Antitrust Law Daily Wrap Up, ANTITRUST NEWS: State high school league’s ban on private school membership alleged to restrain trade, (Jun 3, 2014)

By Linda O’Brien, J.D., LL.M.

A state public high school league has restrained competition in the markets for commercial exhibition of high school football and basketball games by excluding non-public high schools from league membership and participation in playoff games with public high school league members, according to a complaint filed in the federal district court of Lynchburg, Virginia (Liberty Christian Academy v. Virginia High School League, June 2, 2014).

The Virginia High School League, Inc. (VHSL) is a non-governmental corporation with a membership comprised of the public high schools in Virginia. The VHSL conducts high school athletic activities, which includes selling tickets, telecast rights, and corporate sponsorships to publicly-exhibited high school football and basketball games. The Liberty Christian Academy (LCA) is a non-public high school, which sponsors high school athletic teams and participates in the Virginia Independent Schools Athletic Association (VISAA). The VISAA is a nonprofit organization comprised of Virginia non-public high schools that are excluded from VHSL membership.

The complaint alleges that the rules of the VHSL, the premier state-wide high school athletic league, expressly ban membership by non-public high schools and bar such institutions from participating in commercial transactions with VHSL members for the exhibition of high school football and basketball games. Non-public schools are also excluded from participating in state championship games with VHSL schools, insulating VHSL members from economic competition in the most prominent football and basketball games in the state.

According to the complaint, the LCA must resort to scheduling football and basketball games with teams of lower quality and often from out-of-state. LCA has lost significant revenue by virtue of VHSL’s group boycott, since it may not participate in public exhibitions of playoff games that (1) are organized by the VHSL, (2) generate substantial revenue for VHSL members, and (3) constitute the state’s premier high school football and basketball games.

The VHSL boycott injures the ability of LCA to attract the best football and basketball student athletes who may choose a competing public high school for its higher level of competition and exposure to football and basketball offered by VHSL members, the plaintiff charged. The boycott adversely affects the quality and revenue generating ability of LCA football and basketball games and LCA’s attractiveness to non-athlete students, the complaint alleges.

The VHSL restraints prohibit non-public schools from effectively competing in commercial exhibition of football and basketball games in the state. The prohibition reduces the quality of competition and directly deprives consumers of superior football and basketball competitions that would be possible if not for the VHSL’s unlawful conduct. These restraints allegedly operate as a horizontal group boycott, which is per se unlawful, and constitute an unreasonable restraint of trade under the rule of reason.

There are no legitimate justifications for the group boycott since less restrictive alternatives for achieving legitimate procompetitive purposes are available. Forty-seven states current permit non-public high schools to regularly participate in commercial athletic contests with public high schools.

LCA asserts claims for violations of Section 1 of the Sherman Act and the Virginia Antitrust Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 6:14-cv-00018-NKM.

Attorneys: Mathew D. Staver and Daniel J. Schmid (Liberty Counsel) and Jeffrey L. Kessler (Winston & Strawn LLP) for Liberty Christian Academy.

Companies: Virginia High School League, Inc.

News: Antitrust VirginiaNews