Flaa v. Hollywood Foreign Press Association

55 F.4th 680

Kjersti FLAA, an individual; Rosa Gamazo Robbins, Plaintiffs-Appellants,

v.HOLLYWOOD FOREIGN PRESS ASSOCIATION, a California Mutual Benefit Corporation; Aud Berggren Morisse, an individual; Tina Johnk Christensen, an individual; Aniko Skorka Navai, an individual; Meher Tatna, an individual, Defendants-Appellees.

No. 21-55347

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 16, 2022 Pasadena, California

FILED DECEMBER 8, 2022

David W. Quinto (argued) and Joanna Ardalan, One LLP, Beverly Hills, California, for Plaintiffs-Appellants.

Samir Deger-Sen (argued) and Mateo de la Torre, Latham & Watkins LLP, New York, New York; Christopher S. Yates, Latham & Watkins LLP, San Francisco, California; Marvin S. Putnam and Robert J. Ellison, Latham & Watkins, Los Angeles, California; for Defendants-Appellees.

Before: John B. Owens and Eric D. Miller, Circuit Judges, and Dana L. Christensen,^* District Judge.

OPINION

MILLER, Circuit Judge:

Kjersti Flaa and Rosa Gamazo Robbins are entertainment journalists who seek admission to the Hollywood Foreign Press Association (HFPA). The journalists challenge the HFPA's membership policies under federal and state antitrust laws and California's right of fair procedure. They also seek a declaration that the HFPA's bylaws conflict with its tax-exempt status. The district court dismissed their complaint for failure to state a claim and for lack of subject-matter jurisdiction. We affirm.

I

Because this is an appeal from a motion to dismiss, we assume the truth of the facts alleged in the complaint. Ellis v. Salt River Project Agric. Improvement & Power Dist. , 24 F.4th 1262, 1266 (9th Cir. 2022).

Flaa and Gamazo are entertainment journalists based in Los Angeles. Flaa began her career in Norway, where she reported on entertainment for several Norwegian publications. In 2007, Flaa moved to New York, where she reported for several Norwegian newspapers and magazines and served as the lead interviewer for the "biggest entertainment television show in Norway." In 2015, she moved to Southern California. There, she founded and served as the creative director of a production company that produced a short-form entertainment series, "Hollywood Stories," that was carried on Scandinavia's largest streaming network and was sold to more than 40 countries. Flaa also hosts a celebrity interview series on YouTube, "Flaawsome Talk," that has been viewed nearly 70 million times. Flaa's work has earned her professional awards and recognition. For example, Flaa was profiled by "major outlets in Norway concerning her success reporting on celebrities."

Gamazo, a citizen of Spain, has also been a successful entertainment journalist for many years. She has "report[ed] for outlets around the world" and has served as a correspondent for numerous outlets, including Mediaset España, since 2013, reporting on entertainment, trends, and restaurants in Los Angeles. Gamazo conducts celebrity interviews and publishes them online, and she also serves as a correspondent for La Razón , a Spanish newspaper.

Flaa and Gamazo seek admission to the HFPA. Founded in 1943, the HFPA is a California non-profit mutual-benefit corporation best known for hosting the annual Golden Globe Awards. At the time the complaint was filed, the HFPA had 85 members, all of whom were involved in reporting for media outlets outside of the United States. According to the complaint, "[o]nly half [of] the HFPA's members are considered truly ‘active,’ " and only "[t]wo or three dozen HFPA members ... are legitimate, respected media figures," while the rest are "intermittent freelancers at best." The HFPA's stated purposes include "promoting interest in the study of the arts," "providing facilities for education and instruction in the arts of motion picture production," and "establishing favorable relations and cultural ties between foreign countries and the USA."

Membership in the HFPA offers significant advantages. Movie studios provide HFPA members with access to Hollywood talent that non-HFPA members lack: HFPA members receive opportunities to interview and interact with popular actors, directors, and producers. Studios grant HFPA members such privileges in order to gain favor with the individuals responsible for voting on the Golden Globe Awards. HFPA members also reap financial benefits. Members receive invitations to all-expenses-paid excursions to film festivals and press junkets, and are paid directly by the HFPA for performing what the complaint describes as trivial, makeweight tasks.

According to the complaint, membership in the HFPA is increasingly vital to success as a foreign entertainment journalist. Until a few years ago, non-HFPA foreign journalists could compete for the few interview and press-junket slots available to non-members. Now, however, those slots are given to "bloggers and social media influencers." The lack of interview opportunities has been "economically devastating for non-member foreign reporters."

