Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Tex.: Rodeo cowboys unable to corral injunction against association’s by-laws changes, (Feb 5, 2016)

By Edward L. Puzzo, J.D.

High-profile professional rodeo cowboys were unable to show that by-laws changes made by their professional organization were directed at their competing organization in violation of antitrust laws, causing them irreparable harm, the federal district court in Dallas has ruled. However, while finding an insufficient basis for a preliminary injunction, the court declined to dismiss the Section 2 Sherman Act claim of monopolization (The Elite Rodeo Association v. Professional Rodeo Cowboys Association, Inc., February 4, 2016, Lynn, B.).

The Professional Rodeo Cowboys Association (PRCA) is the largest and oldest rodeo sanctioning organization in the world. In 2014, approximately 80 of the highest-profile rodeo athletes—including Trevor Brazile, Bobby Mote, and Ryan Motes—formed the Elite Rodeo Association d/b/a Elite Rodeo Athletes (ERA). Soon after the ERA's September 15, 2015, announcement that its top rodeo athletes would focus their tour schedules on the ERA tour in 2016, the PRCA’s board of directors passed amendments to their association by-laws. One of the rules, “Conflicting Rodeo Association Bylaws,” prohibited any PRCA member from pursuing interests in a competing rodeo association. Another rule prohibited local rodeo committees from producing a rodeo event by a competing rodeo association within 72 hours before or after a PRCA sanctioned rodeo.

The ERA and its individual members brought an action against PRCA, alleging that PRCA’s by-laws changes were an unreasonable restraint of trade violating Section 1 of the Sherman Act, and that PRCA engaged in monopolization in violation of Section 2 of the Sherman Act. The ERA sought a preliminary injunction against the changed PRCA bylaws; the PRCA moved to dismiss.

Preliminary injunction. One of the requirements for a preliminary injunction is a showing by the plaintiff that they will suffer irreparable harm absent an injunction. The ERA did not meet this requirement, the court stated. First, the evidence indicates that ERA members are projected to earn as much through ERA rodeos as they previously earned through the PRCA. Second, the ERA members would not be excluded from lucrative unsanctioned “open rodeos,” such as the Calgary Stampede.

It is true, the court conceded, that certain courts have concluded that lost playing time can constitute irreparable harm to professional athletes, but those cases involved situations where, unlike here, the athletes were entirely locked out of their sports. This case also differs from a prior ruling concerning an earlier PRCA by-law change found to have caused rodeo athletes irreparable harm, because in that case, Medlin v. Professional Rodeo Cowboys Association, 1991 LEXIS 20847 (D. Colo. 1991), there was no alternative venue for professional rodeo cowboys. Here, the purpose of the ERA is to create an alternative venue for elite professional rodeo cowboys, so there is little danger that they would spend a year on the sidelines getting rusty, suffering injury or fading in popularity.

The court consequently denied the plaintiffs’ motion for a preliminary injunction.

Restraint of trade. The court next found that concerted action could legally have occurred here, but the plaintiffs were unable to make a clear showing of conspiracy or concerted action. In particular, the ERA was unable to show that a majority of board members stood to profit from the allegedly anticompetitive bylaws. The court could not infer from the passage of the bylaws and the evidence presented that the allegedly conspiring parties knew the essential nature and general scope of the joint plan, and had a meeting of the minds to achieve it. Thus the plaintiffs were unable to make a clear showing of a likelihood of success on the merits of their Section 1 claim, the court ruled.

Monopolization. PRCA’s market share is substantial by any metric, the court next stated. But high market share alone, in the absence of significant entry barriers, may overestimate market power. In this case, according to the court, the initial success the ERA has experienced so far, despite the PRCA’s “obvious hostility” indicates that the PRCA does not have the ability to exclude competitors from the market. The evidence also indicated that other entities besides ERA have successfully entered this market. Thus the plaintiffs were unable to make a clear showing of a likelihood of success on the merits of their Section 2 claim regarding monopoly power, the court stated. However, unlike the Section 1 claim, the court continued, plaintiffs sufficiently and plausibly pleaded the existence of monopoly power. Therefore, the court denied the PRCA’s motion to dismiss the monopolization claim.

The case is Civil Action No. 3:15-cv-03609-M.

Attorneys: T. Ray Guy (Weil Gotshal & Manges LLP) for The Elite Rodeo Association. James A. Keyte, Paul M. Eckles, Peter S. Julian, Luke T. Taeschler, and Michelle L. Davis (Skadden Arps Slate Meagher & Flom LLP) for Professional Rodeo Cowboys Association Inc.

Companies: The Elite Rodeo Association; Professional Rodeo Cowboys Association Inc.

Cases: Antitrust TexasNews