved ability to attract sponsors, better health, and longer careers”). 3 The Court recognizes that if TRO Plaintiffs are not allowed to play in the 2022 FedExCup 4 Playoffs, TRO Plaintiffs will lose the opportunity to qualify for next year’s Majors and several other 5 high-profile tournaments. The Court accepts that the FedExCup Playoffs are a major tournament of 6 the year, and that they serve as a gateway to the Majors, future sponsorships, and career status. 7 Further, the Court acknowledges that TRO Plaintiffs each had a reasonable opportunity to make it 8 into the top 30 or top 75 golfers in the 2022 FedExCup Playoffs. Nonetheless, the Court finds that 9 these facts are not sufficient to show irreparable harm. TRO Plaintiffs each knew, going into 10 negotiations with LIV Golf, that they were virtually certain to be cut off from TOUR play. TRO 11 Plaintiffs’ own expert indicated that PGA TOUR members that have “already elected to participate 12 in LIV Golf events” required “large upfront payments” at least in part because their calculus 13 included the “loss of opportunities to earn ranking points [and] to earn entry into the Majors.” See 14 Leitzinger Decl., ECF No. 2-13 ¶ 9. Based on this evidence, TRO Plaintiffs have not even shown 15 that they have been harmed—let alone irreparably. It is clear that the LIV Golf contracts negotiated 16 by the TRO Plaintiffs and consummated between the parties were based on the players’ calculation 17 of what they would be leaving behind and the amount of money they would need to compensate for 18 those losses. TRO Plaintiffs have signed contracts that richly reward them for their talent and 19 compensate for lost opportunity through TOUR play. In fact, the evidence shows almost without a 20 doubt that they will be earning significantly more money with LIV Golf than they could reasonably 21 have expected to make through TOUR play over the same time period. 22 Further, TRO Plaintiffs’ contention that they will irreparably lose future sponsorship 23 opportunities and career status is undermined by TRO Plaintiffs’ evidence that LIV Golf offers a 24 refreshing new “extremely fan-friendly” business model that will lead to “an improved broadcast 25 output and entertainment experience” compared to the staid old golf world built by PGA TOUR. 26 See Khosla Decl., ECF No. 2-12 ¶¶ 11–13; see also Complaint, ECF No. 1 ¶¶ 49–57 (“Elite 27 Professional Golf Has Stagnated Under the PGA Tour’s Monopoly”). If LIV Golf is elite golf’s 28 future, what do TRO Plaintiffs care about the dust-collecting trophies of a bygone era? 10 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 11 of 14 1 The Court further appreciates the ample case law TRO Plaintiffs have presented where courts 2 have found irreparable harm based on professional sports players being barred from play. However, 3 the Court finds persuasive Judge Lynn’s reasoning in the Elite Rodeo case that “[i]n cases 4 recognizing lost playing time alone as constituting irreparable harm, athletes were entirely locked 5 out of their sports”—a fate that has not befallen TRO Plaintiffs given their continued involvement 6 with LIV Golf. See 159 F.Supp.3d at 745; O.M., by and through Moultrie v. Nat’l Women’s Soccer 7 League, LLC, 541 F.Supp.3d 1171, 1184 (D. Or. 2021) (“[T]here are no substitutes to actual 8 professional 9 439 F.Supp. at 1319 (“The nature of [hockey player’s] occupation is it requires constant practice 10 against the very best competition possible in order to finely hone his hockey skills.”); Denver 11 Rockets, 325 F.Supp. at 1057 (“If Haywood is unable to continue to play professional basketball for 12 Seattle, he will suffer irreparable injury in that a substantial part of his playing career will have been 13 dissipated, his physical condition, skills and coordination will deteriorate from lack of highlevel 14 [sic] competition[.]”). TRO Plaintiffs’ other cases involve harms and issues not present in the 15 above-captioned case. See Gilder, 936 F.2d at 423 (irreparable harm