City of Oakland v. Oakland Raiders

20 F.4th 441

CITY OF OAKLAND, Plaintiff-Appellant,

v.OAKLAND RAIDERS, a California Limited Partnership; Arizona Cardinals Football Club, LLC ; Atlanta Falcons Football Club LLC; Baltimore Ravens, LP; Buffalo Bills, LLC; Panthers Football, LLC; Chicago Bears Football Club, Inc.; Cincinnati Bengals, Inc.; Cleveland Browns Football Company, LLC; Dallas Cowboys Football Club, Ltd.; PDB Sports Ltd.; Detroit Lions, Inc.; Green Bay Packers, Inc.; Houston NFL Holdings, LP; Indianapolis Colts, Inc.; Jacksonville Jaguars LLC; Kansas City Chiefs Football Club, Inc.; Chargers Football Company LLC; The Rams Football Company, LLC; Miami Dolphins, Ltd.; Minnesota Vikings Football LLC; New York Football Giants, Inc.; New York Jets, LLC; Philadelphia Eagles LLC; Pittsburgh Steelers LLC; Forty Niners Football Company LLC; Football Northwest LLC; Buccaneers Team LLC ; Tennessee Football, Inc.; Pro-Football, Inc.; National Football League; New England Patriots LLC; New Orleans Louisiana Saints, LLC, Defendants-Appellees.

No. 20-16075

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 14, 2021 San Francisco, California

Filed December 2, 2021

Michael M. Fay (argued), James W. Quinn, Jenny H. Kim, and Emily Burgess, Berg & Androphy, New York, New York; Bruce L. Simon, Pearson Simon & Warshaw, LLP, San Francisco, California; Clifford H. Pearson, Michael H. Pearson and Thomas J. Nolan, Pearson Simon & Warshaw, LLP, Sherman Oaks, California; Barbara Jean Parker, Maria Bee, and Malia McPherson, Office of the City Attorney, Oakland, California, for Plaintiff-Appellant City of Oakland.

Daniel B. Asimow (argued) and Kenneth G. Hausman, Arnold & Porter Kaye Scholer LLP, San Francisco, California; Jonathan I. Gleklen, Arnold & Porter Kaye Scholer LLP, Washington, D.C.; for Defendant-Appellee The Oakland Raiders.

John E. Hall, Gregg H. Levy, Derek Ludwin, and Benjamin J. Razi, Covington & Burling LLP, Washington, D.C., for Defendants-Appellees The National Football League and all NFL Clubs other than The Oakland Raiders.

Makan Delrahim Assistant Attorney General; Michael F. Murray, Deputy Assistant Attorney General; Daniel E. Haar and Jeffrey D. Negrette, Attorneys; Antitrust Division, United States Department of Justice, Washington, D.C.; for Amicus Curiae United States of America.

Before: A. Wallace Tashima and Patrick J. Bumatay, Circuit Judges, and Douglas L. Rayes,^* District Judge.

OPINION

TASHIMA, Circuit Judge Plaintiff City of Oakland (the "City") alleges that the National Football League ("NFL") and its thirty-two member teams (collectively, "Defendants") have "created artificial scarcity in their product (NFL teams), and then used that scarcity ... to demand supra-competitive prices from host cities." First Am. Compl. ("FAC" or "complaint") FAC ¶ 1.¹ It further alleges that, "[w]hen Oakland could not pay those prices, Defendants punished the city: they voted to allow the Raiders to move to Las Vegas, which left Oakland without an NFL team and caused significant losses to Oakland." FAC ¶ 2. The City contends that Defendants' conduct amounts to an unreasonable restraint of trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, on two independent bases: First, because it constitutes an unlawful group boycott, and second, because it constitutes an unlawful horizontal price-fixing scheme. The district court dismissed the City's Sherman Act claim for failure to state a claim upon which relief may be granted. See City of Oakland v. Oakland Raiders , 445 F. Supp. 3d 587, 606 (N.D. Cal. 2020) ; Fed. R. Civ. P. 12(b)(6). We affirm.

We agree with the district court that the City has failed to allege a group boycott. A group boycott occurs when multiple producers refuse to sell goods or services to a particular consumer. Although the City alleges collective action (i.e. , that the other NFL teams supported the Raiders' boycott), it has not alleged a group boycott. The City has alleged only that a single producer—the Raiders—refused to deal with the City.

The City's horizontal price fixing theory fails as well. To plead a Sherman Act claim, a private plaintiff must show that it is a proper party to pursue the claim—a requirement known as antitrust standing. Although buyers who pay collusive overcharges (direct purchasers) ordinarily have antitrust standing to challenge a horizontal price-fixing scheme, buyers, like the City, who are priced out the market—and hence do not purchase the product or pay the overcharge—ordinarily do not. A nonpurchaser's injury is less direct than the injuries of actual purchasers and highly speculative: we cannot know whether, in the absence of Defendants' restrictions on output, the nonpurchaser would have made a purchase and, if so, under what terms. In addition, the City's damages are highly speculative and would be exceedingly difficult to calculate. We therefore agree with the district court that the City has failed to allege antitrust standing on its horizontal price fixing theory of liability.

