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Ninth Circuit:
Oakland’s Suit Against NFL, Member Teams Properly Axed
Panel Says There Was No ‘Group Boycott,’ City Lacks Standing Under Sherman Act
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday affirmed the scuttling of the City of Oakland’s action against the National Football League and its 32 member teams over the relocation of the Raiders to Las Vegas.
Senior Circuit Judge A. Wallace Tashima wrote, for the majority:
“We agree with the district court that the City has failed to allege a group boycott. A group boycott occurs when multiple producers refuse to sell goods or services to a particular consumer. Although the City alleges collective action (i.e., that the other NFL teams supported the Raiders’ boycott), it has not alleged a group boycott. The City has alleged only that a single producer—the Raiders—-refused to deal with the City.”
The jurist also said that “the City’s contention that, in the absence of Defendants’ challenged practices, it would have retained the Raiders (or acquired another team) is too speculative to establish antitrust standing.”
Tashima was joined by District Court Judge Douglas L. Rayes of the District of Arizona, sitting by designation. Circuit Judge Patrick J. Bumatay wrote a partially concurring opinion.
City’s Allegations
The city said in its Sept. 9, 2019 first amended complaint:
“This is an action for damages arising out of Defendants’ unlawful decision to use their collective market power, premised on their artificially-restricted 32-team professional football league, to deprive Oakland of its long-resident NFL team, the Raiders. That collective decision—Defendants’ 2017 vote to allow the Raiders to relocate to Las Vegas—the culmination of Defendants’ threats against Oakland to both (a) relocate the Raiders to Las Vegas and (b) deprive Oakland of any reasonable chance to host another NFL team. Defendants first created artificial scarcity in their product (NFL teams), and then used that scarcity in what economists have described as “extortion” or “sabotage” power to demand supra-competitive prices from host cities, such as Oakland.”
The pleading continues: “In order to remain the host city of an NFL team…, Oakland was asked to pay supra-competitive prices, including stadium investments, which are effectively a forced subsidy. When Oakland could not pay those prices. Defendants punished the city: they voted to allow the Raiders to move to Las Vegas, which left Oakland without an NFL team and caused significant losses to Oakland.”
The NFL’s actions, the city asserted, “were blatant violations of the antitrust laws,” as well as the league’s own constitution and policies.
‘Illegal Transfer’
It specified:
“To be clear, Defendants did not sell the Raiders to the highest bidder in a fair and competitive auction. Instead, they created an artificially-restricted market for NFL teams and then proceeded to extract supra-competitive prices from Las Vegas while simultaneously refusing to deal with Oakland in the market for hosting NFL teams. In this case. Defendants constrained the supply of NFL teams, thereby leveraging their cartel power and orchestrating an illegal transfer of wealth from a municipality to private businesses.”
The pleading describes the NFL as “a closed sports cartel” with 32 member teams, alleging that “the number of U.S. cities capable of supporting an NFL team” exceeds 50.
Chief Magistrate Judge Joseph C. Spero of the Northern District of California on April 30, 2020 dismissed the antitrust claim with prejudice and dismissed the claims under California law without prejudice to being refiled in state court.
Tashima’s Opinion
Addressing the city’s horizontal price-fixing theory, Tashima said the allegations that the city lost its team based on anticompetitive conduct were sufficient to accord it constitutional status but are insufficient to state a claim under the Sherman Act because there was no direct injury to the plaintiff and any injury or damages that might be inferred were grounded on mere speculation.
He commented:
“The City has not alleged—and there is no way of knowing-—what would have occurred in a more competitive marketplace. Would new teams have joined the NFL? Would they have found Oakland attractive? Would the Raiders have left Oakland in any event? Would the Raiders have stayed in the Bay Area, but not in Oakland? What price would the City have paid to retain the Raiders or acquire another team? Would the City have been willing and able to pay a competitive price? There are too many speculative links in the chain of causation between Defendants’ alleged restrictions on output and the City’s alleged injuries.”
Bumatay’s Views
Bumatay concurred in Tashima’s opinion except for the portion in which he found that Oakland had constitutional status. He said that in the majority’s view, “Oakland gels to suit up and take the field of Article III standing but can’t run the claims into the endzone of antitrust liability,” remarking:
“Upon further review, however, I think, the majority fumbles the standing analysis on the price-fixing claim. I would hold that this claim is too speculative to satisfy the threshold of constitutional standing and so must be benched even before kickoff. On the group boycott claim, I fully agree with the majority that Oakland stays on the field but ultimately fails to score on the merits. In short, we should have dismissed Oakland’s price-fixing claim on Article III standing grounds and denied the group boycott claim on legal sufficiency grounds.”
He went on to say:
“[T]he City can’t rely on a Hail Mary of speculation to satisfy standing. In my view, we should have blown the whistle on jurisdiction rather than letting that claim play out on the merits.”
The case is City of Oakland v. Oakland Raiders, 20-16075.
New Stadium
The Raiders are now playing in a new $1.9 billion stadium, promised to it as an inducement to move to Las Vegas. It requested permission to move in 2017 which was approved by a 31-1 vote of the member clubs.
A condition was that the Raiders pay, over a period of years, a $378 million relocation fee, to be split among the other teams.
At the time the Raiders announced its desire to move, a proposal was being floated in Oakland to build a new $1.3 billion stadium. According to the Raiders’ pleading:
“From 2014 to 2017, the Raiders, through [owner] Mark Davis, publicly stated their desire to stay in and negotiate with Oakland while they affirmatively sought to move anywhere else: San Antonio. Los Angeles. San Diego, or Las Vegas, hi fact, at one point. Mark Davis simply stopped speaking to Oakland’s Mayor, Libby Schaaf….The Raiders, the NFL. and ultimately, the vast majority of NFL Clubs, were just stringing Oakland along as part of their collusive scheme to relocate the Raiders.”
The city’s basketball team, the Golden State Warriors, relocated to San Francisco in 2019 and its baseball team, the Oakland A’s, is eying a possible move to Las Vegas. CNBC reported on Wednesday that the prospect looms of a stadium being constructed for the A’s on the site of the Tropicana Hotel and Casino on the Strip, although negotiations with Oakland continue for the building of a new stadium there.
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