where a PGA TOUR ban on 16 clubs will have an “unquantifiable adverse impact on [golfers’] earnings, their ability to maintain 17 their eligibility for the tour, and for endorsement contracts”); Jackson, 802 F.Supp. at 231 18 (irreparable harm given players’ “inability to play for teams that may better utilize their skills, and 19 thus maximize their value, [and] their inability to switch to teams that would allow them to start or 20 [] to play on natural grass (which may prolong a player’s career), may be impossible to quantify in 21 monetary terms”); see also Elite Rodeo, 159 F.Supp.3d at 746 n.36 (“Such demonstrated harms [as 22 were at issue in Jackson] were not proven here.”). And to the extent that the case law supports 23 irreparable harm based on a professional sports player’s lost opportunity to become a “superstar,” 24 the Court finds that there is evidence to suggest that superstar status is still available—potentially 25 even more available—to TRO Plaintiffs in LIV Golf’s “extremely fan-friendly” league. See Khosla 26 Decl., ECF No. 2-12 ¶¶ 11–13. 27 28 competition to help [plaintiff] realize her full potential.”); Linseman, Based on the above reasoning, the Court finds that TRO Plaintiffs have failed to meet their burden of showing irreparable harm. 11 Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 12 of 14 1 B. Likelihood of Success on the Merits Since the Court finds that TRO Plaintiffs have failed to show irreparable harm, the Court 2 does not need to reach the issue of whether TRO Plaintiffs have shown a likelihood of success on 3 the merits. Nonetheless, as it did at the August 9, 2022 hearing, the Court will provide a brief 4 summary of its impressions of the merits of TRO Plaintiffs’ claims at this stage. 5 As a threshold matter, the Court determines whether TRO Plaintiffs are seeking a mandatory 6 or a prohibitory injunction, since this impacts the applicable standard for satisfying the likelihood 7 of success on the merits requirement. See, e.g., Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 8 2015) (“Because [plaintiff] seeks a mandatory injunction, she must establish that the law and facts 9 clearly favor her position, not simply that she is likely to succeed.”) (emphasis in original). A 10 11 mandatory injunction goes beyond simply maintaining the status quo, i.e. “the state of affairs ‘at the United States District Court Northern District of California time the complaint was filed.’” Animal Legal Def. Fund v. U.S.D.A., No. 17–cv–00949–WHO, 12 2017 WL 2352009, at *3 (N.D. Cal. May 31, 2017); see also N.D. ex rel. Parents v. Haw. Dep’t of 13 Educ., 600 F.3d 1104, 1112 n. 6 (9th Cir.2010) (“The status quo means the last, uncontested status 14 15 which preceded the pending controversy.”). Here, TRO Plaintiffs seek to “enjoin[] [PGA TOUR] from prohibiting [TRO Plaintiffs] from playing in the FedExCup Playoffs.” See Proposed Order, 16 ECF No. 56 ¶ 2. At the time TRO Plaintiffs filed their Complaint, they had been suspended for over 17 one month from playing in PGA TOUR events and their disciplinary action was pending appeal. 18 Whether they would be granted a stay was unclear. Accordingly, the relief TRO Plaintiffs are 19 seeking is a mandatory—not a prohibitory—injunction. Therefore, TRO Plaintiffs would be 20 21 required to show that the law and facts “clearly favor” their success on the merits—not simply that they are likely to succeed. See Garcia, 786 F.3d at 740. 