I.²

In 1995, the Oakland Raiders professional football team signed an agreement to play in the Oakland-Alameda County Coliseum ("Coliseum"). FAC ¶ 102. Under the terms of the agreement, the Raiders leased the Coliseum for a period of sixteen years, with an annual rent of $50,000; the City offered the Raiders a $31.9 million relocation and operating loan; the City committed up to $10 million toward the construction of a new training facility; the City offered up to $85 million toward stadium modernization efforts; and the Raiders agreed to a $1 surcharge on ticket sales, with the proceeds to benefit Oakland public schools and other public services. FAC ¶ 102. The Raiders extended the lease in 2009 and again in 2014. FAC ¶¶ 107, 112.

In the years that followed, the City negotiated with the Raiders in an unsuccessful attempt to keep the team in Oakland. In 2014, the City proposed donating land to the Raiders for a new stadium. FAC ¶ 113. In 2015, the City proposed a $500 million renovation of the Coliseum, to which the City would have contributed significantly. FAC ¶ 113. In 2016, the City supported a proposal to build a new $1.3 billion stadium in Oakland, financed by $350 million in public funds, $400 million from an investment group led by former NFL players Ronnie Lott and Rodney Peete, and $500 million from the Raiders. FAC ¶ 121. The City alleges that the Raiders and the NFL engaged in these negotiations in bad faith. According to the complaint, "[t]he Raiders, the NFL, and ultimately, the vast majority of NFL Clubs, were just stringing Oakland along as part of their collusive scheme to relocate the Raiders." FAC ¶ 23.

In 2017, the Raiders filed an application with the NFL to relocate the team to Las Vegas. FAC ¶ 124. The NFL teams voted thirty-one to one to approve the relocation. FAC ¶ 132. The complaint alleges that the move benefitted the Raiders and the other NFL teams alike. The Raiders moved to a new, $1.9 billion stadium in Las Vegas, financed by $750 million in public funds, FAC ¶¶ 5, 149, and the team's enterprise value more than doubled to $3 billion, FAC ¶¶ 5, 63. The other teams, meanwhile, divided a $378 million relocation fee paid by the Raiders, FAC ¶ 66, and, due to revenue sharing among NFL teams, stand to share in "new television rights in a new geographic territory, new merchandising, new intellectual property and game receipts from an ultra-luxury $1.9 billion stadium," FAC ¶¶ 4, 66.

In 2018, the City commenced this action against the NFL, the Raiders, and the other thirty-one NFL teams, alleging an antitrust violation under § 1 of the Sherman Act, 15 U.S.C. § 1, as well as breach of contract and unjust enrichment claims under California law. FAC ¶¶ 218–42. The complaint seeks declaratory and monetary relief, including treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15(a).

With respect to the Sherman Act claim, which is the focus of this appeal, the complaint alleges that

[t]he relevant market in this action is the market for hosting NFL teams. The consumers in this market are all Host Cities offering, and all cities and communities that are willing to offer (i.e. , potential Host Cities), home stadia and other support to major league professional football teams in the geographic United States. The product in this market is the NFL team, as a hosted entity.

FAC ¶ 189. The City alleges that this market is anticompetitive because the NFL limits both the number of teams and the freedom of teams to relocate: NFL rules permit neither league expansion nor team relocation without the approval of three-fourths of the NFL's teams. FAC ¶ 66. The complaint further alleges that these policies and practices artificially restrict the number of teams, driving up the prices demanded of and paid by host cities. As incumbent and aspiring host cities compete with one another, they are forced to pay supracompetitive prices to retain or acquire teams, usually in the form of publicly financed stadia. The complaint alleges that in a competitive market—with more teams and fewer restrictions on relocation—teams would instead compete for host cities, driving down prices: "Because all viable locations would have a team, team owners would not be able to make threats about leaving their current Host Cities. In fact, the tables would take a dramatic turn: teams actually would compete for financially viable locations." FAC ¶ 47 (quoting R. Fort, Market Power in Pro Sports: Problems and Solutions , 13–14, in The Economics of Sports (W. Kern ed., 2000)). The complaint maintains that, "[i]n a competitive market, demanding a new stadium would be a risky move for any team owner: the Host City could reject the demand and seek out a new team willing to play in the existing stadium." FAC ¶ 145.

The City's contention that, in a competitive market, the Raiders would have stayed in Oakland rests on three premises. First, the City alleges that there would be more NFL teams in a competitive market. According to...