It's My Party, Inc. v. Live Nation, Inc.

811 F.3d 676

IT'S MY PARTY, INC.; It's My Amphitheatre, Inc., d/b/a Merriweather Post Pavilion, Plaintiffs–Appellants,

v.LIVE NATION, INC., Defendant–Appellee.

No. 15–1278.

United States Court of Appeals, Fourth Circuit.

Argued: Dec. 8, 2015.

Decided: Feb. 4, 2016.

ARGUED:Robert William Hayes, Cozen O'connor, Philadelphia, Pennsylvania, for Appellants. Jonathan M. Jacobson, Wilson Sonsini Goodrich & Rosati, New York, New York, for Appellee. ON BRIEF:Abby L. Sacunas, Philadelphia, Pennsylvania, L. Barrett Boss, Cozen O'connor, Washington, D.C., for Appellants. Chul Pak, Lucy Yen, Kimberley Piro, Wilson Sonsini Goodrich & Rosati, New York, New York, for Appellee.

Before WILKINSON, NIEMEYER, and DIAZ, Circuit Judges.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge NIEMEYER and Judge DIAZ joined.

WILKINSON, Circuit Judge:

Plaintiff It's My Party, Inc. (IMP) contends that defendant Live Nation, Inc. (LN) has violated the Sherman Antitrust Act by engaging in monopolization, tying arrangements, and exclusive dealing in the music concert industry. The district court granted summary judgment to defendant LN. Because plaintiff has failed to define the relevant markets or to demonstrate any anticompetitive conduct, we affirm.

I.

A.

IMP and LN are competitors in the live music industry. Both promote concert tours and operate concert venues, but they differ in geographic reach. Plaintiff IMP is a regional player that promotes concerts and works with venues in the Washington, DC and Baltimore, MD area. Defendant LN is a national promoter that provides services to artists throughout the country. It owns, leases, or holds exclusive booking rights at venues across the United States. LN has expanded over time by acquiring other concert promoters as well as Ticketmaster, a major ticket sales and distribution company.

In addition to promoting concerts, IMP and LN both operate outdoor amphitheaters. IMP manages and operates Merriweather Post Pavilion in Columbia, Maryland, and LN owns Nissan Pavilion (now called Jiffy Lube Live) in Bristow, Virginia. Merriweather has a seating capacity of roughly 19,000 with 5,000 fixed seats, while Nissan has a capacity for 25,000 with 10,000 fixed seats. Concert venues range in size from small clubs with a capacity of about 1,000 to sports stadiums seating over 60,000.

Artists select venues based on their capacity, revenue potential, and the option of playing outdoors. The Washington–Baltimore area has a number of concert venues other than Merriweather and Nissan. Among the other venues are the Filene Center at Wolf Trap (7,000 person amphitheater), the First Mariner Arena (14,000 person arena), the Patriot Center (10,000 person arena), the Pier Six Pavilion (4,200 person amphitheater), and the Verizon Center (19,000 person arena). J.A. 1516. Notwithstanding the abundance of options, Merriweather has more than held its own. Between 2006 and 2012, it hosted an impressive line-up of prominent artists, including Bob Dylan, John Legend, Maroon 5, Nickelback, Nine Inch Nails, Sheryl Crow, Taylor Swift, The Black Eyed Peas, and The Fray. J.A. 827–40.

The basics of the music concert industry are easily described. IMP and LN compete for the business of artists, vying to promote their concerts and showcase them in their venues. Promoters, in negotiation with artists, work on financing concerts, arranging dates and locations, securing venues, and advertising. In terms of compensation, the artist typically receives either a minimum guaranteed payment or an agreed-upon percentage of the gross ticket sales.

Artists have two main options for organizing the individual concerts that make up their tours. One approach is to use a different local promoter for each location and secure venues through the promoters. Alternatively, an artist can work with a national promoter such as LN for most or all of the tour. The two options frequently offer different modes of compensation. "Artists who contract with one or a few national promoters to organize their tours often receive a guaranteed payment from the promoter based on the number of shows organized by that promoter. Artists who contract ‘locally’ and book with several promoters in various parts of the country will often receive instead a percentage of the gross ticket sales from each concert." It's My Party, Inc. v. Live Nat., Inc., 88 F.Supp.3d 475, 481 (D.Md.2015).