22 23 1. Breach of Contract Regarding their breach of contract claim, TRO Plaintiffs argue that the PGA TOUR 24 25 Regulations unambiguously provide that “any penalty” is stayed pending appeal. See PGA TOUR Regulations, ECF No. 1-1 § VII.E.2. Since PGA TOUR has not stayed TRO Plaintiffs’ suspension 26 pending their appeals, TRO Plaintiffs argue that PGA TOUR has breached its regulations. In 27 response, PGA TOUR argues that the language of Article VII, Section C of the PGA TOUR 28 12 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 13 of 14 1 Regulations, which allows the Commissioner to “immediately suspend” a member’s playing 2 privileges upon a probation violation, clearly indicates that such a suspension is “irrespective of 3 whether that violation carries with it a penalty designated minor, intermediate or major.” See id. 4 § VII.C. Since the Regulations provide appeals only for minor, intermediate, and major penalties, 5 PGA TOUR argues that the stay-of-appeal right does not pertain to an immediate suspension based 6 on a probation violation. Further, PGA TOUR argues that courts must defer to the judgment of 7 private organizations on how their regulations and disciplinary procedures for their members should 8 operate. See Opposition, ECF No. 50 at 23 (citing Scheire v. Int’l Show Car Ass’n (ISCA), 9 717 F.2d 464, 465 (9th Cir. 1983)). 10 The Court agrees with PGA TOUR as to TRO Plaintiffs’ breach of contract claim. Giving 11 proper deference to the PGA TOUR’s interpretation and application of its disciplinary rules, the 12 Court finds that PGA TOUR’s interpretation of the Commissioner’s authority under Article VII, 13 Section C of the PGA TOUR Regulations is not unreasonable. Accordingly, the Court finds that at 14 this early stage of the case TRO Plaintiffs have failed to make the necessary showing that the facts 15 clearly favor their success on the merits of their breach of contract claim. 16 2. Antitrust Claims 17 TRO Plaintiffs argue that the merits of their two federal antitrust claims—under Sections 1 18 and 2 of the Sherman Act—are sufficient to warrant a temporary restraining order. See Motion, 19 ECF No. 2 at 11–22. TRO Plaintiffs claim that the disciplinary actions and the PGA TOUR 20 Regulations they are based on violate the Sherman Act. PGA TOUR raises significant deficiencies 21 as to each claim at this stage. See Opposition, ECF No. 50 at 17–25. 22 Regarding the Section 1 claim that PGA TOUR and the European Tour engaged in a group 23 boycott, TRO Plaintiffs argue that such a group boycott is a per se violation of the Sherman Act. 24 But PGA TOUR accurately points out that group boycotts are only considered to be a per se 25 violation when they involve horizontal competitors—which TRO Plaintiffs’ own expert opines PGA 26 TOUR and the European Tour are not. See NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 135 (1998); 27 Leitzinger Decl., ECF No. 2-13 ¶¶ 42–46. While a group boycott may still be considered a violation 28 of the Sherman Act under the rule of reason, TRO Plaintiffs’ rule of reason analysis is limited to a 13 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 63 Filed 08/10/22 Page 14 of 14 1 single footnote and not alleged in the Complaint. See Motion, ECF No. 2 at 19 n.7. Accordingly, 2 the Court finds TRO Plaintiffs’ showing as to the Sherman Act Section 1 claim to be insufficient to 3 meet their burden of showing that the facts clearly favor their success on the merits at this stage. 4 Regarding the Section 2 claim that PGA TOUR engaged in unlawful maintenance of a 5 monopoly, PGA TOUR argues that TRO Plaintiffs’ evidence of LIV Golf’s early success in entering 6 the elite professional golf market undermines TRO Plaintiffs’ contention that PGA TOUR has the 7 power to exclude competitors from the market. See Opposition, ECF No. 50 at 18–19. On this 8 claim, as well as the Section 1 claim, the Court acknowledges that TRO Plaintiffs raise significant 9 antitrust issues that are facially appealing. But PGA TOUR has responded with preliminary 10 evidence and argument potentially exposing fundamental flaws in Plaintiffs’ claims. These complex 11 issues are best resolved on a more developed record. 12 IV. 13 14 ORDER For the foregoing reasons, IT IS HEREBY ORDERED that TRO Plaintiffs’ motion is DENIED WITHOUT PREJUDICE to filing a motion for preliminary injunction. 15 16 17 18 Dated: August 10, 2022 ______________________________________ BETH LABSON FREEMAN United States District Judge 19 20 21 22 23 24 25 26 27 28 14
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