Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Class action against NFL’s exclusive license with Reebok proceeds, (Sep 2, 2014)

By Greg Hammond, J.D.

The National Football League, its member clubs, and Reebok International, Ltd. were unable to dodge a consumer’s class action, alleging that the NFL’s exclusive licensing agreement with Reebok constituted anticompetitive behavior in violation of California and federal antitrust laws. In denying the defendants’ motion for partial summary judgment, the federal district court in San Jose, California determined that more factual development is necessary to rule on whether the Cartwright Act is inapplicable to the interstate activities of professional football (Dang v. San Francisco Forty Niners, Ltd., August 29, 2014, Davila, E.).

Background. Reebok was granted an exclusive license to manufacture NFL-branded apparel in December 2000. However, Patrick Dang—a consumer of NFL apparel—filed suit against the NFL, its member clubs, and Reebok, alleging that the agreement changed the NFL’s licensing landscape from a competitive market to an anticompetitive one, in violation of California’s Cartwright Act, the Sherman Act, and the Clayton Act. Specifically, he alleged that he paid an “anticompetitive overcharge for his purchase,” due to the defendants’ allegedly unlawful and anticompetitive agreement. The defendants moved for partial summary judgment based on the California Supreme Court’s ruling in Partee v. San Diego Chargers Football Co. (34 Cal. 3d 378, (1983)). Partee held that the Cartwright Act cannot be applied to the “interstate activities of professional football,” which includes “activities, which, if regulated by the state law, would result in a burden on professional football that would outweigh the state’s interest in regulating such activities.”

Insufficient case law. The defendants cited a number of cases that interpreted Partee, including Hebert v. Los Angeles Raider, Ltd., 23 Cal. App. 4th 414 (1991); City of San Jose v. Office of Comm’r of Baseball, 2013 WL 5609346 (N.D. Cal. Oct. 11, 2013); and City of Oakland v. Oakland Raiders, 174 Cal. App. 3d 414 (1985). However, the court determined that none of the cases clearly held that California’s regulation of the purported exclusive licensing scheme is barred by Partee or by the Commerce Clause. Nevertheless, the court noted that the instant case was most similar to City of Oakland, “where the court’s determination as to whether application of state law to the interstate business violated the Commerce Clause was a question of first impression and was made on a more fully developed record.” Consequently, the court denied the defendants’ motion for partial summary judgment, finding that further factual development is necessary for the court to rule on this issue.

The case number is 5:12-CV-05481-EJD.

Attorneys: Ralph B. Kalfayan (Krause Kalfayan Benink & Slavens) for Patrick Dang. Sonya Diane Winner (Covington & Burling LLP) for San Francisco Forty Niners, Ltd., The Oakland Raiders, LP, Chargers Football Co., LLC, New Orleans Louisana Saints, LLC, and Football Northwest LLC.

Companies: San Francisco Forty Niners, Ltd.; The Oakland Raiders, LP; Chargers Football Co., LLC; New Orleans Louisana Saints, LLC; Football Northwest LLC

Cases: Antitrust CaliforniaNews