It is no surprise, then, that journalists like Flaa and Gamazo seek HFPA membership. But the HFPA strictly limits the admission of new members. At the time the complaint was filed, a journalist seeking HFPA membership was required to submit two letters of sponsorship from active HFPA members, provide 24 articles written by the applicant in the last three years, demonstrate membership in the Motion Picture Association of America, and receive a majority vote of the HFPA's active members, among other requirements. The HFPA admitted only one new member in 2018, and no new members in 2019.

Flaa unsuccessfully applied for membership in 2018, 2019, and 2020. Gamazo attempted to apply in 2015, 2017, 2018, and 2019, but she could not find two members to sponsor her application. The complaint asserts that the HFPA's restrictive membership practices serve to insulate HFPA members from competition and protect the financial benefits that accrue to them.

In August 2020, Flaa brought this action in the Central District of California against the HFPA and several of its individual members. She alleged that the HFPA's refusal to admit her and other qualified journalists violated federal and state antitrust law and California's common-law right to fair procedure. Flaa also sought a declaratory judgment that the HFPA's bylaws conflict with its obligations as a tax-exempt mutual-benefit corporation under 26 U.S.C. § 501(c)(6).

The district court dismissed the complaint. The court dismissed the antitrust claims because Flaa "fail[ed] to plead a facially sustainable market definition." It dismissed the fair-procedure claim because the California right to fair procedure applies only "to an organization that ‘occupies a quasi public position similar to that of a public service business,’ " and the court determined that the HFPA is not such an organization. (quoting James v. Marinship Corp. , 25 Cal.2d 721, 155 P.2d 329, 335 (1944) ). And it dismissed the declaratory-judgment claim for lack of jurisdiction because 28 U.S.C. § 2201(a) generally bars federal courts from deciding claims for declaratory relief relating to federal taxes.

The district court's dismissal was with prejudice, except as to the antitrust claims, which the court allowed Flaa to amend. Flaa then joined Gamazo as a co-plaintiff and filed an amended complaint. In the amended complaint, the journalists asserted that the HFPA had committed per se antitrust violations by engaging in a group boycott and agreeing upon a horizontal market division.

The district court dismissed the amended complaint and denied further leave to amend. The court rejected the group-boycott theory because the journalists did not "offer non-conclusory allegations that the HFPA or its members have market power" or "plead facts establishing a joint effort among horizontal competitors." The court rejected the market-division theory because, as it understood the complaint, "HFPA members are generally not able to compete with one another because of the peculiar characteristics of each geographic submarket," and "[i]f HFPA members cannot compete, then they cannot agree to divide a market." The court also rejected the antitrust claims under the rule of reason because "the allegations in the amended complaint remain ‘hopelessly muddled as to what product market (or markets) are at issue here,’ " and the complaint did not plausibly allege that the HFPA has market power. (quoting Ticketmaster L.L.C. v. RMG Techs., Inc. , 536 F. Supp. 2d 1191, 1195 (C.D. Cal. 2008) ).

The journalists appeal. We review the district court's dismissal for lack of subject-matter jurisdiction or for failure to state a claim de novo. Gilbert v. United States , 998 F.3d 410, 413 (9th Cir. 2021) ; City of Oakland v. Oakland Raiders , 20 F.4th 441, 451 (9th Cir. 2021).

II

We begin with the journalists' antitrust claims. The journalists allege that the HFPA's exclusionary membership practices violate section 1 (restraint of trade) and section 2 (monopolization) of the Sherman Act, 15 U.S.C. §§ 1, 2, as well as California's Cartwright Act, Cal. Bus. & Prof. Code §§ 16700 – 16770. Because the analysis under the Cartwright Act mirrors the analysis under the Sherman Act, we consider both claims together. See PLS.Com, LLC v. National Ass'n of Realtors , 32 F.4th 824, 831–32 (9th Cir. 2022). And because the legal tests used for sections 1 and 2 of the Sherman Act are similar, we can "review claims under each section simultaneously." FTC v. Qualcomm Inc. , 969 F.3d 974, 991 (9th Cir. 2020). If "a court finds that the conduct in question is not anticompetitive under § 1, the court need not separately analyze the conduct under § 2." Id. (emphasis omitted).

Section 1 prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." 15 U.S.C. § 1. Notwithstanding the apparent breadth of that provision, the Supreme Court has long interpreted it "to outlaw only unreasonable rest...