B.

IMP was dissatisfied with the workings of the industry as described above. Plaintiff brought suit on March 5, 2009, alleging that LN had violated § 1 and § 2 of the Sherman Act and parallel Maryland antitrust law through monopolization, tying arrangements, and exclusive dealing. The result of LN's conduct, claims IMP, was the foreclosure of competition in the concert promotion and venue markets. The district court denied LN's motion to dismiss in July 2009 and an initial motion for summary judgment without prejudice in August 2012. Following briefing and argument, the court granted summary judgment in LN's favor in February 2015.

In a careful opinion, the district court declined to adopt IMP's definition of the promotion market and excluded the portion of its expert analysis defining the venue market. It's My Party, 88 F.Supp.3d at 485–88, 490–92. The trial court also found insufficient evidence that LN had engaged in monopolization, tying, or any other anticompetitive behavior. Plaintiff's state law claims were deemed to fall in tandem with its federal ones. IMP now appeals.

Our standard of review is well settled. Summary judgment is justified if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "In reviewing a motion for summary judgment, the court must ‘draw any permissible inference from the underlying facts in the light most favorable to the party opposing the motion.’ " Sylvia Dev. Corp. v. Calvert County, Md., 48 F.3d 810, 817 (4th Cir.1995) (quoting Tuck v. Henkel Corp., 973 F.2d 371, 374 (4th Cir.1992) (citation omitted)).

II.

Plaintiff faces here the initial challenge of identifying exactly what market defendant is accused of monopolizing. Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 455–56, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993) (discussing the definition of a relevant market as a threshold issue for monopolization claims under § 2 ); Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 464, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (treating "appreciable economic power in the tying market" as a "necessary feature of an illegal tying arrangement"). In the absence of a plausible market definition, courts are hard pressed to discern the nature or extent of any anticompetitive injury that plaintiff and other similarly situated parties may be suffering.

This case involves two separate but related markets: the market for concert promotion and the market for concert venues. In both, the relevant consumers are performing artists, who contract with promoters and venues to put on concerts. In its market definition analysis, IMP characterized the promotion market as national rather than local and restricted the venue market to major amphitheaters to the exclusion of other venues. As the district court recognized, these definitions were plainly designed to bolster IMP's monopolization and tying claims by artificially exaggerating LN's market power and shrinking the scope of artists' choices.

A.

To support its claims that LN was monopolizing the concert promotion market and tying promotion services to its venues, IMP had to first define the promotion market and demonstrate LN's market power therein. According to IMP, promoters compete nationally for contracts to promote performances anywhere in the country. By defining the market as national, IMP could more easily construe LN's nationwide network of promoters and venues as evidence of market power. In contrast, IMP could portray itself as a modest regional outfit whose resources pale in comparison. If instead the market were defined locally and narrowed to just the Washington–Baltimore area, then IMP would appear more evenly matched against LN's regional capacity. Unfortunately for plaintiff, its market definitions are blind to the basic economics of concert promotion.

The relevant geographic market in antitrust cases is defined by the "area within which the defendant's customers ... can practicably turn to alternative supplies if the defendant were to raise its prices." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 441 (4th Cir.2011). Applied to this case, that inquiry focuses on the area within which artists can find alternative promoters if any one promoter were to increase its prices. The goal of concert promotion is of course to boost ticket sales. Therefore, artists' demand for promotion services is derivative of the public's demand for concert performances. Concertgoers will typically not travel out of their region to attend a concert in response to higher ticket prices in their area. Heerwagen v. Clear Channel Commc'ns, 435 F.3d 219, 228 (2d Cir.2006). Because the demand for concerts is local, promoters need to target their advertising to the area surrounding a particular venue. As the district court found in reviewing the record, "promoting shows is highly localized, and ... most promoters promote in specific locations." It's My Party, 88 F.Supp.3d at 492. "For example, Live Nation books the majority of its television advertising locally, with only about five percent spent on national advertising." Id. at 491.

These market dynamics favor promoters familiar with local media outlets and the local audience. An artist is unlikely to switch to a promoter based in Miami simply because a Baltimore promoter demands a bigger cut of the ticket sale proceeds. IMP sidesteps this point by focusing on the feasibility of promoting concerts from anywhere using modern technology. That technological capacity is useless, however,...